UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | February 28 |
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Date of reporting period: | February 28, 2010 |
Item 1. Reports to Stockholders
Fidelity®
Select Portfolios®
Consumer Discretionary Sector
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
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Note to shareholders |
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Shareholder Expense Example |
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Fund Updates* |
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Consumer Discretionary Sector |
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Automotive Portfolio |
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Construction and Housing Portfolio |
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Consumer Discretionary Portfolio |
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Leisure Portfolio |
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Multimedia Portfolio |
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Retailing Portfolio |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Prospectus | P-1 |
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* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Automotive Portfolio | .95% |
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|
|
Actual |
| $ 1,000.00 | $ 1,143.90 | $ 5.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Construction and Housing Portfolio | .99% |
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|
|
Actual |
| $ 1,000.00 | $ 1,058.50 | $ 5.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.89 | $ 4.96 |
Consumer Discretionary Portfolio | 1.06% |
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|
|
Actual |
| $ 1,000.00 | $ 1,159.50 | $ 5.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
Leisure Portfolio | .90% |
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|
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Actual |
| $ 1,000.00 | $ 1,133.00 | $ 4.76 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Multimedia Portfolio | 1.04% |
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|
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Actual |
| $ 1,000.00 | $ 1,206.80 | $ 5.69 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.64 | $ 5.21 |
Retailing Portfolio | .93% |
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Actual |
| $ 1,000.00 | $ 1,180.20 | $ 5.03 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Automotive Portfolio | 215.39% | -0.30% | 5.74% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 29, 2000. 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.
Annual Report
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Michael Weaver, Portfolio Manager of Select Automotive Portfolio: The fund advanced 215.39% during the past year, significantly outperforming the S&P 500 and the 206.22% return of its industry benchmark, the S&P® Custom Automobiles & Components Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Relative to its S&P industry index, strong stock selection and an overweighting in auto parts and equipment fueled most of the fund's outperformance. Out-of-index stock picks in trucking and consumer electronics also aided results, as did underweighting motorcycle manufacturers - primarily Harley-Davidson. In terms of other individual holdings, the biggest contributor to relative results was a substantially overweighted position in Tenneco, which makes vehicle exhaust-system and suspension components. The company faced several challenges early in 2009 that weighed on its stock price. These included lower industry sales, risk that the domestic supply chain could collapse due to the failure of large customers GM and Chrysler and concern that the company may default on a portion of its outstanding debt. However, the stock rallied dramatically after the government announced it would provide support to manufacturers and suppliers to prevent a supply-chain collapse, and Tenneco received a waiver from its lender to avoid defaulting on its debt. The fund also benefited from not holding GM as it went through bankruptcy. My out-of-benchmark investment in rental car provider Avis Budget Group rallied from depressed levels as the company emerged from the weakest point in its business cycle and investors anticipated improving pricing power and better long-term earnings potential. I sold Avis during the period. Lastly, overweighting auto-parts maker Federal-Mogul also helped. On the downside, positioning in automobile manufacturers was by far the biggest detractor, including a large underweighting in major index component Ford Motor. Ford gained market share at the expense of both GM and Chrysler, and its stock price moved steadily higher as a result. As its shares rose in value, Ford was able to restructure its balance sheet on more-favorable terms than I had anticipated. An underweighting in American Axle & Manufacturing Holdings - a key supplier to GM - also cut into returns, as its stock rebounded sharply. The company avoided bankruptcy after receiving substantial financial assistance from GM. Untimely ownership of non-benchmark automotive retailer Sonic Automotive was another detractor. Stock choices in automotive retail, construction/farm machinery/heavy trucks, tires/rubber and distributors also dampened results, as did holding an average cash position of approximately 2% in a rallying market.
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.
Annual Report
Automotive Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Honda Motor Co. Ltd. sponsored ADR | 11.7 | 0.0 |
Toyota Motor Corp. sponsored ADR | 11.1 | 0.0 |
Daimler AG | 7.6 | 0.9 |
Johnson Controls, Inc. | 6.7 | 20.4 |
BorgWarner, Inc. | 6.5 | 8.2 |
Tenneco, Inc. | 5.0 | 3.3 |
Gentex Corp. | 4.5 | 4.4 |
TRW Automotive Holdings Corp. | 4.2 | 5.1 |
Sonic Automotive, Inc. Class A (sub. vtg.) | 3.6 | 4.8 |
Autoliv, Inc. | 3.6 | 7.7 |
| 64.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Auto Components | 48.6% |
|
![]() | Automobiles | 36.8% |
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![]() | Specialty Retail | 11.0% |
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![]() | Household Durables | 1.5% |
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![]() | Machinery | 1.3% |
|
![]() | All Others* | 0.8% |
|
As of August 31, 2009 | |||
![]() | Auto Components | 64.3% |
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![]() | Specialty Retail | 17.2% |
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![]() | Automobiles | 8.8% |
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![]() | Road & Rail | 4.6% |
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![]() | Machinery | 3.5% |
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![]() | All Others* | 1.6% |
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* Includes short-term investments and net other assets. |
Annual Report
Automotive Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
AUTO COMPONENTS - 48.6% | |||
Auto Parts & Equipment - 45.7% | |||
American Axle & Manufacturing Holdings, Inc. (a)(c) | 266,200 | $ 2,611,422 | |
ArvinMeritor, Inc. (a)(c) | 321,900 | 3,753,354 | |
Autoliv, Inc. | 117,555 | 5,244,129 | |
BorgWarner, Inc. | 253,300 | 9,488,618 | |
Dana Holding Corp. (a) | 409,500 | 4,656,015 | |
Exide Technologies (a) | 631,000 | 3,628,250 | |
Federal-Mogul Corp. Class A (a) | 122,424 | 2,366,456 | |
Gentex Corp. | 341,500 | 6,628,515 | |
Johnson Controls, Inc. | 313,070 | 9,736,477 | |
Magna International, Inc. Class A (sub. vtg.) | 85,200 | 4,858,161 | |
Modine Manufacturing Co. (a) | 37,800 | 355,320 | |
Tenneco, Inc. (a) | 365,180 | 7,362,029 | |
TRW Automotive Holdings Corp. (a) | 225,700 | 6,064,559 | |
| 66,753,305 | ||
Tires & Rubber - 2.9% | |||
Cooper Tire & Rubber Co. | 30,500 | 534,970 | |
The Goodyear Tire & Rubber Co. (a) | 278,026 | 3,611,558 | |
| 4,146,528 | ||
TOTAL AUTO COMPONENTS | 70,899,833 | ||
AUTOMOBILES - 36.8% | |||
Automobile Manufacturers - 34.4% | |||
Daimler AG | 265,100 | 11,083,831 | |
Ford Motor Co. (a) | 246,761 | 2,896,974 | |
Honda Motor Co. Ltd. sponsored ADR (c) | 491,500 | 17,010,815 | |
Thor Industries, Inc. | 69,600 | 2,361,528 | |
Toyota Motor Corp. sponsored ADR (c) | 216,800 | 16,223,144 | |
Winnebago Industries, Inc. (a)(c) | 52,900 | 617,872 | |
| 50,194,164 | ||
Motorcycle Manufacturers - 2.4% | |||
Harley-Davidson, Inc. (c) | 144,900 | 3,565,989 | |
TOTAL AUTOMOBILES | 53,760,153 | ||
HOUSEHOLD DURABLES - 1.5% | |||
Consumer Electronics - 1.5% | |||
Harman International Industries, Inc. | 51,300 | 2,213,082 | |
MACHINERY - 1.3% | |||
Construction & Farm Machinery & Heavy Trucks - 1.3% | |||
Commercial Vehicle Group, Inc. (a) | 48,087 | 238,992 | |
| |||
Shares | Value | ||
Cummins, Inc. | 12,800 | $ 726,784 | |
Navistar International Corp. (a) | 25,500 | 998,580 | |
| 1,964,356 | ||
SOFTWARE - 0.4% | |||
Application Software - 0.4% | |||
Solera Holdings, Inc. | 18,700 | 638,792 | |
SPECIALTY RETAIL - 11.0% | |||
Automotive Retail - 11.0% | |||
Asbury Automotive Group, Inc. (a) | 262,526 | 3,053,177 | |
Group 1 Automotive, Inc. (a) | 99,500 | 2,763,115 | |
Lithia Motors, Inc. Class A (sub. vtg.) (a)(c) | 465,700 | 2,971,166 | |
Penske Automotive Group, Inc. (a) | 139,000 | 2,022,450 | |
Sonic Automotive, Inc. Class A (sub. vtg.) (a)(c) | 509,900 | 5,251,970 | |
| 16,061,878 | ||
TOTAL COMMON STOCKS (Cost $129,700,823) | 145,538,094 | ||
Money Market Funds - 21.8% | |||
|
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|
|
Fidelity Cash Central Fund, 0.16% (d) | 371,609 | 371,609 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 31,420,975 | 31,420,975 | |
TOTAL MONEY MARKET FUNDS (Cost $31,792,584) | 31,792,584 | ||
TOTAL INVESTMENT PORTFOLIO - 121.4% (Cost $161,493,407) | 177,330,678 | ||
NET OTHER ASSETS - (21.4)% | (31,308,021) | ||
NET ASSETS - 100% | $ 146,022,657 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,732 |
Fidelity Securities Lending Cash Central Fund | 36,625 |
Total | $ 43,357 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 66.3% |
Japan | 22.8% |
Germany | 7.6% |
Canada | 3.3% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $3,841,985 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Automotive Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $30,770,851) - See accompanying schedule: Unaffiliated issuers (cost $129,700,823) | $ 145,538,094 |
|
Fidelity Central Funds (cost $31,792,584) | 31,792,584 |
|
Total Investments (cost $161,493,407) |
| $ 177,330,678 |
Receivable for fund shares sold | 498,564 | |
Dividends receivable | 22,200 | |
Distributions receivable from Fidelity Central Funds | 5,298 | |
Prepaid expenses | 503 | |
Other receivables | 8,508 | |
Total assets | 177,865,751 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,488 | |
Payable for fund shares redeemed | 287,137 | |
Accrued management fee | 66,883 | |
Other affiliated payables | 35,856 | |
Other payables and accrued expenses | 28,755 | |
Collateral on securities loaned, at value | 31,420,975 | |
Total liabilities | 31,843,094 | |
|
|
|
Net Assets | $ 146,022,657 | |
Net Assets consist of: |
| |
Paid in capital | $ 131,669,022 | |
Accumulated net investment loss | (60) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,483,331) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 15,837,026 | |
Net Assets, for 4,616,440 shares outstanding | $ 146,022,657 | |
Net Asset Value, offering price and redemption price per share ($146,022,657 ÷ 4,616,440 shares) | $ 31.63 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 658,032 |
Interest |
| 7 |
Income from Fidelity Central Funds (including $36,625 from security lending) |
| 43,357 |
Total income |
| 701,396 |
|
|
|
Expenses | ||
Management fee | $ 537,285 | |
Transfer agent fees | 263,622 | |
Accounting and security lending fees | 39,080 | |
Custodian fees and expenses | 15,123 | |
Independent trustees' compensation | 552 | |
Registration fees | 40,867 | |
Audit | 38,399 | |
Legal | 284 | |
Interest | 61 | |
Miscellaneous | 1,009 | |
Total expenses before reductions | 936,282 | |
Expense reductions | (11,797) | 924,485 |
Net investment income (loss) | (223,089) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 12,553,550 | |
Foreign currency transactions | (5,810) | |
Total net realized gain (loss) |
| 12,547,740 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 32,049,379 | |
Assets and liabilities in foreign currencies | 411 | |
Total change in net unrealized appreciation (depreciation) |
| 32,049,790 |
Net gain (loss) | 44,597,530 | |
Net increase (decrease) in net assets resulting from operations | $ 44,374,441 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (223,089) | $ 255,828 |
Net realized gain (loss) | 12,547,740 | (6,816,202) |
Change in net unrealized appreciation (depreciation) | 32,049,790 | (7,681,859) |
Net increase (decrease) in net assets resulting from operations | 44,374,441 | (14,242,233) |
Distributions to shareholders from net investment income | (69,440) | (188,395) |
Distributions to shareholders from net realized gain | - | (6,728) |
Total distributions | (69,440) | (195,123) |
Share transactions | 237,075,048 | 14,431,650 |
Reinvestment of distributions | 67,208 | 185,758 |
Cost of shares redeemed | (143,070,227) | (18,426,076) |
Net increase (decrease) in net assets resulting from share transactions | 94,072,029 | (3,808,668) |
Redemption fees | 64,595 | 4,272 |
Total increase (decrease) in net assets | 138,441,625 | (18,241,752) |
|
|
|
Net Assets | ||
Beginning of period | 7,581,032 | 25,822,784 |
End of period (including accumulated net investment loss of $60 and undistributed net investment income of $66,298, respectively) | $ 146,022,657 | $ 7,581,032 |
Other Information Shares | ||
Sold | 8,989,665 | 682,736 |
Issued in reinvestment of distributions | 3,926 | 12,936 |
Redeemed | (5,130,314) | (696,837) |
Net increase (decrease) | 3,863,277 | (1,165) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.07 | $ 34.23 | $ 40.24 | $ 34.35 | $ 34.10 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | .42 | .18 | .06 | .06 |
Net realized and unrealized gain (loss) | 21.67 | (24.30) | (4.98) | 5.85 | .21 |
Total from investment operations | 21.61 | (23.88) | (4.80) | 5.91 | .27 |
Distributions from net investment income | (.07) | (.28) | (.13) | (.06) | (.07) |
Distributions from net realized gain | - | (.01) | (1.11) | - | - |
Total distributions | (.07) | (.29) | (1.24) | (.06) | (.07) |
Redemption fees added to paid in capital C | .02 | .01 | .03 | .04 | .05 |
Net asset value, end of period | $ 31.63 | $ 10.07 | $ 34.23 | $ 40.24 | $ 34.35 |
Total Return A, B | 215.39% | (69.99)% | (12.11)% | 17.33% | .94% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .99% | 1.47% | 1.19% | 1.58% | 1.59% |
Expenses net of fee waivers, if any | .99% | 1.15% | 1.15% | 1.22% | 1.25% |
Expenses net of all reductions | .97% | 1.15% | 1.15% | 1.21% | 1.19% |
Net investment income (loss) | (.23)% | 1.73% | .44% | .16% | .17% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 146,023 | $ 7,581 | $ 25,823 | $ 47,708 | $ 15,361 |
Portfolio turnover rate E | 156% | 156% | 258% | 256% | 206% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Construction and Housing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Construction and Housing Portfolio | 67.46% | -2.36% | 9.46% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 29, 2000. 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.
Annual Report
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Daniel Kelley, Portfolio Manager of Select Construction and Housing Portfolio: The fund returned 67.46% for the 12 months ending February 28, 2010, outperforming the S&P 500 and the 56.39% return of the MSCI® U.S. IM Custom Construction & Housing 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Amid the dramatic stock market turnaround, the homebuilding group was the top contributor to fund performance versus the MSCI index, thanks to good stock selection and a sizable overweighting. Renewed access to capital, rising demand and industry consolidation spurred by the government's homebuyer tax incentive all helped drive homebuilder stocks higher. Security selection and a large underweighting in construction and engineering also helped performance, as did stock picks in three out-of-index categories - retail real estate investment trusts (REITs), real estate services and paper packaging. Conversely, an underweighting in residential REITs detracted from performance, as the group outperformed the MSCI index. The fund's underweighting in the strong-performing building products segment also hurt, but those losses were mitigated by good stock selection there. A modest cash position also curbed results. In terms of individual stocks, out-of-index holdings in paper packaging company Temple-Inland and commercial real estate broker CB Richard Ellis Group topped our list of contributors, followed by homebuilders Meritage Homes and Centex - the latter of which was acquired during the period. Our biggest detractors were underweightings in wallboard manufacturer USG and apartment REIT AvalonBay Communities. An out-of-index position in consumer electronics retailer Best Buy also hurt, as did not owning apartment REIT and index component Mid-America Apartment Communities. Best Buy and Temple-Inland were no longer held at period-end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Construction and Housing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Home Depot, Inc. | 21.8 | 19.9 |
Lowe's Companies, Inc. | 18.3 | 16.8 |
Equity Residential (SBI) | 4.0 | 2.7 |
Fluor Corp. | 3.7 | 3.1 |
Masco Corp. | 3.6 | 2.4 |
Vulcan Materials Co. | 3.5 | 4.0 |
Lennar Corp. Class A | 3.2 | 2.1 |
KB Home | 3.1 | 2.4 |
Jacobs Engineering Group, Inc. | 2.6 | 2.3 |
Toll Brothers, Inc. | 2.5 | 2.7 |
| 66.3 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Specialty Retail | 42.6% |
|
![]() | Household Durables | 15.5% |
|
![]() | Construction & Engineering | 15.4% |
|
![]() | Real Estate Investment Trusts | 11.4% |
|
![]() | Building Products | 5.3% |
|
![]() | All Others* | 9.8% |
|
As of August 31, 2009 | |||
![]() | Specialty Retail | 41.5% |
|
![]() | Construction & Engineering | 16.2% |
|
![]() | Household Durables | 14.8% |
|
![]() | Real Estate Investment Trusts | 11.6% |
|
![]() | Construction Materials | 5.4% |
|
![]() | All Others* | 10.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Construction and Housing Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
BUILDING PRODUCTS - 5.3% | |||
Building Products - 5.3% | |||
Masco Corp. | 264,500 | $ 3,536,365 | |
Owens Corning (a) | 43,100 | 1,014,143 | |
USG Corp. (a)(c) | 52,600 | 709,048 | |
| 5,259,556 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.4% | |||
Environmental & Facility Services - 0.4% | |||
Tetra Tech, Inc. (a) | 19,800 | 414,216 | |
CONSTRUCTION & ENGINEERING - 15.4% | |||
Construction & Engineering - 15.4% | |||
EMCOR Group, Inc. (a) | 26,000 | 598,520 | |
Fluor Corp. | 86,250 | 3,691,500 | |
Foster Wheeler AG (a) | 82,000 | 2,018,020 | |
Granite Construction, Inc. | 15,800 | 436,554 | |
Jacobs Engineering Group, Inc. (a) | 66,700 | 2,587,960 | |
KBR, Inc. | 84,800 | 1,756,208 | |
Orion Marine Group, Inc. (a) | 25,800 | 453,048 | |
Quanta Services, Inc. (a) | 18,275 | 347,225 | |
Shaw Group, Inc. (a) | 51,000 | 1,769,700 | |
Tutor Perini Corp. (a) | 25,900 | 512,043 | |
URS Corp. (a) | 25,371 | 1,179,752 | |
| 15,350,530 | ||
CONSTRUCTION MATERIALS - 3.8% | |||
Construction Materials - 3.8% | |||
Martin Marietta Materials, Inc. (c) | 4,350 | 344,607 | |
Vulcan Materials Co. (c) | 80,100 | 3,477,141 | |
| 3,821,748 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.5% | |||
Health Care Facilities - 0.5% | |||
Emeritus Corp. (a) | 26,700 | 468,318 | |
HOUSEHOLD DURABLES - 15.5% | |||
Homebuilding - 15.5% | |||
D.R. Horton, Inc. | 180,137 | 2,226,493 | |
KB Home (c) | 186,731 | 3,039,981 | |
Lennar Corp. Class A | 191,128 | 3,136,410 | |
M.D.C. Holdings, Inc. | 3,500 | 119,770 | |
M/I Homes, Inc. (a) | 26,400 | 339,240 | |
Meritage Homes Corp. (a) | 9,500 | 203,205 | |
NVR, Inc. (a) | 1,150 | 814,545 | |
Pulte Homes, Inc. (a) | 175,783 | 1,903,730 | |
Ryland Group, Inc. | 39,830 | 903,743 | |
Standard Pacific Corp. (a) | 71,400 | 301,308 | |
Toll Brothers, Inc. (a) | 130,884 | 2,464,546 | |
| 15,452,971 | ||
INDUSTRIAL CONGLOMERATES - 0.4% | |||
Industrial Conglomerates - 0.4% | |||
McDermott International, Inc. (a) | 16,700 | 381,595 | |
| |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - 11.4% | |||
Residential REITs - 10.2% | |||
Apartment Investment & Management Co. Class A | 76,371 | $ 1,274,632 | |
AvalonBay Communities, Inc. | 15,919 | 1,296,125 | |
BRE Properties, Inc. | 6,000 | 202,260 | |
Camden Property Trust (SBI) | 19,800 | 792,990 | |
Equity Residential (SBI) | 110,600 | 3,990,448 | |
Essex Property Trust, Inc. (c) | 15,500 | 1,331,450 | |
Home Properties, Inc. | 5,700 | 261,060 | |
UDR, Inc. | 62,038 | 1,042,238 | |
| 10,191,203 | ||
Retail REITs - 1.2% | |||
CBL & Associates Properties, Inc. | 98,500 | 1,171,165 | |
TOTAL REAL ESTATE INVESTMENT TRUSTS | 11,362,368 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 3.9% | |||
Diversified Real Estate Activities - 1.5% | |||
The St. Joe Co. (a)(c) | 53,800 | 1,479,500 | |
Real Estate Operating Companies - 1.2% | |||
Forest City Enterprises, Inc. Class A (a)(c) | 100,400 | 1,204,800 | |
Real Estate Services - 1.2% | |||
CB Richard Ellis Group, Inc. Class A (a) | 87,622 | 1,156,610 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 3,840,910 | ||
SPECIALTY RETAIL - 42.6% | |||
Home Improvement Retail - 42.6% | |||
Home Depot, Inc. | 696,000 | 21,715,200 | |
Lowe's Companies, Inc. | 766,900 | 18,183,199 | |
Lumber Liquidators Holdings, Inc. (a)(c) | 7,600 | 168,568 | |
Sherwin-Williams Co. | 36,100 | 2,288,018 | |
| 42,354,985 | ||
TOTAL COMMON STOCKS (Cost $99,012,896) | 98,707,197 | ||
Money Market Funds - 12.1% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 1,197,564 | $ 1,197,564 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 10,879,575 | 10,879,575 | |
TOTAL MONEY MARKET FUNDS (Cost $12,077,139) | 12,077,139 | ||
TOTAL INVESTMENT PORTFOLIO - 111.3% (Cost $111,090,035) | 110,784,336 | ||
NET OTHER ASSETS - (11.3)% | (11,222,487) | ||
NET ASSETS - 100% | $ 99,561,849 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 5,389 |
Fidelity Securities Lending Cash Central Fund | 17,185 |
Total | $ 22,574 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $13,637,579 of which $8,111,449 and $5,526,130 will expire on Febru-ary 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $10,520,612) - See accompanying schedule: Unaffiliated issuers (cost $99,012,896) | $ 98,707,197 |
|
Fidelity Central Funds (cost $12,077,139) | 12,077,139 |
|
Total Investments (cost $111,090,035) |
| $ 110,784,336 |
Receivable for investments sold | 310,644 | |
Receivable for fund shares sold | 104,862 | |
Dividends receivable | 38,067 | |
Distributions receivable from Fidelity Central Funds | 1,059 | |
Prepaid expenses | 437 | |
Other receivables | 11 | |
Total assets | 111,239,416 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 654,519 | |
Payable for fund shares redeemed | 39,009 | |
Accrued management fee | 44,446 | |
Other affiliated payables | 29,354 | |
Other payables and accrued expenses | 30,664 | |
Collateral on securities loaned, at value | 10,879,575 | |
Total liabilities | 11,677,567 | |
|
|
|
Net Assets | $ 99,561,849 | |
Net Assets consist of: |
| |
Paid in capital | $ 117,853,637 | |
Undistributed net investment income | 102,753 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,088,842) | |
Net unrealized appreciation (depreciation) on investments | (305,699) | |
Net Assets, for 3,330,939 shares outstanding | $ 99,561,849 | |
Net Asset Value, offering price and redemption price per share ($99,561,849 ÷ 3,330,939 shares) | $ 29.89 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 1,857,645 |
Income from Fidelity Central Funds (including $17,185 from security lending) |
| 22,574 |
Total income |
| 1,880,219 |
|
|
|
Expenses | ||
Management fee | $ 568,830 | |
Transfer agent fees | 336,083 | |
Accounting and security lending fees | 41,147 | |
Custodian fees and expenses | 18,028 | |
Independent trustees' compensation | 698 | |
Registration fees | 26,457 | |
Audit | 36,357 | |
Legal | 526 | |
Miscellaneous | 1,481 | |
Total expenses before reductions | 1,029,607 | |
Expense reductions | (4,456) | 1,025,151 |
Net investment income (loss) | 855,068 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (2,159,027) | |
Foreign currency transactions | 4,743 | |
Total net realized gain (loss) |
| (2,154,284) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 43,777,586 | |
Assets and liabilities in foreign currencies | 409 | |
Total change in net unrealized appreciation (depreciation) |
| 43,777,995 |
Net gain (loss) | 41,623,711 | |
Net increase (decrease) in net assets resulting from operations | $ 42,478,779 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Construction and Housing Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 855,068 | $ 933,523 |
Net realized gain (loss) | (2,154,284) | (14,835,320) |
Change in net unrealized appreciation (depreciation) | 43,777,995 | (38,400,378) |
Net increase (decrease) in net assets resulting from operations | 42,478,779 | (52,302,175) |
Distributions to shareholders from net investment income | (826,043) | (984,426) |
Distributions to shareholders from net realized gain | - | (2,251,733) |
Total distributions | (826,043) | (3,236,159) |
Share transactions | 78,915,369 | 123,225,729 |
Reinvestment of distributions | 800,902 | 3,096,609 |
Cost of shares redeemed | (104,036,666) | (73,266,365) |
Net increase (decrease) in net assets resulting from share transactions | (24,320,395) | 53,055,973 |
Redemption fees | 10,659 | 16,026 |
Total increase (decrease) in net assets | 17,343,000 | (2,466,335) |
|
|
|
Net Assets | ||
Beginning of period | 82,218,849 | 84,685,184 |
End of period (including undistributed net investment income of $102,753 and undistributed net investment income of $62,009, respectively) | $ 99,561,849 | $ 82,218,849 |
Other Information Shares | ||
Sold | 3,118,032 | 4,621,586 |
Issued in reinvestment of distributions | 28,811 | 103,107 |
Redeemed | (4,380,076) | (2,712,351) |
Net increase (decrease) | (1,233,233) | 2,012,342 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.01 | $ 33.19 | $ 45.98 | $ 49.42 | $ 45.82 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .31 | .26 | .19 | - H |
Net realized and unrealized gain (loss) | 11.91 | (14.35) | (8.49) | 2.28 | 3.99 |
Total from investment operations | 12.13 | (14.04) | (8.23) | 2.47 | 3.99 |
Distributions from net investment income | (.25) | (.30) | (.16) | (.05) | (.01) |
Distributions from net realized gain | - | (.85) | (4.41) | (5.87) | (.42) |
Total distributions | (.25) | (1.15) | (4.57) | (5.92) | (.43) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .04 |
Net asset value, end of period | $ 29.89 | $ 18.01 | $ 33.19 | $ 45.98 | $ 49.42 |
Total Return A, B | 67.46% | (43.68)% | (18.11)% | 5.41% | 8.98% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.01% | 1.03% | .98% | 1.02% | 1.05% |
Expenses net of fee waivers, if any | 1.01% | 1.03% | .98% | 1.02% | 1.05% |
Expenses net of all reductions | 1.01% | 1.02% | .97% | 1.02% | 1.01% |
Net investment income (loss) | .84% | 1.14% | .63% | .41% | -% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 99,562 | $ 82,219 | $ 84,685 | $ 163,981 | $ 244,403 |
Portfolio turnover rate E | 82% | 85% | 102% | 54% | 154% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Discretionary Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Consumer Discretionary Portfolio A | 66.54% | 0.19% | 1.12% |
A Prior to October 1, 2006, Consumer Discretionary Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 29, 2000. 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.
Annual Report
Consumer Discretionary Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Harris, Portfolio Manager of Select Consumer Discretionary Portfolio: For the year ending February 28, 2010, the fund's shares returned 66.54%, ahead of the S&P 500 but underperforming the 82.16% return of the MSCI® U.S. IM Consumer Discretionary 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. The top detractor from the fund's performance versus the MSCI index was its underweighting in automaker Ford Motor, which performed very strongly as the only one of the Big Three automakers to avoid government assistance. The fund's modest cash position also hurt in a strong market. An overweighting and weak picks in automotive retailing detracted as well, including a large position in Advance Auto Parts. Poor stock choices in restaurants also hampered results, with a stake in fast-food chain Burger King Holdings lagging. An overweighting in home-improvement retailer Lowe's - the fund's largest position, on average - and non-benchmark positions in warehouse retail giant Costco and mega-retailer Wal-Mart Stores further detracted. On the positive side, the fund's stake in casino operator Las Vegas Sands was a winner when the company benefited from a public offering of its Sands China property during the period, while hotel and leisure property operator Wyndham Worldwide was another bright spot, representing a cyclical-earnings opportunity as the economy improves. In the footwear area, Iconix Brand Group, an entity that buys down-and-out brands and relaunches them through value retailers, was a key contributor. An underweighting and good stock picks within specialized consumer services also boosted returns. Some of the stocks I've discussed were sold prior to period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer Discretionary Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Target Corp. | 5.8 | 6.7 |
Lowe's Companies, Inc. | 5.8 | 7.0 |
McDonald's Corp. | 5.6 | 5.1 |
The Walt Disney Co. | 5.5 | 5.4 |
Amazon.com, Inc. | 3.6 | 2.4 |
Staples, Inc. | 2.4 | 3.2 |
Wyndham Worldwide Corp. | 2.2 | 1.2 |
Viacom, Inc. Class B (non-vtg.) | 2.2 | 1.9 |
Advance Auto Parts, Inc. | 2.1 | 2.4 |
Johnson Controls, Inc. | 2.1 | 2.0 |
| 37.3 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Hotels, Restaurants & Leisure | 22.0% |
|
![]() | Specialty Retail | 21.7% |
|
![]() | Media | 21.0% |
|
![]() | Multiline Retail | 7.6% |
|
![]() | Internet & Catalog Retail | 4.8% |
|
![]() | All Others* | 22.9% |
|
As of August 31, 2009 | |||
![]() | Specialty Retail | 22.9% |
|
![]() | Media | 21.7% |
|
![]() | Hotels, Restaurants & Leisure | 20.4% |
|
![]() | Multiline Retail | 6.9% |
|
![]() | Household Durables | 4.1% |
|
![]() | All Others* | 24.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Discretionary Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
AUTO COMPONENTS - 3.3% | |||
Auto Parts & Equipment - 3.3% | |||
BorgWarner, Inc. | 17,275 | $ 647,122 | |
Gentex Corp. | 11,700 | 227,097 | |
Johnson Controls, Inc. | 52,900 | 1,645,190 | |
| 2,519,409 | ||
AUTOMOBILES - 3.1% | |||
Automobile Manufacturers - 2.3% | |||
Bayerische Motoren Werke AG (BMW) | 4,771 | 193,475 | |
Ford Motor Co. (a) | 136,513 | 1,602,663 | |
| 1,796,138 | ||
Motorcycle Manufacturers - 0.8% | |||
Harley-Davidson, Inc. | 23,200 | 570,952 | |
TOTAL AUTOMOBILES | 2,367,090 | ||
CONSUMER FINANCE - 0.2% | |||
Consumer Finance - 0.2% | |||
Capital One Financial Corp. | 4,800 | 181,200 | |
DISTRIBUTORS - 0.8% | |||
Distributors - 0.8% | |||
Li & Fung Ltd. | 134,000 | 623,200 | |
DIVERSIFIED CONSUMER SERVICES - 3.1% | |||
Education Services - 1.8% | |||
DeVry, Inc. | 10,200 | 644,130 | |
Navitas Ltd. | 28,303 | 122,459 | |
Strayer Education, Inc. (c) | 2,700 | 612,441 | |
| 1,379,030 | ||
Specialized Consumer Services - 1.3% | |||
Coinstar, Inc. (a) | 7,040 | 208,947 | |
Sotheby's Class A (ltd. vtg.) (c) | 18,960 | 460,728 | |
Steiner Leisure Ltd. (a) | 8,100 | 348,057 | |
| 1,017,732 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 2,396,762 | ||
FOOD & STAPLES RETAILING - 1.2% | |||
Food Retail - 0.6% | |||
Susser Holdings Corp. (a)(c) | 53,083 | 444,836 | |
Hypermarkets & Super Centers - 0.6% | |||
BJ's Wholesale Club, Inc. (a) | 2,900 | 104,893 | |
Costco Wholesale Corp. | 6,200 | 378,014 | |
| 482,907 | ||
TOTAL FOOD & STAPLES RETAILING | 927,743 | ||
HOTELS, RESTAURANTS & LEISURE - 22.0% | |||
Casinos & Gaming - 3.8% | |||
Bally Technologies, Inc. (a) | 9,500 | 393,395 | |
International Game Technology | 33,400 | 586,170 | |
| |||
Shares | Value | ||
Las Vegas Sands Corp. unit | 2,710 | $ 769,640 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a) | 54,400 | 219,776 | |
Sands China Ltd. | 70,000 | 99,199 | |
WMS Industries, Inc. (a) | 22,800 | 864,804 | |
| 2,932,984 | ||
Hotels, Resorts & Cruise Lines - 6.3% | |||
Carnival Corp. unit | 33,200 | 1,193,872 | |
Home Inns & Hotels Management, Inc. sponsored ADR (a)(c) | 11,599 | 389,378 | |
Royal Caribbean Cruises Ltd. (a) | 14,400 | 407,088 | |
Starwood Hotels & Resorts Worldwide, Inc. | 30,377 | 1,175,590 | |
Wyndham Worldwide Corp. | 73,600 | 1,692,064 | |
| 4,857,992 | ||
Leisure Facilities - 0.4% | |||
Vail Resorts, Inc. (a) | 9,300 | 334,893 | |
Restaurants - 11.5% | |||
BJ's Restaurants, Inc. (a) | 18,284 | 391,278 | |
Brinker International, Inc. | 6,400 | 115,904 | |
Chipotle Mexican Grill, Inc. Class A (a) | 2,200 | 230,362 | |
Darden Restaurants, Inc. | 27,000 | 1,094,850 | |
Jack in the Box, Inc. (a) | 12,500 | 264,000 | |
McDonald's Corp. | 67,300 | 4,297,105 | |
P.F. Chang's China Bistro, Inc. (a)(c) | 4,400 | 186,736 | |
Sonic Corp. (a) | 26,790 | 227,447 | |
Starbucks Corp. (a) | 62,500 | 1,431,875 | |
Texas Roadhouse, Inc. Class A (a) | 20,300 | 272,629 | |
The Cheesecake Factory, Inc. (a) | 12,700 | 300,355 | |
| 8,812,541 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 16,938,410 | ||
HOUSEHOLD DURABLES - 4.2% | |||
Home Furnishings - 1.1% | |||
Mohawk Industries, Inc. (a) | 7,500 | 386,850 | |
Tempur-Pedic International, Inc. (a) | 15,300 | 434,520 | |
| 821,370 | ||
Homebuilding - 2.0% | |||
Lennar Corp. Class A | 25,970 | 426,168 | |
M.D.C. Holdings, Inc. | 2,700 | 92,394 | |
Meritage Homes Corp. (a) | 9,300 | 198,927 | |
NVR, Inc. (a) | 186 | 131,744 | |
Pulte Homes, Inc. (a) | 40,430 | 437,857 | |
Toll Brothers, Inc. (a) | 12,900 | 242,907 | |
| 1,529,997 | ||
Household Appliances - 1.1% | |||
Black & Decker Corp. | 3,900 | 282,633 | |
Whirlpool Corp. | 6,900 | 580,704 | |
| 863,337 | ||
TOTAL HOUSEHOLD DURABLES | 3,214,704 | ||
Common Stocks - continued | |||
Shares | Value | ||
INTERNET & CATALOG RETAIL - 4.8% | |||
Internet Retail - 4.8% | |||
Amazon.com, Inc. (a) | 23,400 | $ 2,770,560 | |
Blue Nile, Inc. (a) | 8,103 | 415,198 | |
Expedia, Inc. | 22,186 | 493,417 | |
| 3,679,175 | ||
INTERNET SOFTWARE & SERVICES - 1.9% | |||
Internet Software & Services - 1.9% | |||
Google, Inc. Class A (a) | 2,078 | 1,094,690 | |
GREE, Inc. | 3,200 | 197,062 | |
Tencent Holdings Ltd. | 8,500 | 166,667 | |
| 1,458,419 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.4% | |||
Leisure Products - 0.4% | |||
Polaris Industries, Inc. | 7,200 | 329,328 | |
MACHINERY - 0.5% | |||
Industrial Machinery - 0.5% | |||
The Stanley Works | 6,600 | 377,850 | |
MEDIA - 21.0% | |||
Advertising - 2.2% | |||
Interpublic Group of Companies, Inc. (a) | 99,878 | 749,085 | |
Lamar Advertising Co. Class A (a) | 17,200 | 517,376 | |
National CineMedia, Inc. | 25,915 | 416,972 | |
| 1,683,433 | ||
Broadcasting - 0.7% | |||
Discovery Communications, Inc. Class C (a) | 21,000 | 557,340 | |
Cable & Satellite - 7.1% | |||
Cablevision Systems Corp. - NY Group Class A | 26,400 | 635,712 | |
Comcast Corp. Class A | 64,330 | 1,057,585 | |
DIRECTV (a) | 43,203 | 1,462,422 | |
DISH Network Corp. Class A | 17,600 | 351,472 | |
Time Warner Cable, Inc. | 30,947 | 1,444,915 | |
Virgin Media, Inc. | 29,800 | 482,760 | |
| 5,434,866 | ||
Movies & Entertainment - 9.9% | |||
DreamWorks Animation SKG, Inc. Class A (a) | 5,283 | 229,599 | |
Madison Square Garden, Inc. Class A (a) | 6,400 | 124,800 | |
The Walt Disney Co. | 135,500 | 4,233,020 | |
Time Warner, Inc. | 48,121 | 1,397,434 | |
Viacom, Inc. Class B (non-vtg.) (a) | 56,700 | 1,681,155 | |
| 7,666,008 | ||
Publishing - 1.1% | |||
McGraw-Hill Companies, Inc. | 24,800 | 848,160 | |
TOTAL MEDIA | 16,189,807 | ||
| |||
Shares | Value | ||
MULTILINE RETAIL - 7.6% | |||
Department Stores - 1.8% | |||
Kohl's Corp. (a) | 19,900 | $ 1,071,018 | |
Nordstrom, Inc. | 8,782 | 324,407 | |
| 1,395,425 | ||
General Merchandise Stores - 5.8% | |||
Target Corp. | 86,700 | 4,466,780 | |
TOTAL MULTILINE RETAIL | 5,862,205 | ||
PROFESSIONAL SERVICES - 0.4% | |||
Human Resource & Employment Services - 0.4% | |||
Monster Worldwide, Inc. (a) | 23,700 | 330,615 | |
SPECIALTY RETAIL - 21.7% | |||
Apparel Retail - 4.0% | |||
Citi Trends, Inc. (a) | 23,397 | 695,827 | |
Gymboree Corp. (a) | 14,235 | 619,223 | |
Inditex SA | 3,271 | 192,880 | |
Ross Stores, Inc. | 13,400 | 655,394 | |
rue21, Inc. | 3,900 | 112,086 | |
Urban Outfitters, Inc. (a) | 19,100 | 615,211 | |
Zumiez, Inc. (a)(c) | 12,992 | 186,305 | |
| 3,076,926 | ||
Automotive Retail - 2.7% | |||
Advance Auto Parts, Inc. | 40,600 | 1,656,480 | |
O'Reilly Automotive, Inc. (a) | 10,800 | 424,440 | |
| 2,080,920 | ||
Computer & Electronics Retail - 1.1% | |||
Best Buy Co., Inc. | 9,372 | 342,078 | |
hhgregg, Inc. (a) | 25,200 | 525,924 | |
| 868,002 | ||
Home Improvement Retail - 8.6% | |||
Home Depot, Inc. | 52,611 | 1,641,463 | |
Lowe's Companies, Inc. | 187,700 | 4,450,367 | |
Lumber Liquidators Holdings, Inc. (a)(c) | 22,000 | 487,960 | |
| 6,579,790 | ||
Homefurnishing Retail - 1.0% | |||
Bed Bath & Beyond, Inc. (a) | 10,700 | 445,227 | |
Williams-Sonoma, Inc. | 13,600 | 291,856 | |
| 737,083 | ||
Specialty Stores - 4.3% | |||
Cabela's, Inc. Class A (a) | 24,900 | 384,954 | |
Indigo Books & Music, Inc. | 400 | 6,645 | |
Office Depot, Inc. (a) | 32,800 | 236,816 | |
OfficeMax, Inc. (a) | 22,000 | 351,340 | |
Signet Jewelers Ltd. (a) | 8,600 | 247,766 | |
Staples, Inc. | 71,912 | 1,852,453 | |
Common Stocks - continued | |||
Shares | Value | ||
SPECIALTY RETAIL - CONTINUED | |||
Specialty Stores - continued | |||
Vitamin Shoppe, Inc. | 9,605 | $ 190,851 | |
West Marine, Inc. (a) | 7,800 | 73,554 | |
| 3,344,379 | ||
TOTAL SPECIALTY RETAIL | 16,687,100 | ||
TEXTILES, APPAREL & LUXURY GOODS - 2.5% | |||
Apparel, Accessories & Luxury Goods - 1.1% | |||
G-III Apparel Group Ltd. (a) | 16,045 | 336,464 | |
Polo Ralph Lauren Corp. Class A | 6,800 | 543,524 | |
| 879,988 | ||
Footwear - 1.4% | |||
Deckers Outdoor Corp. (a) | 1,100 | 132,220 | |
Iconix Brand Group, Inc. (a) | 14,900 | 194,147 | |
NIKE, Inc. Class B | 10,570 | 714,532 | |
| 1,040,899 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 1,920,887 | ||
TOTAL COMMON STOCKS (Cost $65,836,704) | 76,003,904 | ||
Money Market Funds - 5.1% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 1,995,661 | $ 1,995,661 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 1,968,675 | 1,968,675 | |
TOTAL MONEY MARKET FUNDS (Cost $3,964,336) | 3,964,336 | ||
TOTAL INVESTMENT PORTFOLIO - 103.8% (Cost $69,801,040) | 79,968,240 | ||
NET OTHER ASSETS - (3.8)% | (2,957,430) | ||
NET ASSETS - 100% | $ 77,010,810 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,661 |
Fidelity Securities Lending Cash Central Fund | 8,059 |
Total | $ 11,720 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 76,003,904 | $ 75,234,264 | $ 769,640 | $ - |
Money Market Funds | 3,964,336 | 3,964,336 | - | - |
Total Investments in Securities: | $ 79,968,240 | $ 79,198,600 | $ 769,640 | $ - |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $1,245,493 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,909,915) - See accompanying schedule: Unaffiliated issuers (cost $65,836,704) | $ 76,003,904 |
|
Fidelity Central Funds (cost $3,964,336) | 3,964,336 |
|
Total Investments (cost $69,801,040) |
| $ 79,968,240 |
Receivable for investments sold | 1,643,940 | |
Receivable for fund shares sold | 256,886 | |
Dividends receivable | 92,732 | |
Distributions receivable from Fidelity Central Funds | 894 | |
Prepaid expenses | 182 | |
Other receivables | 1,937 | |
Total assets | 81,964,811 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,887,485 | |
Payable for fund shares redeemed | 10,347 | |
Accrued management fee | 33,536 | |
Other affiliated payables | 21,037 | |
Other payables and accrued expenses | 32,921 | |
Collateral on securities loaned, at value | 1,968,675 | |
Total liabilities | 4,954,001 | |
|
|
|
Net Assets | $ 77,010,810 | |
Net Assets consist of: |
| |
Paid in capital | $ 69,562,601 | |
Undistributed net investment income | 23,820 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,742,669) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 10,167,058 | |
Net Assets, for 3,976,764 shares outstanding | $ 77,010,810 | |
Net Asset Value, offering price and redemption price per share ($77,010,810 ÷ 3,976,764 shares) | $ 19.37 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 757,757 |
Interest |
| 37 |
Income from Fidelity Central Funds (including $8,059 from security lending) |
| 11,720 |
Total income |
| 769,514 |
|
|
|
Expenses | ||
Management fee | $ 297,716 | |
Transfer agent fees | 179,225 | |
Accounting and security lending fees | 21,045 | |
Custodian fees and expenses | 26,932 | |
Independent trustees' compensation | 319 | |
Registration fees | 17,249 | |
Audit | 35,489 | |
Legal | 219 | |
Interest | 189 | |
Miscellaneous | 502 | |
Total expenses before reductions | 578,885 | |
Expense reductions | (6,340) | 572,545 |
Net investment income (loss) | 196,969 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,570,564 | |
Foreign currency transactions | 564 | |
Total net realized gain (loss) |
| 2,571,128 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 19,170,695 | |
Assets and liabilities in foreign currencies | (234) | |
Total change in net unrealized appreciation (depreciation) |
| 19,170,461 |
Net gain (loss) | 21,741,589 | |
Net increase (decrease) in net assets resulting from operations | $ 21,938,558 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Discretionary Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 196,969 | $ 140,639 |
Net realized gain (loss) | 2,571,128 | (4,819,818) |
Change in net unrealized appreciation (depreciation) | 19,170,461 | (7,359,749) |
Net increase (decrease) in net assets resulting from operations | 21,938,558 | (12,038,928) |
Distributions to shareholders from net investment income | (191,875) | (120,743) |
Distributions to shareholders from net realized gain | - | (12,281) |
Total distributions | (191,875) | (133,024) |
Share transactions | 58,076,902 | 23,110,904 |
Reinvestment of distributions | 189,124 | 128,293 |
Cost of shares redeemed | (24,328,431) | (14,047,507) |
Net increase (decrease) in net assets resulting from share transactions | 33,937,595 | 9,191,690 |
Redemption fees | 1,754 | 7,634 |
Total increase (decrease) in net assets | 55,686,032 | (2,972,628) |
|
|
|
Net Assets | ||
Beginning of period | 21,324,778 | 24,297,406 |
End of period (including undistributed net investment income of $23,820 and undistributed net investment income of $18,727, respectively) | $ 77,010,810 | $ 21,324,778 |
Other Information Shares | ||
Sold | 3,568,123 | 1,454,483 |
Issued in reinvestment of distributions | 10,486 | 9,406 |
Redeemed | (1,429,225) | (870,086) |
Net increase (decrease) | 2,149,384 | 593,803 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 11.67 | $ 19.70 | $ 26.85 | $ 25.74 | $ 24.23 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .10 | .01 | .11 F | (.03) |
Net realized and unrealized gain (loss) | 7.70 | (8.05) | (3.95) | 3.15 | 1.80 |
Total from investment operations | 7.76 | (7.95) | (3.94) | 3.26 | 1.77 |
Distributions from net investment income | (.06) | (.08) | (.06) | - | - |
Distributions from net realized gain | - | (.01) | (3.15) | (2.16) | (.26) |
Total distributions | (.06) | (.09) | (3.21) | (2.16) | (.26) |
Redemption fees added to paid in capital C | - I | .01 | - I | .01 | - I |
Net asset value, end of period | $ 19.37 | $ 11.67 | $ 19.70 | $ 26.85 | $ 25.74 |
Total Return A, B | 66.54% | (40.37)% | (16.15)% | 12.99% | 7.31% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.10% | 1.19% | 1.12% | 1.14% | 1.15% |
Expenses net of fee waivers, if any | 1.10% | 1.15% | 1.12% | 1.14% | 1.15% |
Expenses net of all reductions | 1.08% | 1.15% | 1.12% | 1.13% | 1.13% |
Net investment income (loss) | .37% | .62% | .03% | .43% F | (.11)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 77,011 | $ 21,325 | $ 24,297 | $ 40,249 | $ 49,682 |
Portfolio turnover rate E | 134% | 71% | 108% | 244% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.12 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.03)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Leisure Portfolio | 52.35% | 4.05% | 2.62% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 29, 2000. 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.
Annual Report
Leisure Portfolio
Management's Discussion of Fund Performance
Market recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Peter Dixon, Portfolio Manager of Select Leisure Portfolio: During the year, the fund gained 52.35%, trailing the S&P 500 but outpacing the 51.75% return of the MSCI® U.S. IM Consumer Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. The fund had good stock selection in the hotels, resorts and cruise lines group. However, this was more than offset by poor stock picking in the restaurants and casino/gaming groups. The fund gained from overweighting casino and gaming stocks, which soared. Overweighting hotels, resorts and cruise lines and underweighting restaurants also added to performance. Individual contributions came from underweighting McDonald's, which trailed the overall market. Hotel company Wyndham Worldwide performed better than had been expected, and the fund gained from its significant overweighting in the stock. Penn National Gaming and WMS Industries also did very well. After overweighting Penn for most of the period, I sold it. WMS enjoyed rising demand for slot machines plus strong market share and growing profit margins. Darden Restaurants, which owns Olive Garden and Red Lobster, performed well. The fund's results were hurt by underweighting casino stock Wynn Resorts, which recovered strongly during the period. Burger King Holdings was a poor-performing stock that I eventually sold. The fund also lost ground by underweighting Starbucks, which did well. The fund ended the period with an overweighting in the coffee retailer. Restaurant chain Jack in the Box had a rough year, while casino operator MGM Mirage detracted as well.
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.
Annual Report
Leisure Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 22.4 | 24.6 |
Starbucks Corp. | 7.1 | 4.7 |
Yum! Brands, Inc. | 6.9 | 7.5 |
Carnival Corp. unit | 6.1 | 6.1 |
Starwood Hotels & Resorts Worldwide, Inc. | 5.0 | 2.9 |
Wyndham Worldwide Corp. | 4.4 | 3.6 |
Marriott International, Inc. Class A | 3.7 | 3.4 |
WMS Industries, Inc. | 3.6 | 3.0 |
Darden Restaurants, Inc. | 3.3 | 3.3 |
DeVry, Inc. | 3.2 | 2.0 |
| 65.7 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Hotels, Restaurants & Leisure | 81.7% |
|
![]() | Diversified Consumer Services | 17.1% |
|
![]() | Food Products | 0.6% |
|
![]() | All Others* | 0.6% |
|
As of August 31, 2009 | |||
![]() | Hotels, Restaurants & Leisure | 79.3% |
|
![]() | Diversified Consumer Services | 18.7% |
|
![]() | Food Products | 0.3% |
|
![]() | Leisure Equipment & Products | 0.3% |
|
![]() | All Others* | 1.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Leisure Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 17.1% | |||
Education Services - 11.1% | |||
American Public Education, Inc. (a) | 100 | $ 4,326 | |
Apollo Group, Inc. Class A (non-vtg.) (a) | 104,600 | 6,263,448 | |
Career Education Corp. (a)(c) | 54,600 | 1,518,972 | |
Corinthian Colleges, Inc. (a)(c) | 37,842 | 613,797 | |
DeVry, Inc. | 115,900 | 7,319,085 | |
ITT Educational Services, Inc. (a) | 8,800 | 959,552 | |
Navitas Ltd. | 214,402 | 927,656 | |
Strayer Education, Inc. (c) | 29,466 | 6,683,773 | |
Universal Technical Institute, Inc. (a) | 28,500 | 719,910 | |
| 25,010,519 | ||
Specialized Consumer Services - 6.0% | |||
Coinstar, Inc. (a)(c) | 161,800 | 4,802,224 | |
H&R Block, Inc. | 1,200 | 20,736 | |
Matthews International Corp. Class A | 600 | 20,112 | |
Regis Corp. | 21,500 | 355,395 | |
Service Corp. International | 69,900 | 563,394 | |
Sotheby's Class A (ltd. vtg.) (c) | 90,601 | 2,201,604 | |
Steiner Leisure Ltd. (a) | 100,730 | 4,328,368 | |
Stewart Enterprises, Inc. Class A | 234,852 | 1,150,775 | |
| 13,442,608 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 38,453,127 | ||
FOOD PRODUCTS - 0.6% | |||
Packaged Foods & Meats - 0.6% | |||
TreeHouse Foods, Inc. (a) | 34,068 | 1,465,946 | |
HOTELS, RESTAURANTS & LEISURE - 81.7% | |||
Casinos & Gaming - 12.4% | |||
Ameristar Casinos, Inc. (c) | 110,400 | 1,665,936 | |
Aristocrat Leisure Ltd. | 3 | 11 | |
Bally Technologies, Inc. (a) | 103,900 | 4,302,499 | |
International Game Technology | 339,000 | 5,949,450 | |
Las Vegas Sands Corp. (a) | 184,700 | 3,071,561 | |
Las Vegas Sands Corp. unit | 11,700 | 3,322,800 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a)(c) | 190,200 | 768,408 | |
MGM Mirage, Inc. (a)(c) | 2,500 | 26,350 | |
Sands China Ltd. | 365,200 | 517,534 | |
WMS Industries, Inc. (a) | 212,600 | 8,063,918 | |
Wynn Resorts Ltd. (c) | 2,300 | 146,211 | |
| 27,834,678 | ||
Hotels, Resorts & Cruise Lines - 22.6% | |||
Carnival Corp. unit | 383,600 | 13,794,256 | |
Ctrip.com International Ltd. sponsored ADR (a) | 20,700 | 791,361 | |
Home Inns & Hotels Management, Inc. sponsored ADR (a)(c) | 25,400 | 852,678 | |
Marriott International, Inc. Class A | 306,101 | 8,298,398 | |
Orient Express Hotels Ltd. Class A (a) | 800 | 9,144 | |
Royal Caribbean Cruises Ltd. (a)(c) | 213,920 | 6,047,518 | |
| |||
Shares | Value | ||
Starwood Hotels & Resorts Worldwide, Inc. | 287,300 | $ 11,118,510 | |
Wyndham Worldwide Corp. | 428,400 | 9,848,916 | |
| 50,760,781 | ||
Leisure Facilities - 1.2% | |||
International Speedway Corp. Class A | 116 | 3,098 | |
Vail Resorts, Inc. (a)(c) | 75,899 | 2,733,123 | |
| 2,736,221 | ||
Restaurants - 45.5% | |||
Buffalo Wild Wings, Inc. (a)(c) | 41,261 | 1,813,421 | |
Chipotle Mexican Grill, Inc. Class A (a)(c) | 17,409 | 1,822,896 | |
Darden Restaurants, Inc. | 182,000 | 7,380,100 | |
Denny's Corp. (a) | 325,654 | 895,549 | |
Jack in the Box, Inc. (a) | 94,722 | 2,000,529 | |
McDonald's Corp. | 786,400 | 50,211,641 | |
P.F. Chang's China Bistro, Inc. (a)(c) | 40,900 | 1,735,796 | |
Papa John's International, Inc. (a) | 52,030 | 1,270,052 | |
Red Robin Gourmet Burgers, Inc. (a) | 51,600 | 1,023,228 | |
Starbucks Corp. (a) | 691,700 | 15,846,847 | |
The Cheesecake Factory, Inc. (a) | 107,200 | 2,535,280 | |
Wendy's/Arby's Group, Inc. | 775 | 3,782 | |
Yum! Brands, Inc. | 457,300 | 15,420,156 | |
| 101,959,277 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 183,290,957 | ||
TOTAL COMMON STOCKS (Cost $182,526,828) | 223,210,030 | ||
Money Market Funds - 11.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 1,001,123 | 1,001,123 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 25,031,249 | 25,031,249 | |
TOTAL MONEY MARKET FUNDS (Cost $26,032,372) | 26,032,372 | ||
TOTAL INVESTMENT PORTFOLIO - 111.0% (Cost $208,559,200) | 249,242,402 | ||
NET OTHER ASSETS - (11.0)% | (24,777,672) | ||
NET ASSETS - 100% | $ 224,464,730 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 7,703 |
Fidelity Securities Lending Cash Central Fund | 71,896 |
Total | $ 79,599 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 223,210,030 | $ 219,887,230 | $ 3,322,800 | $ - |
Money Market Funds | 26,032,372 | 26,032,372 | - | - |
Total Investments in Securities: | $ 249,242,402 | $ 245,919,602 | $ 3,322,800 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.7% |
Panama | 6.1% |
Liberia | 2.7% |
Bahamas (Nassau) | 1.9% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $20,041,799 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $24,722,717) - See accompanying schedule: Unaffiliated issuers (cost $182,526,828) | $ 223,210,030 |
|
Fidelity Central Funds (cost $26,032,372) | 26,032,372 |
|
Total Investments (cost $208,559,200) |
| $ 249,242,402 |
Receivable for fund shares sold | 145,246 | |
Dividends receivable | 516,828 | |
Distributions receivable from Fidelity Central Funds | 9,803 | |
Prepaid expenses | 686 | |
Other receivables | 1,926 | |
Total assets | 249,916,891 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 98,219 | |
Payable for fund shares redeemed | 133,358 | |
Accrued management fee | 103,981 | |
Other affiliated payables | 55,856 | |
Other payables and accrued expenses | 29,498 | |
Collateral on securities loaned, at value | 25,031,249 | |
Total liabilities | 25,452,161 | |
|
|
|
Net Assets | $ 224,464,730 | |
Net Assets consist of: |
| |
Paid in capital | $ 208,071,295 | |
Undistributed net investment income | 456,684 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (24,746,451) | |
Net unrealized appreciation (depreciation) on investments | 40,683,202 | |
Net Assets, for 3,206,947 shares outstanding | $ 224,464,730 | |
Net Asset Value, offering price and redemption price per share ($224,464,730 ÷ 3,206,947 shares) | $ 69.99 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 3,285,121 |
Interest |
| 152 |
Income from Fidelity Central Funds (including $71,896 from security lending) |
| 79,599 |
Total income |
| 3,364,872 |
|
|
|
Expenses | ||
Management fee | $ 1,156,782 | |
Transfer agent fees | 608,525 | |
Accounting and security lending fees | 82,916 | |
Custodian fees and expenses | 13,461 | |
Independent trustees' compensation | 1,413 | |
Registration fees | 23,504 | |
Audit | 36,182 | |
Legal | 1,021 | |
Miscellaneous | 2,849 | |
Total expenses before reductions | 1,926,653 | |
Expense reductions | (12,749) | 1,913,904 |
Net investment income (loss) | 1,450,968 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 18,632,080 | |
Foreign currency transactions | 1,690 | |
Capital gain distributions from Fidelity Central Funds | 1,203 | |
Total net realized gain (loss) |
| 18,634,973 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 61,789,198 | |
Assets and liabilities in foreign currencies | 412 | |
Total change in net unrealized appreciation (depreciation) |
| 61,789,610 |
Net gain (loss) | 80,424,583 | |
Net increase (decrease) in net assets resulting from operations | $ 81,875,551 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Leisure Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,450,968 | $ 1,720,117 |
Net realized gain (loss) | 18,634,973 | (41,985,782) |
Change in net unrealized appreciation (depreciation) | 61,789,610 | (24,338,216) |
Net increase (decrease) in net assets resulting from operations | 81,875,551 | (64,603,881) |
Distributions to shareholders from net investment income | (1,367,599) | (1,549,729) |
Distributions to shareholders from net realized gain | - | (827,037) |
Total distributions | (1,367,599) | (2,376,766) |
Share transactions | 42,414,521 | 72,683,633 |
Reinvestment of distributions | 1,299,149 | 2,234,565 |
Cost of shares redeemed | (58,875,013) | (59,254,513) |
Net increase (decrease) in net assets resulting from share transactions | (15,161,343) | 15,663,685 |
Redemption fees | 3,448 | 7,977 |
Total increase (decrease) in net assets | 65,350,057 | (51,308,985) |
|
|
|
Net Assets | ||
Beginning of period | 159,114,673 | 210,423,658 |
End of period (including undistributed net investment income of $456,684 and undistributed net investment income of $370,424, respectively) | $ 224,464,730 | $ 159,114,673 |
Other Information Shares | ||
Sold | 719,534 | 1,360,167 |
Issued in reinvestment of distributions | 20,652 | 38,286 |
Redeemed | (974,531) | (1,005,494) |
Net increase (decrease) | (234,345) | 392,959 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.24 | $ 69.03 | $ 79.61 | $ 80.64 | $ 75.07 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 | .60 | .69 | .25 F | (.28) |
Net realized and unrealized gain (loss) | 23.73 | (22.57) | (5.73) | 10.52 | 8.83 |
Total from investment operations | 24.16 | (21.97) | (5.04) | 10.77 | 8.55 |
Distributions from net investment income | (.41) | (.54) | (.55) | (.12) | - |
Distributions from net realized gain | - | (.28) | (4.99) | (11.69) | (2.98) |
Total distributions | (.41) | (.82) | (5.54) | (11.81) | (2.98) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 69.99 | $ 46.24 | $ 69.03 | $ 79.61 | $ 80.64 |
Total Return A, B | 52.35% | (32.07)% | (7.09)% | 13.61% | 11.67% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .94% | .93% | .91% | .96% | .99% |
Expenses net of fee waivers, if any | .94% | .93% | .91% | .96% | .99% |
Expenses net of all reductions | .93% | .93% | .91% | .94% | .94% |
Net investment income (loss) | .70% | 1.00% | .86% | .31% F | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 224,465 | $ 159,115 | $ 210,424 | $ 258,340 | $ 205,290 |
Portfolio turnover rate E | 99% | 120% | 74% | 179% | 107% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .20%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Multimedia Portfolio | 88.96% | 1.72% | 0.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 29, 2000. 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.
Annual Report
Multimedia Portfolio
Management's Discussion of Fund Performance
Market recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Kristina Salen, Portfolio Manager of Select Multimedia Portfolio: For the 12-month period ending February 28, 2010, the fund's shares gained 88.96%, outperforming the S&P 500 but lagging the 92.46% return of the MSCI® U.S. IM Media 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund's underperformance was driven by its underexposure to lower-quality traditional media stocks with weaker business fundamentals that enjoyed the largest gains during the year, and by its significant cash position when the market started to run. More specifically, some weak choices in movies and entertainment hurt, including our position in News Corp., the fund's largest individual detractor. Although the stock was among the fund's largest holdings, it was underweighted relative to the MSCI index, and the fund's relative performance suffered when the stock moved sharply higher. Underweighting satellite radio operator Sirius XM Radio was a negative when the stock surged after media conglomerate Liberty Media took a sizable stake in the highly leveraged company. Within digital media, an out-of-index stake in Internet search and online advertising leader Google detracted when the high-quality stock lost ground to the lower-quality investments fueling the rally. Underweighting two publishing stocks - coupon publisher Valassis Communications and newspaper publisher Gannett - also hurt returns. On the positive side, an underweighting and strong stock picking in the cable & satellite space was a big positive, including an underweighting in cable giant Comcast. In December, the company announced taking a majority stake in NBC Universal, which could subject the company to political and regulatory scrutiny that could limit the stock's near-term performance potential. Conversely, overweighting Virgin Media and Time Warner Cable, which are in the same industry, paid off as both companies benefited from overall positive business fundamentals in the cable business. Elsewhere, several out-of-index stakes in new media boosted relative returns, including China-based mobile gaming company Tencent Holdings. Tencent also benefited from its exposure to higher-growth emerging markets. Some of the stocks I've discussed were sold prior to period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Multimedia Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
The Walt Disney Co. | 14.9 | 14.5 |
Time Warner, Inc. | 7.9 | 6.7 |
DIRECTV | 7.3 | 3.3 |
Comcast Corp. Class A | 5.2 | 6.3 |
Time Warner Cable, Inc. | 5.1 | 5.5 |
Viacom, Inc. Class B (non-vtg.) | 4.5 | 4.9 |
Omnicom Group, Inc. | 3.8 | 3.8 |
News Corp. Class A | 3.4 | 3.5 |
McGraw-Hill Companies, Inc. | 3.2 | 3.7 |
Cablevision Systems Corp. - NY Group Class A | 2.7 | 2.6 |
| 58.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Media | 85.3% |
|
![]() | Internet Software & Services | 5.8% |
|
![]() | Software | 1.6% |
|
![]() | Internet & Catalog Retail | 1.1% |
|
![]() | Diversified Financial Services | 0.6% |
|
![]() | All Others* | 5.6% |
|
As of August 31, 2009 | |||
![]() | Media | 86.5% |
|
![]() | Internet Software & Services | 6.4% |
|
![]() | Software | 1.1% |
|
![]() | Internet & Catalog Retail | 0.9% |
|
![]() | Diversified Financial Services | 0.7% |
|
![]() | All Others* | 4.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Multimedia Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.4% | |||
Communications Equipment - 0.4% | |||
Juniper Networks, Inc. (a) | 10,500 | $ 293,790 | |
DIVERSIFIED FINANCIAL SERVICES - 0.6% | |||
Specialized Finance - 0.6% | |||
Moody's Corp. (c) | 17,800 | 473,836 | |
INTERNET & CATALOG RETAIL - 1.1% | |||
Catalog Retail - 0.3% | |||
Liberty Media Corp. Interactive Series A (a) | 18,900 | 237,951 | |
Internet Retail - 0.8% | |||
B2W Companhia Global Do Varejo | 15,400 | 319,990 | |
DeNA Co. Ltd. | 35 | 271,883 | |
| 591,873 | ||
TOTAL INTERNET & CATALOG RETAIL | 829,824 | ||
INTERNET SOFTWARE & SERVICES - 5.8% | |||
Internet Software & Services - 5.8% | |||
AOL, Inc. (a) | 142 | 3,519 | |
Baidu.com, Inc. sponsored ADR (a) | 900 | 466,812 | |
eBay, Inc. (a) | 9,200 | 211,784 | |
Google, Inc. Class A (a) | 3,250 | 1,712,100 | |
GREE, Inc. | 5,900 | 363,332 | |
Mercadolibre, Inc. (a)(c) | 9,400 | 386,716 | |
NetEase.com, Inc. sponsored ADR (a) | 7,200 | 279,792 | |
NHN Corp. (a) | 1,215 | 189,582 | |
Sina Corp. (a) | 6,400 | 242,048 | |
Tencent Holdings Ltd. | 31,000 | 607,843 | |
| 4,463,528 | ||
MEDIA - 85.3% | |||
Advertising - 8.6% | |||
Arbitron, Inc. | 200 | 4,300 | |
CyberAgent, Inc. | 206 | 375,009 | |
Focus Media Holding Ltd. ADR (a)(c) | 24,800 | 382,664 | |
Interpublic Group of Companies, Inc. (a) | 171,600 | 1,287,000 | |
Lamar Advertising Co. Class A (a)(c) | 31,200 | 938,496 | |
National CineMedia, Inc. | 45,700 | 735,313 | |
Omnicom Group, Inc. | 78,600 | 2,878,332 | |
| 6,601,114 | ||
Broadcasting - 4.4% | |||
CBS Corp. Class B | 55,400 | 719,646 | |
Discovery Communications, Inc. (a) | 42,550 | 1,325,433 | |
Discovery Communications, Inc. Class C (a) | 48,050 | 1,275,247 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 100 | 1,846 | |
| 3,322,172 | ||
| |||
Shares | Value | ||
Cable & Satellite - 33.1% | |||
Cablevision Systems Corp. - NY Group Class A | 84,300 | $ 2,029,944 | |
Comcast Corp.: | |||
Class A | 239,350 | 3,934,914 | |
Class A (special) (non-vtg.) | 51,700 | 800,833 | |
DIRECTV (a) | 163,913 | 5,548,455 | |
DISH Network Corp. Class A | 65,700 | 1,312,029 | |
Knology, Inc. (a) | 26,400 | 302,280 | |
Liberty Global, Inc.: | |||
Class A (a)(c) | 42,875 | 1,152,480 | |
Class C (a) | 42,100 | 1,114,387 | |
Liberty Media Corp.: | |||
Capital Series A (a) | 15,900 | 538,056 | |
Starz Series A (a) | 17,550 | 893,822 | |
Naspers Ltd. Class N | 3,400 | 126,798 | |
Net Servicos de Comunicacao SA sponsored ADR (c) | 37,700 | 464,087 | |
Scripps Networks Interactive, Inc. Class A | 20,300 | 803,474 | |
Sirius XM Radio, Inc. (a) | 1,146,960 | 1,169,899 | |
Time Warner Cable, Inc. | 84,069 | 3,925,182 | |
Virgin Media, Inc. | 72,300 | 1,171,260 | |
| 25,287,900 | ||
Movies & Entertainment - 34.6% | |||
Cinemark Holdings, Inc. | 31,900 | 513,909 | |
Cinemax India Ltd. | 18,381 | 26,014 | |
DreamWorks Animation SKG, Inc. Class A (a) | 27,600 | 1,199,496 | |
Lions Gate Entertainment Corp. (a) | 25,300 | 137,885 | |
Live Nation Entertainment, Inc. (a) | 42,900 | 557,271 | |
Madison Square Garden, Inc. Class A (a) | 3,075 | 59,963 | |
News Corp.: | |||
Class A | 194,382 | 2,598,887 | |
Class B | 1,300 | 20,475 | |
Regal Entertainment Group Class A | 28,700 | 428,778 | |
The Walt Disney Co. | 364,004 | 11,371,484 | |
Time Warner, Inc. | 208,466 | 6,053,853 | |
Viacom, Inc. Class B (non-vtg.) (a) | 114,600 | 3,397,890 | |
| 26,365,905 | ||
Publishing - 4.6% | |||
Gannett Co., Inc. | 42,000 | 636,300 | |
Martha Stewart Living Omnimedia, Inc. Class A (a) | 45,600 | 243,960 | |
McGraw-Hill Companies, Inc. | 71,600 | 2,448,720 | |
The New York Times Co. Class A (a) | 18,700 | 204,578 | |
| 3,533,558 | ||
TOTAL MEDIA | 65,110,649 | ||
PROFESSIONAL SERVICES - 0.4% | |||
Human Resource & Employment Services - 0.4% | |||
Monster Worldwide, Inc. (a) | 19,700 | 274,815 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - 1.6% | |||
Home Entertainment Software - 1.5% | |||
Activision Blizzard, Inc. | 30,400 | $ 323,152 | |
Giant Interactive Group, Inc. ADR (c) | 37,200 | 288,672 | |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 3,400 | 134,504 | |
Take-Two Interactive Software, Inc. (a)(c) | 38,600 | 371,332 | |
| 1,117,660 | ||
Systems Software - 0.1% | |||
Rovi Corp. (a) | 3,300 | 110,550 | |
TOTAL SOFTWARE | 1,228,210 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
Wireless Telecommunication Services - 0.4% | |||
Vivo Participacoes SA sponsored ADR | 10,900 | 294,954 | |
TOTAL COMMON STOCKS (Cost $64,798,549) | 72,969,606 | ||
Money Market Funds - 9.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 3,206,272 | $ 3,206,272 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 3,876,450 | 3,876,450 | |
TOTAL MONEY MARKET FUNDS (Cost $7,082,722) | 7,082,722 | ||
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $71,881,271) | 80,052,328 | ||
NET OTHER ASSETS - (4.9)% | (3,743,654) | ||
NET ASSETS - 100% | $ 76,308,674 |
Legend |
(a) Non-income producing |
(b) Includes investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 5,234 |
Fidelity Securities Lending Cash Central Fund | 16,003 |
Total | $ 21,237 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $4,923,365 of which $3,658,632 and $1,264,733 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $3,873,277) - See accompanying schedule: Unaffiliated issuers (cost $64,798,549) | $ 72,969,606 |
|
Fidelity Central Funds (cost $7,082,722) | 7,082,722 |
|
Total Investments (cost $71,881,271) |
| $ 80,052,328 |
Foreign currency held at value (cost $2,367) | 2,379 | |
Receivable for investments sold | 12,418 | |
Receivable for fund shares sold | 145,952 | |
Dividends receivable | 104,081 | |
Distributions receivable from Fidelity Central Funds | 847 | |
Prepaid expenses | 140 | |
Other receivables | 917 | |
Total assets | 80,319,062 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 50,092 | |
Accrued management fee | 33,050 | |
Other affiliated payables | 19,221 | |
Other payables and accrued expenses | 31,575 | |
Collateral on securities loaned, at value | 3,876,450 | |
Total liabilities | 4,010,388 | |
|
|
|
Net Assets | $ 76,308,674 | |
Net Assets consist of: |
| |
Paid in capital | $ 74,010,783 | |
Undistributed net investment income | 2,738 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,875,950) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 8,171,103 | |
Net Assets, for 2,218,755 shares outstanding | $ 76,308,674 | |
Net Asset Value, offering price and redemption price per share ($76,308,674 ÷ 2,218,755 shares) | $ 34.39 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 527,094 |
Special dividends |
| 157,299 |
Interest |
| 7 |
Income from Fidelity Central Funds (including $16,003 from security lending) |
| 21,237 |
Total income |
| 705,637 |
|
|
|
Expenses | ||
Management fee | $ 263,952 | |
Transfer agent fees | 151,684 | |
Accounting and security lending fees | 18,969 | |
Custodian fees and expenses | 12,753 | |
Independent trustees' compensation | 317 | |
Registration fees | 16,364 | |
Audit | 37,807 | |
Legal | 230 | |
Miscellaneous | 571 | |
Total expenses before reductions | 502,647 | |
Expense reductions | (2,176) | 500,471 |
Net investment income (loss) | 205,166 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (443,439) | |
Foreign currency transactions | (3,879) | |
Total net realized gain (loss) |
| (447,318) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 24,644,508 | |
Assets and liabilities in foreign currencies | 57 | |
Total change in net unrealized appreciation (depreciation) |
| 24,644,565 |
Net gain (loss) | 24,197,247 | |
Net increase (decrease) in net assets resulting from operations | $ 24,402,413 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 205,166 | $ 92,315 |
Net realized gain (loss) | (447,318) | (5,232,347) |
Change in net unrealized appreciation (depreciation) | 24,644,565 | (18,069,693) |
Net increase (decrease) in net assets resulting from operations | 24,402,413 | (23,209,725) |
Distributions to shareholders from net investment income | (216,486) | (80,043) |
Distributions to shareholders from net realized gain | - | (1,247,080) |
Total distributions | (216,486) | (1,327,123) |
Share transactions | 46,703,954 | 18,040,482 |
Reinvestment of distributions | 207,579 | 1,278,352 |
Cost of shares redeemed | (20,974,314) | (30,742,054) |
Net increase (decrease) in net assets resulting from share transactions | 25,937,219 | (11,423,220) |
Redemption fees | 2,081 | 2,063 |
Total increase (decrease) in net assets | 50,125,227 | (35,958,005) |
|
|
|
Net Assets | ||
Beginning of period | 26,183,447 | 62,141,452 |
End of period (including undistributed net investment income of $2,738 and undistributed net investment income of $17,559, respectively) | $ 76,308,674 | $ 26,183,447 |
Other Information Shares | ||
Sold | 1,463,045 | 601,001 |
Issued in reinvestment of distributions | 6,399 | 39,967 |
Redeemed | (684,012) | (967,838) |
Net increase (decrease) | 785,432 | (326,870) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.27 | $ 35.30 | $ 47.31 | $ 47.33 | $ 43.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .13 F | .06 | .01 | (.07) | (.12) |
Net realized and unrealized gain (loss) | 16.12 | (16.17) | (5.79) | 6.27 | 4.70 |
Total from investment operations | 16.25 | (16.11) | (5.78) | 6.20 | 4.58 |
Distributions from net investment income | (.13) | (.06) | - | - | - |
Distributions from net realized gain | - | (.86) | (6.23) | (6.23) | (.80) |
Total distributions | (.13) | (.92) | (6.23) | (6.23) | (.80) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 34.39 | $ 18.27 | $ 35.30 | $ 47.31 | $ 47.33 |
Total Return A, B | 88.96% | (46.75)% | (13.88)% | 13.73% | 10.48% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.08% | 1.07% | .99% | 1.04% | 1.07% |
Expenses net of fee waivers, if any | 1.08% | 1.07% | .99% | 1.04% | 1.07% |
Expenses net of all reductions | 1.07% | 1.07% | .98% | 1.04% | 1.04% |
Net investment income (loss) | .44% F | .22% | .01% | (.16)% | (.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 76,309 | $ 26,183 | $ 62,141 | $ 90,806 | $ 80,715 |
Portfolio turnover rate E | 40% | 39% | 68% | 179% | 48% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects special dividends which amounted to $.10 per share. Excluding these special dividends, the ratio of net investment income (loss) to average net assets would have been .10%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Retailing Portfolio | 79.26% | 6.04% | 5.01% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 29, 2000. 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.
Annual Report
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Peter Dixon, who became Portfolio Manager of Select Retailing Portfolio on April 14, 2010, after the period covered by this report: For the 12-month period ending February 28, 2010, the fund's shares returned 79.26%, outpacing the S&P 500 and the 75.19% gain of the fund's industry benchmark, the MSCI® U.S. IM Retailing 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. The fund's performance versus the MSCI index was driven by strong stock selection in a variety of retailing industries, including specialty stores and home-improvement retail. Among specialty stores, stakes in office supply turnaround stories OfficeMax and Office Depot moved sharply higher when the market rotated toward more-volatile stocks during the period, while a non-index position in jewelry retailer Signet Jewelers benefited from the same trend. In the home-improvement retail area, a large overweighting in Lumber Liquidators was a key contributor, rallying strongly as investors became more confident that the economy was stabilizing. Likewise, underweighting major index component Home Depot helped when more-defensive stocks fell out of favor. An out-of-index stake in regional home furnishings retailer Kirkland's was yet another beneficiary of changing market preferences. On the negative side, an overweighting in jeweler Zale was the largest individual detractor. The company suffered from weak holiday sales that hampered a potential business turnaround. A non-index position in Wal-Mart Stores detracted when investors shifted toward lower-quality investments. In other areas, underweighting Liberty Media and Limited Brands in the catalog and apparel retail areas, respectively, hurt results. Our underweighting in department stores detracted as well, as did stock picking within automotive retail and holding a small position in cash during a strong market. A number of the stocks I've discussed were sold prior to period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Retailing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Staples, Inc. | 9.5 | 11.0 |
Amazon.com, Inc. | 9.1 | 6.8 |
Home Depot, Inc. | 8.8 | 7.6 |
Lowe's Companies, Inc. | 8.7 | 9.3 |
Target Corp. | 6.7 | 8.4 |
TJX Companies, Inc. | 4.2 | 5.4 |
Kohl's Corp. | 4.2 | 1.2 |
Best Buy Co., Inc. | 4.1 | 4.8 |
Bed Bath & Beyond, Inc. | 3.2 | 0.0 |
RadioShack Corp. | 3.0 | 2.2 |
| 61.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Specialty Retail | 69.5% |
|
![]() | Multiline Retail | 14.7% |
|
![]() | Internet & Catalog Retail | 13.9% |
|
![]() | Internet Software & Services | 0.5% |
|
![]() | Textiles, Apparel & Luxury Goods | 0.0%* |
|
![]() | All Others** | 1.4% |
|
As of August 31, 2009 | |||
![]() | Specialty Retail | 64.4% |
|
![]() | Multiline Retail | 15.8% |
|
![]() | Internet & Catalog Retail | 10.6% |
|
![]() | Food & Staples Retailing | 3.4% |
|
![]() | Distributors | 1.4% |
|
![]() | All Others** | 4.4% |
|
* Amount represents less than 0.1%. |
** Includes short-term investments and net other assets. |
Annual Report
Retailing Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
DISTRIBUTORS - 0.0% | |||
Distributors - 0.0% | |||
Genuine Parts Co. | 400 | $ 16,144 | |
FOOD & STAPLES RETAILING - 0.0% | |||
Drug Retail - 0.0% | |||
CVS Caremark Corp. | 400 | 13,500 | |
INTERNET & CATALOG RETAIL - 13.9% | |||
Catalog Retail - 1.3% | |||
dELiA*s, Inc. (a) | 4,761 | 8,094 | |
Liberty Media Corp. Interactive Series A (a) | 135,500 | 1,705,945 | |
| 1,714,039 | ||
Internet Retail - 12.6% | |||
Amazon.com, Inc. (a) | 106,100 | 12,562,240 | |
Blue Nile, Inc. (a)(c) | 25,500 | 1,306,620 | |
Expedia, Inc. | 59,500 | 1,323,280 | |
Priceline.com, Inc. (a) | 9,600 | 2,176,896 | |
| 17,369,036 | ||
TOTAL INTERNET & CATALOG RETAIL | 19,083,075 | ||
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
eBay, Inc. (a) | 29,700 | 683,694 | |
MULTILINE RETAIL - 14.7% | |||
Department Stores - 6.7% | |||
Kohl's Corp. (a) | 107,700 | 5,796,414 | |
Macy's, Inc. | 104,900 | 2,008,835 | |
Nordstrom, Inc. (c) | 37,900 | 1,400,026 | |
| 9,205,275 | ||
General Merchandise Stores - 8.0% | |||
Big Lots, Inc. (a) | 400 | 13,400 | |
Dollar Tree, Inc. (a) | 20,400 | 1,137,096 | |
Family Dollar Stores, Inc. | 19,900 | 656,501 | |
Target Corp. | 179,500 | 9,247,840 | |
| 11,054,837 | ||
TOTAL MULTILINE RETAIL | 20,260,112 | ||
SPECIALTY RETAIL - 69.5% | |||
Apparel Retail - 16.1% | |||
Abercrombie & Fitch Co. Class A | 38,400 | 1,398,528 | |
Aeropostale, Inc. (a) | 200 | 7,072 | |
American Eagle Outfitters, Inc. | 73,400 | 1,238,258 | |
AnnTaylor Stores Corp. (a)(c) | 60,000 | 1,032,600 | |
Casual Male Retail Group, Inc. (a) | 83,800 | 258,104 | |
Chico's FAS, Inc. | 30,200 | 409,210 | |
Christopher & Banks Corp. | 13,400 | 92,996 | |
| |||
Shares | Value | ||
Citi Trends, Inc. (a) | 50,900 | $ 1,513,766 | |
Coldwater Creek, Inc. (a)(c) | 94,900 | 492,531 | |
Foot Locker, Inc. | 79,600 | 1,032,412 | |
Gap, Inc. | 35,800 | 769,700 | |
Gymboree Corp. (a) | 56,000 | 2,436,000 | |
Hot Topic, Inc. (a) | 68,700 | 444,489 | |
J. Crew Group, Inc. (a) | 31,300 | 1,317,104 | |
Jos. A. Bank Clothiers, Inc. (a)(c) | 13,300 | 594,909 | |
Ross Stores, Inc. | 31,900 | 1,560,229 | |
rue21, Inc. | 12,750 | 366,435 | |
TJX Companies, Inc. | 140,200 | 5,836,526 | |
Urban Outfitters, Inc. (a) | 24,000 | 773,040 | |
Zumiez, Inc. (a)(c) | 39,900 | 572,166 | |
| 22,146,075 | ||
Automotive Retail - 4.8% | |||
Advance Auto Parts, Inc. | 37,100 | 1,513,680 | |
AutoNation, Inc. (a) | 700 | 12,425 | |
AutoZone, Inc. (a) | 7,700 | 1,277,661 | |
O'Reilly Automotive, Inc. (a) | 41,100 | 1,615,230 | |
Sonic Automotive, Inc. Class A (sub. vtg.) (a)(c) | 209,400 | 2,156,820 | |
| 6,575,816 | ||
Computer & Electronics Retail - 8.1% | |||
Best Buy Co., Inc. | 154,900 | 5,653,850 | |
Conn's, Inc. (a)(c) | 4,900 | 22,050 | |
Gamestop Corp. Class A (a)(c) | 29,900 | 514,280 | |
hhgregg, Inc. (a) | 42,000 | 876,540 | |
RadioShack Corp. | 210,200 | 4,111,512 | |
| 11,178,232 | ||
Home Improvement Retail - 17.5% | |||
Home Depot, Inc. | 386,500 | 12,058,800 | |
Lowe's Companies, Inc. | 504,600 | 11,964,066 | |
Sherwin-Williams Co. | 300 | 19,014 | |
| 24,041,880 | ||
Homefurnishing Retail - 3.2% | |||
Bed Bath & Beyond, Inc. (a) | 104,800 | 4,360,728 | |
Specialty Stores - 19.8% | |||
Big 5 Sporting Goods Corp. | 95,700 | 1,462,296 | |
Cabela's, Inc. Class A (a) | 12,200 | 188,612 | |
Dick's Sporting Goods, Inc. (a) | 50,100 | 1,218,933 | |
Hibbett Sports, Inc. (a) | 600 | 13,806 | |
Indigo Books & Music, Inc. | 83,600 | 1,388,765 | |
Office Depot, Inc. (a) | 180,100 | 1,300,322 | |
OfficeMax, Inc. (a) | 191,200 | 3,053,464 | |
Signet Jewelers Ltd. (a) | 103,300 | 2,976,073 | |
Staples, Inc. | 507,694 | 13,078,197 | |
Tiffany & Co., Inc. | 20,200 | 896,678 | |
Tractor Supply Co. (a) | 10,100 | 552,672 | |
West Marine, Inc. (a) | 108,134 | 1,019,704 | |
| 27,149,522 | ||
TOTAL SPECIALTY RETAIL | 95,452,253 | ||
Common Stocks - continued | |||
Shares | Value | ||
TEXTILES, APPAREL & LUXURY GOODS - 0.0% | |||
Apparel, Accessories & Luxury Goods - 0.0% | |||
Polo Ralph Lauren Corp. Class A | 200 | $ 15,986 | |
Warnaco Group, Inc. (a) | 400 | 16,696 | |
| 32,682 | ||
TOTAL COMMON STOCKS (Cost $112,831,328) | 135,541,460 | ||
Money Market Funds - 5.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 2,084,305 | 2,084,305 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 5,673,425 | 5,673,425 | |
TOTAL MONEY MARKET FUNDS (Cost $7,757,730) | 7,757,730 | ||
TOTAL INVESTMENT PORTFOLIO - 104.3% (Cost $120,589,058) | 143,299,190 | ||
NET OTHER ASSETS - (4.3)% | (5,890,630) | ||
NET ASSETS - 100% | $ 137,408,560 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 11,594 |
Fidelity Securities Lending Cash Central Fund | 39,056 |
Total | $ 50,650 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $5,521,762) - See accompanying schedule: Unaffiliated issuers (cost $112,831,328) | $ 135,541,460 |
|
Fidelity Central Funds (cost $7,757,730) | 7,757,730 |
|
Total Investments (cost $120,589,058) |
| $ 143,299,190 |
Receivable for investments sold | 3,694,284 | |
Receivable for fund shares sold | 557,417 | |
Dividends receivable | 62,305 | |
Distributions receivable from Fidelity Central Funds | 1,186 | |
Prepaid expenses | 498 | |
Other receivables | 6,441 | |
Total assets | 147,621,321 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,349,213 | |
Payable for fund shares redeemed | 61,628 | |
Accrued management fee | 59,816 | |
Other affiliated payables | 35,579 | |
Other payables and accrued expenses | 33,100 | |
Collateral on securities loaned, at value | 5,673,425 | |
Total liabilities | 10,212,761 | |
|
|
|
Net Assets | $ 137,408,560 | |
Net Assets consist of: |
| |
Paid in capital | $ 110,524,285 | |
Undistributed net investment income | 26,731 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,147,412 | |
Net unrealized appreciation (depreciation) on investments | 22,710,132 | |
Net Assets, for 3,045,774 shares outstanding | $ 137,408,560 | |
Net Asset Value, offering price and redemption price per share ($137,408,560 ÷ 3,045,774 shares) | $ 45.11 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 1,644,265 |
Income from Fidelity Central Funds (including $39,056 from security lending) |
| 50,650 |
Total income |
| 1,694,915 |
|
|
|
Expenses | ||
Management fee | $ 780,956 | |
Transfer agent fees | 397,582 | |
Accounting and security lending fees | 55,250 | |
Custodian fees and expenses | 23,654 | |
Independent trustees' compensation | 915 | |
Registration fees | 39,476 | |
Audit | 37,006 | |
Legal | 660 | |
Miscellaneous | 1,439 | |
Total expenses before reductions | 1,336,938 | |
Expense reductions | (24,067) | 1,312,871 |
Net investment income (loss) | 382,044 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 31,825,516 | |
Foreign currency transactions | 154 | |
Total net realized gain (loss) |
| 31,825,670 |
Change in net unrealized appreciation (depreciation) on investment securities | 29,858,749 | |
Net gain (loss) | 61,684,419 | |
Net increase (decrease) in net assets resulting from operations | $ 62,066,463 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 382,044 | $ 298,682 |
Net realized gain (loss) | 31,825,670 | (14,107,745) |
Change in net unrealized appreciation (depreciation) | 29,858,749 | (4,729,440) |
Net increase (decrease) in net assets resulting from operations | 62,066,463 | (18,538,503) |
Distributions to shareholders from net investment income | (344,976) | (300,191) |
Distributions to shareholders from net realized gain | (6,618,336) | - |
Total distributions | (6,963,312) | (300,191) |
Share transactions | 190,409,593 | 55,538,999 |
Reinvestment of distributions | 6,697,463 | 282,913 |
Cost of shares redeemed | (155,150,576) | (44,697,053) |
Net increase (decrease) in net assets resulting from share transactions | 41,956,480 | 11,124,859 |
Redemption fees | 14,152 | 10,562 |
Total increase (decrease) in net assets | 97,073,783 | (7,703,273) |
|
|
|
Net Assets | ||
Beginning of period | 40,334,777 | 48,038,050 |
End of period (including undistributed net investment income of $26,731 and undistributed net investment income of $34, respectively) | $ 137,408,560 | $ 40,334,777 |
Other Information Shares | ||
Sold | 5,287,234 | 1,613,669 |
Issued in reinvestment of distributions | 157,699 | 9,830 |
Redeemed | (3,922,393) | (1,413,926) |
Net increase (decrease) | 1,522,540 | 209,573 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.48 | $ 36.57 | $ 54.98 | $ 50.78 | $ 50.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .11 | .21 | (.01) | .30 F | (.10) |
Net realized and unrealized gain (loss) | 20.74 | (10.11) | (10.59) | 7.46 | 6.24 |
Total from investment operations | 20.85 | (9.90) | (10.60) | 7.76 | 6.14 |
Distributions from net investment income | (.11) | (.20) | (.22) | - | - |
Distributions from net realized gain | (2.11) | - | (7.60) | (3.58) | (6.29) |
Total distributions | (2.22) | (.20) | (7.82) | (3.58) | (6.29) |
Redemption fees added to paid in capital C | - I | .01 | .01 | .02 | .04 |
Net asset value, end of period | $ 45.11 | $ 26.48 | $ 36.57 | $ 54.98 | $ 50.78 |
Total Return A, B | 79.26% | (27.09)% | (21.43)% | 15.79% | 12.77% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .96% | 1.07% | 1.02% | 1.06% | 1.06% |
Expenses net of fee waivers, if any | .96% | 1.07% | 1.02% | 1.06% | 1.06% |
Expenses net of all reductions | .94% | 1.06% | 1.02% | 1.06% | 1.04% |
Net investment income (loss) | .27% | .63% | (.02)% | .58% F | (.20)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 137,409 | $ 40,335 | $ 48,038 | $ 83,843 | $ 67,009 |
Portfolio turnover rate E | 281% | 504% | 260% | 202% | 114% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects special dividends which amounted to $.37 per share. Excluding these special dividends, the ratio of net investment income (loss) to average net assets would have been (.13)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010 is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distributions 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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, certain foreign taxes, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross | Gross | Net unrealized |
Automotive Portfolio | $ 162,203,411 | $ 23,238,522 | $ (8,111,255) | $ 15,127,267 |
Construction and Housing Portfolio | 115,541,300 | 8,215,907 | (12,972,871) | (4,756,964) |
Consumer Discretionary Portfolio | 70,712,870 | 11,374,143 | (2,118,773) | 9,255,370 |
Leisure Portfolio | 211,394,295 | 41,880,733 | (4,032,626) | 37,848,107 |
Multimedia Portfolio | 72,431,346 | 12,364,986 | (4,744,004) | 7,620,982 |
Retailing Portfolio | 121,691,166 | 23,023,447 | (1,415,423) | 21,608,024 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital Loss | Net unrealized |
Automotive Portfolio | $ 3,068,658 | $ - | $ - | $ 15,127,022 |
Construction and Housing Portfolio | 102,753 | - | (13,637,579) | (4,756,964) |
Consumer Discretionary Portfolio | 24,538 | - | (1,245,493) | 9,255,228 |
Leisure Portfolio | 456,807 | - | (20,041,799) | 37,848,107 |
Multimedia Portfolio | 2,738 | - | (4,923,365) | 7,621,028 |
Retailing Portfolio | 4,115,959 | 1,160,390 | - | 21,608,024 |
The tax character of distributions paid was as follows:
February 28, 2010 | Ordinary | Long-term | Total |
Automotive Portfolio | $ 69,440 | $ - | $ 69,440 |
Construction and Housing Portfolio | 826,043 | - | 826,043 |
Consumer Discretionary Portfolio | 191,875 | - | 191,875 |
Leisure Portfolio | 1,367,599 | - | 1,367,599 |
Multimedia Portfolio | 216,486 | - | 216,486 |
Retailing Portfolio | 6,179,149 | 784,163 | 6,963,312 |
February 28, 2009 | Ordinary | Long-term | Total |
Automotive Portfolio | $ 195,123 | $ - | $ 195,123 |
Construction and Housing Portfolio | 984,426 | 2,251,733 | 3,236,159 |
Consumer Discretionary Portfolio | 133,024 | - | 133,024 |
Leisure Portfolio | 1,786,025 | 590,741 | 2,376,766 |
Multimedia Portfolio | 80,043 | 1,247,080 | 1,327,123 |
Retailing Portfolio | 300,191 | - | 300,191 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Automotive Portfolio | 235,765,593 | 141,960,639 |
Construction and Housing Portfolio | 81,171,088 | 105,265,767 |
Consumer Discretionary Portfolio | 103,478,345 | 69,730,220 |
Leisure Portfolio | 200,413,750 | 215,748,356 |
Multimedia Portfolio | 42,956,316 | 17,967,148 |
Retailing Portfolio | 406,874,718 | 371,408,114 |
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
For the 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% | .26% | .57% |
Construction and Housing Portfolio | .30% | .26% | .56% |
Consumer Discretionary Portfolio | .30% | .26% | .56% |
Leisure Portfolio | .30% | .26% | .56% |
Multimedia Portfolio | .30% | .26% | .57% |
Retailing Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Automotive Portfolio | .28% |
Construction and Housing Portfolio | .33% |
Consumer Discretionary Portfolio | .34% |
Leisure Portfolio | .30% |
Multimedia Portfolio | .33% |
Retailing Portfolio | .29% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Automotive Portfolio | $ 2,495 |
Construction and Housing Portfolio | 8,978 |
Consumer Discretionary Portfolio | 4,658 |
Leisure Portfolio | 10,251 |
Multimedia Portfolio | 1,266 |
Retailing Portfolio | 18,069 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or | Average Daily | Weighted | Interest |
Automotive Portfolio | Borrower | $ 3,080,000 | .36% | $ 61 |
Consumer Discretionary Portfolio | Borrower | 5,821,667 | .39% | 189 |
6. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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.
Annual Report
Notes to Financial Statements - continued
6. Committed Line of Credit - continued
The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Automotive Portfolio | $ 286 |
Construction and Housing Portfolio | 365 |
Consumer Discretionary Portfolio | 172 |
Leisure Portfolio | 724 |
Multimedia Portfolio | 147 |
Retailing Portfolio | 490 |
During the period, there were no borrowings on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Automotive Portfolio | $ 11,797 | $ - |
Construction and Housing Portfolio | 4,456 | - |
Consumer Discretionary Portfolio | 6,338 | 2 |
Leisure Portfolio | 12,740 | 9 |
Multimedia Portfolio | 2,176 | - |
Retailing Portfolio | 24,067 | - |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, PAS U.S. Opportunity Fidelity Fund of Funds was the owner of record of approximately 11% of the total outstanding shares of Construction and Housing Portfolio. The PAS U.S. Opportunity Fund of Funds was the owner of record of approximately 16% and 12% of the total outstanding shares of Consumer Discretionary Portfolio and Retailing Portfolio, respectively. The PAS Funds of Funds were the owners of record, in the aggregate, of approximately 25% of the total outstanding shares of Consumer Discretionary Portfolio. In addition, at the end of the period, VIP FundsManager 60% Portfolio was the owner of record of approximately 14% of the total outstanding shares of Consumer Discretionary Portfolio. The VIP FundsManager Portfolios were the owners of record, in the aggregate, of approximately 27% of the total outstanding shares of Consumer Discretionary Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010 the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 | 04/12/10 | 04/09/10 | $- | $0.63 |
Construction and Housing Portfolio | 04/12/10 | 04/09/10 | $.035 | $- |
Consumer Discretionary Portfolio | 04/12/10 | 04/09/10 | $.01 | $- |
Leisure Portfolio | 04/12/10 | 04/09/10 | $.145 | $- |
Multimedia Portfolio | 04/12/10 | 04/09/10 | $0.005 | $0.00 |
Retailing Portfolio | 04/12/10 | 04/09/10 | $.01 | $1.33 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2009 | December 2009 |
Automotive Portfolio | 18% | -% |
Construction and Housing Portfolio | 100% | 100% |
Consumer Discretionary Portfolio | 100% | 100% |
Leisure Portfolio | 100% | 100% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | -% | 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.
| April 2009 | December 2009 |
Automotive Portfolio | 100% | -% |
Construction and Housing Portfolio | 100% | 100% |
Consumer Discretionary Portfolio | 100% | 100% |
Leisure Portfolio | 100% | 100% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | -% | 21% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELCON-UANNPRO-0410
1.910417.100
Fidelity®
Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Note to shareholders | An explanation of the changes to the fund | |
Consumer Staples Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Consumer Staples Portfolio A | 40.96% | 7.63% | 10.48% |
A Prior to October 1, 2006, Consumer Staples Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$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, 2000. 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.
Annual Report
Consumer Staples Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Robert Lee, Portfolio Manager of Select Consumer Staples Portfolio: During the past year, the fund's Retail Class shares returned 40.96% trailing the S&P 500 but outperforming the 37.17% gain of the fund's sector benchmark, the MSCI® U.S. IM Consumer Staples 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Leading the way in terms of performance relative to the MSCI index was strong stock picking and a modest underweighting in the soft drink industry, including stakes in bottlers Coca-Cola Enterprises and Mexico's Coca-Cola FEMSA, as well as Canada's private-label manufacturer Cott. Stock choices within packaged food/meats were significant contributors, particularly holdings in Anglo-Dutch firm Unilever and Switzerland's Nestlé. Good stock selection in brewers also helped, including an out-of-index stake in Belgian brewer Anheuser-Busch InBev, which posted solid gains in response to the successful merger between two major brewers. Underweighting major index component Wal-Mart Stores also was a positive, when the stock lagged for much of the period. On the negative side, underweighting the strong-performing tobacco group - and index constituents within, including Philip Morris International - detracted, as did an overweighting and weak stock selection within food retailing, including an outsized stake in major grocery chain Kroger. Weak stock selection in the distillers & vintners industry also hurt, including a position in Constellation Brands. In other areas, not owning global cosmetic manufacturer and index component Estee Lauder was a negative when the stock performed very well near the end of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.11% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.90 | $ 5.74 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,085.40 | $ 7.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.50 | $ 10.07 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Class C | 1.87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.70 | $ 9.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Consumer Staples | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.20 | $ 4.56 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.30 | $ 4.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 14.6 | 11.5 |
CVS Caremark Corp. | 6.4 | 8.0 |
The Coca-Cola Co. | 5.8 | 6.6 |
British American Tobacco PLC sponsored ADR | 5.0 | 4.9 |
Wal-Mart Stores, Inc. | 4.6 | 5.0 |
Walgreen Co. | 4.3 | 2.7 |
PepsiCo, Inc. | 4.3 | 6.9 |
Altria Group, Inc. | 3.9 | 3.5 |
Avon Products, Inc. | 3.6 | 2.7 |
Safeway, Inc. | 3.3 | 2.5 |
| 55.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Beverages | 24.8% |
|
![]() | Food & Staples Retailing | 22.0% |
|
![]() | Household Products | 17.9% |
|
![]() | Food Products | 13.1% |
|
![]() | Tobacco | 11.5% |
|
![]() | All Others* | 10.7% |
|
As of August 31, 2009 | |||
![]() | Beverages | 29.5% |
|
![]() | Food & Staples Retailing | 21.4% |
|
![]() | Food Products | 14.7% |
|
![]() | Household Products | 14.6% |
|
![]() | Tobacco | 11.9% |
|
![]() | All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
BEVERAGES - 24.8% | |||
Brewers - 6.0% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 277,611 | $ 2,799,982 | |
Anheuser-Busch InBev SA NV | 566,622 | 28,358,717 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 65,200 | 6,321,140 | |
Molson Coors Brewing Co. Class B | 953,715 | 38,511,012 | |
| 75,990,851 | ||
Distillers & Vintners - 4.1% | |||
Brown-Forman Corp. Class B (non-vtg.) | 128,521 | 6,729,360 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,066,373 | 31,078,250 | |
Diageo PLC sponsored ADR | 217,663 | 14,209,041 | |
| 52,016,651 | ||
Soft Drinks - 14.7% | |||
Coca-Cola Bottling Co. Consolidated | 37,504 | 2,087,098 | |
Coca-Cola Enterprises, Inc. | 781,200 | 19,959,660 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 101,029 | 6,487,072 | |
Coca-Cola Icecek AS | 373,332 | 3,475,775 | |
Cott Corp. (a) | 21,000 | 151,076 | |
Dr Pepper Snapple Group, Inc. | 546,131 | 17,339,659 | |
Embotelladora Andina SA sponsored ADR (c) | 323,541 | 6,347,874 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 72,490 | 3,102,572 | |
PepsiCo, Inc. | 873,327 | 54,556,738 | |
The Coca-Cola Co. | 1,395,715 | 73,582,095 | |
| 187,089,619 | ||
TOTAL BEVERAGES | 315,097,121 | ||
FOOD & STAPLES RETAILING - 22.0% | |||
Drug Retail - 10.7% | |||
CVS Caremark Corp. | 2,404,926 | 81,166,253 | |
Walgreen Co. | 1,557,718 | 54,893,982 | |
| 136,060,235 | ||
Food Retail - 5.0% | |||
Kroger Co. | 878,068 | 19,405,303 | |
Safeway, Inc. | 1,681,396 | 41,900,388 | |
Susser Holdings Corp. (a) | 70,300 | 589,114 | |
The Pantry, Inc. (a) | 162,909 | 2,134,108 | |
| 64,028,913 | ||
Hypermarkets & Super Centers - 6.3% | |||
BJ's Wholesale Club, Inc. (a) | 586,299 | 21,206,435 | |
Wal-Mart Stores, Inc. | 1,076,480 | 58,205,274 | |
| 79,411,709 | ||
TOTAL FOOD & STAPLES RETAILING | 279,500,857 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 13.1% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 609,253 | $ 17,887,668 | |
Bunge Ltd. | 198,072 | 11,803,110 | |
Corn Products International, Inc. | 187,577 | 6,111,259 | |
SLC Agricola SA | 364,400 | 3,123,457 | |
Viterra, Inc. (a) | 331,300 | 3,060,334 | |
| 41,985,828 | ||
Packaged Foods & Meats - 9.8% | |||
Ausnutria Dairy Hunan Co. Ltd. Class H | 4,155,000 | 2,960,134 | |
Brasil Foods SA | 1,000 | 24,447 | |
Cermaq ASA (a) | 304,000 | 3,394,981 | |
Cosan Ltd. Class A (a) | 91,200 | 827,184 | |
Danone | 101,220 | 5,918,984 | |
Dean Foods Co. (a) | 1,918,268 | 27,987,530 | |
General Mills, Inc. | 116,923 | 8,419,625 | |
Kraft Foods, Inc. Class A | 310,062 | 8,815,063 | |
Lindt & Spruengli AG (c) | 109 | 2,535,792 | |
Nestle SA (Reg.) | 655,642 | 32,617,335 | |
Tyson Foods, Inc. Class A | 321,761 | 5,482,807 | |
Unilever NV (NY Shares) | 837,612 | 25,203,745 | |
| 124,187,627 | ||
TOTAL FOOD PRODUCTS | 166,173,455 | ||
HOUSEHOLD PRODUCTS - 17.9% | |||
Household Products - 17.9% | |||
Colgate-Palmolive Co. | 230,514 | 19,118,831 | |
Energizer Holdings, Inc. (a) | 390,266 | 22,615,915 | |
Procter & Gamble Co. | 2,928,338 | 185,305,226 | |
| 227,039,972 | ||
PERSONAL PRODUCTS - 4.1% | |||
Personal Products - 4.1% | |||
Avon Products, Inc. | 1,496,306 | 45,547,555 | |
Mead Johnson Nutrition Co. Class A | 86,926 | 4,111,600 | |
Natura Cosmeticos SA | 164,500 | 3,033,030 | |
| 52,692,185 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 595,924 | 37,543,212 | |
Perrigo Co. | 1,000 | 49,570 | |
| 37,592,782 | ||
TOBACCO - 11.5% | |||
Tobacco - 11.5% | |||
Altria Group, Inc. | 2,442,510 | 49,143,301 | |
British American Tobacco PLC sponsored ADR | 934,941 | 63,482,494 | |
KT&G Corp. | 56,270 | 3,114,254 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 540,657 | $ 26,481,380 | |
Souza Cruz Industria Comerico | 92,300 | 3,156,429 | |
| 145,377,858 | ||
TOTAL COMMON STOCKS (Cost $1,133,829,769) | 1,223,474,230 | ||
Money Market Funds - 3.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 42,479,890 | 42,479,890 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 830,658 | 830,658 | |
TOTAL MONEY MARKET FUNDS (Cost $43,310,548) | 43,310,548 | ||
TOTAL INVESTMENT PORTFOLIO - 99.8% (Cost $1,177,140,317) | 1,266,784,778 | ||
NET OTHER ASSETS - 0.2% | 2,782,497 | ||
NET ASSETS - 100% | $ 1,269,567,275 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 73,704 |
Fidelity Securities Lending Cash Central Fund | 140,195 |
Total | $ 213,899 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.4% |
United Kingdom | 6.1% |
Switzerland | 2.8% |
Belgium | 2.3% |
Netherlands | 2.0% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $2,242,566 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $803,687) - See accompanying schedule: Unaffiliated issuers (cost $1,133,829,769) | $ 1,223,474,230 |
|
Fidelity Central Funds (cost $43,310,548) | 43,310,548 |
|
Total Investments (cost $1,177,140,317) |
| $ 1,266,784,778 |
Foreign currency held at value (cost $108) | 108 | |
Receivable for investments sold | 12,862,525 | |
Receivable for fund shares sold | 1,923,204 | |
Dividends receivable | 1,615,280 | |
Distributions receivable from Fidelity Central Funds | 10,510 | |
Prepaid expenses | 3,545 | |
Other receivables | 3,944 | |
Total assets | 1,283,203,894 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,325,644 | |
Payable for fund shares redeemed | 1,419,802 | |
Accrued management fee | 577,290 | |
Distribution fees payable | 124,205 | |
Other affiliated payables | 294,964 | |
Other payables and accrued expenses | 64,056 | |
Collateral on securities loaned, at value | 830,658 | |
Total liabilities | 13,636,619 | |
|
|
|
Net Assets | $ 1,269,567,275 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,194,469,877 | |
Undistributed net investment income | 1,438,918 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (15,985,104) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 89,643,584 | |
Net Assets | $ 1,269,567,275 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
Calculation of Maximum Offering Price Class A: | $ 61.06 | |
|
|
|
Maximum offering price per share (100/94.25 of $61.06) | $ 64.79 | |
|
|
|
Class T: | $ 60.77 | |
|
|
|
Maximum offering price per share (100/96.50 of $60.77) | $ 62.97 | |
|
|
|
Class B: | $ 60.37 | |
|
|
|
Class C: | $ 60.29 | |
|
|
|
Consumer Staples: | $ 61.34 | |
|
|
|
Institutional Class: | $ 61.26 |
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.
Annual Report
Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 28,762,013 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 213,899 |
Total income |
| 28,975,917 |
|
|
|
Expenses | ||
Management fee | $ 6,157,861 | |
Transfer agent fees | 3,057,955 | |
Distribution fees | 1,411,256 | |
Accounting and security lending fees | 411,499 | |
Custodian fees and expenses | 127,130 | |
Independent trustees' compensation | 7,233 | |
Registration fees | 135,457 | |
Audit | 42,554 | |
Legal | 5,574 | |
Miscellaneous | 16,951 | |
Total expenses before reductions | 11,373,470 | |
Expense reductions | (27,975) | 11,345,495 |
Net investment income (loss) | 17,630,422 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,385,671 | |
Foreign currency transactions | (33,750) | |
Total net realized gain (loss) |
| 34,351,921 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 298,588,712 | |
Assets and liabilities in foreign currencies | 1,251 | |
Total change in net unrealized appreciation (depreciation) |
| 298,589,963 |
Net gain (loss) | 332,941,884 | |
Net increase (decrease) in net assets resulting from operations | $ 350,572,306 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 17,630,422 | $ 12,665,686 |
Net realized gain (loss) | 34,351,921 | (44,836,625) |
Change in net unrealized appreciation (depreciation) | 298,589,963 | (269,141,455) |
Net increase (decrease) in net assets resulting from operations | 350,572,306 | (301,312,394) |
Distributions to shareholders from net investment income | (15,962,478) | (11,887,776) |
Distributions to shareholders from net realized gain | - | (334,486) |
Total distributions | (15,962,478) | (12,222,262) |
Share transactions - net increase (decrease) | 33,089,434 | 494,877,505 |
Redemption fees | 34,831 | 113,075 |
Total increase (decrease) in net assets | 367,734,093 | 181,455,924 |
|
|
|
Net Assets | ||
Beginning of period | 901,833,182 | 720,377,258 |
End of period (including undistributed net investment income of $1,438,918 and undistributed net investment income of $512,356, respectively) | $ 1,269,567,275 | $ 901,833,182 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | - | (.02) | (2.44) | - |
Total distributions | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .96 | .88 | .71 | .56 | .50 |
Net realized and unrealized gain (loss) | 17.11 | (19.31) | 7.30 | 8.88 | 3.25 |
Total from investment operations | 18.07 | (18.43) | 8.01 | 9.44 | 3.75 |
Distributions from net investment income | (.87) | (.67) | (.46) | (.32) | (.44) |
Distributions from net realized gain | - | (.03) | (2.44) | (3.18) | (2.56) |
Total distributions | (.87) | (.69) I | (2.90) | (3.50) | (3.00) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Total Return A, B | 40.96% | (29.23)% | 13.72% | 18.43% | 7.50% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .92% | .91% | .91% | 1.01% | 1.04% |
Expenses net of fee waivers, if any | .92% | .91% | .90% | .99% | 1.04% |
Expenses net of all reductions | .91% | .90% | .90% | .98% | 1.03% |
Net investment income (loss) | 1.73% | 1.55% | 1.12% | .99% | .97% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 |
Portfolio turnover rate E | 69% | 70% | 71% | 99% | 75% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | - | (.03) | (2.44) | - |
Total distributions | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | .01 | .01 | - J |
Net asset value, end of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 117,013,594 |
Gross unrealized depreciation | (40,330,590) |
Net unrealized appreciation (depreciation) | $ 76,683,004 |
|
|
Tax Cost | $ 1,190,101,774 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,439,085 |
Capital loss carryforward | $ (2,242,566) |
Net unrealized appreciation (depreciation) | $ 76,682,972 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 15,962,478 | $ 12,222,262 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $749,813,665 and $739,748,758, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 396,506 | $ 13,397 |
Class T | .25% | .25% | 133,350 | 561 |
Class B | .75% | .25% | 193,963 | 145,659 |
Class C | .75% | .25% | 687,437 | 308,759 |
|
|
| $ 1,411,256 | $ 468,376 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 109,547 |
Class T | 12,607 |
Class B* | 51,810 |
Class C* | 24,728 |
| $ 198,692 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 402,842 | .25 |
Class T | 82,383 | .31 |
Class B | 65,652 | .34 |
Class C | 180,801 | .26 |
Consumer Staples | 2,245,942 | .28 |
Institutional Class | 80,335 | .23 |
| $ 3,057,955 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,379 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,814 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $140,195.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $27,863 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $112.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 2,068,687 | $ 1,409,006 |
Class T | 279,551 | 273,000 |
Class B | 121,683 | 118,536 |
Class C | 461,837 | 437,729 |
Consumer Staples | 12,515,444 | 9,279,861 |
Institutional Class | 515,276 | 369,644 |
Total | $ 15,962,478 | $ 11,887,776 |
From net realized gain |
|
|
Class A | $ - | $ 11,953 |
Consumer Staples | - | 317,666 |
Institutional Class | - | 4,867 |
Total | $ - | $ 334,486 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,132,943 | 2,896,213 | $ 59,482,737 | $ 154,503,507 |
Reinvestment of distributions | 31,495 | 27,496 | 1,903,559 | 1,327,859 |
Shares redeemed | (1,263,286) | (542,745) | (70,043,896) | (28,294,587) |
Net increase (decrease) | (98,848) | 2,380,964 | $ (8,657,600) | $ 127,536,779 |
Class T |
|
|
|
|
Shares sold | 173,895 | 520,546 | $ 9,112,154 | $ 27,382,626 |
Reinvestment of distributions | 4,329 | 5,430 | 262,823 | 260,678 |
Shares redeemed | (207,203) | (108,963) | (10,599,980) | (5,646,618) |
Net increase (decrease) | (28,979) | 417,013 | $ (1,225,003) | $ 21,996,686 |
Class B |
|
|
|
|
Shares sold | 104,786 | 323,554 | $ 5,439,880 | $ 17,593,411 |
Reinvestment of distributions | 1,610 | 1,967 | 97,230 | 94,022 |
Shares redeemed | (99,879) | (60,442) | (5,370,134) | (3,153,125) |
Net increase (decrease) | 6,517 | 265,079 | $ 166,976 | $ 14,534,308 |
Class C |
|
|
|
|
Shares sold | 378,183 | 1,133,018 | $ 19,816,576 | $ 59,347,217 |
Reinvestment of distributions | 5,180 | 6,095 | 312,378 | 290,992 |
Shares redeemed | (422,141) | (191,974) | (22,614,834) | (10,093,420) |
Net increase (decrease) | (38,778) | 947,139 | $ (2,485,880) | $ 49,544,789 |
Consumer Staples |
|
|
|
|
Shares sold | 6,969,074 | 13,482,265 | $ 390,940,582 | $ 765,828,751 |
Reinvestment of distributions | 198,030 | 185,893 | 11,983,104 | 9,096,289 |
Shares redeemed | (6,628,713) | (9,136,327) | (351,735,799) | (521,761,725) |
Net increase (decrease) | 538,391 | 4,531,831 | $ 51,187,887 | $ 253,163,315 |
Institutional Class |
|
|
|
|
Shares sold | 333,805 | 760,504 | $ 17,656,120 | $ 40,084,673 |
Reinvestment of distributions | 4,184 | 4,038 | 251,491 | 196,481 |
Shares redeemed | (449,527) | (227,140) | (23,804,557) | (12,179,526) |
Net increase (decrease) | (111,538) | 537,402 | $ (5,896,946) | $ 28,101,628 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio (a fund of Fidelity Select Portfolios) at February 28, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Consumer Staples Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Fund's 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
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.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of the North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELCS-UANNPRO-0410
1.910418.100
Fidelity®
Select Portfolios®
Energy Sector
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Energy Sector |
|
|
Energy |
| |
Energy Service |
| |
Natural Gas |
| |
Natural Resources |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Energy Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,156.10 | $ 4.65 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Energy Service Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,154.60 | $ 4.65 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Natural Gas Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,120.10 | $ 4.73 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Natural Resources Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.00 | $ 4.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Energy Portfolio | 59.11% | 7.22% | 10.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 29, 2000. 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.
Annual Report
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Dowd, Portfolio Manager of Select Energy Portfolio: For the 12 months ending February 28, 2010, the fund returned 59.11%, outpacing the S&P 500 and the 36.01% return of the MSCI® U.S. IM Energy 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. While a favorable backdrop of steadier economic conditions, rising commodity prices, rallying coal stocks and investors' increased appetite for risk all contributed to the fund's strong returns during the period, the key to performance was my decision to position the portfolio aggressively in both market segments and securities. The biggest boost versus the MSCI Index came from our large underweighting in integrated oil and gas stocks. Having just a small slice of industry giant and major index component Exxon Mobil made this position the fund's top contributor by far. A generous underweighting in Chevron also contributed. Neither Exxon nor Chevron were held at period end. Favorable supply/demand trends in the coal industry and attractive stock valuations helped drive up performance from coal producers Massey Energy and Foundation Coal Holdings. Alpha Natural Resources acquired Foundation Coal during the period. Attractively valued land-rig provider Nabors Industries also contributed. Of course, there were disappointments. Chief among them was an underweighted position in strong-performing oil and gas equipment/services giant Schlumberger. An emphasis on oil and gas refining/marketing also was a considerable drag on performance. Sunoco and Frontier Oil were two significant detractors in this segment. Sunoco was not held at period end. An underweighting in oil and natural gas producer EOG Resources hurt when the stock rallied.
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.
Annual Report
Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 7.0 | 6.1 |
XTO Energy, Inc. | 5.6 | 0.0 |
Occidental Petroleum Corp. | 5.2 | 6.4 |
Southwestern Energy Co. | 5.2 | 4.8 |
BJ Services Co. | 4.2 | 2.9 |
Anadarko Petroleum Corp. | 4.1 | 1.7 |
Petrohawk Energy Corp. | 3.8 | 3.5 |
Alpha Natural Resources, Inc. | 3.5 | 2.6 |
Massey Energy Co. | 3.3 | 3.0 |
National Oilwell Varco, Inc. | 3.2 | 2.3 |
| 45.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Oil, Gas & Consumable Fuels | 57.5% |
|
![]() | Energy Equipment & Services | 38.1% |
|
![]() | Electrical Equipment | 2.1% |
|
![]() | Construction & Engineering | 0.7% |
|
![]() | Gas Utilities | 0.6% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2009 | |||
![]() | Oil, Gas & Consumable Fuels | 55.7% |
|
![]() | Energy Equipment & Services | 39.0% |
|
![]() | Electrical Equipment | 2.4% |
|
![]() | Gas Utilities | 1.1% |
|
![]() | Construction & Engineering | 0.5% |
|
![]() | All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Energy Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
CHEMICALS - 0.1% | |||
Commodity Chemicals - 0.1% | |||
STR Holdings, Inc. (c) | 65,900 | $ 1,094,599 | |
CONSTRUCTION & ENGINEERING - 0.7% | |||
Construction & Engineering - 0.7% | |||
Jacobs Engineering Group, Inc. (a) | 410,754 | 15,937,255 | |
ELECTRICAL EQUIPMENT - 2.1% | |||
Electrical Components & Equipment - 2.0% | |||
centrotherm photovoltaics AG (a) | 82,178 | 3,320,198 | |
First Solar, Inc. (a)(c) | 158,749 | 16,811,519 | |
JA Solar Holdings Co. Ltd. ADR (a)(c) | 2,744,882 | 13,614,615 | |
SunPower Corp.: | |||
Class A (a)(c) | 71,600 | 1,342,500 | |
Class B (a) | 488,700 | 7,980,471 | |
| 43,069,303 | ||
Heavy Electrical Equipment - 0.1% | |||
Vestas Wind Systems AS (a) | 38,200 | 1,886,868 | |
TOTAL ELECTRICAL EQUIPMENT | 44,956,171 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 67,975 | 4,550,926 | |
ENERGY EQUIPMENT & SERVICES - 38.1% | |||
Oil & Gas Drilling - 11.9% | |||
Atwood Oceanics, Inc. (a) | 100,745 | 3,370,928 | |
Diamond Offshore Drilling, Inc. | 200 | 17,464 | |
Ensco International Ltd. ADR | 335,400 | 14,814,618 | |
Helmerich & Payne, Inc. | 728,398 | 29,514,687 | |
Hercules Offshore, Inc. (a) | 535,633 | 1,960,417 | |
Nabors Industries Ltd. (a) | 2,327,161 | 51,290,628 | |
Noble Corp. | 1,493,400 | 63,111,084 | |
Northern Offshore Ltd. (a) | 3,489,000 | 5,714,736 | |
Patterson-UTI Energy, Inc. | 635,242 | 9,808,136 | |
Pride International, Inc. (a) | 421,900 | 11,804,762 | |
Transocean Ltd. (a) | 775,051 | 61,864,571 | |
| 253,272,031 | ||
Oil & Gas Equipment & Services - 26.2% | |||
Baker Hughes, Inc. | 456,048 | 21,853,820 | |
Basic Energy Services, Inc. (a) | 90,700 | 857,115 | |
BJ Services Co. | 4,109,789 | 89,798,890 | |
Cameron International Corp. (a) | 65,300 | 2,685,789 | |
Complete Production Services, Inc. (a) | 141,700 | 1,978,132 | |
Core Laboratories NV | 75,900 | 9,413,877 | |
Dresser-Rand Group, Inc. (a) | 115,700 | 3,576,287 | |
Global Industries Ltd. (a) | 1,018,660 | 6,875,955 | |
Halliburton Co. | 1,248,230 | 37,634,135 | |
Helix Energy Solutions Group, Inc. (a) | 226,800 | 2,610,468 | |
Key Energy Services, Inc. (a) | 235,800 | 2,391,012 | |
National Oilwell Varco, Inc. | 1,585,212 | 68,909,166 | |
Newpark Resources, Inc. (a) | 64,007 | 330,916 | |
| |||
Shares | Value | ||
Oceaneering International, Inc. (a) | 287,370 | $ 17,371,517 | |
Oil States International, Inc. (a) | 83,100 | 3,574,962 | |
Schlumberger Ltd. | 2,455,960 | 150,059,157 | |
Smith International, Inc. | 1,309,178 | 53,663,206 | |
Superior Energy Services, Inc. (a) | 584,206 | 12,075,538 | |
Superior Well Services, Inc. (a) | 28,100 | 502,709 | |
TSC Offshore Group Ltd. (a) | 5,462,000 | 1,688,800 | |
Weatherford International Ltd. (a) | 3,735,944 | 62,352,905 | |
Willbros Group, Inc. (a) | 637,018 | 9,618,972 | |
| 559,823,328 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 813,095,359 | ||
GAS UTILITIES - 0.6% | |||
Gas Utilities - 0.6% | |||
Questar Corp. | 262,828 | 11,036,148 | |
Zhongyu Gas Holdings Ltd. (a) | 18,716,000 | 1,904,826 | |
| 12,940,974 | ||
METALS & MINING - 0.3% | |||
Diversified Metals & Mining - 0.3% | |||
Teck Resources Ltd. Class B (sub. vtg.) (a) | 148,600 | 5,465,260 | |
OIL, GAS & CONSUMABLE FUELS - 57.5% | |||
Coal & Consumable Fuels - 11.3% | |||
Alpha Natural Resources, Inc. (a) | 1,625,526 | 74,790,451 | |
Arch Coal, Inc. | 2,244,977 | 50,489,533 | |
Centennial Coal Co. Ltd. | 738,787 | 2,415,590 | |
Cloud Peak Energy, Inc. | 353,705 | 5,379,853 | |
CONSOL Energy, Inc. | 686,916 | 34,593,090 | |
International Coal Group, Inc. (a) | 287,096 | 1,251,739 | |
Massey Energy Co. | 1,643,305 | 70,777,146 | |
PT Bumi Resources Tbk | 8,082,000 | 1,947,996 | |
SouthGobi Energy Resources Ltd. (a)(d) | 12,400 | 193,262 | |
| 241,838,660 | ||
Integrated Oil & Gas - 9.2% | |||
Marathon Oil Corp. | 2,020,600 | 58,496,370 | |
Murphy Oil Corp. | 100 | 5,190 | |
Occidental Petroleum Corp. | 1,388,538 | 110,874,759 | |
Royal Dutch Shell PLC Class A sponsored ADR | 388,500 | 21,266,490 | |
Suncor Energy, Inc. | 180,700 | 5,222,226 | |
| 195,865,035 | ||
Oil & Gas Exploration & Production - 34.4% | |||
Anadarko Petroleum Corp. | 1,255,465 | 88,045,760 | |
Apache Corp. | 378,200 | 39,196,648 | |
Arena Resources, Inc. (a) | 278,420 | 11,534,941 | |
Brigham Exploration Co. (a) | 381,500 | 6,264,230 | |
Cabot Oil & Gas Corp. | 1,403,180 | 56,323,645 | |
Canadian Natural Resources Ltd. | 295,100 | 19,878,059 | |
Chesapeake Energy Corp. | 412,685 | 10,965,040 | |
Comstock Resources, Inc. (a) | 578,416 | 19,966,920 | |
EOG Resources, Inc. | 122,647 | 11,534,950 | |
EXCO Resources, Inc. | 2,544,013 | 48,107,286 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Mariner Energy, Inc. (a) | 3,100 | $ 46,562 | |
Newfield Exploration Co. (a) | 514,600 | 26,280,622 | |
Niko Resources Ltd. | 53,000 | 5,036,826 | |
OPTI Canada, Inc. (a) | 466,800 | 838,443 | |
Painted Pony Petroleum Ltd. Class A (a) | 393,900 | 2,807,555 | |
Petrobank Energy & Resources Ltd. (a) | 74,700 | 3,865,445 | |
Petrohawk Energy Corp. (a) | 3,771,595 | 80,712,133 | |
Range Resources Corp. | 259,750 | 13,145,948 | |
Southwestern Energy Co. (a) | 2,593,090 | 110,335,980 | |
Ultra Petroleum Corp. (a) | 419,100 | 19,165,443 | |
Whiting Petroleum Corp. (a) | 554,425 | 41,498,711 | |
XTO Energy, Inc. | 2,613,782 | 119,449,837 | |
| 735,000,984 | ||
Oil & Gas Refining & Marketing - 2.6% | |||
Frontier Oil Corp. | 1,313,984 | 16,280,262 | |
Holly Corp. | 265,300 | 6,812,904 | |
Tesoro Corp. | 139,800 | 1,666,416 | |
Valero Energy Corp. | 1,386,908 | 24,298,628 | |
World Fuel Services Corp. | 210,800 | 5,569,336 | |
| 54,627,546 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,227,332,225 | ||
TOTAL COMMON STOCKS (Cost $1,794,014,354) | 2,125,372,769 |
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
ELECTRICAL EQUIPMENT - 0.0% | ||||
Electrical Components & Equipment - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 1,040,000 | 1,024,504 |
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (e) | 8,223,204 | $ 8,223,204 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 27,496,708 | 27,496,708 | |
TOTAL MONEY MARKET FUNDS (Cost $35,719,912) | 35,719,912 |
TOTAL INVESTMENT PORTFOLIO - 101.3% (Cost $1,830,774,266) | 2,162,117,185 |
NET OTHER ASSETS - (1.3)% | (28,099,333) | ||
NET ASSETS - 100% | $ 2,134,017,852 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $ 193,262 or 0.0% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 59,233 |
Fidelity Securities Lending Cash Central Fund | 660,431 |
Total | $ 719,664 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 2,125,372,769 | $ 2,125,372,769 | $ - | $ - |
Convertible Bonds | 1,024,504 | - | 1,024,504 | - |
Money Market Funds | 35,719,912 | 35,719,912 | - | - |
Total Investments in Securities: | $ 2,162,117,185 | $ 2,161,092,681 | $ 1,024,504 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.7% |
Switzerland | 8.7% |
Netherlands Antilles | 7.0% |
Canada | 2.9% |
United Kingdom | 1.7% |
Others (individually less than 1%) | 2.0% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $231,079,492 all of which will expire on February 28, 2018. |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $23,924,412 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,016,951) - See accompanying schedule: Unaffiliated issuers (cost $1,795,054,354) | $ 2,126,397,273 |
|
Fidelity Central Funds (cost $35,719,912) | 35,719,912 |
|
Total Investments (cost $1,830,774,266) |
| $ 2,162,117,185 |
Receivable for investments sold | 5,228,134 | |
Receivable for fund shares sold | 1,691,519 | |
Dividends receivable | 1,724,430 | |
Interest receivable | 18,525 | |
Distributions receivable from Fidelity Central Funds | 43,333 | |
Prepaid expenses | 6,273 | |
Other receivables | 22,612 | |
Total assets | 2,170,852,011 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,083 | |
Payable for investments purchased | 5,029,199 | |
Payable for fund shares redeemed | 2,723,561 | |
Accrued management fee | 988,946 | |
Other affiliated payables | 535,824 | |
Other payables and accrued expenses | 58,838 | |
Collateral on securities loaned, at value | 27,496,708 | |
Total liabilities | 36,834,159 | |
|
|
|
Net Assets | $ 2,134,017,852 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,090,492,711 | |
Distributions in excess of net investment income | (206,987) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (287,604,584) | |
Net unrealized appreciation (depreciation) on investments | 331,336,712 | |
Net Assets, for 48,996,257 shares outstanding | $ 2,134,017,852 | |
Net Asset Value, offering price and redemption price per share ($2,134,017,852 ÷ 48,996,257 shares) | $ 43.55 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 20,235,383 |
Interest |
| 40,691 |
Income from Fidelity Central Funds (including $660,431 from security lending) |
| 719,664 |
Total income |
| 20,995,738 |
|
|
|
Expenses | ||
Management fee | $ 10,924,170 | |
Transfer agent fees | 5,734,083 | |
Accounting and security lending fees | 652,145 | |
Custodian fees and expenses | 58,325 | |
Independent trustees' compensation | 12,824 | |
Registration fees | 88,568 | |
Audit | 46,110 | |
Legal | 9,270 | |
Interest | 238 | |
Miscellaneous | 33,590 | |
Total expenses before reductions | 17,559,323 | |
Expense reductions | (122,583) | 17,436,740 |
Net investment income (loss) | 3,558,998 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 44,049,493 | |
Foreign currency transactions | (347,999) | |
Capital gain distributions from Fidelity Central Funds | 2,224 | |
Total net realized gain (loss) |
| 43,703,718 |
Change in net unrealized appreciation (depreciation) on investment securities | 750,988,749 | |
Net gain (loss) | 794,692,467 | |
Net increase (decrease) in net assets resulting from operations | $ 798,251,465 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended February 28, | Year ended February 28, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,558,998 | $ 841,184 |
Net realized gain (loss) | 43,703,718 | (276,486,254) |
Change in net unrealized appreciation (depreciation) | 750,988,749 | (1,486,947,327) |
Net increase (decrease) in net assets resulting from operations | 798,251,465 | (1,762,592,397) |
Distributions to shareholders from net investment income | (4,448,317) | (495,957) |
Distributions to shareholders from net realized gain | - | (62,490,281) |
Total distributions | (4,448,317) | (62,986,238) |
Share transactions | 635,828,628 | 1,140,937,797 |
Reinvestment of distributions | 4,235,438 | 59,330,132 |
Cost of shares redeemed | (637,354,218) | (1,193,502,037) |
Net increase (decrease) in net assets resulting from share transactions | 2,709,848 | 6,765,892 |
Redemption fees | 122,933 | 342,869 |
Total increase (decrease) in net assets | 796,635,929 | (1,818,469,874) |
|
|
|
Net Assets | ||
Beginning of period | 1,337,381,923 | 3,155,851,797 |
End of period (including distributions in excess of net investment income of $206,987 and distributions in excess of net investment income of $155, respectively) | $ 2,134,017,852 | $ 1,337,381,923 |
Other Information Shares | ||
Sold | 16,609,422 | 22,915,495 |
Issued in reinvestment of distributions | 101,862 | 912,631 |
Redeemed | (16,469,484) | (24,013,312) |
Net increase (decrease) | 241,800 | (185,186) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 27.43 | $ 64.48 | $ 48.80 | $ 49.20 | $ 38.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | .07 | .02 | .01 | .18 | .12 |
Net realized and unrealized gain (loss) | 16.14 | (35.81) | 19.61 | 4.13 | 12.87 |
Total from investment operations | 16.21 | (35.79) | 19.62 | 4.31 | 12.99 |
Distributions from net investment income | (.09) | (.01) | (.05) | (.10) | (.09) |
Distributions from net realized gain | - | (1.26) | (3.90) | (4.62) | (2.44) |
Total distributions | (.09) | (1.27) | (3.95) | (4.72) | (2.53) |
Redemption fees added to paid in capitalC | -H | .01 | .01 | .01 | .03 |
Net asset value, end of period | $ 43.55 | $ 27.43 | $ 64.48 | $ 48.80 | $ 49.20 |
Total ReturnA,B | 59.11% | (56.63)% | 40.72% | 8.57% | 34.39% |
Ratios to Average Net AssetsD,F |
|
|
|
|
|
Expenses before reductions | .90% | .83% | .84% | .89% | .94% |
Expenses net of fee waivers, if any | .90% | .83% | .84% | .89% | .94% |
Expenses net of all reductions | .90% | .83% | .84% | .89% | .89% |
Net investment income (loss) | .18% | .03% | .02% | .36% | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,134,018 | $ 1,337,382 | $ 3,155,852 | $ 2,145,397 | $ 2,547,799 |
Portfolio turnover rateE | 97% | 148% | 55% | 102% | 128% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Energy Service Portfolio | 72.15% | 6.04% | 8.63% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 29, 2000. 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.
Annual Report
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Dowd, Portfolio Manager of Select Energy Service Portfolio: For the 12 months ending February 28, 2010, the fund returned 72.15%, outpacing the S&P 500 and in line with the 72.29% return of the MSCI® U.S. IM Energy Equipment & Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. A favorable backdrop of steadier economic conditions, rising commodity prices and investors' increased appetite for risk all contributed to the fund's strong returns over the period. Security selection provided a boost versus the MSCI Index. Deepwater oil and gas drilling company Atwood Oceanics was the fund's top contributor, benefiting from a backlog of orders that enabled it to maintain profitability while competitors floundered. I sold the position. Attractively priced stocks from oil and gas equipment/services firms Lufkin Industries and Dril-Quip both recovered as oil prices soared. I sold Dril-Quip. A below-benchmark position in oil and gas equipment/services firm Baker Hughes helped when earnings missteps led the stock to falter. Conversely, individual stock disappointments included out-of-index positions in solar power companies SunPower, First Solar and Energy Conversion Devices, which were hurt by pricing pressure due to a glut of solar equipment on the market. I sold Energy Conversion Devices. An outsized stake in oil and gas equipment/services firm Weatherford International declined when the company experienced project delays and was unable to translate higher revenue into larger profits. An underweighted position in strong-performing global oil services conglomerate Halliburton also detracted.
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.
Annual Report
Energy Service Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 19.0 | 23.3 |
National Oilwell Varco, Inc. | 6.4 | 6.4 |
Transocean Ltd. | 5.8 | 7.6 |
Baker Hughes, Inc. | 5.8 | 0.0 |
Smith International, Inc. | 5.4 | 4.5 |
Weatherford International Ltd. | 5.0 | 7.7 |
Halliburton Co. | 4.4 | 4.2 |
BJ Services Co. | 3.9 | 4.8 |
Nabors Industries Ltd. | 3.2 | 2.2 |
Ensco International Ltd. ADR | 2.6 | 0.0 |
| 61.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Energy Equipment & Services | 96.7% |
|
![]() | Electrical Equipment | 2.3% |
|
![]() | Construction & Engineering | 0.6% |
|
![]() | Electronic Equipment & Components | 0.2% |
|
![]() | All Others* | 0.2% |
|
As of August 31, 2009 | |||
![]() | Energy Equipment & Services | 97.4% |
|
![]() | Electrical Equipment | 2.5% |
|
![]() | Industrial | 0.0% |
|
![]() | All Others* | 0.1% |
|
* Includes short-term investments and net other assets. |
† Amount represents less than 0.1%. |
Annual Report
Energy Service Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 0.6% | |||
Construction & Engineering - 0.6% | |||
Jacobs Engineering Group, Inc. (a) | 210,600 | $ 8,171,280 | |
ELECTRICAL EQUIPMENT - 2.3% | |||
Electrical Components & Equipment - 2.3% | |||
centrotherm photovoltaics AG (a) | 50,900 | 2,056,488 | |
First Solar, Inc. (a)(c) | 92,600 | 9,806,340 | |
JA Solar Holdings Co. Ltd. ADR (a)(c) | 2,273,800 | 11,278,048 | |
SunPower Corp.: | |||
Class A (a) | 45,500 | 853,125 | |
Class B (a) | 324,800 | 5,303,984 | |
| 29,297,985 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 37,100 | 2,483,845 | |
ENERGY EQUIPMENT & SERVICES - 96.7% | |||
Oil & Gas Drilling - 22.1% | |||
Ensco International Ltd. ADR | 762,800 | 33,692,876 | |
Helmerich & Payne, Inc. | 398,600 | 16,151,272 | |
Hercules Offshore, Inc. (a)(c) | 1,486,631 | 5,441,069 | |
Nabors Industries Ltd. (a) | 1,885,255 | 41,551,020 | |
Noble Corp. | 725,935 | 30,678,013 | |
Northern Offshore Ltd. (a) | 5,235,000 | 8,574,561 | |
Parker Drilling Co. (a) | 943,000 | 4,837,590 | |
Patterson-UTI Energy, Inc. | 2,167,500 | 33,466,200 | |
Pioneer Drilling Co. (a) | 735,400 | 5,250,756 | |
Pride International, Inc. (a) | 672,000 | 18,802,560 | |
Seahawk Drilling, Inc. (a) | 174,140 | 3,578,577 | |
Transocean Ltd. (a) | 937,587 | 74,838,194 | |
Trinidad Drilling Ltd. | 696,600 | 4,753,232 | |
Union Drilling, Inc. (a) | 238,300 | 1,591,844 | |
| 283,207,764 | ||
Oil & Gas Equipment & Services - 74.6% | |||
Allis-Chalmers Energy, Inc. (a)(c) | 388,900 | 1,470,042 | |
Baker Hughes, Inc. (c) | 1,552,300 | 74,386,216 | |
Basic Energy Services, Inc. (a) | 1,025,600 | 9,691,920 | |
BJ Services Co. | 2,318,100 | 50,650,485 | |
Bristow Group, Inc. (a) | 340,700 | 12,336,747 | |
Cal Dive International, Inc. (a) | 65,662 | 462,917 | |
Calfrac Well Services Ltd. | 175,300 | 3,973,300 | |
Cameron International Corp. (a) | 424,088 | 17,442,739 | |
Carbo Ceramics, Inc. | 19,100 | 1,165,673 | |
Complete Production Services, Inc. (a) | 839,900 | 11,725,004 | |
Core Laboratories NV (c) | 185,900 | 23,057,177 | |
Dawson Geophysical Co. (a) | 56,300 | 1,608,491 | |
Dresser-Rand Group, Inc. (a) | 378,300 | 11,693,253 | |
Global Industries Ltd. (a) | 1,947,300 | 13,144,275 | |
Gulfmark Offshore, Inc. Class A (a) | 72,100 | 1,773,660 | |
Halliburton Co. | 1,857,141 | 55,992,801 | |
Hornbeck Offshore Services, Inc. (a) | 350,000 | 6,608,000 | |
| |||
Shares | Value | ||
ION Geophysical Corp. (a) | 428,400 | $ 1,962,072 | |
Key Energy Services, Inc. (a) | 1,608,600 | 16,311,204 | |
Lufkin Industries, Inc. | 344,300 | 25,151,115 | |
National Oilwell Varco, Inc. | 1,874,662 | 81,491,557 | |
Natural Gas Services Group, Inc. (a) | 73,000 | 1,118,360 | |
Newpark Resources, Inc. (a) | 3,422,463 | 17,694,134 | |
North American Energy Partners, Inc. (a) | 394,200 | 4,016,899 | |
Oceaneering International, Inc. (a) | 512,300 | 30,968,535 | |
Oil States International, Inc. (a) | 266,000 | 11,443,320 | |
OYO Geospace Corp. (a) | 24,400 | 1,050,664 | |
PHI, Inc. (non-vtg.) (a) | 248,100 | 4,842,912 | |
RPC, Inc. | 596,400 | 7,371,504 | |
Schlumberger Ltd. | 3,997,846 | 244,268,393 | |
SEACOR Holdings, Inc. (a) | 18,500 | 1,413,030 | |
Smith International, Inc. | 1,703,156 | 69,812,364 | |
Superior Energy Services, Inc. (a) | 861,875 | 17,814,956 | |
Superior Well Services, Inc. (a)(c) | 764,000 | 13,667,960 | |
T-3 Energy Services, Inc. (a) | 477,800 | 11,342,972 | |
Tenaris SA sponsored ADR (c) | 75,900 | 3,144,537 | |
TETRA Technologies, Inc. (a) | 2,508,602 | 25,286,708 | |
TSC Offshore Group Ltd. (a) | 4,114,000 | 1,272,011 | |
Weatherford International Ltd. (a) | 3,856,838 | 64,370,626 | |
Willbros Group, Inc. (a) | 248,000 | 3,744,800 | |
| 956,743,333 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 1,239,951,097 | ||
TOTAL COMMON STOCKS (Cost $1,061,119,981) | 1,279,904,207 |
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
ELECTRICAL EQUIPMENT - 0.0% | ||||
Electrical Components & Equipment - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 620,000 | 610,762 |
Money Market Funds - 6.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 1,698,223 | $ 1,698,223 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 82,277,498 | 82,277,498 | |
TOTAL MONEY MARKET FUNDS (Cost $83,975,721) | 83,975,721 |
TOTAL INVESTMENT PORTFOLIO - 106.4% (Cost $1,145,715,702) | 1,364,490,690 |
NET OTHER ASSETS - (6.4)% | (82,063,026) | ||
NET ASSETS - 100% | $ 1,282,427,664 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 25,392 |
Fidelity Securities Lending Cash Central Fund | 438,190 |
Total | $ 463,582 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 1,279,904,207 | $ 1,279,904,207 | $ - | $ - |
Convertible Bonds | 610,762 | - | 610,762 | - |
Money Market Funds | 83,975,721 | 83,975,721 | - | - |
Total Investments in Securities: | $ 1,364,490,690 | $ 1,363,879,928 | $ 610,762 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 60.4% |
Netherlands Antilles | 19.0% |
Switzerland | 13.2% |
United Kingdom | 2.6% |
Netherlands | 1.8% |
Canada | 1.0% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 1.0% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $233,148,622 all of which will expire on February 28, 2018. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $80,209,856) - See accompanying schedule: Unaffiliated issuers (cost $1,061,739,981) | $ 1,280,514,969 |
|
Fidelity Central Funds (cost $83,975,721) | 83,975,721 |
|
Total Investments (cost $1,145,715,702) |
| $ 1,364,490,690 |
Receivable for investments sold | 16,001,827 | |
Receivable for fund shares sold | 795,832 | |
Dividends receivable | 1,096,077 | |
Interest receivable | 11,044 | |
Distributions receivable from Fidelity Central Funds | 20,732 | |
Prepaid expenses | 3,768 | |
Other receivables | 2,746 | |
Total assets | 1,382,422,716 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 484 | |
Payable for investments purchased | 12,747,715 | |
Payable for fund shares redeemed | 4,014,765 | |
Accrued management fee | 595,292 | |
Other affiliated payables | 320,355 | |
Other payables and accrued expenses | 38,943 | |
Collateral on securities loaned, at value | 82,277,498 | |
Total liabilities | 99,995,052 | |
|
|
|
Net Assets | $ 1,282,427,664 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,318,907,015 | |
Accumulated net investment loss | (196) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (255,254,129) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 218,774,974 | |
Net Assets, for 22,009,495 shares outstanding | $ 1,282,427,664 | |
Net Asset Value, offering price and redemption price per share ($1,282,427,664 ÷ 22,009,495 shares) | $ 58.27 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,317,518 |
Special dividends |
| 2,213,662 |
Interest |
| 24,273 |
Income from Fidelity Central Funds (including $438,190 from security lending) |
| 463,582 |
Total income |
| 11,019,035 |
|
|
|
Expenses | ||
Management fee | $ 6,566,385 | |
Transfer agent fees | 3,425,907 | |
Accounting and security lending fees | 435,951 | |
Custodian fees and expenses | 43,754 | |
Independent trustees' compensation | 7,751 | |
Registration fees | 73,965 | |
Audit | 50,192 | |
Legal | 5,374 | |
Interest | 1,069 | |
Miscellaneous | 22,479 | |
Total expenses before reductions | 10,632,827 | |
Expense reductions | (57,025) | 10,575,802 |
Net investment income (loss) | 443,233 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 48,041,238 | |
Foreign currency transactions | (26,627) | |
Capital gains distributions from Fidelity Central Funds | 1,561 | |
Total net realized gain (loss) |
| 48,016,172 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 489,518,476 | |
Assets and liabilities in foreign currencies | 36 | |
Total change in net unrealized appreciation (depreciation) |
| 489,518,512 |
Net gain (loss) | 537,534,684 | |
Net increase (decrease) in net assets resulting from operations | $ 537,977,917 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended February 28, | Year ended February 28, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 443,233 | $ (477,832) |
Net realized gain (loss) | 48,016,172 | (285,795,308) |
Change in net unrealized appreciation (depreciation) | 489,518,512 | (1,034,651,820) |
Net increase (decrease) in net assets resulting from operations | 537,977,917 | (1,320,924,960) |
Distributions to shareholders from net investment income | (787,232) | - |
Distributions to shareholders from net realized gain | - | (95,954,641) |
Total distributions | (787,232) | (95,954,641) |
Share transactions | 505,358,815 | 984,296,735 |
Reinvestment of distributions | 745,437 | 90,434,435 |
Cost of shares redeemed | (501,940,099) | (1,173,417,767) |
Net increase (decrease) in net assets resulting from share transactions | 4,164,153 | (98,686,597) |
Redemption fees | 127,188 | 406,720 |
Total increase (decrease) in net assets | 541,482,026 | (1,515,159,478) |
|
|
|
Net Assets | ||
Beginning of period | 740,945,638 | 2,256,105,116 |
End of period (including accumulated net investment loss of $196 and accumulated net investment loss of $122, respectively) | $ 1,282,427,664 | $ 740,945,638 |
Other Information Shares | ||
Sold | 9,992,001 | 12,065,354 |
Issued in reinvestment of distributions | 12,721 | 951,841 |
Redeemed | (9,871,755) | (15,499,784) |
Net increase (decrease) | 132,967 | (2,482,589) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008K | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 33.87 | $ 92.62 | $ 66.82 | $ 68.03 | $ 49.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | .02F | (.02)G | (.21) | (.21)H | (.12)I |
Net realized and unrealized gain (loss) | 24.41 | (54.75) | 28.45 | 3.07 | 18.64 |
Total from investment operations | 24.43 | (54.77) | 28.24 | 2.86 | 18.52 |
Distributions from net investment income | (.04) | - | - | - | - |
Distributions from net realized gain | - | (4.00) | (2.46) | (4.15) | - |
Total distributions | (.04) | (4.00) | (2.46) | (4.15) | - |
Redemption fees added to paid in capitalC | .01 | .02 | .02 | .08 | .07 |
Net asset value, end of period | $ 58.27 | $ 33.87 | $ 92.62 | $ 66.82 | $ 68.03 |
Total ReturnA,B | 72.15% | (61.89)% | 42.91% | 3.92% | 37.60% |
Ratios to Average Net AssetsD,J |
|
|
|
|
|
Expenses before reductions | .91% | .82% | .83% | .88% | .94% |
Expenses net of fee waivers, if any | .91% | .82% | .83% | .88% | .94% |
Expenses net of all reductions | .91% | .82% | .83% | .88% | .91% |
Net investment income (loss) | .04%F | (.03)%G | (.23)% | (.30)%H | (.21)%I |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,282,428 | $ 740,946 | $ 2,256,105 | $ 1,221,404 | $ 1,734,076 |
Portfolio turnover rateE | 84% | 82% | 64% | 92% | 58% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.15)%. G Investment income per share reflects a special dividend which amounted to $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.11)%. H Investment income per share reflects a special dividend which amounted to $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.39)%. I Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.34)%. J Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. K For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Natural Gas Portfolio | 63.57% | 4.73% | 11.55% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 29, 2000. 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.
Annual Report
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from James McElligott, Portfolio Manager of Select Natural Gas Portfolio: During the past year, the fund returned 63.57%, topping the S&P 500 and the 61.11% mark of the S&P® Custom Natural Gas Index, which was adopted in December 2009 as a better representation of the fund's investment universe. An out-of-index stake in coal and consumable fuels aided relative performance the most versus the industry benchmark. Having minimal exposure to multi-utilities, gas utilities and electric utilities - most of which are regulated, slow-growth companies - further bolstered the fund's performance. Our top relative contributor, Massey Energy, is a producer of metallurgical-grade coal - the kind used to make steel - - and thermal coal, which is burned as a fuel in many power plants. Robust demand for steel from emerging markets combined with cold winter temperatures and somewhat higher prices in the second half of the period for natural gas - a competing fuel - to benefit Massey's stock price. A large overweighting in exploration and production (E&P) holding Quicksilver Resources provided a considerable boost to relative performance. Despite initial concern about its balance sheet, Quicksilver's stock more than doubled, as the company was able to restructure some debt and entered into a joint venture agreement that brought in some cash. Not owning index components Duke Energy and Dominion Resources bolstered our results, as did significantly underweighting Sempra Energy. Meanwhile the share price of oil E&P holding Venoco soared in response to easing concern about its balance sheet. Conversely, weak stock selection in oil and gas refining and marketing more than offset the benefits of overweighting the group. Similarly, a heavier-than-index representation in oil and gas exploration/production was helpful, but that positive was overshadowed by unfavorable stock picks. Additionally, the fund's positions in solar stocks - which are classified in our listings under electrical components/equipment - fared poorly. At the stock level, solar technology supplier SunPower was one of the few fund holdings to finish the period with a negative return, due to industrywide oversupply of solar components and some adverse regulatory events in Europe. Denbury Resources, an oil producer, also detracted, as did SandRidge Energy, a gas producer. Some stocks mentioned were out-of-index holdings.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Natural Gas Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Plains Exploration & Production Co. | 9.3 | 8.1 |
Anadarko Petroleum Corp. | 9.2 | 5.3 |
Chesapeake Energy Corp. | 8.4 | 9.0 |
Southwestern Energy Co. | 4.9 | 5.6 |
Denbury Resources, Inc. | 4.4 | 4.7 |
Range Resources Corp. | 4.4 | 5.0 |
Massey Energy Co. | 3.3 | 3.5 |
Petrohawk Energy Corp. | 2.8 | 2.0 |
Ultra Petroleum Corp. | 2.6 | 2.7 |
Nabors Industries Ltd. | 2.5 | 2.3 |
| 51.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Oil, Gas & Consumable Fuels | 71.9% |
|
![]() | Energy Equipment & Services | 21.6% |
|
![]() | Electrical Equipment | 2.3% |
|
![]() | Gas Utilities | 1.1% |
|
![]() | Electric Utilities | 0.8% |
|
![]() | All Others* | 2.3% |
|
As of August 31, 2009 | |||
![]() | Oil, Gas & Consumable Fuels | 73.8% |
|
![]() | Energy Equipment & Services | 18.2% |
|
![]() | Electrical Equipment | 2.9% |
|
![]() | Electric Utilities | 1.2% |
|
![]() | Gas Utilities | 0.8% |
|
![]() | All Others* | 3.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Gas Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 94.5% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 0.8% | |||
Electric Utilities - 0.8% | |||
Entergy Corp. | 62,600 | $ 4,755,722 | |
FirstEnergy Corp. | 35,300 | 1,364,345 | |
Great Plains Energy, Inc. | 153,700 | 2,737,397 | |
| 8,857,464 | ||
ELECTRICAL EQUIPMENT - 2.2% | |||
Electrical Components & Equipment - 2.2% | |||
First Solar, Inc. (a)(c) | 80,500 | 8,524,950 | |
Renewable Energy Corp. AS (a)(c) | 1,173,032 | 4,164,235 | |
SunPower Corp.: | |||
Class A (a) | 34,800 | 652,500 | |
Class B (a) | 699,500 | 11,422,835 | |
| 24,764,520 | ||
ENERGY EQUIPMENT & SERVICES - 21.6% | |||
Oil & Gas Drilling - 11.6% | |||
Atwood Oceanics, Inc. (a) | 258,790 | 8,659,113 | |
Diamond Offshore Drilling, Inc. (c) | 5,000 | 436,600 | |
Ensco International Ltd. ADR | 588,100 | 25,976,377 | |
Helmerich & Payne, Inc. | 383,415 | 15,535,976 | |
Nabors Industries Ltd. (a) | 1,293,682 | 28,512,751 | |
Noble Corp. | 386,700 | 16,341,942 | |
Northern Offshore Ltd. (a) | 1,400,000 | 2,293,101 | |
Patterson-UTI Energy, Inc. | 996,400 | 15,384,416 | |
Pride International, Inc. (a) | 274,100 | 7,669,318 | |
Scorpion Offshore Ltd. (a) | 150,000 | 733,515 | |
Seadrill Ltd. (c) | 259,900 | 5,976,482 | |
Transocean Ltd. (a) | 68,127 | 5,437,897 | |
| 132,957,488 | ||
Oil & Gas Equipment & Services - 10.0% | |||
Baker Hughes, Inc. | 319,300 | 15,300,856 | |
BJ Services Co. | 397,700 | 8,689,745 | |
Cameron International Corp. (a) | 123,744 | 5,089,591 | |
FMC Technologies, Inc. (a) | 173,800 | 9,762,346 | |
Halliburton Co. | 609,100 | 18,364,365 | |
National Oilwell Varco, Inc. | 377,856 | 16,425,400 | |
Schlumberger Ltd. | 100,000 | 6,110,000 | |
Smith International, Inc. | 218,600 | 8,960,414 | |
TSC Offshore Group Ltd. (a) | 3,462,000 | 1,070,418 | |
Weatherford International Ltd. (a) | 1,459,200 | 24,354,048 | |
| 114,127,183 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 247,084,671 | ||
GAS UTILITIES - 1.1% | |||
Gas Utilities - 1.1% | |||
China Gas Holdings Ltd. | 1,000,000 | 524,336 | |
China Resources Gas Group Ltd. | 2,354,000 | 3,402,628 | |
Questar Corp. | 50,000 | 2,099,500 | |
Xinao Gas Holdings Ltd. | 2,518,000 | 6,046,678 | |
| 12,073,142 | ||
| |||
Shares | Value | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.8% | |||
Independent Power Producers & Energy Traders - 0.8% | |||
Dynegy, Inc. Class A (a) | 3,424,513 | $ 5,136,770 | |
NRG Energy, Inc. (a) | 141,900 | 3,099,096 | |
RRI Energy, Inc. (a) | 186,600 | 793,050 | |
| 9,028,916 | ||
METALS & MINING - 0.3% | |||
Diversified Metals & Mining - 0.3% | |||
Globe Specialty Metals, Inc. | 66,100 | 678,186 | |
Grande Cache Coal Corp. (a) | 100,000 | 642,433 | |
Ivanhoe Mines Ltd. (a) | 100,000 | 1,597,529 | |
| 2,918,148 | ||
MULTI-UTILITIES - 0.2% | |||
Multi-Utilities - 0.2% | |||
CMS Energy Corp. | 44,200 | 674,934 | |
Sempra Energy | 43,500 | 2,138,895 | |
| 2,813,829 | ||
OIL, GAS & CONSUMABLE FUELS - 67.5% | |||
Coal & Consumable Fuels - 7.9% | |||
Arch Coal, Inc. | 1,120,508 | 25,200,225 | |
China Coal Energy Co. Ltd. (H Shares) | 3,821,000 | 6,094,146 | |
China Shenhua Energy Co. Ltd. (H Shares) | 1,727,500 | 7,433,266 | |
CONSOL Energy, Inc. | 169,600 | 8,541,056 | |
Evergreen Energy, Inc. (a)(c) | 4,517,715 | 1,382,421 | |
Massey Energy Co. | 880,100 | 37,905,907 | |
Peabody Energy Corp. | 29,200 | 1,342,324 | |
PT Bumi Resources Tbk | 8,637,000 | 2,081,767 | |
| 89,981,112 | ||
Integrated Oil & Gas - 1.2% | |||
Chevron Corp. | 50,000 | 3,615,000 | |
ConocoPhillips | 50,000 | 2,400,000 | |
Hess Corp. | 86,900 | 5,109,720 | |
InterOil Corp. (a) | 40,000 | 2,512,400 | |
| 13,637,120 | ||
Oil & Gas Exploration & Production - 54.1% | |||
Anadarko Petroleum Corp. | 1,499,100 | 105,131,883 | |
Apache Corp. | 17,700 | 1,834,428 | |
Chesapeake Energy Corp. | 3,588,650 | 95,350,431 | |
Compton Petroleum Corp. (a)(c) | 2,989,800 | 2,557,206 | |
Concho Resources, Inc. (a) | 15,000 | 696,750 | |
Denbury Resources, Inc. (a)(c) | 3,590,675 | 50,556,704 | |
Devon Energy Corp. | 2,200 | 151,492 | |
EOG Resources, Inc. | 142,100 | 13,364,505 | |
EXCO Resources, Inc. | 324,900 | 6,143,859 | |
Iteration Energy Ltd. (a) | 500,000 | 798,289 | |
Mariner Energy, Inc. (a) | 512,600 | 7,699,252 | |
Niko Resources Ltd. | 25,000 | 2,375,861 | |
Noble Energy, Inc. | 77,600 | 5,636,864 | |
Painted Pony Petroleum Ltd. (a)(d) | 11,400 | 81,254 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Painted Pony Petroleum Ltd. Class A (a) | 138,600 | $ 987,883 | |
Petrobank Energy & Resources Ltd. (a) | 67,300 | 3,482,523 | |
Petrohawk Energy Corp. (a) | 1,501,472 | 32,131,501 | |
Plains Exploration & Production Co. (a) | 3,242,160 | 106,375,270 | |
Quicksilver Resources, Inc. (a)(c) | 694,453 | 10,361,239 | |
Range Resources Corp. | 996,300 | 50,422,743 | |
SandRidge Energy, Inc. (a)(c) | 2,145,700 | 17,036,858 | |
Southwestern Energy Co. (a) | 1,302,200 | 55,408,610 | |
Stone Energy Corp. (a) | 414,300 | 7,063,815 | |
Ultra Petroleum Corp. (a) | 648,719 | 29,665,920 | |
Venoco, Inc. (a) | 36,695 | 421,259 | |
W&T Offshore, Inc. (c) | 283,290 | 2,495,785 | |
Whiting Petroleum Corp. (a) | 49,600 | 3,712,560 | |
XTO Energy, Inc. | 127,875 | 5,843,888 | |
| 617,788,632 | ||
Oil & Gas Refining & Marketing - 2.0% | |||
Holly Corp. | 166,000 | 4,262,880 | |
Petroplus Holdings AG (c) | 168,220 | 2,541,149 | |
Tesoro Corp. (c) | 133,046 | 1,585,908 | |
Valero Energy Corp. | 529,100 | 9,269,832 | |
Western Refining, Inc. (a)(c) | 1,285,200 | 5,577,768 | |
| 23,237,537 | ||
Oil & Gas Storage & Transport - 2.3% | |||
Copano Energy LLC | 509,051 | 12,115,414 | |
Markwest Energy Partners LP | 243,500 | 7,202,730 | |
Quicksilver Gas Services LP | 360,600 | 7,280,514 | |
| 26,598,658 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 771,243,059 | ||
TOTAL COMMON STOCKS (Cost $1,185,527,061) | 1,078,783,749 | ||
Convertible Preferred Stocks - 1.6% | |||
|
|
|
|
OIL, GAS & CONSUMABLE FUELS - 1.6% | |||
Oil & Gas Exploration & Production - 1.6% | |||
SandRidge Energy, Inc. 8.50% | 150,000 | 18,178,500 |
Convertible Bonds - 2.9% | ||||
| Principal Amount | Value | ||
ELECTRICAL EQUIPMENT - 0.1% | ||||
Electrical Components & Equipment - 0.1% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 550,000 | $ 541,805 | ||
OIL, GAS & CONSUMABLE FUELS - 2.8% | ||||
Oil & Gas Exploration & Production - 2.8% | ||||
Chesapeake Energy Corp. 2.5% 5/15/37 | 37,160,000 | 32,355,212 | ||
TOTAL CONVERTIBLE BONDS (Cost $23,808,974) | 32,897,017 |
Money Market Funds - 5.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (e) | 3,565,281 | 3,565,281 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 57,420,473 | 57,420,473 | |
TOTAL MONEY MARKET FUNDS (Cost $60,985,754) | 60,985,754 |
TOTAL INVESTMENT PORTFOLIO - 104.3% (Cost $1,284,577,789) | 1,190,845,020 |
NET OTHER ASSETS - (4.3)% | (49,097,650) | ||
NET ASSETS - 100% | $ 1,141,747,370 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $ 81,254 or 0.0% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 54,290 |
Fidelity Securities Lending Cash Central Fund | 442,988 |
Total | $ 497,278 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 1,078,783,749 | $ 1,078,783,749 | $ - | $ - |
Convertible Preferred Stocks | 18,178,500 | - | 18,178,500 | - |
Convertible Bonds | 32,897,017 | - | 32,897,017 | - |
Money Market Funds | 60,985,754 | 60,985,754 | - | - |
Total Investments in Securities: | $ 1,190,845,020 | $ 1,139,769,503 | $ 51,075,517 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 85.5% |
Switzerland | 4.2% |
Canada | 3.9% |
United Kingdom | 2.3% |
China | 1.6% |
Others (individually less than 1%) | 2.5% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $250,898,144 of which $57,129,531 and $193,768,613 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $55,281,090) - See accompanying schedule: Unaffiliated issuers (cost $1,223,592,035) | $ 1,129,859,266 |
|
Fidelity Central Funds (cost $60,985,754) | 60,985,754 |
|
Total Investments (cost $1,284,577,789) |
| $ 1,190,845,020 |
Receivable for investments sold | 27,615,583 | |
Receivable for fund shares sold | 713,493 | |
Dividends receivable | 382,092 | |
Interest receivable | 280,755 | |
Distributions receivable from Fidelity Central Funds | 23,546 | |
Prepaid expenses | 3,350 | |
Other receivables | 8,760 | |
Total assets | 1,219,872,599 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 97,618 | |
Payable for investments purchased | 18,267,163 | |
Payable for fund shares redeemed | 1,452,535 | |
Accrued management fee | 533,437 | |
Other affiliated payables | 307,624 | |
Other payables and accrued expenses | 46,379 | |
Collateral on securities loaned, at value | 57,420,473 | |
Total liabilities | 78,125,229 | |
|
|
|
Net Assets | $ 1,141,747,370 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,559,324,482 | |
Accumulated net investment loss | (4,708,222) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (319,136,669) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (93,732,221) | |
Net Assets, for 36,425,573 shares outstanding | $ 1,141,747,370 | |
Net Asset Value, offering price and redemption price per share ($1,141,747,370 ÷ 36,425,573 shares) | $ 31.34 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,606,145 |
Interest |
| 1,162,903 |
Income from Fidelity Central Funds (including $442,988 from security lending) |
| 497,278 |
Total income |
| 8,266,326 |
|
|
|
Expenses | ||
Management fee | $ 5,818,728 | |
Transfer agent fees | 3,208,662 | |
Accounting and security lending fees | 402,680 | |
Custodian fees and expenses | 53,883 | |
Independent trustees' compensation | 6,817 | |
Registration fees | 83,376 | |
Audit | 44,688 | |
Legal | 4,912 | |
Interest | 531 | |
Miscellaneous | 18,993 | |
Total expenses before reductions | 9,643,270 | |
Expense reductions | (62,232) | 9,581,038 |
Net investment income (loss) | (1,314,712) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 69,420,113 | |
Foreign currency transactions | (79,052) | |
Capital gain distributions from Fidelity Central Funds | 3,891 | |
Total net realized gain (loss) |
| 69,344,952 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 362,290,043 | |
Assets and liabilities in foreign currencies | 1,247 | |
Total change in net unrealized appreciation (depreciation) |
| 362,291,290 |
Net gain (loss) | 431,636,242 | |
Net increase (decrease) in net assets resulting from operations | $ 430,321,530 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended February 28, | Year ended February 28, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,314,712) | $ (1,874,591) |
Net realized gain (loss) | 69,344,952 | (383,695,753) |
Change in net unrealized appreciation (depreciation) | 362,291,290 | (895,676,854) |
Net increase (decrease) in net assets resulting | 430,321,530 | (1,281,247,198) |
Distributions to shareholders from net realized gain | - | (73,105,192) |
Share transactions | 448,470,801 | 1,350,618,090 |
Reinvestment of distributions | - | 66,614,755 |
Cost of shares redeemed | (442,159,974) | (961,532,824) |
Net increase (decrease) in net assets resulting from share transactions | 6,310,827 | 455,700,021 |
Redemption fees | 113,377 | 384,033 |
Total increase (decrease) in net assets | 436,745,734 | (898,268,336) |
|
|
|
Net Assets | ||
Beginning of period | 705,001,636 | 1,603,269,972 |
End of period (including accumulated net investment loss of $4,708,222 and accumulated net investment loss of $3,824,668, respectively) | $ 1,141,747,370 | $ 705,001,636 |
Other Information Shares | ||
Sold | 15,462,388 | 30,313,112 |
Issued in reinvestment of distributions | - | 1,342,769 |
Redeemed | (15,836,062) | (26,979,116) |
Net increase (decrease) | (373,674) | 4,676,765 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 19.16 | $ 49.91 | $ 39.61 | $ 38.86 | $ 34.41 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.04) | (.05) | (.05) | (.03)F | (.09) |
Net realized and unrealized gain (loss) | 12.22 | (28.62) | 14.53 | 4.08 | 8.58 |
Total from investment operations | 12.18 | (28.67) | 14.48 | 4.05 | 8.49 |
Distributions from net realized gain | - | (2.09) | (4.19) | (3.31) | (4.08) |
Redemption fees added to paid in capitalC | -I | .01 | .01 | .01 | .04 |
Net asset value, end of period | $ 31.34 | $ 19.16 | $ 49.91 | $ 39.61 | $ 38.86 |
Total ReturnA,B | 63.57% | (59.99)% | 38.08% | 10.43% | 26.28% |
Ratios to Average Net AssetsD,G |
|
|
|
|
|
Expenses before reductions | .93% | .85% | .85% | .90% | .95% |
Expenses net of fee waivers, if any | .93% | .85% | .85% | .90% | .95% |
Expenses net of all reductions | .93% | .85% | .85% | .89% | .88% |
Net investment income (loss) | (.13)% | (.13)% | (.10)% | (.09)%F | (.24)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,141,747 | $ 705,002 | $ 1,603,270 | $ 1,025,589 | $ 1,555,579 |
Portfolio turnover rateE | 110% | 81% | 68% | 59% | 148% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Natural Resources Portfolio | 61.13% | 9.61% | 11.87% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 29, 2000. 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.
Annual Report
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Dowd, Portfolio Manager of Select Natural Resources Portfolio: For the 12 months ending February 28, 2010, the fund returned 61.13%, outpacing the S&P 500 and the 53.99% return of the S&P® North American Natural Resources Sector Index. While a favorable backdrop of steadier economic conditions, rising commodity prices and investors' increased appetite for risk all contributed to the fund's strong returns, the real key to success relative to the sector index was my decision to position the portfolio aggressively in terms of industry groups as well as securities. The fund's biggest boost came from a significant underweighting in integrated oil and gas stocks. Having only a small slice of industry giant and major index component Exxon Mobil made this holding the fund's top contributor. Significant underweightings in Chevron and ConocoPhillips also worked well. A stake in coal producer Massey Energy delivered superior performance, as did a large position in oil and gas equipment/services firm BJ Services. Foreign holdings contributed, bolstered in part by a weaker dollar. Disappointments included a large stake in oil and gas exploration/production firm Petrohawk Energy; an emphasis on the oil and gas refining/marketing segment, including a sizable position in Frontier Oil; an above-index position in integrated oil company Marathon Oil; and having no stake in strong-performing index component International Paper.
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.
Annual Report
Natural Resources Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Occidental Petroleum Corp. | 5.3 | 6.9 |
Southwestern Energy Co. | 5.2 | 4.5 |
Schlumberger Ltd. | 5.1 | 4.1 |
Anadarko Petroleum Corp. | 4.0 | 0.8 |
Petrohawk Energy Corp. | 3.8 | 3.5 |
Canadian Natural Resources Ltd. | 3.6 | 3.2 |
BJ Services Co. | 3.5 | 2.6 |
Marathon Oil Corp. | 3.0 | 3.8 |
Massey Energy Co. | 2.7 | 2.6 |
Smith International, Inc. | 2.6 | 1.6 |
| 38.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Oil, Gas & Consumable Fuels | 52.4% |
|
![]() | Energy Equipment & Services | 26.2% |
|
![]() | Metals & Mining | 13.4% |
|
![]() | Containers & Packaging | 2.8% |
|
![]() | Electrical Equipment | 1.5% |
|
![]() | All Others* | 3.7% |
|
As of August 31, 2009 | |||
![]() | Oil, Gas & Consumable Fuels | 50.9% |
|
![]() | Energy Equipment & Services | 28.5% |
|
![]() | Metals & Mining | 14.6% |
|
![]() | Containers & Packaging | 1.7% |
|
![]() | Electrical Equipment | 1.7% |
|
![]() | All Others* | 2.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Resources Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
CHEMICALS - 0.1% | |||
Commodity Chemicals - 0.1% | |||
Calgon Carbon Corp. (a) | 146,700 | $ 2,275,317 | |
CONSTRUCTION & ENGINEERING - 1.3% | |||
Construction & Engineering - 1.3% | |||
Fluor Corp. | 83,000 | 3,552,400 | |
Jacobs Engineering Group, Inc. (a) | 406,900 | 15,787,720 | |
| 19,340,120 | ||
CONTAINERS & PACKAGING - 2.8% | |||
Metal & Glass Containers - 2.4% | |||
Ball Corp. | 130,700 | 7,063,028 | |
Crown Holdings, Inc. (a) | 164,400 | 4,491,408 | |
Greif, Inc. Class A | 32,300 | 1,655,052 | |
Owens-Illinois, Inc. (a) | 638,300 | 18,919,212 | |
Pactiv Corp. (a) | 139,800 | 3,461,448 | |
| 35,590,148 | ||
Paper Packaging - 0.4% | |||
Temple-Inland, Inc. | 293,300 | 5,461,246 | |
TOTAL CONTAINERS & PACKAGING | 41,051,394 | ||
ELECTRICAL EQUIPMENT - 1.5% | |||
Electrical Components & Equipment - 1.5% | |||
centrotherm photovoltaics AG (a) | 57,100 | 2,306,983 | |
First Solar, Inc. (a)(c) | 90,700 | 9,605,130 | |
JA Solar Holdings Co. Ltd. ADR (a)(c) | 718,300 | 3,562,768 | |
SunPower Corp.: | |||
Class A (a) | 50,000 | 937,500 | |
Class B (a) | 363,600 | 5,937,588 | |
| 22,349,969 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
Itron, Inc. (a) | 59,500 | 3,983,525 | |
ENERGY EQUIPMENT & SERVICES - 26.2% | |||
Oil & Gas Drilling - 6.8% | |||
Ensco International Ltd. ADR | 213,200 | 9,417,044 | |
Helmerich & Payne, Inc. | 217,900 | 8,829,308 | |
Hercules Offshore, Inc. (a) | 571,594 | 2,092,034 | |
Nabors Industries Ltd. (a) | 1,149,700 | 25,339,388 | |
Noble Corp. | 602,500 | 25,461,650 | |
Northern Offshore Ltd. (a) | 2,365,000 | 3,873,703 | |
Patterson-UTI Energy, Inc. | 426,000 | 6,577,440 | |
Pride International, Inc. (a) | 264,400 | 7,397,912 | |
Transocean Ltd. (a) | 155,200 | 12,388,064 | |
| 101,376,543 | ||
Oil & Gas Equipment & Services - 19.4% | |||
Baker Hughes, Inc. | 138,200 | 6,622,544 | |
BJ Services Co. | 2,389,400 | 52,208,390 | |
Core Laboratories NV (c) | 68,100 | 8,446,443 | |
| |||
Shares | Value | ||
Dresser-Rand Group, Inc. (a) | 87,200 | $ 2,695,352 | |
Global Industries Ltd. (a) | 401,100 | 2,707,425 | |
Halliburton Co. | 826,800 | 24,928,020 | |
National Oilwell Varco, Inc. | 602,858 | 26,206,237 | |
Oceaneering International, Inc. (a) | 122,500 | 7,405,125 | |
Schlumberger Ltd. | 1,234,652 | 75,437,237 | |
Smith International, Inc. | 929,000 | 38,079,710 | |
Superior Energy Services, Inc. (a) | 172,000 | 3,555,240 | |
TSC Offshore Group Ltd. (a) | 3,250,000 | 1,004,870 | |
Weatherford International Ltd. (a) | 1,910,680 | 31,889,249 | |
Willbros Group, Inc. (a) | 402,700 | 6,080,770 | |
| 287,266,612 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 388,643,155 | ||
FOOD PRODUCTS - 1.2% | |||
Agricultural Products - 1.2% | |||
Bunge Ltd. | 228,300 | 13,604,397 | |
Corn Products International, Inc. | 124,200 | 4,046,436 | |
| 17,650,833 | ||
GAS UTILITIES - 0.2% | |||
Gas Utilities - 0.2% | |||
Questar Corp. | 48,700 | 2,044,913 | |
Zhongyu Gas Holdings Ltd. (a) | 12,744,000 | 1,297,024 | |
| 3,341,937 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 159,070 | 3,474,089 | |
METALS & MINING - 13.4% | |||
Diversified Metals & Mining - 3.8% | |||
Compass Minerals International, Inc. | 56,066 | 4,234,665 | |
Freeport-McMoRan Copper & Gold, Inc. | 442,867 | 33,285,884 | |
Teck Resources Ltd. Class B (sub. vtg.) (a) | 512,900 | 18,863,607 | |
| 56,384,156 | ||
Gold - 9.6% | |||
Agnico-Eagle Mines Ltd. (Canada) | 165,900 | 9,579,552 | |
AngloGold Ashanti Ltd. sponsored ADR | 309,700 | 11,266,886 | |
Barrick Gold Corp. | 671,400 | 25,299,130 | |
Eldorado Gold Corp. (a) | 545,500 | 6,889,708 | |
Gold Fields Ltd. sponsored ADR | 200,100 | 2,299,149 | |
Goldcorp, Inc. | 407,100 | 15,405,771 | |
Harmony Gold Mining Co. Ltd. sponsored ADR | 607,000 | 5,541,910 | |
IAMGOLD Corp. | 1,077,800 | 15,855,875 | |
Kinross Gold Corp. | 309,467 | 5,608,492 | |
Lihir Gold Ltd. | 3,693,798 | 8,768,596 | |
Newcrest Mining Ltd. | 496,958 | 13,951,784 | |
Newmont Mining Corp. | 204,400 | 10,072,832 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Randgold Resources Ltd. sponsored ADR | 78,600 | $ 5,659,986 | |
Yamana Gold, Inc. | 547,200 | 5,777,517 | |
| 141,977,188 | ||
TOTAL METALS & MINING | 198,361,344 | ||
OIL, GAS & CONSUMABLE FUELS - 52.4% | |||
Coal & Consumable Fuels - 8.3% | |||
Alpha Natural Resources, Inc. (a) | 719,514 | 33,104,839 | |
Arch Coal, Inc. | 1,442,600 | 32,444,074 | |
Cloud Peak Energy, Inc. | 200,000 | 3,042,000 | |
CONSOL Energy, Inc. | 267,600 | 13,476,336 | |
International Coal Group, Inc. (a) | 199,900 | 871,564 | |
Massey Energy Co. | 947,200 | 40,795,904 | |
| 123,734,717 | ||
Integrated Oil & Gas - 10.8% | |||
Marathon Oil Corp. | 1,528,000 | 44,235,600 | |
Occidental Petroleum Corp. | 992,700 | 79,267,093 | |
Suncor Energy, Inc. | 1,274,452 | 36,831,633 | |
| 160,334,326 | ||
Oil & Gas Exploration & Production - 31.0% | |||
Anadarko Petroleum Corp. | 852,900 | 59,813,877 | |
Apache Corp. | 205,100 | 21,256,564 | |
Arena Resources, Inc. (a) | 230,500 | 9,549,615 | |
Berry Petroleum Co. Class A | 179,100 | 4,799,880 | |
Brigham Exploration Co. (a) | 266,600 | 4,377,572 | |
Cabot Oil & Gas Corp. | 650,400 | 26,107,056 | |
Canadian Natural Resources Ltd. | 792,600 | 53,389,867 | |
Chesapeake Energy Corp. | 287,400 | 7,636,218 | |
Comstock Resources, Inc. (a) | 222,700 | 7,687,604 | |
EXCO Resources, Inc. | 1,857,650 | 35,128,162 | |
Mariner Energy, Inc. (a) | 1,800 | 27,036 | |
Newfield Exploration Co. (a) | 435,700 | 22,251,199 | |
Nexen, Inc. | 544,300 | 12,285,222 | |
Niko Resources Ltd. | 37,200 | 3,535,282 | |
Noble Energy, Inc. | 63,600 | 4,619,904 | |
Painted Pony Petroleum Ltd. Class A (a) | 278,300 | 1,983,607 | |
Petrobank Energy & Resources Ltd. (a) | 50,000 | 2,587,313 | |
Petrohawk Energy Corp. (a) | 2,595,840 | 55,550,976 | |
Plains Exploration & Production Co. (a) | 92,713 | 3,041,914 | |
Range Resources Corp. | 70,273 | 3,556,517 | |
Southwestern Energy Co. (a) | 1,810,600 | 77,041,030 | |
Ultra Petroleum Corp. (a) | 249,900 | 11,427,927 | |
Whiting Petroleum Corp. (a) | 440,900 | 33,001,365 | |
| 460,655,707 | ||
| |||
Shares | Value | ||
Oil & Gas Refining & Marketing - 2.3% | |||
CVR Energy, Inc. (a) | 250,000 | $ 2,055,000 | |
Frontier Oil Corp. | 918,400 | 11,378,976 | |
Holly Corp. | 184,300 | 4,732,824 | |
Tesoro Corp. (c) | 244,700 | 2,916,824 | |
Valero Energy Corp. | 708,700 | 12,416,424 | |
| 33,500,048 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 778,224,798 | ||
PAPER & FOREST PRODUCTS - 0.3% | |||
Forest Products - 0.3% | |||
Weyerhaeuser Co. | 96,900 | 3,914,760 | |
TOTAL COMMON STOCKS (Cost $1,312,402,863) | 1,482,611,241 |
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
ELECTRICAL EQUIPMENT - 0.0% | ||||
Electrical Components & Equipment - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 710,000 | 699,421 |
Money Market Funds - 0.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (d) | 1,483,275 | 1,483,275 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 11,993,950 | 11,993,950 | |
TOTAL MONEY MARKET FUNDS (Cost $13,477,225) | 13,477,225 |
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $1,326,590,088) | 1,496,787,887 |
NET OTHER ASSETS - (0.8)% | (11,930,603) | ||
NET ASSETS - 100% | $ 1,484,857,284 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 26,523 |
Fidelity Securities Lending Cash Central Fund | 254,931 |
Total | $ 281,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 1,482,611,241 | $ 1,482,611,241 | $ - | $ - |
Convertible Bonds | 699,421 | - | 699,421 | - |
Money Market Funds | 13,477,225 | 13,477,225 | - | - |
Total Investments in Securities: | $ 1,496,787,887 | $ 1,496,088,466 | $ 699,421 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 68.9% |
Canada | 15.2% |
Netherlands Antilles | 5.1% |
Switzerland | 4.6% |
South Africa | 1.3% |
Bermuda | 1.2% |
Others (individually less than 1%) | 3.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $354,182,130 of which $125,735,259 and $228,446,871 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,939,153) - See accompanying schedule: Unaffiliated issuers (cost $1,313,112,863) | $ 1,483,310,662 |
|
Fidelity Central Funds (cost $13,477,225) | 13,477,225 |
|
Total Investments (cost $1,326,590,088) |
| $ 1,496,787,887 |
Receivable for investments sold | 3,756,481 | |
Receivable for fund shares sold | 1,319,127 | |
Dividends receivable | 1,084,766 | |
Interest receivable | 12,647 | |
Distributions receivable from Fidelity Central Funds | 17,823 | |
Prepaid expenses | 4,394 | |
Other receivables | 7,124 | |
Total assets | 1,502,990,249 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 462 | |
Payable for investments purchased | 3,486,224 | |
Payable for fund shares redeemed | 1,508,036 | |
Accrued management fee | 688,451 | |
Other affiliated payables | 403,832 | |
Other payables and accrued expenses | 52,010 | |
Collateral on securities loaned, at value | 11,993,950 | |
Total liabilities | 18,132,965 | |
|
|
|
Net Assets | $ 1,484,857,284 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,710,867,436 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (396,208,790) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 170,198,638 | |
Net Assets, for 53,678,008 shares outstanding | $ 1,484,857,284 | |
Net Asset Value, offering price and redemption price per share ($1,484,857,284 ÷ 53,678,008 shares) | $ 27.66 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 12,044,267 |
Interest |
| 27,855 |
Income from Fidelity Central Funds (including $254,931 from security lending) |
| 281,454 |
Total income |
| 12,353,576 |
|
|
|
Expenses | ||
Management fee | $ 7,622,108 | |
Transfer agent fees | 4,257,110 | |
Accounting and security lending fees | 486,352 | |
Custodian fees and expenses | 56,571 | |
Independent trustees' compensation | 8,879 | |
Registration fees | 82,272 | |
Audit | 44,089 | |
Legal | 6,302 | |
Interest | 1,246 | |
Miscellaneous | 24,271 | |
Total expenses before reductions | 12,589,200 | |
Expense reductions | (93,784) | 12,495,416 |
Net investment income (loss) | (141,840) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 98,846,094 | |
Foreign currency transactions | (133,215) | |
Total net realized gain (loss) |
| 98,712,879 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 461,832,420 | |
Assets and liabilities in foreign currencies | (29,342) | |
Total change in net unrealized appreciation (depreciation) |
| 461,803,078 |
Net gain (loss) | 560,515,957 | |
Net increase (decrease) in net assets resulting from operations | $ 560,374,117 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended February 28, | Year ended February 28, |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (141,840) | $ 610,162 |
Net realized gain (loss) | 98,712,879 | (481,787,967) |
Change in net unrealized appreciation (depreciation) | 461,803,078 | (864,632,048) |
Net increase (decrease) in net assets resulting from operations | 560,374,117 | (1,345,809,853) |
Distributions to shareholders from net investment income | (813,938) | (636,818) |
Distributions to shareholders from net realized gain | (5,426,262) | (30,567,245) |
Total distributions | (6,240,200) | (31,204,063) |
Share transactions | 501,390,989 | 1,221,643,673 |
Reinvestment of distributions | 6,022,872 | 30,006,724 |
Cost of shares redeemed | (499,894,528) | (1,380,303,375) |
Net increase (decrease) in net assets resulting from share transactions | 7,519,333 | (128,652,978) |
Redemption fees | 93,909 | 402,052 |
Total increase (decrease) in net assets | 561,747,159 | (1,505,264,842) |
|
|
|
Net Assets | ||
Beginning of period | 923,110,125 | 2,428,374,967 |
End of period | $ 1,484,857,284 | $ 923,110,125 |
Other Information Shares | ||
Sold | 20,187,018 | 34,996,171 |
Issued in reinvestment of distributions | 224,232 | 769,798 |
Redeemed | (20,277,385) | (44,494,728) |
Net increase (decrease) | 133,865 | (8,728,759) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.24 | $ 39.00 | $ 28.75 | $ 25.87 | $ 20.07 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | -H | .01 | .03 | .08 | .05 |
Net realized and unrealized gain (loss) | 10.54 | (21.29) | 11.74 | 3.81 | 6.72 |
Total from investment operations | 10.54 | (21.28) | 11.77 | 3.89 | 6.77 |
Distributions from net investment income | (.02) | (.01) | (.03) | (.07) | (.04) |
Distributions from net realized gain | (.10) | (.48) | (1.50) | (.95) | (.95) |
Total distributions | (.12) | (.49) | (1.53) | (1.02) | (.99) |
Redemption fees added to paid in capitalC | -H | .01 | .01 | .01 | .02 |
Net asset value, end of period | $ 27.66 | $ 17.24 | $ 39.00 | $ 28.75 | $ 25.87 |
Total ReturnA,B | 61.13% | (55.24)% | 41.62% | 15.18% | 34.50% |
Ratios to Average Net AssetsD,F |
|
|
|
|
|
Expenses before reductions | .93% | .85% | .85% | .93% | .99% |
Expenses net of fee waivers, if any | .93% | .85% | .85% | .93% | .99% |
Expenses net of all reductions | .92% | .84% | .85% | .92% | .93% |
Net investment income (loss) | (.01) % | .03% | .09% | .31% | .21% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,484,857 | $ 923,110 | $ 2,428,375 | $ 958,443 | $ 880,840 |
Portfolio turnover rateE | 85% | 136% | 44% | 116% | 119% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are funds of Fidelity Select Portfolios (the trust). Energy Portfolio, Energy Service Portfolio, and Natural Gas Portfolio are non-diversified funds. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. The Natural Resources Portfolio may also invest in certain precious metals. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), partnerships, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) |
Energy Portfolio | ||||
Energy Service Portfolio | ||||
Natural Gas Portfolio | ||||
Natural Resources Portfolio |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary | Capital loss carryforward | Net unrealized appreciation (depreciation) |
Energy Portfolio | $ - | ||
Energy Service Portfolio | - | ||
Natural Gas Portfolio | |||
Natural Resources Portfolio |
The tax character of distributions paid was as follows:
February 28, 2010 | Ordinary | Long-term | Total |
Energy Portfolio | |||
Energy Service Portfolio | |||
Natural Gas Portfolio | - | - | - |
Natural Resources Portfolio | |||
February 28, 2009 | Ordinary | Long-term | Total |
Energy Portfolio | $ 495,957 | $ 62,490,281 | $ 62,986,238 |
Energy Service Portfolio | - | 95,954,641 | 95,954,641 |
Natural Gas Portfolio | 7,345,498 | 65,759,694 | 73,105,192 |
Natural Resources Portfolio | 636,818 | 30,567,245 | 31,204,063 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Energy Portfolio | 1,828,348,038 | 1,823,309,264 |
Energy Service Portfolio | 960,476,778 | 944,364,582 |
Natural Gas Portfolio | 1,104,468,975 | 1,107,673,166 |
Natural Resources Portfolio | 1,120,416,905 | 1,120,072,268 |
Annual Report
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Energy Portfolio | .30% | .26% | .56% |
Energy Service Portfolio | .30% | .26% | .56% |
Natural Gas Portfolio | .30% | .26% | .56% |
Natural Resources Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .30% |
Energy Service Portfolio | .29% |
Natural Gas Portfolio | .31% |
Natural Resources Portfolio | .31% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Energy Portfolio | $ 9,149 |
Energy Service Portfolio | 10,805 |
Natural Gas Portfolio | 25,076 |
Natural Resources Portfolio | 8,378 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Energy Portfolio | Borrower | $ 6,313,333 | .45% | $ 238 |
Energy Service Portfolio | Borrower | 6,600,857 | .42% | 1,069 |
Natural Gas Portfolio | Borrower | 6,923,143 | .39% | 531 |
Natural Resources Portfolio | Borrower | 5,077,870 | .38% | 1,246 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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 is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Energy Portfolio | $ 6,728 |
Energy Service Portfolio | 4,040 |
Natural Gas Portfolio | 3,569 |
Natural Resources Portfolio | 4,691 |
During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service | Custody |
Energy Portfolio | $ 122,396 | $ 187 |
Energy Service Portfolio | 57,025 | - |
Natural Gas Portfolio | 62,232 | - |
Natural Resources Portfolio | 93,775 | 9 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 16, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
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.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 | Dividends | Capital Gains |
Natural Gas Portfolio | 04/12/10 | 04/09/10 | - | $0.055 |
Natural Resources Portfolio | 04/12/10 | 04/09/10 | - | $0.01 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| December 2009 |
Energy Portfolio | 100% |
Energy Service Portfolio | 100% |
Natural Resources Portfolio | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| December 2009 |
Energy Portfolio | 100% |
Energy Service Portfolio | 100% |
Natural Resources Portfolio | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
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Investment Sub-Advisers
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FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
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Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
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Fidelity®
Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Financial Services Portfolio
Home Finance Portfolio
Insurance Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Financials Sector |
|
|
Banking Portfolio |
| |
Brokerage and Investment Management Portfolio |
| |
Financial Services Portfolio |
| |
Home Finance Portfolio |
| |
Insurance Portfolio |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Banking Portfolio | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,094.10 | $ 4.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Brokerage and Investment Management Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,000.50 | $ 4.41 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Financial Services Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,031.10 | $ 4.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Home Finance Portfolio | 1.03% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,092.50 | $ 5.34 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.69 | $ 5.16 |
Insurance Portfolio | .97% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,058.50 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.98 | $ 4.86 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Banking Portfolio | 87.04% | -7.83% | 2.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 29, 2000. 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.
Annual Report
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Vincent Montemaggiore, Portfolio Manager of Select Banking Portfolio: The fund advanced 87.04% during the past year, significantly outperforming the S&P 500 and the 79.33% return of its industry benchmark, the MSCI® U.S. IM Banks 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - and the S&P 500. Relative to the MSCI index, solid overall stock selection, as well as underweighted positions in the regional banks and thrifts/mortgage finance industries fueled the fund's outperformance. Stocks picks in regional banks, other diversified financial services and consumer finance added the most versus the index. Top contributors included out-of-benchmark investments in Bank of America and credit card issuer Capital One Financial. Acting on the conviction that consumer credit would recover before corporate- or commercial real estate-related credit, I took relatively large positions in these companies - both of which have considerable consumer exposure - when they were trading at very cheap valuations. Overweightings in two regional banks - Nara Bancorp and Columbia Banking Systems - also aided relative results. I underweighted regional banks because, as a group, their loan portfolios were more-heavily exposed to commercial real estate and residential construction compared with larger banks, and their capital levels were less secure. That said, I identified some relatively healthy regional banks that I thought might be able to acquire weaker competitors with help from the Federal Deposit Insurance Corporation (FDIC), which is exactly what happened with Columbia. Nara did not make any acquisitions but the bank's stock rose on speculation that it might. I sold Columbia during the period. On the downside, maintaining an average cash stake of nearly 3% in a rallying market was the biggest relative detractor. In terms of specific stocks, an overweighting in regional bank Associated Banc-Corp dampened results, as increased loan-loss provisions pressured earnings, causing its stock to underperform. In addition, underweighting bank holding company Wells Fargo hurt. The stock accounts for a major portion of the index, and the fund's concentration limit prevented me from taking an index-sized position. Stock choices in asset management/custody banks, data processing/outsourced services, property/casualty insurance, mortgage real estate investment trusts, specialized finance and investment banking/brokerage also detracted. Lastly, underweighting strong-performing diversified banks more than offset favorable security selection in that area.
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.
Annual Report
Banking Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 10.9 | 24.1 |
BB&T Corp. | 6.4 | 3.9 |
PNC Financial Services Group, Inc. | 5.4 | 5.0 |
Regions Financial Corp. | 4.8 | 3.0 |
U.S. Bancorp, Delaware | 4.6 | 5.6 |
SunTrust Banks, Inc. | 4.3 | 3.6 |
Comerica, Inc. | 4.1 | 3.6 |
Fifth Third Bancorp | 3.3 | 3.0 |
Bank of America Corp. | 3.2 | 3.9 |
JPMorgan Chase & Co. | 2.8 | 5.5 |
| 49.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Commercial Banks | 75.5% |
|
![]() | Diversified Financial Services | 7.7% |
|
![]() | Thrifts & Mortgage Finance | 7.7% |
|
![]() | Capital Markets | 2.5% |
|
![]() | Consumer Finance | 1.4% |
|
![]() | All Others* | 5.2% |
|
As of August 31, 2009 | |||
![]() | Commercial Banks | 71.6% |
|
![]() | Diversified Financial Services | 10.0% |
|
![]() | Consumer Finance | 3.2% |
|
![]() | Thrifts & Mortgage Finance | 3.0% |
|
![]() | Capital Markets | 2.5% |
|
![]() | All Others* | 9.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Banking Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value | ||
CAPITAL MARKETS - 2.5% | |||
Asset Management & Custody Banks - 1.4% | |||
Bank of New York Mellon Corp. | 178,903 | $ 5,102,314 | |
Investment Banking & Brokerage - 1.1% | |||
Morgan Stanley | 134,100 | 3,778,938 | |
TOTAL CAPITAL MARKETS | 8,881,252 | ||
COMMERCIAL BANKS - 75.5% | |||
Diversified Banks - 21.0% | |||
Barclays PLC Sponsored ADR (b) | 186,400 | 3,573,288 | |
Comerica, Inc. | 406,500 | 14,666,520 | |
Royal Bank of Scotland Group PLC sponsored ADR (a)(c) | 123,800 | 1,428,652 | |
U.S. Bancorp, Delaware | 670,100 | 16,491,161 | |
Wells Fargo & Co. | 1,437,292 | 39,295,563 | |
| 75,455,184 | ||
Regional Banks - 54.5% | |||
Associated Banc-Corp. (c) | 544,920 | 7,034,917 | |
Bank of Hawaii Corp. | 54,300 | 2,292,003 | |
BB&T Corp. | 803,200 | 22,915,296 | |
Cathay General Bancorp (c) | 788,000 | 7,667,240 | |
Center Financial Corp. (a)(c) | 779,500 | 3,780,575 | |
Citizens Banking Corp., Michigan (a) | 1,237,100 | 872,156 | |
City National Corp. | 113,400 | 5,660,928 | |
CVB Financial Corp. (c) | 390,600 | 3,632,580 | |
Fifth Third Bancorp | 984,300 | 12,018,303 | |
Huntington Bancshares, Inc. | 1,931,451 | 9,290,279 | |
KeyCorp | 549,800 | 3,931,070 | |
M&T Bank Corp. (c) | 74,300 | 5,753,049 | |
Marshall & Ilsley Corp. | 225,400 | 1,595,832 | |
Nara Bancorp, Inc. (a) | 303,000 | 2,675,490 | |
National Penn Bancshares, Inc. | 948,500 | 6,535,165 | |
Pacific Continental Corp. | 130,590 | 1,318,959 | |
PacWest Bancorp (c) | 234,300 | 4,756,290 | |
PNC Financial Services Group, Inc. | 361,841 | 19,452,572 | |
Regions Financial Corp. | 2,539,400 | 17,140,950 | |
Sterling Bancshares, Inc. | 760,200 | 3,588,144 | |
SunTrust Banks, Inc. | 647,400 | 15,414,594 | |
SVB Financial Group (a)(c) | 217,479 | 9,690,864 | |
TCF Financial Corp. (c) | 283,100 | 4,087,964 | |
Umpqua Holdings Corp. (c) | 307,800 | 3,841,344 | |
Western Alliance Bancorp. (a)(c) | 900,400 | 5,186,304 | |
Whitney Holding Corp. | 73,200 | 940,620 | |
| |||
Shares | Value | ||
Wilmington Trust Corp., Delaware (c) | 596,100 | $ 8,595,762 | |
Wilshire Bancorp, Inc. (c) | 655,400 | 6,160,760 | |
| 195,830,010 | ||
TOTAL COMMERCIAL BANKS | 271,285,194 | ||
CONSUMER FINANCE - 1.4% | |||
Consumer Finance - 1.4% | |||
Capital One Financial Corp. | 132,100 | 4,986,775 | |
DIVERSIFIED FINANCIAL SERVICES - 7.7% | |||
Other Diversified Financial Services - 7.2% | |||
Bank of America Corp. | 684,948 | 11,411,234 | |
Citigroup, Inc. | 679,200 | 2,309,280 | |
ING Groep NV sponsored ADR (a) | 223,800 | 1,998,534 | |
JPMorgan Chase & Co. | 237,900 | 9,984,663 | |
NBH Holdings Corp. Class A (a)(d) | 13,300 | 256,025 | |
| 25,959,736 | ||
Specialized Finance - 0.5% | |||
CME Group, Inc. | 6,500 | 1,960,985 | |
TOTAL DIVERSIFIED FINANCIAL SERVICES | 27,920,721 | ||
INSURANCE - 1.1% | |||
Property & Casualty Insurance - 1.1% | |||
ACE Ltd. | 37,200 | 1,859,628 | |
Berkshire Hathaway, Inc. Class B (a) | 27,000 | 2,163,510 | |
| 4,023,138 | ||
IT SERVICES - 1.3% | |||
Data Processing & Outsourced Services - 1.3% | |||
Visa, Inc. Class A | 56,800 | 4,843,904 | |
REAL ESTATE INVESTMENT TRUSTS - 0.4% | |||
Industrial REITs - 0.4% | |||
ProLogis Trust | 109,100 | 1,406,299 | |
THRIFTS & MORTGAGE FINANCE - 7.7% | |||
Thrifts & Mortgage Finance - 7.7% | |||
Abington Bancorp, Inc. | 182,100 | 1,400,349 | |
Astoria Financial Corp. | 287,500 | 3,815,125 | |
First Niagara Financial Group, Inc. | 292,700 | 4,109,508 | |
Hudson City Bancorp, Inc. (c) | 215,300 | 2,910,856 | |
New York Community Bancorp, Inc. (c) | 185,800 | 2,878,042 | |
Northwest Bancshares, Inc. | 315,500 | 3,726,055 | |
Ocwen Financial Corp. (a) | 218,400 | 2,360,904 | |
People's United Financial, Inc. | 142,400 | 2,245,648 | |
Washington Federal, Inc. | 214,500 | 4,180,605 | |
| 27,627,092 | ||
TOTAL COMMON STOCKS (Cost $335,153,215) | 350,974,375 | ||
Money Market Funds - 13.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (e) | 8,059,639 | $ 8,059,639 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 41,065,875 | 41,065,875 | |
TOTAL MONEY MARKET FUNDS (Cost $49,125,514) | 49,125,514 | ||
TOTAL INVESTMENT PORTFOLIO - 111.3% (Cost $384,278,729) | 400,099,889 | ||
NET OTHER ASSETS - (11.3)% | (40,662,175) | ||
NET ASSETS - 100% | $ 359,437,714 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $256,025 or 0.1% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 28,751 |
Fidelity Securities Lending Cash Central Fund | 125,535 |
Total | $ 154,286 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 350,974,375 | $ 350,718,350 | $ 256,025 | $ - |
Money Market Funds | 49,125,514 | 49,125,514 | - | - |
Total Investments in Securities: | $ 400,099,889 | $ 399,843,864 | $ 256,025 | $ - |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $47,575,078 of which $37,412,485 and $10,162,593 will expire on February 28, 2017 and 2018, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $14,106,361 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $39,477,711) - See accompanying schedule: Unaffiliated issuers (cost $335,153,215) | $ 350,974,375 |
|
Fidelity Central Funds (cost $49,125,514) | 49,125,514 |
|
Total Investments (cost $384,278,729) |
| $ 400,099,889 |
Receivable for fund shares sold | 2,431,346 | |
Dividends receivable | 297,420 | |
Distributions receivable from Fidelity Central Funds | 9,149 | |
Prepaid expenses | 1,037 | |
Other receivables | 8,530 | |
Total assets | 402,847,371 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,748,425 | |
Payable for fund shares redeemed | 319,318 | |
Accrued management fee | 157,744 | |
Other affiliated payables | 89,072 | |
Other payables and accrued expenses | 29,223 | |
Collateral on securities loaned, at value | 41,065,875 | |
Total liabilities | 43,409,657 | |
|
|
|
Net Assets | $ 359,437,714 | |
Net Assets consist of: |
| |
Paid in capital | $ 458,108,877 | |
Undistributed net investment income | 163,741 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (114,655,635) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 15,820,731 | |
Net Assets, for 21,613,680 shares outstanding | $ 359,437,714 | |
Net Asset Value, offering price and redemption price per share ($359,437,714 ÷ 21,613,680 shares) | $ 16.63 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 3,922,618 |
Interest |
| 31 |
Income from Fidelity Central Funds (including $125,535 from security lending) |
| 154,286 |
Total income |
| 4,076,935 |
|
|
|
Expenses | ||
Management fee | $ 1,638,299 | |
Transfer agent fees | 905,894 | |
Accounting and security lending fees | 117,812 | |
Custodian fees and expenses | 14,293 | |
Independent trustees' compensation | 1,950 | |
Registration fees | 41,792 | |
Audit | 41,285 | |
Legal | 1,368 | |
Miscellaneous | 5,259 | |
Total expenses before reductions | 2,767,952 | |
Expense reductions | (20,336) | 2,747,616 |
Net investment income (loss) | 1,329,319 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 9,348,610 | |
Foreign currency transactions | (92) | |
Total net realized gain (loss) |
| 9,348,518 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 146,257,956 | |
Assets and liabilities in foreign currencies | 917 | |
Total change in net unrealized appreciation (depreciation) |
| 146,258,873 |
Net gain (loss) | 155,607,391 | |
Net increase (decrease) in net assets resulting from operations | $ 156,936,710 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,329,319 | $ 10,046,068 |
Net realized gain (loss) | 9,348,518 | (117,437,758) |
Change in net unrealized appreciation (depreciation) | 146,258,873 | (98,776,752) |
Net increase (decrease) in net assets resulting from operations | 156,936,710 | (206,168,442) |
Distributions to shareholders from net investment income | (4,369,898) | (8,084,799) |
Distributions to shareholders from net realized gain | - | (698,226) |
Total distributions | (4,369,898) | (8,783,025) |
Share transactions | 246,260,700 | 283,785,355 |
Reinvestment of distributions | 4,210,966 | 8,230,328 |
Cost of shares redeemed | (194,829,173) | (219,822,999) |
Net increase (decrease) in net assets resulting from share transactions | 55,642,493 | 72,192,684 |
Redemption fees | 70,895 | 149,764 |
Total increase (decrease) in net assets | 208,280,200 | (142,609,019) |
|
|
|
Net Assets | ||
Beginning of period | 151,157,514 | 293,766,533 |
End of period (including undistributed net investment income of $163,741 and undistributed net investment income of $3,183,202, respectively) | $ 359,437,714 | $ 151,157,514 |
Other Information Shares | ||
Sold | 18,721,629 | 15,878,703 |
Issued in reinvestment of distributions | 335,981 | 548,744 |
Redeemed | (14,172,266) | (12,908,021) |
Net increase (decrease) | 4,885,344 | 3,519,426 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 9.04 | $ 22.24 | $ 33.52 | $ 36.71 | $ 37.98 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .67 | .81 | .78 | .76 |
Net realized and unrealized gain (loss) | 7.74 | (13.32) | (9.57) | 2.12 | 1.82 |
Total from investment operations | 7.80 | (12.65) | (8.76) | 2.90 | 2.58 |
Distributions from net investment income | (.21) | (.51) | (.64) | (.71) | (.62) |
Distributions from net realized gain | - | (.05) | (1.88) | (5.39) | (3.23) |
Total distributions | (.21) | (.56) | (2.52) | (6.10) | (3.85) |
Redemption fees added to paid in capital C | - H | .01 | - H | .01 | - H |
Net asset value, end of period | $ 16.63 | $ 9.04 | $ 22.24 | $ 33.52 | $ 36.71 |
Total Return A, B | 87.04% | (57.85)% | (27.30)% | 8.23% | 7.22% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .95% | .93% | .91% | .93% | .94% |
Expenses net of fee waivers, if any | .95% | .93% | .91% | .93% | .94% |
Expenses net of all reductions | .94% | .93% | .90% | .91% | .92% |
Net investment income (loss) | .46% | 3.86% | 2.75% | 2.15% | 2.04% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 359,438 | $ 151,158 | $ 293,767 | $ 349,271 | $ 367,009 |
Portfolio turnover rate E | 105% | 199% | 86% | 112% | 70% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Brokerage and Investment Management Portfolio | 78.44% | 3.98% | 6.17% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 29, 2000. 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.
Annual Report
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Benjamin Hesse, Portfolio Manager of Select Brokerage and Investment Management Portfolio: For the 12 months ending February 28, 2010, the fund returned 78.44%, beating both the S&P 500 and the 69.30% return of the MSCI® U.S. IM Capital Markets 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Stock picking helped the fund beat the MSCI index, with particularly helpful results from the asset management/custody bank industry and out-of-benchmark investments in the multi-line insurance, other diversified financial services and specialized finance industries. Top contributors included Genworth Financial, a multi-line insurer, and Bank of America, a large diversified financial services company. Both rallied sharply as the need to raise additional capital diminished. The fund also benefited from underweightings in Bank of New York Mellon and Northern Trust, well-capitalized banks that lagged in the market recovery. Finally, foreign holdings aided performance, bolstered in part by the weaker dollar. The fund was hindered by a having a nearly 6% cash position early in the period as stocks rose sharply, as well as by disappointing stock selection in investment banking/brokerage and property/casualty insurance. A sizable underweighting for most of the year in investment bank Goldman Sachs, a large index component, and an out-of-index position in Nomura Holdings, a top Japanese investment bank/brokerage company, also detracted from results. Nomura was no longer held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Brokerage and Investment Management Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Bank of America Corp. | 5.6 | 0.0 |
Citigroup, Inc. | 5.4 | 0.0 |
Morgan Stanley | 5.1 | 4.5 |
Moody's Corp. | 4.8 | 0.0 |
T. Rowe Price Group, Inc. | 4.6 | 0.9 |
EFG International | 4.1 | 4.9 |
UBS AG (NY Shares) | 3.9 | 1.6 |
Franklin Resources, Inc. | 3.4 | 3.6 |
MF Global Holdings Ltd. | 3.4 | 0.4 |
GFI Group, Inc. | 3.1 | 3.8 |
| 43.4 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Capital Markets | 64.8% |
|
![]() | Diversified Financial Services | 23.3% |
|
![]() | Commercial Banks | 8.5% |
|
![]() | Insurance | 2.7% |
|
![]() | IT Services | 2.1% |
|
![]() | All Others † | (1.4)% |
|
† Short-term investments and net other assets are not included in the pie chart. |
As of August 31, 2009 | |||
![]() | Capital Markets | 64.4% |
|
![]() | Diversified Financial Services | 15.0% |
|
![]() | Insurance | 4.8% |
|
![]() | Commercial Banks | 2.3% |
|
![]() | IT Services | 0.6% |
|
![]() | All Others* | 12.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Brokerage and Investment Management Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 104.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 64.8% | |||
Asset Management & Custody Banks - 33.2% | |||
AllianceBernstein Holding LP | 180,400 | $ 4,879,820 | |
Bank of New York Mellon Corp. | 595,200 | 16,975,104 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) (a) | 209,141 | 6,910,374 | |
BlackRock, Inc. Class A | 40,100 | 8,773,880 | |
EFG International (c) | 1,653,052 | 22,694,078 | |
Franklin Resources, Inc. | 185,600 | 18,879,232 | |
GLG Partners, Inc. (a)(c) | 1,296,606 | 3,604,565 | |
Janus Capital Group, Inc. | 747,609 | 9,345,113 | |
Julius Baer Group Ltd. | 183,590 | 5,710,702 | |
Julius Baer Holding Ltd. | 191,350 | 2,087,325 | |
Legg Mason, Inc. | 262,261 | 6,779,447 | |
MCG Capital Corp. (a) | 52,700 | 269,824 | |
Northern Trust Corp. | 300,100 | 15,992,329 | |
Och-Ziff Capital Management Group LLC Class A | 1,255,437 | 17,149,269 | |
Pzena Investment Management, Inc. (a) | 13,649 | 81,894 | |
State Street Corp. | 276,900 | 12,435,579 | |
T. Rowe Price Group, Inc. | 499,700 | 25,329,793 | |
U.S. Global Investments, Inc. Class A | 505,129 | 4,889,649 | |
Waddell & Reed Financial, Inc. Class A | 49,300 | 1,620,984 | |
| 184,408,961 | ||
Diversified Capital Markets - 6.0% | |||
Credit Suisse Group sponsored ADR (c) | 242,010 | 10,793,646 | |
UBS AG: | |||
(For. Reg.) (a) | 34,591 | 478,713 | |
(NY Shares) (a) | 1,571,685 | 21,783,554 | |
| 33,055,913 | ||
Investment Banking & Brokerage - 25.6% | |||
Broadpoint Gleacher Securities Group, Inc. (a) | 3,336,600 | 13,379,766 | |
Charles Schwab Corp. | 842,000 | 15,417,020 | |
Cowen Group, Inc. Class A (a) | 3,400 | 18,496 | |
Evercore Partners, Inc. Class A | 365,121 | 10,993,793 | |
GFI Group, Inc. | 3,167,324 | 17,451,955 | |
Goldman Sachs Group, Inc. | 101,800 | 15,916,430 | |
Jefferies Group, Inc. (c) | 565,127 | 14,105,570 | |
Lazard Ltd. Class A | 1,600 | 57,488 | |
MF Global Holdings Ltd. (a)(c) | 2,725,851 | 18,862,889 | |
Morgan Stanley | 1,001,400 | 28,219,452 | |
Stifel Financial Corp. (a) | 37,595 | 2,056,447 | |
SWS Group, Inc. | 83,800 | 1,009,790 | |
TD Ameritrade Holding Corp. (a) | 174,349 | 3,049,364 | |
Thomas Weisel Partners Group, Inc. (a) | 437,603 | 1,763,540 | |
| 142,302,000 | ||
TOTAL CAPITAL MARKETS | 359,766,874 | ||
COMMERCIAL BANKS - 8.5% | |||
Diversified Banks - 3.4% | |||
Barclays PLC Sponsored ADR | 877,200 | 16,815,924 | |
| |||
Shares | Value | ||
BBVA Banco Frances SA sponsored ADR | 22,075 | $ 134,216 | |
Industrial & Commercial Bank of China Ltd. (H Shares) | 756,000 | 534,699 | |
Wells Fargo & Co. | 56,800 | 1,552,912 | |
| 19,037,751 | ||
Regional Banks - 5.1% | |||
SunTrust Banks, Inc. | 655,606 | 15,609,979 | |
Zions Bancorp | 670,100 | 12,423,654 | |
| 28,033,633 | ||
TOTAL COMMERCIAL BANKS | 47,071,384 | ||
DIVERSIFIED FINANCIAL SERVICES - 23.3% | |||
Other Diversified Financial Services - 12.6% | |||
Bank of America Corp. | 1,861,200 | 31,007,590 | |
Citigroup, Inc. | 8,924,100 | 30,341,940 | |
JPMorgan Chase & Co. | 208,700 | 8,759,139 | |
| 70,108,669 | ||
Specialized Finance - 10.7% | |||
BM&F BOVESPA SA | 1,367,445 | 8,906,194 | |
Bursa Malaysia Bhd | 579,000 | 1,238,739 | |
Climate Exchange PLC (a) | 5,700 | 45,204 | |
CME Group, Inc. | 55,465 | 16,733,236 | |
JSE Ltd. | 583,900 | 4,702,956 | |
KKR Financial Holdings LLC | 120,400 | 841,596 | |
Moody's Corp. (c) | 1,011,100 | 26,915,482 | |
| 59,383,407 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 129,492,076 | ||
INSURANCE - 2.7% | |||
Multi-Line Insurance - 2.7% | |||
Genworth Financial, Inc. Class A (a) | 964,098 | 15,367,722 | |
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
China Finance Online Co. Ltd. ADR (a) | 380,500 | 2,674,915 | |
IT SERVICES - 2.1% | |||
Data Processing & Outsourced Services - 2.1% | |||
MasterCard, Inc. Class A | 44,804 | 10,052,673 | |
Online Resources Corp. (a) | 399,300 | 1,465,431 | |
| 11,518,104 | ||
MEDIA - 2.0% | |||
Advertising - 0.2% | |||
SearchMedia Holdings Ltd. (a) | 273,700 | 1,327,445 | |
Publishing - 1.8% | |||
McGraw-Hill Companies, Inc. | 293,500 | 10,037,700 | |
TOTAL MEDIA | 11,365,145 | ||
Common Stocks - continued | |||
Shares | Value | ||
MULTILINE RETAIL - 0.3% | |||
Department Stores - 0.3% | |||
Saks, Inc. (a)(c) | 273,712 | $ 1,910,510 | |
TOTAL COMMON STOCKS (Cost $570,446,119) | 579,166,730 | ||
Money Market Funds - 9.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 4,686,519 | 4,686,519 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 46,835,716 | 46,835,716 | |
TOTAL MONEY MARKET FUNDS (Cost $51,522,235) | 51,522,235 | ||
TOTAL INVESTMENT PORTFOLIO - 113.5% (Cost $621,968,354) | 630,688,965 | ||
NET OTHER ASSETS - (13.5)% | (75,216,431) | ||
NET ASSETS - 100% | $ 555,472,534 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 96,292 |
Fidelity Securities Lending Cash Central Fund | 1,085,315 |
Total | $ 1,181,607 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 579,166,730 | $ 578,688,017 | $ 478,713 | $ - |
Money Market Funds | 51,522,235 | 51,522,235 | - | - |
Total Investments in Securities: | $ 630,688,965 | $ 630,210,252 | $ 478,713 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.8% |
Switzerland | 12.7% |
United Kingdom | 3.0% |
Brazil | 1.6% |
Others (individually less than 1%) | 1.9% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $127,368,480 of which $86,484,136 and $40,884,344 will expire on February 28, 2017 and 2018, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $4,444,604 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $45,549,211) - See accompanying schedule: Unaffiliated issuers (cost $570,446,119) | $ 579,166,730 |
|
Fidelity Central Funds (cost $51,522,235) | 51,522,235 |
|
Total Investments (cost $621,968,354) |
| $ 630,688,965 |
Receivable for investments sold | 1,782,166 | |
Receivable for fund shares sold | 134,570 | |
Dividends receivable | 620,254 | |
Distributions receivable from Fidelity Central Funds | 7,186 | |
Prepaid expenses | 1,875 | |
Other receivables | 73,030 | |
Total assets | 633,308,046 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 30,017,187 | |
Payable for fund shares redeemed | 540,900 | |
Accrued management fee | 254,853 | |
Other affiliated payables | 148,911 | |
Other payables and accrued expenses | 37,945 | |
Collateral on securities loaned, at value | 46,835,716 | |
Total liabilities | 77,835,512 | |
|
|
|
Net Assets | $ 555,472,534 | |
Net Assets consist of: |
| |
Paid in capital | $ 689,072,815 | |
Undistributed net investment income | 491,586 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (142,814,053) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 8,722,186 | |
Net Assets, for 11,739,698 shares outstanding | $ 555,472,534 | |
Net Asset Value, offering price and redemption price per share ($555,472,534 ÷ 11,739,698 shares) | $ 47.32 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 6,880,741 |
Interest |
| 948 |
Income from Fidelity Central Funds (including $1,085,315 from security lending) |
| 1,181,607 |
Total income |
| 8,063,296 |
|
|
|
Expenses | ||
Management fee | $ 2,958,438 | |
Transfer agent fees | 1,550,508 | |
Accounting and security lending fees | 212,806 | |
Custodian fees and expenses | 63,166 | |
Independent trustees' compensation | 3,407 | |
Registration fees | 45,351 | |
Audit | 36,985 | |
Legal | 2,504 | |
Interest | 1,859 | |
Miscellaneous | 9,090 | |
Total expenses before reductions | 4,884,114 | |
Expense reductions | (174,968) | 4,709,146 |
Net investment income (loss) | 3,354,150 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 63,708,776 | |
Capital gain distribution from Fidelity Central Funds | 2,751 | |
Investment not meeting investment restrictions | (14,989) | |
Foreign currency transactions | (229,050) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 27,282 | |
Total net realized gain (loss) |
| 63,494,770 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 170,687,294 | |
Assets and liabilities in foreign currencies | 48,509 | |
Total change in net unrealized appreciation (depreciation) |
| 170,735,803 |
Net gain (loss) | 234,230,573 | |
Net increase (decrease) in net assets resulting from operations | $ 237,584,723 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,354,150 | $ 9,129,257 |
Net realized gain (loss) | 63,494,770 | (191,991,953) |
Change in net unrealized appreciation (depreciation) | 170,735,803 | (166,402,222) |
Net increase (decrease) in net assets resulting from operations | 237,584,723 | (349,264,918) |
Distributions to shareholders from net investment income | (3,004,230) | (10,492,099) |
Distributions to shareholders from net realized gain | - | (29,161,301) |
Total distributions | (3,004,230) | (39,653,400) |
Share transactions |
|
|
Proceeds from sales of shares | 266,339,159 | 173,647,647 |
Reinvestment of distributions | 2,842,411 | 37,807,918 |
Cost of shares redeemed | (242,936,913) | (227,185,576) |
Net increase (decrease) in net assets resulting from share transactions | 26,244,657 | (15,730,011) |
Redemption fees | 29,613 | 60,818 |
Total increase (decrease) in net assets | 260,854,763 | (404,587,511) |
|
|
|
Net Assets | ||
Beginning of period | 294,617,771 | 699,205,282 |
End of period (including undistributed net investment income of $491,586 and undistributed net investment income of $892,512, respectively) | $ 555,472,534 | $ 294,617,771 |
Other Information Shares | ||
Sold | 6,045,653 | 3,594,578 |
Issued in reinvestment of distributions | 68,536 | 803,102 |
Redeemed | (5,417,062) | (5,094,728) |
Net increase (decrease) | 697,127 | (697,048) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.68 | $ 59.56 | $ 73.69 | $ 76.12 | $ 54.95 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .27 | .78 | 1.01 F | .61 | .98 G |
Net realized and unrealized gain (loss) | 20.62 | (30.23) | (8.50) | 6.18 | 23.81 |
Total from investment operations | 20.89 | (29.45) | (7.49) | 6.79 | 24.79 |
Distributions from net investment income | (.25) | (.93) | (.87) | (.59) | (.19) |
Distributions from net realized gain | - | (2.51) | (5.78) | (8.65) | (3.45) |
Total distributions | (.25) | (3.44) | (6.65) | (9.24) | (3.64) |
Redemption fees added to paid in capital C | - J | .01 | .01 | .02 | .02 |
Net asset value, end of period | $ 47.32 | $ 26.68 | $ 59.56 | $ 73.69 | $ 76.12 |
Total Return A,B | 78.44% | (51.86)% | (11.16)% | 9.27% | 45.77% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .93% | .90% | .88% | .90% | .95% |
Expenses net of fee waivers, if any | .93% | .90% | .88% | .90% | .95% |
Expenses net of all reductions | .89% | .89% | .87% | .89% | .89% |
Net investment income (loss) | .64% | 1.74% | 1.41% F | .82% | 1.51% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 555,473 | $ 294,618 | $ 699,205 | $ 1,252,565 | $ 1,246,298 |
Portfolio turnover rate E | 264% | 351% | 84% | 124% | 112% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.18 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.15%. G Investment income per share reflects a special dividend which amounted to $.58 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..63%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Financial Services Portfolio | 79.56% | -6.61% | 1.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 29, 2000. 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.
Annual Report
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Benjamin Hesse, Portfolio Manager of Select Financial Services Portfolio: The fund returned 79.56% during the past year, outpacing the S&P 500 but trailing the 85.10% return of the MSCI® U.S. IM Financials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Financials began the period near rock bottom, but soon rallied, buoyed by improving economic conditions and thawing credit markets. Overall, stock picking was quite strong, particularly within asset management/custody banks, specialized finance and multi-line insurance. In addition, currency fluctuations provided a lift to our foreign holdings. However, the fund still lagged the MSCI index due in part to the impact of a small cash position in such a strong market. Industry positioning also hampered results, as did stock picking in certain groups. Investment banking/brokerage, diversified banks and real estate development were the industries detracting the most. Individual disappointments included KeyCorp, a midwest regional bank that struggled after a poorly executed capital raise, and Broadpoint Gleacher Securities, a small investment bank pressured by an earnings shortfall and a slowdown in fixed-income trading. A sizable but underweighted stake in Bank of America, a large diversified financial company that rallied sharply, also proved costly. Top contributors included Genworth Financial, a multi-line insurer that climbed because it did not have to raise as much capital as expected, and CME Group, operator of the Chicago Mercantile Exchange, which benefited as trading volume picked up. I sold CME before period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Financial Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Bank of America Corp. | 5.9 | 2.9 |
Citigroup, Inc. | 5.0 | 1.3 |
JPMorgan Chase & Co. | 5.0 | 3.6 |
Morgan Stanley | 5.0 | 4.6 |
MasterCard, Inc. Class A | 4.7 | 0.5 |
Zions Bancorp | 4.4 | 0.6 |
McGraw-Hill Companies, Inc. | 3.8 | 3.3 |
SunTrust Banks, Inc. | 3.7 | 0.0 |
Comerica, Inc. | 3.4 | 0.5 |
Sumitomo Mitsui Financial Group, Inc. | 3.2 | 0.0 |
| 44.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Commercial Banks | 36.4% |
|
![]() | Capital Markets | 23.7% |
|
![]() | Diversified Financial Services | 18.4% |
|
![]() | Insurance | 7.2% |
|
![]() | IT Services | 6.7% |
|
![]() | All Others* | 7.6% |
|
As of August 31, 2009 | |||
![]() | Capital Markets | 24.4% |
|
![]() | Commercial Banks | 17.6% |
|
![]() | Insurance | 17.4% |
|
![]() | Diversified Financial Services | 12.3% |
|
![]() | IT Services | 8.3% |
|
![]() | All Others* | 20.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Financial Services Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 100.3% | |||
Shares | Value | ||
CAPITAL MARKETS - 23.7% | |||
Asset Management & Custody Banks - 9.4% | |||
AllianceBernstein Holding LP | 202,500 | $ 5,477,625 | |
Bank of New York Mellon Corp. | 168,653 | 4,809,984 | |
EFG International | 506,416 | 6,952,379 | |
Franklin Resources, Inc. | 108,688 | 11,055,743 | |
Janus Capital Group, Inc. | 114,700 | 1,433,750 | |
Legg Mason, Inc. | 134,218 | 3,469,535 | |
State Street Corp. | 51,793 | 2,326,024 | |
T. Rowe Price Group, Inc. | 94,600 | 4,795,274 | |
The Blackstone Group LP | 313,800 | 4,386,924 | |
U.S. Global Investments, Inc. Class A | 98,652 | 954,951 | |
| 45,662,189 | ||
Investment Banking & Brokerage - 14.3% | |||
Broadpoint Gleacher Securities Group, Inc. (a) | 1,878,046 | 7,530,964 | |
Charles Schwab Corp. | 180,151 | 3,298,565 | |
Evercore Partners, Inc. Class A | 167,926 | 5,056,252 | |
GFI Group, Inc. | 1,360,736 | 7,497,655 | |
Goldman Sachs Group, Inc. | 44,300 | 6,926,305 | |
Jefferies Group, Inc. (c) | 219,471 | 5,477,996 | |
MF Global Holdings Ltd. (a) | 1,159,782 | 8,025,691 | |
Morgan Stanley | 850,100 | 23,955,818 | |
TD Ameritrade Holding Corp. (a) | 64,900 | 1,135,101 | |
| 68,904,347 | ||
TOTAL CAPITAL MARKETS | 114,566,536 | ||
COMMERCIAL BANKS - 36.4% | |||
Diversified Banks - 14.7% | |||
Alpha Bank AE (a) | 531,800 | 5,017,637 | |
Banco Macro SA sponsored ADR | 42,052 | 1,095,875 | |
Barclays PLC Sponsored ADR | 267,400 | 5,126,058 | |
BBVA Banco Frances SA sponsored ADR (c) | 231,233 | 1,405,897 | |
China Citic Bank Corp. Ltd. Class H | 5,443,000 | 3,639,325 | |
China Merchants Bank Co. Ltd. | 365,500 | 900,307 | |
Comerica, Inc. | 455,800 | 16,445,264 | |
Mizuho Financial Group, Inc. | 2,164,100 | 4,190,546 | |
National Bank of Greece SA (a) | 415,300 | 7,746,404 | |
National Bank of Greece SA sponsored ADR (c) | 959,400 | 3,703,284 | |
Sumitomo Mitsui Financial Group, Inc. | 483,700 | 15,552,460 | |
U.S. Bancorp, Delaware | 184,200 | 4,533,162 | |
Wells Fargo & Co. | 65,188 | 1,782,240 | |
| 71,138,459 | ||
Regional Banks - 21.7% | |||
1st Pacific Bancorp (a) | 86,193 | 77,574 | |
Atlantic Southern Financial Group, Inc. (a)(c) | 55,206 | 98,267 | |
| |||
Shares | Value | ||
Bancorp New Jersey, Inc. | 9,188 | $ 114,850 | |
BancTrust Financial Group, Inc. (c) | 87,350 | 395,696 | |
Bar Harbor Bankshares | 3,668 | 98,119 | |
Boston Private Financial Holdings, Inc. | 96,800 | 663,080 | |
Bridge Capital Holdings (a) | 13,708 | 111,172 | |
Chicopee Bancorp, Inc. (a) | 7,830 | 100,224 | |
Citizens Banking Corp., Michigan (a) | 3,922,631 | 2,765,455 | |
CoBiz, Inc. (c) | 599,912 | 3,545,480 | |
Evans Bancorp, Inc. | 5,276 | 69,221 | |
Fifth Third Bancorp | 357,600 | 4,366,296 | |
First Bancorp, Puerto Rico (c) | 216,600 | 459,192 | |
Frontier Financial Corp. (a)(c) | 138,316 | 497,938 | |
Glacier Bancorp, Inc. (c) | 253,394 | 3,674,213 | |
Huntington Bancshares, Inc. | 265,900 | 1,278,979 | |
KeyCorp | 1,230,237 | 8,796,195 | |
Landmark Bancorp, Inc. | 2,248 | 36,395 | |
MidWestOne Financial Group, Inc. | 10,512 | 117,840 | |
Monroe Bancorp | 16,350 | 108,728 | |
Nara Bancorp, Inc. (a) | 112,702 | 995,159 | |
Oriental Financial Group, Inc. | 147,500 | 1,628,400 | |
PNC Financial Services Group, Inc. | 27,218 | 1,463,240 | |
Preferred Bank, Los Angeles California (c) | 53,500 | 72,225 | |
Regions Financial Corp. | 2,107,870 | 14,228,123 | |
Salisbury Bancorp, Inc. | 4,550 | 101,465 | |
Smithtown Bancorp, Inc. (c) | 98,500 | 421,580 | |
Southwest Bancorp, Inc., Oklahoma | 22,600 | 176,732 | |
Sterling Bancshares, Inc. | 210,400 | 993,088 | |
Sun Bancorp, Inc., New Jersey | 67,486 | 235,526 | |
SunTrust Banks, Inc. | 749,692 | 17,850,167 | |
SVB Financial Group (a) | 124,600 | 5,552,176 | |
Tamalpais Bancorp | 80,160 | 43,278 | |
Umpqua Holdings Corp. (c) | 300,965 | 3,756,043 | |
United Security Bancshares, California (c) | 20,834 | 100,420 | |
Valley National Bancorp (c) | 67,500 | 972,000 | |
W Holding Co., Inc. | 23,406 | 473,269 | |
West Bancorp., Inc. | 20,005 | 103,426 | |
Wintrust Financial Corp. | 200,355 | 6,820,084 | |
Zions Bancorp (c) | 1,149,400 | 21,309,876 | |
| 104,671,191 | ||
TOTAL COMMERCIAL BANKS | 175,809,650 | ||
CONSUMER FINANCE - 0.1% | |||
Consumer Finance - 0.1% | |||
Promise Co. Ltd. (a)(c) | 72,100 | 552,773 | |
DIVERSIFIED FINANCIAL SERVICES - 18.4% | |||
Other Diversified Financial Services - 15.9% | |||
Bank of America Corp. | 1,693,800 | 28,218,707 | |
Citigroup, Inc. | 7,139,200 | 24,273,280 | |
JPMorgan Chase & Co. | 575,291 | 24,144,963 | |
| 76,636,950 | ||
Common Stocks - continued | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - CONTINUED | |||
Specialized Finance - 2.5% | |||
BM&F BOVESPA SA | 34,200 | $ 222,745 | |
JSE Ltd. | 58,700 | 472,792 | |
Moody's Corp. (c) | 426,097 | 11,342,702 | |
| 12,038,239 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 88,675,189 | ||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Casinos & Gaming - 0.2% | |||
Wynn Macau Ltd. (c) | 796,800 | 1,000,850 | |
INSURANCE - 7.2% | |||
Insurance Brokers - 0.2% | |||
Aon Corp. | 30,700 | 1,256,858 | |
Multi-Line Insurance - 4.0% | |||
Assurant, Inc. | 81,300 | 2,481,276 | |
Genworth Financial, Inc. Class A (a) | 818,361 | 13,044,674 | |
Hartford Financial Services Group, Inc. | 150,500 | 3,667,685 | |
| 19,193,635 | ||
Property & Casualty Insurance - 2.0% | |||
CNA Financial Corp. (a) | 189,105 | 4,650,092 | |
XL Capital Ltd. Class A | 270,900 | 4,949,343 | |
| 9,599,435 | ||
Reinsurance - 1.0% | |||
Everest Re Group Ltd. | 51,855 | 4,429,454 | |
Transatlantic Holdings, Inc. | 6,000 | 298,200 | |
| 4,727,654 | ||
TOTAL INSURANCE | 34,777,582 | ||
INTERNET SOFTWARE & SERVICES - 0.8% | |||
Internet Software & Services - 0.8% | |||
China Finance Online Co. Ltd. ADR (a)(c) | 553,081 | 3,888,159 | |
IT SERVICES - 6.7% | |||
Data Processing & Outsourced Services - 6.5% | |||
Euronet Worldwide, Inc. (a) | 270,976 | 4,910,085 | |
MasterCard, Inc. Class A | 100,709 | 22,596,078 | |
MoneyGram International, Inc. (a)(c) | 1,401,183 | 3,881,277 | |
| 31,387,440 | ||
IT Consulting & Other Services - 0.2% | |||
Satyam Computer Services Ltd. sponsored ADR (a)(c) | 131,900 | 699,070 | |
TOTAL IT SERVICES | 32,086,510 | ||
MEDIA - 4.0% | |||
Advertising - 0.2% | |||
SearchMedia Holdings Ltd. (a) | 250,100 | 1,212,985 | |
| |||
Shares | Value | ||
Publishing - 3.8% | |||
McGraw-Hill Companies, Inc. | 532,132 | $ 18,198,914 | |
TOTAL MEDIA | 19,411,899 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.9% | |||
Diversified Real Estate Activities - 0.4% | |||
Mitsubishi Estate Co. Ltd. | 105,000 | 1,649,029 | |
Real Estate Development - 1.5% | |||
Central China Real Estate Ltd. | 5,923,000 | 1,449,808 | |
Xinyuan Real Estate Co. Ltd. ADR (a) | 1,494,839 | 5,829,872 | |
| 7,279,680 | ||
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 8,928,709 | ||
THRIFTS & MORTGAGE FINANCE - 0.9% | |||
Thrifts & Mortgage Finance - 0.9% | |||
BofI Holding, Inc. (a) | 50,561 | 658,810 | |
Cheviot Financial Corp. | 12,542 | 104,099 | |
First Financial Northwest, Inc. | 14,800 | 96,792 | |
Mayflower Bancorp, Inc. | 1,700 | 11,730 | |
Meridian Interstate Bancorp, Inc. (a) | 54,608 | 546,080 | |
Ocean Shore Holding Co. | 39,517 | 413,348 | |
Osage Bancshares, Inc. | 27,700 | 229,356 | |
Park Bancorp, Inc. (a) | 100 | 440 | |
United Western Bancorp, Inc. | 335,369 | 814,947 | |
Washington Federal, Inc. | 72,278 | 1,408,698 | |
| 4,284,300 | ||
TOTAL COMMON STOCKS (Cost $472,665,135) | 483,982,157 | ||
Convertible Preferred Stocks - 0.0% | |||
|
|
|
|
COMMERCIAL BANKS - 0.0% | |||
Regional Banks - 0.0% | |||
UCBH Holdings, Inc. Series B, 8.50% | 130 | 1,105 | |
Money Market Funds - 6.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 2,413,751 | $ 2,413,751 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 29,237,034 | 29,237,034 | |
TOTAL MONEY MARKET FUNDS (Cost $31,650,785) | 31,650,785 | ||
TOTAL INVESTMENT PORTFOLIO - 106.9% (Cost $504,511,601) | 515,634,047 | ||
NET OTHER ASSETS - (6.9)% | (33,113,684) | ||
NET ASSETS - 100% | $ 482,520,363 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 51,022 |
Fidelity Securities Lending Cash Central Fund | 2,118,053 |
Total | $ 2,169,075 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 483,982,157 | $ 483,982,157 | $ - | $ - |
Convertible Preferred Stocks | 1,105 | - | 1,105 | - |
Money Market Funds | 31,650,785 | 31,650,785 | - | - |
Total Investments in Securities: | $ 515,634,047 | $ 515,632,942 | $ 1,105 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.2% |
Japan | 4.6% |
Greece | 3.4% |
Cayman Islands | 1.9% |
China | 1.7% |
Switzerland | 1.4% |
United Kingdom | 1.1% |
Others (individually less than 1%) | 1.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $90,388,654 of which $89,769,047 and $619,607 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $28,418,391) - See accompanying schedule: Unaffiliated issuers (cost $472,860,816) | $ 483,983,262 |
|
Fidelity Central Funds (cost $31,650,785) | 31,650,785 |
|
Total Investments (cost $504,511,601) |
| $ 515,634,047 |
Receivable for investments sold | 10,367,328 | |
Receivable for fund shares sold | 763,982 | |
Dividends receivable | 471,028 | |
Distributions receivable from Fidelity Central Funds | 26,108 | |
Prepaid expenses | 1,596 | |
Other receivables | 44,656 | |
Total assets | 527,308,745 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,461,723 | |
Payable for investments purchased | 13,219,166 | |
Payable for fund shares redeemed | 475,827 | |
Accrued management fee | 219,524 | |
Other affiliated payables | 136,289 | |
Other payables and accrued expenses | 38,819 | |
Collateral on securities loaned, at value | 29,237,034 | |
Total liabilities | 44,788,382 | |
|
|
|
Net Assets | $ 482,520,363 | |
Net Assets consist of: |
| |
Paid in capital | $ 576,998,233 | |
Distributions in excess of net investment income | (186,830) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (105,416,247) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 11,125,207 | |
Net Assets, for 8,134,418 shares outstanding | $ 482,520,363 | |
Net Asset Value, offering price and redemption price per share ($482,520,363 ÷ 8,134,418 shares) | $ 59.32 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 4,900,979 |
Interest |
| 1,013 |
Income from Fidelity Central Funds (including $2,118,053 from security lending) |
| 2,169,075 |
Total income |
| 7,071,067 |
|
|
|
Expenses | ||
Management fee | $ 2,458,066 | |
Transfer agent fees | 1,388,458 | |
Accounting and security lending fees | 175,912 | |
Custodian fees and expenses | 82,020 | |
Independent trustees' compensation | 2,876 | |
Registration fees | 42,333 | |
Audit | 38,329 | |
Legal | 2,105 | |
Interest | 580 | |
Miscellaneous | 7,169 | |
Total expenses before reductions | 4,197,848 | |
Expense reductions | (182,681) | 4,015,167 |
Net investment income (loss) | 3,055,900 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 118,171,394 | |
Capital gain distribution from Fidelity Central Funds | 1,871 | |
Foreign currency transactions | 252,838 | |
Total net realized gain (loss) |
| 118,426,103 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 89,947,854 | |
Assets and liabilities in foreign currencies | 6,922 | |
Total change in net unrealized appreciation (depreciation) |
| 89,954,776 |
Net gain (loss) | 208,380,879 | |
Net increase (decrease) in net assets resulting from operations | $ 211,436,779 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,055,900 | $ 8,926,409 |
Net realized gain (loss) | 118,426,103 | (215,418,516) |
Change in net unrealized appreciation (depreciation) | 89,954,776 | (90,088,871) |
Net increase (decrease) in net assets resulting from operations | 211,436,779 | (296,580,978) |
Distributions to shareholders from net investment income | (5,034,571) | (7,565,769) |
Distributions to shareholders from net realized gain | (247,305) | (616,556) |
Total distributions | (5,281,876) | (8,182,325) |
Share transactions | 256,861,350 | 334,665,316 |
Reinvestment of distributions | 5,111,284 | 7,877,782 |
Cost of shares redeemed | (213,004,771) | (193,057,404) |
Net increase (decrease) in net assets resulting from share transactions | 48,967,863 | 149,485,694 |
Redemption fees | 53,594 | 153,358 |
Total increase (decrease) in net assets | 255,176,360 | (155,124,251) |
|
|
|
Net Assets | ||
Beginning of period | 227,344,003 | 382,468,254 |
End of period (including distributions in excess of net investment income of $186,830 and undistributed net investment income of $1,639,234, respectively) | $ 482,520,363 | $ 227,344,003 |
Other Information Shares | ||
Sold | 5,247,995 | 5,258,003 |
Issued in reinvestment of distributions | 97,877 | 163,932 |
Redeemed | (4,008,087) | (3,161,525) |
Net increase (decrease) | 1,337,785 | 2,260,410 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 33.45 | $ 84.31 | $ 117.33 | $ 120.01 | $ 114.70 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .37 | 1.58 | 1.73 | 1.56 | 1.41 |
Net realized and unrealized gain (loss) | 26.14 | (51.12) | (27.77) | 10.14 | 13.73 |
Total from investment operations | 26.51 | (49.54) | (26.04) | 11.70 | 15.14 |
Distributions from net investment income | (.62) | (1.22) | (1.45) | (1.29) | (1.34) |
Distributions from net realized gain | (.03) | (.13) | (5.54) | (13.10) | (8.50) |
Total distributions | (.65) | (1.35) | (6.99) | (14.39) | (9.84) |
Redemption fees added to paid in capital C | .01 | .03 | .01 | .01 | .01 |
Net asset value, end of period | $ 59.32 | $ 33.45 | $ 84.31 | $ 117.33 | $ 120.01 |
Total Return A,B | 79.56% | (59.22)% | (23.05)% | 10.14% | 14.51% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .96% | .94% | .90% | .93% | .97% |
Expenses net of fee waivers, if any | .96% | .94% | .90% | .93% | .97% |
Expenses net of all reductions | .92% | .93% | .89% | .92% | .95% |
Net investment income (loss) | .70% | 2.57% | 1.57% | 1.31% | 1.26% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 482,520 | $ 227,344 | $ 382,468 | $ 541,576 | $ 490,239 |
Portfolio turnover rate E | 301% | 129% | 53% | 55% | 47% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Home Finance Portfolio | 44.74% | -21.03% | -2.54% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Home Finance Portfolio on February 29, 2000. 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.
Annual Report
Home Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Christopher Lee, Portfolio Manager of Select Home Finance Portfolio: For the 12 months ending February 28, 2010, the fund returned 44.74%, lagging the S&P 500 but outpacing the 34.83% return of the MSCI® U.S. IM Thrifts & Mortgage Finance 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Home finance stocks benefited as the economy improved, the housing market stabilized and investor confidence returned. The year's best performers were more-credit-sensitive companies, which beat the well-capitalized, more-conservatively run names that dominate the MSCI index. The fund benefited from its underweightings in many of the safer, more stable thrift/mortgage finance companies that underperformed, such as People's United Financial, and its bias toward more-credit-sensitive companies in related industries outside the index. Standouts included Capital One Financial, a consumer credit card company, and PNC Financial Services Group, a regional bank based in Pittsburgh. Neither was in the index. Astoria Financial, a New York City thrift/mortgage finance company that rallied nicely, also aided performance. Having little or no exposure to certain thrifts/mortgage finance companies in the MSCI index, including New York Community Bancorp, whose core business is multi-family loans in New York City, and Freddie Mac, which was taken over by the government, hindered relative results, as both stocks posted steep gains. A small cash position during such a strong market also hurt performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Home Finance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
People's United Financial, Inc. | 9.5 | 6.6 |
New York Community Bancorp, Inc. | 9.1 | 2.9 |
Hudson City Bancorp, Inc. | 5.1 | 9.5 |
First Niagara Financial Group, Inc. | 4.9 | 4.5 |
Astoria Financial Corp. | 4.3 | 4.4 |
Ocwen Financial Corp. | 4.2 | 2.9 |
Northwest Bancshares, Inc. | 4.1 | 0.0 |
TFS Financial Corp. | 4.1 | 0.0 |
MGIC Investment Corp. | 3.6 | 4.4 |
Washington Federal, Inc. | 3.4 | 4.1 |
| 52.3 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Thrifts & Mortgage Finance | 71.4% |
|
![]() | Commercial Banks | 9.2% |
|
![]() | Diversified Financial Services | 4.7% |
|
![]() | Insurance | 3.4% |
|
![]() | Consumer Finance | 3.2% |
|
![]() | All Others* | 8.1% |
|
As of August 31, 2009 | |||
![]() | Thrifts & Mortgage Finance | 72.5% |
|
![]() | Commercial Banks | 7.6% |
|
![]() | Insurance | 4.6% |
|
![]() | Real Estate Investment Trusts | 3.8% |
|
![]() | IT Services | 3.6% |
|
![]() | All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Home Finance Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value | ||
CAPITAL MARKETS - 1.8% | |||
Asset Management & Custody Banks - 1.4% | |||
Bank of New York Mellon Corp. | 40,000 | $ 1,140,800 | |
Investment Banking & Brokerage - 0.4% | |||
Charles Schwab Corp. | 20,000 | 366,200 | |
TOTAL CAPITAL MARKETS | 1,507,000 | ||
COMMERCIAL BANKS - 9.2% | |||
Diversified Banks - 4.8% | |||
Comerica, Inc. | 45,000 | 1,623,600 | |
Wells Fargo & Co. | 90,000 | 2,460,600 | |
| 4,084,200 | ||
Regional Banks - 4.4% | |||
BB&T Corp. | 25,000 | 713,250 | |
Investors Bancorp, Inc. (a) | 100,000 | 1,287,000 | |
PNC Financial Services Group, Inc. | 17,500 | 940,800 | |
Webster Financial Corp. | 15,000 | 240,000 | |
Wilmington Trust Corp., Delaware | 43,100 | 621,502 | |
| 3,802,552 | ||
TOTAL COMMERCIAL BANKS | 7,886,752 | ||
CONSUMER FINANCE - 3.2% | |||
Consumer Finance - 3.2% | |||
American Express Co. | 25,000 | 954,750 | |
Capital One Financial Corp. | 28,200 | 1,064,550 | |
Discover Financial Services | 50,000 | 682,500 | |
| 2,701,800 | ||
DIVERSIFIED FINANCIAL SERVICES - 4.7% | |||
Other Diversified Financial Services - 4.7% | |||
Bank of America Corp. | 115,000 | 1,915,900 | |
Citigroup, Inc. | 125,000 | 425,000 | |
JPMorgan Chase & Co. | 40,000 | 1,678,800 | |
| 4,019,700 | ||
INSURANCE - 3.4% | |||
Multi-Line Insurance - 1.1% | |||
Genworth Financial, Inc. Class A (a) | 60,000 | 956,400 | |
Property & Casualty Insurance - 2.3% | |||
The First American Corp. | 60,000 | 1,933,800 | |
TOTAL INSURANCE | 2,890,200 | ||
IT SERVICES - 1.1% | |||
Data Processing & Outsourced Services - 1.1% | |||
Fidelity National Information Services, Inc. | 40,000 | 901,600 | |
| |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - 1.8% | |||
Mortgage REITs - 1.8% | |||
Chimera Investment Corp. | 100,000 | $ 400,000 | |
MFA Financial, Inc. | 160,000 | 1,158,400 | |
| 1,558,400 | ||
THRIFTS & MORTGAGE FINANCE - 71.4% | |||
Thrifts & Mortgage Finance - 71.4% | |||
Abington Bancorp, Inc. | 185,000 | 1,422,650 | |
Astoria Financial Corp. | 275,000 | 3,649,250 | |
Bank Mutual Corp. | 200,000 | 1,298,000 | |
Beneficial Mutual Bancorp, Inc. (a) | 150,000 | 1,408,500 | |
Brookline Bancorp, Inc., Delaware | 220,000 | 2,261,600 | |
Capitol Federal Financial | 40,000 | 1,384,800 | |
First Financial Holdings, Inc. | 30,000 | 358,800 | |
First Niagara Financial Group, Inc. | 300,000 | 4,212,000 | |
Flushing Financial Corp. | 125,000 | 1,586,250 | |
Hudson City Bancorp, Inc. (c) | 320,000 | 4,326,400 | |
Meridian Interstate Bancorp, Inc. (a) | 40,000 | 400,000 | |
MGIC Investment Corp. (a)(c) | 400,000 | 3,064,000 | |
New York Community Bancorp, Inc. (c) | 500,000 | 7,745,000 | |
Northwest Bancshares, Inc. | 300,000 | 3,543,000 | |
Ocwen Financial Corp. (a)(c) | 330,000 | 3,567,300 | |
Oritani Financial Corp. | 30,000 | 475,200 | |
People's United Financial, Inc. | 515,000 | 8,121,550 | |
Radian Group, Inc. (c) | 255,400 | 2,508,028 | |
Rockville Financial, Inc. | 20,000 | 212,800 | |
TFS Financial Corp. | 270,000 | 3,469,500 | |
ViewPoint Financial Group | 125,000 | 1,826,250 | |
Washington Federal, Inc. | 150,000 | 2,923,500 | |
WSFS Financial Corp. | 40,000 | 1,227,600 | |
| 60,991,978 | ||
TOTAL COMMON STOCKS (Cost $82,030,944) | 82,457,430 | ||
Money Market Funds - 25.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 4,034,502 | 4,034,502 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 17,433,400 | 17,433,400 | |
TOTAL MONEY MARKET FUNDS (Cost $21,467,902) | 21,467,902 | ||
TOTAL INVESTMENT PORTFOLIO - 121.7% (Cost $103,498,846) | 103,925,332 | ||
NET OTHER ASSETS - (21.7)% | (18,516,714) | ||
NET ASSETS - 100% | $ 85,408,618 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,851 |
Fidelity Securities Lending Cash Central Fund | 31,281 |
Total | $ 38,132 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $146,041,140 of which $97,174,837 and $48,866,303 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Home Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $16,713,017) - See accompanying schedule: Unaffiliated issuers (cost $82,030,944) | $ 82,457,430 |
|
Fidelity Central Funds (cost $21,467,902) | 21,467,902 |
|
Total Investments (cost $103,498,846) |
| $ 103,925,332 |
Receivable for fund shares sold | 378,286 | |
Dividends receivable | 116,638 | |
Distributions receivable from Fidelity Central Funds | 1,804 | |
Prepaid expenses | 236 | |
Other receivables | 6,350 | |
Total assets | 104,428,646 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,391,575 | |
Payable for fund shares redeemed | 105,909 | |
Accrued management fee | 36,139 | |
Other affiliated payables | 24,729 | |
Other payables and accrued expenses | 28,276 | |
Collateral on securities loaned, at value | 17,433,400 | |
Total liabilities | 19,020,028 | |
|
|
|
Net Assets | $ 85,408,618 | |
Net Assets consist of: |
| |
Paid in capital | $ 233,058,364 | |
Undistributed net investment income | 313,820 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (148,390,052) | |
Net unrealized appreciation (depreciation) on investments | 426,486 | |
Net Assets, for 7,376,313 shares outstanding | $ 85,408,618 | |
Net Asset Value, offering price and redemption price per share ($85,408,618 ÷ 7,376,313 shares) | $ 11.58 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,099,862 |
Interest |
| 2 |
Income from Fidelity Central Funds (including $31,281 from security lending) |
| 38,132 |
Total income |
| 2,137,996 |
|
|
|
Expenses | ||
Management fee | $ 375,466 | |
Transfer agent fees | 230,212 | |
Accounting and security lending fees | 26,991 | |
Custodian fees and expenses | 10,403 | |
Independent trustees' compensation | 517 | |
Registration fees | 19,788 | |
Audit | 35,810 | |
Legal | 696 | |
Miscellaneous | 1,256 | |
Total expenses before reductions | 701,139 | |
Expense reductions | (17,996) | 683,143 |
Net investment income (loss) | 1,454,853 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,027,821 | |
Investment not meeting investment restrictions | (809) | |
Foreign currency transactions | (608) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 809 | |
Total net realized gain (loss) |
| 2,027,213 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 19,933,083 | |
Assets and liabilities in foreign currencies | 138 | |
Total change in net unrealized appreciation (depreciation) |
| 19,933,221 |
Net gain (loss) | 21,960,434 | |
Net increase (decrease) in net assets resulting from operations | $ 23,415,287 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,454,853 | $ 4,543,310 |
Net realized gain (loss) | 2,027,213 | (147,880,334) |
Change in net unrealized appreciation (depreciation) | 19,933,221 | 40,527,045 |
Net increase (decrease) in net assets resulting from operations | 23,415,287 | (102,809,979) |
Distributions to shareholders from net investment income | (2,931,320) | (3,386,062) |
Distributions to shareholders from net realized gain | - | (298,730) |
Total distributions | (2,931,320) | (3,684,792) |
Share transactions | 37,068,220 | 69,272,127 |
Reinvestment of distributions | 2,830,347 | 3,541,834 |
Cost of shares redeemed | (26,423,145) | (66,122,745) |
Net increase (decrease) in net assets resulting from share transactions | 13,475,422 | 6,691,216 |
Redemption fees | 9,764 | 40,782 |
Total increase (decrease) in net assets | 33,969,153 | (99,762,773) |
|
|
|
Net Assets | ||
Beginning of period | 51,439,465 | 151,202,238 |
End of period (including undistributed net investment income of $313,820 and undistributed net investment income of $1,794,191, respectively) | $ 85,408,618 | $ 51,439,465 |
Other Information Shares | ||
Sold | 3,532,774 | 3,651,965 |
Issued in reinvestment of distributions | 288,408 | 284,292 |
Redeemed | (2,584,163) | (3,650,187) |
Net increase (decrease) | 1,237,019 | 286,070 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 8.38 | $ 25.83 | $ 48.40 | $ 51.83 | $ 59.12 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .22 | .75 | .86 | .81 | 1.32 F |
Net realized and unrealized gain (loss) | 3.44 | (17.60) | (20.77) | 3.01 | (.77) |
Total from investment operations | 3.66 | (16.85) | (19.91) | 3.82 | .55 |
Distributions from net investment income | (.46) | (.56) | (.80) | (.80) | (.99) |
Distributions from net realized gain | - | (.05) | (1.86) | (6.45) | (6.85) |
Total distributions | (.46) | (.61) | (2.66) | (7.25) | (7.84) |
Redemption fees added to paid in capital C | - I | .01 | - I | - I | - I |
Net asset value, end of period | $ 11.58 | $ 8.38 | $ 25.83 | $ 48.40 | $ 51.83 |
Total Return A,B | 44.74% | (65.96)% | (42.37)% | 7.10% | .99% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.05% | .99% | .93% | .93% | .97% |
Expenses net of fee waivers, if any | 1.05% | .99% | .93% | .93% | .97% |
Expenses net of all reductions | 1.02% | .99% | .92% | .93% | .94% |
Net investment income (loss) | 2.18% | 4.48% | 2.21% | 1.55% | 2.36% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 85,409 | $ 51,439 | $ 151,202 | $ 256,873 | $ 292,124 |
Portfolio turnover rate E | 153% | 79% | 36% | 52% | 76% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.54 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.40%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Insurance Portfolio | 74.97% | -3.96% | 7.26% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 29, 2000. 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.
Annual Report
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Court Dignan, Portfolio Manager of Select Insurance Portfolio: For the year, the fund advanced 74.97%, solidly outpacing the S&P 500 and the 70.50% gain of the MSCI® U.S. IM Insurance 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Solid security selection was the primary driver behind the fund's outperformance of the MSCI index. Stock picking was most successful in the property/casualty insurance group, which was by far the biggest contributor to overall results. Four out of the five top contributors were companies from this industry: XL Capital, CNA Financial, Assured Guaranty and an underweighting in Progressive. CNA was an out-of-index holding. An overweighting in multi-line insurer Genworth Financial also helped. Conversely, overall market selection hampered the fund's returns - particularly an underweighting in the strong-performing life insurance industry - as did a modest cash position. Individual detractors included overweighted positions in Axis Capital Holdings and RenaissanceRe Holdings, and underweightings in life/health insurance firms Prudential Financial and Principal Financial. Some of the stocks I've mentioned were sold by period end while others were added.
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.
Annual Report
Insurance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Berkshire Hathaway, Inc. Class B | 15.2 | 5.6 |
MetLife, Inc. | 8.7 | 9.7 |
The Travelers Companies, Inc. | 8.1 | 7.4 |
Prudential Financial, Inc. | 6.0 | 0.0 |
Allstate Corp. | 5.9 | 0.9 |
ACE Ltd. | 4.7 | 7.4 |
AFLAC, Inc. | 4.5 | 1.4 |
Unum Group | 4.5 | 0.0 |
Progressive Corp. | 3.8 | 0.0 |
XL Capital Ltd. Class A | 3.6 | 5.7 |
| 65.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Insurance | 99.1% |
|
![]() | All Others* | 0.9% |
|
As of August 31, 2009 | |||
![]() | Insurance | 92.2% |
|
![]() | Software | 0.5% |
|
![]() | Thrifts & Mortgage Finance | 0.4% |
|
![]() | Diversified Financial Services | 0.2% |
|
![]() | Capital Markets | 0.1% |
|
![]() | All Others* | 6.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Insurance Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
INSURANCE - 99.1% | |||
Insurance Brokers - 1.9% | |||
Aon Corp. | 29,100 | $ 1,191,354 | |
Marsh & McLennan Companies, Inc. | 39,500 | 917,190 | |
Willis Group Holdings PLC | 27,100 | 807,038 | |
| 2,915,582 | ||
Life & Health Insurance - 33.4% | |||
AFLAC, Inc. | 137,400 | 6,794,430 | |
Delphi Financial Group, Inc. Class A | 170,800 | 3,643,164 | |
Lincoln National Corp. | 121,900 | 3,069,442 | |
MetLife, Inc. | 360,775 | 13,128,602 | |
Principal Financial Group, Inc. | 218,800 | 5,078,348 | |
Prudential Financial, Inc. | 171,500 | 8,988,315 | |
Torchmark Corp. | 58,300 | 2,710,950 | |
Unum Group | 320,800 | 6,675,848 | |
| 50,089,099 | ||
Multi-Line Insurance - 7.8% | |||
Assurant, Inc. | 16,100 | 491,372 | |
Genworth Financial, Inc. Class A (a) | 213,800 | 3,407,972 | |
Hartford Financial Services Group, Inc. | 59,100 | 1,440,267 | |
HCC Insurance Holdings, Inc. | 114,900 | 3,205,710 | |
Loews Corp. | 84,800 | 3,091,808 | |
| 11,637,129 | ||
Property & Casualty Insurance - 47.0% | |||
ACE Ltd. | 141,649 | 7,081,034 | |
Allstate Corp. | 282,200 | 8,818,750 | |
Amerisafe, Inc. (a) | 83,344 | 1,434,350 | |
Argo Group International Holdings, Ltd. | 52,600 | 1,463,858 | |
Berkshire Hathaway, Inc.: | |||
Class A (a) | 2 | 239,600 | |
Class B (a)(c) | 284,769 | 22,818,540 | |
Progressive Corp. | 332,500 | 5,702,375 | |
The Chubb Corp. | 74,158 | 3,742,013 | |
The First American Corp. | 55,500 | 1,788,765 | |
The Travelers Companies, Inc. | 230,200 | 12,106,218 | |
XL Capital Ltd. Class A | 298,255 | 5,449,119 | |
| 70,644,622 | ||
| |||
Shares | Value | ||
Reinsurance - 9.0% | |||
Endurance Specialty Holdings Ltd. | 55,300 | $ 2,126,838 | |
PartnerRe Ltd. | 33,200 | 2,643,052 | |
Platinum Underwriters Holdings Ltd. | 73,900 | 2,763,121 | |
Reinsurance Group of America, Inc. | 22,800 | 1,083,684 | |
RenaissanceRe Holdings Ltd. | 35,895 | 1,987,147 | |
Validus Holdings Ltd. | 102,509 | 2,869,227 | |
| 13,473,069 | ||
TOTAL COMMON STOCKS (Cost $129,338,631) | 148,759,501 | ||
Money Market Funds - 10.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 2,035,294 | 2,035,294 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 13,624,200 | 13,624,200 | |
TOTAL MONEY MARKET FUNDS (Cost $15,659,494) | 15,659,494 | ||
TOTAL INVESTMENT PORTFOLIO - 109.5% (Cost $144,998,125) | 164,418,995 | ||
NET OTHER ASSETS - (9.5)% | (14,243,369) | ||
NET ASSETS - 100% | $ 150,175,626 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 10,450 |
Fidelity Securities Lending Cash Central Fund | 23,025 |
Total | $ 33,475 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 85.5% |
Bermuda | 9.3% |
Switzerland | 4.7% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $37,283,920 of which $1,214,111 and $36,069,809 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $13,477,866) - See accompanying schedule: Unaffiliated issuers (cost $129,338,631) | $ 148,759,501 |
|
Fidelity Central Funds (cost $15,659,494) | 15,659,494 |
|
Total Investments (cost $144,998,125) |
| $ 164,418,995 |
Cash | 182,738 | |
Receivable for fund shares sold | 215,677 | |
Dividends receivable | 90,926 | |
Distributions receivable from Fidelity Central Funds | 2,066 | |
Prepaid expenses | 359 | |
Other receivables | 2,734 | |
Total assets | 164,913,495 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 932,528 | |
Payable for fund shares redeemed | 43,405 | |
Accrued management fee | 67,252 | |
Other affiliated payables | 40,482 | |
Other payables and accrued expenses | 30,002 | |
Collateral on securities loaned, at value | 13,624,200 | |
Total liabilities | 14,737,869 | |
|
|
|
Net Assets | $ 150,175,626 | |
Net Assets consist of: |
| |
Paid in capital | $ 172,422,854 | |
Undistributed net investment income | 7,515 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (41,675,613) | |
Net unrealized appreciation (depreciation) on investments | 19,420,870 | |
Net Assets, for 3,614,368 shares outstanding | $ 150,175,626 | |
Net Asset Value, offering price and redemption price per share ($150,175,626 ÷ 3,614,368 shares) | $ 41.55 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 2,172,780 |
Income from Fidelity Central Funds (including $23,025 from security lending) |
| 33,475 |
Total income |
| 2,206,255 |
|
|
|
Expenses | ||
Management fee | $ 640,747 | |
Transfer agent fees | 375,732 | |
Accounting and security lending fees | 44,878 | |
Custodian fees and expenses | 12,457 | |
Independent trustees' compensation | 745 | |
Registration fees | 18,517 | |
Audit | 35,656 | |
Legal | 542 | |
Miscellaneous | 1,542 | |
Total expenses before reductions | 1,130,816 | |
Expense reductions | (22,447) | 1,108,369 |
Net investment income (loss) | 1,097,886 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (2,766,703) | |
Foreign currency transactions | 5,209 | |
Total net realized gain (loss) |
| (2,761,494) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,104,154 | |
Assets and liabilities in foreign currencies | (153) | |
Total change in net unrealized appreciation (depreciation) |
| 56,104,001 |
Net gain (loss) | 53,342,507 | |
Net increase (decrease) in net assets resulting from operations | $ 54,440,393 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,097,886 | $ 1,340,884 |
Net realized gain (loss) | (2,761,494) | (38,219,843) |
Change in net unrealized appreciation (depreciation) | 56,104,001 | (42,115,199) |
Net increase (decrease) in net assets resulting from operations | 54,440,393 | (78,994,158) |
Distributions to shareholders from net investment income | (1,083,490) | (1,343,177) |
Distributions to shareholders from net realized gain | - | (51,409) |
Total distributions | (1,083,490) | (1,394,586) |
Share transactions | 65,680,133 | 54,368,280 |
Reinvestment of distributions | 1,053,143 | 1,331,943 |
Cost of shares redeemed | (46,500,482) | (52,802,582) |
Net increase (decrease) in net assets resulting from share transactions | 20,232,794 | 2,897,641 |
Redemption fees | 6,001 | 8,364 |
Total increase (decrease) in net assets | 73,595,698 | (77,482,739) |
|
|
|
Net Assets | ||
Beginning of period | 76,579,928 | 154,062,667 |
End of period (including undistributed net investment income of $7,515 and distributions in excess of net investment income of $12,126, respectively) | $ 150,175,626 | $ 76,579,928 |
Other Information Shares | ||
Sold | 1,715,410 | 1,588,134 |
Issued in reinvestment of distributions | 26,936 | 44,579 |
Redeemed | (1,325,955) | (1,286,940) |
Net increase (decrease) | 416,391 | 345,773 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 23.95 | $ 54.02 | $ 69.38 | $ 68.72 | $ 62.15 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .34 | .51 | .45 | .44 | .70 F |
Net realized and unrealized gain (loss) | 17.60 | (30.02) | (10.95) | 5.25 | 7.71 |
Total from investment operations | 17.94 | (29.51) | (10.50) | 5.69 | 8.41 |
Distributions from net investment income | (.34) | (.54) | (.30) | (.40) | (.60) |
Distributions from net realized gain | - | (.02) | (4.56) | (4.64) | (1.26) |
Total distributions | (.34) | (.56) | (4.86) | (5.04) | (1.86) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | .02 |
Net asset value, end of period | $ 41.55 | $ 23.95 | $ 54.02 | $ 69.38 | $ 68.72 |
Total Return A,B | 74.97% | (54.83)% | (16.04)% | 8.33% | 13.68% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .99% | .97% | .93% | .98% | 1.03% |
Expenses net of fee waivers, if any | .99% | .97% | .93% | .98% | 1.03% |
Expenses net of all reductions | .97% | .97% | .93% | .98% | 1.02% |
Net investment income (loss) | .96% | 1.27% | .65% | .64% | 1.08% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 150,176 | $ 76,580 | $ 154,063 | $ 244,251 | $ 208,927 |
Portfolio turnover rate E | 215% | 426% | 60% | 58% | 44% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.38 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .50%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio, and Insurance Portfolio (the Funds) are funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds are non-diversified with the exception of Home Finance Portfolio, Financial Services Portfolio, and Banking Portfolio. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010 is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, certain foreign taxes, partnerships, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales, and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Banking Portfolio | $ 437,257,684 | $ 44,444,051 | $ (81,601,846) | $ (37,157,795) |
Brokerage and Investment Management Portfolio | 633,271,371 | 64,158,126 | (66,740,532) | (2,582,406) |
Financial Services Portfolio | 519,725,829 | 39,733,623 | (43,825,405) | (4,091,782) |
Home Finance Portfolio | 105,486,945 | 7,029,985 | (8,591,598) | (1,561,613) |
Insurance Portfolio | 149,379,469 | 17,240,615 | (2,201,089) | 15,039,526 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Capital loss | Net unrealized |
Banking Portfolio | $ 168,615 | $ (47,575,078) | $ (37,158,224) |
Brokerage and Investment Management Portfolio | 491,587 | (127,368,480) | (2,580,830) |
Financial Services Portfolio | - | (90,388,654) | (4,089,021) |
Home Finance Portfolio | 313,881 | (146,041,140) | (1,561,613) |
Insurance Portfolio | 7,516 | (37,283,920) | 15,039,526 |
The tax character of distributions paid was as follows:
February 28, 2010 | Ordinary | Total |
Banking Portfolio | $ 4,369,898 | $ 4,369,898 |
Brokerage and Investment Management Portfolio | 3,004,230 | 3,004,230 |
Financial Services Portfolio | 5,281,876 | 5,281,876 |
Home Finance Portfolio | 2,931,320 | 2,931,320 |
Insurance Portfolio | 1,083,490 | 1,083,490 |
February 28, 2009 | Ordinary | Long-term | Total |
Banking Portfolio | $ 8,084,799 | $ 698,226 | $ 8,783,025 |
Brokerage and Investment Management Portfolio | 10,492,099 | 29,161,301 | 39,653,400 |
Financial Services Portfolio | 7,565,769 | 616,556 | 8,182,325 |
Home Finance Portfolio | 3,386,062 | 298,730 | 3,684,792 |
Insurance Portfolio | 1,368,057 | 26,529 | 1,394,586 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Banking Portfolio | 344,902,431 | 292,507,964 |
Brokerage and Investment Management Portfolio | 1,358,921,236 | 1,290,676,889 |
Financial Services Portfolio | 1,327,337,509 | 1,251,266,118 |
Home Finance Portfolio | 110,589,689 | 99,416,102 |
Insurance Portfolio | 260,001,679 | 240,825,396 |
Brokerage and Investment Management Portfolio realized a gain and loss of $12,293 and $27,282, respectively, on the sales of investments which did not meet the investment restrictions of the Fund. The loss of $27,282 was fully reimbursed by the Fund's investment advisor.
Home Finance Portfolio realized a loss of $809 on sales of investments which did not meet the investment restrictions of the Fund. The loss of $809 was fully reimbursed by the Fund's investment advisor.
Annual Report
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the 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% | .26% | .56% |
Brokerage and Investment Management Portfolio | .30% | .26% | .56% |
Financial Services Portfolio | .30% | .26% | .56% |
Home Finance Portfolio | .30% | .26% | .56% |
Insurance Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Banking Portfolio | .31% |
Brokerage and Investment Management Portfolio | .29% |
Financial Services Portfolio | .32% |
Home Finance Portfolio | .34% |
Insurance Portfolio | .33% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Banking Portfolio | $ 25,846 |
Brokerage and Investment Management Portfolio | 106,230 |
Financial Services Portfolio | 118,208 |
Home Finance Portfolio | 14,090 |
Insurance Portfolio | 4,248 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily | Weighted Average | Interest |
Brokerage and Investment Management Portfolio | Borrower | $ 7,844,636 | .39% | $ 1,859 |
Financial Services Portfolio | Borrower | 5,403,000 | .39% | 580 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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 is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Banking Portfolio | $ 1,001 |
Brokerage and Investment Management Portfolio | 1,810 |
Financial Services Portfolio | 1,504 |
Home Finance Portfolio | 231 |
Insurance Portfolio | 384 |
During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Banking Portfolio | $ 20,336 | $ - |
Brokerage and Investment Management Portfolio | 174,968 | - |
Financial Services Portfolio | 182,681 | - |
Home Finance Portfolio | 17,984 | 12 |
Insurance Portfolio | 22,447 | - |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the PAS U.S. Opportunity Fidelity Fund of Funds and the VIP FundsManager 60% Portfolio were the owners of record of approximately 12% and 12%, respectively, of the total outstanding shares of Insurance Portfolio. The PAS Funds of Funds and the FundsManager Portfolios were the owners of record, in the aggregate, of approximately 20% and 23%, respectively, of the total outstanding shares of Insurance Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio and Insurance Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the years then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010- |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 2009 | December 2009 |
Financial Services Portfolio | 62% | 72% |
Brokerage and Investment Management Portfolio | 100% | 100% |
Insurance Portfolio | 100% | 100% |
Home Finance Portfolio | 45% | 100% |
Banking Portfolio | 69% | 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 2009 | December 2009 |
Financial Services Portfolio | 56% | 86% |
Brokerage and Investment Management Portfolio | 100% | 100% |
Insurance Portfolio | 100% | 100% |
Home Finance Portfolio | 39% | 100% |
Banking Portfolio | 55% | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELFIN-UANNPRO-0410
1.910420.100
Fidelity®
Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Health Care Sector |
|
|
Biotechnology |
| |
Health Care |
| |
Medical Delivery |
| |
Medical Equipment and Systems |
| |
Pharmaceuticals |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
* Fund Updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Portfolios Health Care Sector
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 toFebruary 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Biotechnology Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,049.00 | $ 4.47 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Health Care Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,128.10 | $ 4.49 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
Medical Delivery Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,181.30 | $ 5.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Medical Equipment and Systems Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,118.80 | $ 4.62 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Pharmaceuticals Portfolio | 1.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,131.80 | $ 5.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.84 | $ 5.01 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Biotechnology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Biotechnology Portfolio | 24.19% | 6.70% | -4.23% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 29, 2000. 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.
Annual Report
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Rajiv Kaul, Portfolio Manager of Select Biotechnology Portfolio: During the year, the fund returned 24.19%, trailing the S&P 500 but handily beating the 20.40% mark of the MSCI® U.S. IM Biotechnology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Favorable stock selection in the biotechnology group, which accounted for almost 92% of the fund's net assets, on average, was the main driver of performance. A large underweighting in major index component Gilead Sciences was a positive factor, as the stock was held back by concern about patent expirations. Likewise, the fund benefited from an underweighted exposure to Genzyme, another large index component. Manufacturing problems dampened sales of its key drug Cerezyme, a treatment for an enzyme disorder called Gaucher disease. Overweighted positions that aided performance included United Therapeutics, which successfully launched two medications, Tyvaso and Adcirca, which had recently been approved by the U.S. Food and Drug Administration (FDA) for the treatment of pulmonary arterial hypertension. Other contributors were Alexion Pharmaceuticals, BioMarin Pharmaceutical and Acorda Therapeutics. Conversely, an out-of-index investment of more than 7% in pharmaceuticals stocks was counterproductive, as my picks in the group posted a double-digit gain but lagged the MSCI index. A small position in health care supplies - also out of index - detracted modestly. Not owning more of Celgene's stock weighed on the fund's performance. A major index component, Celgene saw its share price rise sharply after the company announced favorable clinical trial results for its multiple myeloma drug, Revlimid. Not owning Medarex - which was acquired by Bristol-Myers Squibb during the period - also held back performance. Anadys Pharmaceuticals, an out-of-index holding, that was sold by period end, was another detractor. The stock fell sharply despite positive news related to the antiviral activity of ANA598, the company's hepatitis C drug. Unrewarding timing in our positioning in cancer drug maker Dendreon further dampened results.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Biotechnology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 17.3 | 20.5 |
Gilead Sciences, Inc. | 8.0 | 4.6 |
Alexion Pharmaceuticals, Inc. | 6.3 | 7.2 |
Cephalon, Inc. | 4.8 | 3.5 |
Acorda Therapeutics, Inc. | 4.6 | 3.3 |
Vertex Pharmaceuticals, Inc. | 4.6 | 4.9 |
Genzyme Corp. | 4.3 | 5.2 |
Biogen Idec, Inc. | 4.3 | 9.5 |
United Therapeutics Corp. | 4.2 | 5.0 |
BioMarin Pharmaceutical, Inc. | 3.8 | 2.3 |
| 62.2 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Biotechnology | 91.9% |
|
![]() | Pharmaceuticals | 7.3% |
|
![]() | Health Care | 0.4% |
|
![]() | All Others* | 0.4% |
|
As of August 31, 2009 | |||
![]() | Biotechnology | 93.1% |
|
![]() | Pharmaceuticals | 6.5% |
|
![]() | Health Care | 0.4% |
|
![]() | Life Sciences Tools & Services | 0.3% |
|
![]() | All Others*† | (0.3)% |
|
* Includes short-term investments and net other assets. |
† Short-term investments and net other assets are not included in the pie chart. |
Annual Report
Biotechnology Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 91.3% | |||
Biotechnology - 91.3% | |||
Abraxis BioScience, Inc. (a) | 48,691 | $ 1,575,154 | |
Acadia Pharmaceuticals, Inc. (a) | 324,088 | 424,555 | |
Acorda Therapeutics, Inc. (a) | 1,636,584 | 49,392,105 | |
Affymax, Inc. (a) | 159,496 | 2,982,575 | |
Alexion Pharmaceuticals, Inc. (a) | 1,355,630 | 67,130,798 | |
Alkermes, Inc. (a) | 741,458 | 8,497,109 | |
Allos Therapeutics, Inc. (a)(c) | 2,684,000 | 20,881,520 | |
Alnylam Pharmaceuticals, Inc. (a)(c) | 273,302 | 4,760,921 | |
AMAG Pharmaceuticals, Inc. (a) | 305,976 | 11,685,223 | |
Amgen, Inc. (a) | 3,261,176 | 184,615,174 | |
Amylin Pharmaceuticals, Inc. (a)(c) | 728,216 | 13,763,282 | |
Antigenics, Inc. (a)(c) | 1,014,400 | 781,088 | |
Antigenics, Inc. warrants 1/9/18 (a)(f) | 1,548,000 | 998,760 | |
Arena Pharmaceuticals, Inc. (a)(c) | 417,180 | 1,268,227 | |
ARIAD Pharmaceuticals, Inc. (a) | 445,400 | 1,131,316 | |
Biogen Idec, Inc. (a) | 840,087 | 46,213,186 | |
BioMarin Pharmaceutical, Inc. (a)(c) | 2,056,838 | 41,136,760 | |
Celera Corp. (a) | 371,256 | 2,223,823 | |
Celgene Corp. (a) | 346,427 | 20,619,335 | |
Cephalon, Inc. (a)(c) | 752,961 | 51,705,832 | |
Cepheid, Inc. (a) | 72,100 | 1,088,710 | |
Clinical Data, Inc. (a)(c) | 402,937 | 7,325,395 | |
Cubist Pharmaceuticals, Inc. (a) | 52,908 | 1,113,184 | |
Dendreon Corp. (a)(c) | 1,215,600 | 37,963,188 | |
Enzon Pharmaceuticals, Inc. (a)(c) | 221,900 | 2,061,451 | |
Exelixis, Inc. (a) | 699,300 | 4,524,471 | |
Facet Biotech Corp. (a) | 189,940 | 3,113,117 | |
Genomic Health, Inc. (a)(c) | 40,000 | 716,000 | |
Genzyme Corp. (a) | 812,165 | 46,455,838 | |
Gilead Sciences, Inc. (a) | 1,788,823 | 85,165,863 | |
Halozyme Therapeutics, Inc. (a) | 170,090 | 930,392 | |
Human Genome Sciences, Inc. (a)(c) | 1,092,859 | 30,763,981 | |
ImmunoGen, Inc. (a) | 67,900 | 448,819 | |
Incyte Corp. (a)(c) | 1,309,723 | 13,961,647 | |
InterMune, Inc. (c) | 472,333 | 6,489,855 | |
Ironwood Pharmaceuticals, Inc. Class A | 115,700 | 1,504,100 | |
Isis Pharmaceuticals, Inc. (a) | 583,810 | 5,160,880 | |
Lexicon Pharmaceuticals, Inc. (a) | 3,212,175 | 5,749,793 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 454,200 | 799,392 | |
MannKind Corp. (a)(c) | 267,700 | 2,674,323 | |
Martek Biosciences (a)(c) | 45,200 | 896,316 | |
Medivation, Inc. (a)(c) | 335,866 | 12,094,535 | |
Micromet, Inc. (a)(c) | 177,502 | 1,320,615 | |
Momenta Pharmaceuticals, Inc. (a)(c) | 509,785 | 7,463,252 | |
Myriad Genetics, Inc. (a) | 373,835 | 8,598,205 | |
Myriad Pharmaceuticals, Inc. (a) | 6,579 | 31,645 | |
ONYX Pharmaceuticals, Inc. (a) | 306,252 | 8,501,556 | |
OSI Pharmaceuticals, Inc. (a) | 402,597 | 14,904,141 | |
PDL BioPharma, Inc. (c) | 295,312 | 2,067,184 | |
Pharmasset, Inc. (a) | 166,658 | 3,534,816 | |
| |||
Shares | Value | ||
Progenics Pharmaceuticals, Inc. (a) | 102,400 | $ 445,440 | |
Regeneron Pharmaceuticals, Inc. (a) | 418,199 | 10,229,148 | |
Rigel Pharmaceuticals, Inc. (a) | 503,653 | 3,802,580 | |
Sangamo Biosciences, Inc. (a)(c) | 147,302 | 737,983 | |
Savient Pharmaceuticals, Inc. (a)(c) | 368,587 | 4,968,553 | |
Seattle Genetics, Inc. (a) | 652,912 | 6,659,702 | |
Targacept, Inc. (a) | 202,316 | 3,835,911 | |
Theratechnologies, Inc. (a) | 211,200 | 963,421 | |
United Therapeutics Corp. (a) | 785,468 | 45,093,718 | |
Vertex Pharmaceuticals, Inc. (a) | 1,208,004 | 49,057,042 | |
Zymogenetics, Inc. (a) | 154,305 | 823,989 | |
| 975,826,894 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Health Care Equipment - 0.1% | |||
Alsius Corp. (a) | 314,300 | 12,886 | |
Aradigm Corp. (a) | 509,900 | 71,386 | |
Delcath Systems, Inc. (a)(c) | 228,100 | 1,213,492 | |
| 1,297,764 | ||
Health Care Supplies - 0.3% | |||
Quidel Corp. (a) | 229,335 | 2,995,115 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 4,292,879 | ||
PHARMACEUTICALS - 7.3% | |||
Pharmaceuticals - 7.3% | |||
Adolor Corp. (a) | 541,294 | 828,180 | |
Akorn, Inc. (a)(c) | 753,927 | 1,145,969 | |
Alexza Pharmaceuticals, Inc. (a)(c) | 153,744 | 401,272 | |
Auxilium Pharmaceuticals, Inc. (a)(c) | 1,073,004 | 32,404,721 | |
Biodel, Inc. (a)(c)(d) | 1,967,348 | 7,849,719 | |
Cadence Pharmaceuticals, Inc. (a) | 250,400 | 2,148,432 | |
Elan Corp. PLC sponsored ADR (a) | 1,601,900 | 10,989,034 | |
Inspire Pharmaceuticals, Inc. (a) | 31,300 | 193,434 | |
Jazz Pharmaceuticals, Inc. (a)(c) | 104,165 | 1,018,734 | |
Optimer Pharmaceuticals, Inc. (a)(c) | 768,962 | 9,189,096 | |
ViroPharma, Inc. (a) | 840,112 | 10,467,796 | |
XenoPort, Inc. (a) | 194,700 | 1,557,600 | |
| 78,193,987 | ||
TOTAL COMMON STOCKS (Cost $1,092,922,901) | 1,058,313,760 | ||
Convertible Preferred Stocks - 0.3% | |||
|
|
|
|
BIOTECHNOLOGY - 0.3% | |||
Biotechnology - 0.3% | |||
Xenon Pharmaceuticals, Inc. Series E (a)(f) | 981,626 | 3,416,058 |
Convertible Bonds - 0.3% | ||||
| Principal Amount | Value | ||
BIOTECHNOLOGY - 0.3% | ||||
Biotechnology - 0.3% | ||||
OSI Pharmaceuticals, Inc. 3.25% 9/8/23 | $ 2,670,000 | $ 2,523,150 |
Money Market Funds - 14.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (e) | 10,092,642 | 10,092,642 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 142,359,365 | 142,359,365 | |
TOTAL MONEY MARKET FUNDS (Cost $152,452,007) | 152,452,007 | ||
TOTAL INVESTMENT PORTFOLIO - 113.9% (Cost $1,254,307,588) | 1,216,704,975 | ||
NET OTHER ASSETS - (13.9)% | (148,048,528) | ||
NET ASSETS - 100% | $ 1,068,656,447 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated company |
(e) Affiliated fund that is 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. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,414,818 or 0.4% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/18 | 1/9/08 | $ 1,930,622 |
Xenon Pharmaceuticals, Inc. Series E | 3/23/01 | $ 6,724,138 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 37,921 |
Fidelity Securities Lending Cash Central Fund | 984,705 |
Total | $ 1,022,626 |
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, | Purchases | Sales | Dividend | Value, |
Anadys Pharmaceuticals, Inc. | $ 9,115,593 | $ - | $ 3,462,392 | $ - | $ - |
Biodel, Inc. | 8,698,655 | - | 1,753,251 | - | 7,849,719 |
Total | $ 17,814,248 | $ - | $ 5,215,643 | $ - | $ 7,849,719 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 1,058,313,760 | $ 1,057,302,114 | $ 998,760 | $ 12,886 |
Convertible Preferred Stocks | 3,416,058 | - | - | 3,416,058 |
Convertible Bonds | 2,523,150 | - | 2,523,150 | - |
Money Market Funds | 152,452,007 | 152,452,007 | - | - |
Total Investments in Securities: | $ 1,216,704,975 | $ 1,209,754,121 | $ 3,521,910 | $ 3,428,944 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 3,416,058 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 53,745 |
Cost of Purchases | - |
Proceeds of Sales | (94,290) |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 53,431 |
Ending Balance | $ 3,428,944 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ 53,745 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $250,129,788 of which $184,768,719 and $65,361,069 will expire on February 28, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $13,432,739 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $139,212,627) - See accompanying schedule: Unaffiliated issuers (cost $1,070,204,523) | $ 1,056,403,249 |
|
Fidelity Central Funds (cost $152,452,007) | 152,452,007 |
|
Other affiliated issuers (cost $31,651,058) | 7,849,719 |
|
Total Investments (cost $1,254,307,588) |
| $ 1,216,704,975 |
Cash | 235,985 | |
Receivable for investments sold | 2,887,030 | |
Receivable for fund shares sold | 2,223,775 | |
Interest receivable | 41,459 | |
Distributions receivable from Fidelity Central Funds | 104,101 | |
Prepaid expenses | 3,649 | |
Other receivables | 2,539 | |
Total assets | 1,222,203,513 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,648,247 | |
Payable for fund shares redeemed | 745,403 | |
Accrued management fee | 493,858 | |
Other affiliated payables | 265,390 | |
Other payables and accrued expenses | 34,803 | |
Collateral on securities loaned, at value | 142,359,365 | |
Total liabilities | 153,547,066 | |
|
|
|
Net Assets | $ 1,068,656,447 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,386,323,016 | |
Undistributed net investment income | 15,003 | |
Accumulated undistributed net realized gain (loss) on investments | (280,078,589) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (37,602,983) | |
Net Assets, for 15,754,623 shares outstanding | $ 1,068,656,447 | |
Net Asset Value, offering price and redemption price per share ($1,068,656,447 ÷ 15,754,623 shares) | $ 67.83 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 302,513 |
Special dividends |
| 1,554,772 |
Interest |
| 73,600 |
Income from Fidelity Central Funds (including $984,705 from security lending) |
| 1,022,626 |
Total income |
| 2,953,511 |
|
|
|
Expenses | ||
Management fee | $ 6,076,963 | |
Transfer agent fees | 3,231,435 | |
Accounting and security lending fees | 430,394 | |
Custodian fees and expenses | 34,388 | |
Independent trustees' compensation | 7,986 | |
Registration fees | 39,040 | |
Audit | 39,475 | |
Legal | 9,095 | |
Interest | 4,173 | |
Miscellaneous | 21,754 | |
Total expenses before reductions | 9,894,703 | |
Expense reductions | (35,266) | 9,859,437 |
Net investment income (loss) | (6,905,926) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 44,319,356 | |
Other affiliated issuers | (2,641,227) |
|
Capital gain distributions from Fidelity Central Funds | 6,197 |
|
Total net realized gain (loss) |
| 41,684,326 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 197,662,841 | |
Assets and liabilities in foreign currencies | (370) | |
Total change in net unrealized appreciation (depreciation) |
| 197,662,471 |
Net gain (loss) | 239,346,797 | |
Net increase (decrease) in net assets resulting from operations | $ 232,440,871 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (6,905,926) | $ (7,296,969) |
Net realized gain (loss) | 41,684,326 | (26,399,620) |
Change in net unrealized appreciation (depreciation) | 197,662,471 | (180,443,840) |
Net increase (decrease) in net assets resulting from operations | 232,440,871 | (214,140,429) |
Share transactions | 133,358,248 | 678,692,957 |
Cost of shares redeemed | (449,320,941) | (400,563,233) |
Net increase (decrease) in net assets resulting from share transactions | (315,962,693) | 278,129,724 |
Redemption fees | 40,874 | 144,635 |
Total increase (decrease) in net assets | (83,480,948) | 64,133,930 |
|
|
|
Net Assets | ||
Beginning of period | 1,152,137,395 | 1,088,003,465 |
End of period (including undistributed net investment income of $15,003 and accumulated net investment loss of $686, respectively) | $ 1,068,656,447 | $ 1,152,137,395 |
Other Information Shares | ||
Sold | 2,188,551 | 10,174,385 |
Redeemed | (7,528,675) | (6,463,153) |
Net increase (decrease) | (5,340,124) | 3,711,232 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 54.62 | $ 62.59 | $ 63.89 | $ 68.06 | $ 49.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.39) F | (.38) G | (.53) | (.47) | (.48) |
Net realized and unrealized gain (loss) | 13.60 | (7.60) | (.77) | (3.71) | 19.49 |
Total from investment operations | 13.21 | (7.98) | (1.30) | (4.18) | 19.01 |
Redemption fees added to paid in capital C | - J | .01 | - J | .01 | .01 |
Net asset value, end of period | $ 67.83 | $ 54.62 | $ 62.59 | $ 63.89 | $ 68.06 |
Total Return A,B | 24.19% | (12.73)% | (2.03)% | (6.13)% | 38.78% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .91% | .89% | .89% | .93% | .97% |
Expenses net of fee waivers, if any | .91% | .89% | .89% | .93% | .97% |
Expenses net of all reductions | .91% | .89% | .89% | .92% | .93% |
Net investment income (loss) | (.64)% F | (.61)% G | (.79)% | (.75)% | (.83)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,068,656 | $ 1,152,137 | $ 1,088,003 | $ 1,369,309 | $ 1,811,492 |
Portfolio turnover rate E | 109% | 55% | 143% | 70% | 63% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects special dividends which amounted to $.09 per share. Excluding these special dividends, the ratio of net investment income (loss) to average net assets would have been (.78)%. G Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.69)%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Health Care Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Health Care Portfolio | 48.65% | 4.90% | 3.73% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 29, 2000. 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.
Annual Report
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Edward Yoon, Portfolio Manager of Select Health Care Portfolio: For the 12 months ending February 28, 2010, the fund returned 48.65%, underperforming the S&P 500® but outperforming the 41.77% return of the MSCI® U.S. IM Health Care 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Performance was helped by good stock picking in pharmaceuticals, health care services, health care supplies, managed health care, biotechnology and health care distributors. Overweightings in the health care services and life science tools/services groups also helped. Conversely, a slight underweighting in managed health care hurt. Underweightings in large-cap drug stocks Johnson & Johnson and Abbott Laboratories contributed, as did an overweighting in pharmacy benefit manager Express Scripts. We sold our position in Johnson & Johnson by period end. Investments in Covidien, which makes devices used in general surgery; Brazil's Profarma Distribuidora de Produtos Farmaceuticos, an out-of-benchmark holding; and Cigna, a managed health care stock, also boosted performance. On the other hand, we did not own index component Intuitive Surgical, maker of the da Vinci robotic surgery system, and did not participate in the stock's rally. Overweightings in Illumina, which develops genetic analysis technology, and Myriad Genetics, which makes a genetic test for breast cancer, hurt when these stocks underperformed. Monsanto, a fertilizers/agricultural chemicals company that is not part of the benchmark, detracted as well. We owned the stock based on our view that the company's genetically modified seeds would continue to play an important role in feeding the world, but the shares lost value when corn prices fell. The fund's modest cash position also reduced relative performance in a rapidly rising market.
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.
Annual Report
Health Care Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Pfizer, Inc. | 7.1 | 8.0 |
Medco Health Solutions, Inc. | 5.3 | 4.8 |
Covidien PLC | 5.3 | 5.1 |
Express Scripts, Inc. | 5.0 | 3.6 |
Merck & Co., Inc. | 4.0 | 4.8 |
Illumina, Inc. | 3.4 | 2.8 |
C. R. Bard, Inc. | 3.2 | 2.7 |
Biogen Idec, Inc. | 3.2 | 2.8 |
Allergan, Inc. | 3.2 | 5.1 |
WellPoint, Inc. | 2.3 | 0.6 |
| 42.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Pharmaceuticals | 22.5% |
|
![]() | Health Care Providers | 22.5% |
|
![]() | Health Care Equipment & Supplies | 19.4% |
|
![]() | Biotechnology | 15.1% |
|
![]() | Life Sciences Tools | 11.3% |
|
![]() | All Others* | 9.2% |
|
As of August 31, 2009 | |||
![]() | Pharmaceuticals | 26.8% |
|
![]() | Health Care Equipment & Supplies | 22.4% |
|
![]() | Health Care Providers | 20.4% |
|
![]() | Biotechnology | 14.5% |
|
![]() | Life Sciences Tools | 9.5% |
|
![]() | All Others* | 6.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Health Care Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
BIOTECHNOLOGY - 15.1% | |||
Biotechnology - 15.1% | |||
Acorda Therapeutics, Inc. (a) | 275,000 | $ 8,299,500 | |
Affymax, Inc. (a) | 150,000 | 2,805,000 | |
Alexion Pharmaceuticals, Inc. (a) | 380,000 | 18,817,600 | |
Alnylam Pharmaceuticals, Inc. (a) | 181,200 | 3,156,504 | |
Amgen, Inc. (a) | 550,000 | 31,135,500 | |
ARIAD Pharmaceuticals, Inc. (a)(c) | 1,500,000 | 3,810,000 | |
Biogen Idec, Inc. (a) | 1,000,000 | 55,010,000 | |
BioMarin Pharmaceutical, Inc. (a) | 1,000,000 | 20,000,000 | |
Cephalon, Inc. (a) | 200,000 | 13,734,000 | |
Dendreon Corp. (a) | 141,500 | 4,419,045 | |
Genzyme Corp. (a) | 100,000 | 5,720,000 | |
Gilead Sciences, Inc. (a) | 200,000 | 9,522,000 | |
Human Genome Sciences, Inc. (a) | 185,700 | 5,227,455 | |
Incyte Corp. (a)(c) | 1,250,000 | 13,325,000 | |
Ironwood Pharmaceuticals, Inc. Class A | 207,800 | 2,701,400 | |
Medivation, Inc. (a) | 80,000 | 2,880,800 | |
Micromet, Inc. (a)(c) | 224,297 | 1,668,770 | |
Myriad Genetics, Inc. (a) | 400,000 | 9,200,000 | |
OSI Pharmaceuticals, Inc. (a) | 230,000 | 8,514,600 | |
PDL BioPharma, Inc. | 1,250,000 | 8,750,000 | |
Protalix BioTherapeutics, Inc. (a)(c) | 650,000 | 4,394,000 | |
Seattle Genetics, Inc. (a) | 344,100 | 3,509,820 | |
Targacept, Inc. (a) | 300,000 | 5,688,000 | |
Theravance, Inc. (a) | 200,000 | 2,178,000 | |
United Therapeutics Corp. (a) | 300,000 | 17,223,000 | |
| 261,689,994 | ||
CHEMICALS - 1.0% | |||
Fertilizers & Agricultural Chemicals - 1.0% | |||
Monsanto Co. | 250,000 | 17,662,500 | |
DIVERSIFIED CONSUMER SERVICES - 0.4% | |||
Specialized Consumer Services - 0.4% | |||
Carriage Services, Inc. (a)(d) | 926,904 | 3,744,692 | |
Stewart Enterprises, Inc. Class A | 690,000 | 3,381,000 | |
| 7,125,692 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.6% | |||
Electronic Equipment & Instruments - 1.6% | |||
Agilent Technologies, Inc. (a) | 900,000 | 28,314,000 | |
FOOD & STAPLES RETAILING - 1.5% | |||
Drug Retail - 1.5% | |||
Walgreen Co. | 750,000 | 26,430,000 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 19.4% | |||
Health Care Equipment - 17.0% | |||
ArthroCare Corp. (a) | 300,000 | 7,971,000 | |
Baxter International, Inc. | 200,000 | 11,386,000 | |
C. R. Bard, Inc. | 660,000 | 55,294,800 | |
| |||
Shares | Value | ||
CareFusion Corp. (a) | 730,000 | $ 18,425,200 | |
Conceptus, Inc. (a) | 300,000 | 5,889,000 | |
Covidien PLC | 1,850,000 | 90,872,000 | |
Edwards Lifesciences Corp. (a) | 300,000 | 27,549,000 | |
ev3, Inc. (a) | 720,500 | 10,483,275 | |
HeartWare International, Inc. (a) | 104,658 | 4,033,519 | |
HeartWare International, Inc. CDI unit (a) | 2,478,621 | 2,775,436 | |
Micrus Endovascular Corp. (a) | 600,000 | 12,138,000 | |
Nobel Biocare Holding AG (Switzerland) | 385,000 | 9,789,836 | |
NuVasive, Inc. (a)(c) | 261,900 | 10,462,905 | |
Orthofix International NV (a) | 185,459 | 6,322,297 | |
Orthovita, Inc. (a) | 2,000,000 | 7,680,000 | |
Osmetech PLC (a) | 50,774,143 | 1,494,508 | |
William Demant Holding AS (a) | 60,000 | 4,280,853 | |
Wright Medical Group, Inc. (a) | 400,000 | 6,740,000 | |
| 293,587,629 | ||
Health Care Supplies - 2.4% | |||
AGA Medical Holdings, Inc. | 180,000 | 2,412,000 | |
Cooper Companies, Inc. | 500,000 | 20,030,000 | |
InfuSystems Holdings, Inc. (a) | 713,200 | 1,711,680 | |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 131,400 | 11,169 | |
Inverness Medical Innovations, Inc. (a) | 300,000 | 11,706,000 | |
RTI Biologics, Inc. (a) | 1,395,305 | 5,232,394 | |
| 41,103,243 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 334,690,872 | ||
HEALTH CARE PROVIDERS & SERVICES - 22.5% | |||
Health Care Distributors & Services - 2.2% | |||
Henry Schein, Inc. (a) | 480,000 | 27,278,400 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 608,900 | 6,064,909 | |
Sinopharm Group Co. Ltd. Class H | 800,000 | 3,602,072 | |
| 36,945,381 | ||
Health Care Facilities - 1.7% | |||
Emeritus Corp. (a) | 350,000 | 6,139,000 | |
Hanger Orthopedic Group, Inc. (a) | 570,000 | 10,630,500 | |
Sunrise Senior Living, Inc. (a)(c) | 1,200,000 | 4,716,000 | |
Universal Health Services, Inc. Class B | 270,000 | 8,375,400 | |
| 29,860,900 | ||
Health Care Services - 11.4% | |||
Emergency Medical Services Corp. Class A (a) | 100,000 | 5,206,000 | |
Express Scripts, Inc. (a) | 890,000 | 85,448,900 | |
Health Grades, Inc. (a) | 1,000,000 | 5,350,000 | |
LHC Group, Inc. (a) | 160,000 | 4,816,000 | |
Medco Health Solutions, Inc. (a) | 1,450,000 | 91,698,000 | |
RehabCare Group, Inc. (a) | 150,000 | 4,176,000 | |
| 196,694,900 | ||
Managed Health Care - 7.2% | |||
Aetna, Inc. | 640,000 | 19,193,600 | |
CIGNA Corp. | 1,000,000 | 34,260,000 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Managed Health Care - continued | |||
Health Net, Inc. (a) | 375,000 | $ 8,658,750 | |
UnitedHealth Group, Inc. | 650,000 | 22,009,000 | |
WellPoint, Inc. (a) | 650,000 | 40,215,500 | |
| 124,336,850 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 387,838,031 | ||
HEALTH CARE TECHNOLOGY - 3.0% | |||
Health Care Technology - 3.0% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 850,000 | 15,206,500 | |
Cerner Corp. (a) | 350,000 | 29,032,500 | |
Computer Programs & Systems, Inc. | 116,600 | 4,190,604 | |
Phase Forward, Inc. (a) | 300,000 | 3,579,000 | |
| 52,008,604 | ||
INTERNET SOFTWARE & SERVICES - 0.4% | |||
Internet Software & Services - 0.4% | |||
WebMD Health Corp. (a) | 168,668 | 7,266,217 | |
LIFE SCIENCES TOOLS & SERVICES - 11.3% | |||
Life Sciences Tools & Services - 11.3% | |||
Covance, Inc. (a)(c) | 700,000 | 39,634,000 | |
ICON PLC sponsored ADR (a) | 400,000 | 9,420,000 | |
Illumina, Inc. (a)(c) | 1,607,200 | 58,373,504 | |
Life Technologies Corp. (a) | 400,000 | 20,304,000 | |
PAREXEL International Corp. (a) | 600,000 | 12,090,000 | |
PerkinElmer, Inc. | 800,000 | 17,768,000 | |
QIAGEN NV (a)(c) | 1,700,000 | 37,077,000 | |
| 194,666,504 | ||
PHARMACEUTICALS - 22.5% | |||
Pharmaceuticals - 22.5% | |||
Abbott Laboratories | 450,000 | 24,426,000 | |
Allergan, Inc. | 930,000 | 54,339,900 | |
Ardea Biosciences, Inc. (a)(c) | 440,000 | 6,265,600 | |
Auxilium Pharmaceuticals, Inc. (a) | 78,600 | 2,373,720 | |
Cadence Pharmaceuticals, Inc. (a)(c) | 600,000 | 5,148,000 | |
Hikma Pharmaceuticals PLC | 400,000 | 3,355,220 | |
| |||
Shares | Value | ||
King Pharmaceuticals, Inc. (a) | 1,700,000 | $ 19,125,000 | |
Merck & Co., Inc. | 1,850,000 | 68,228,000 | |
Optimer Pharmaceuticals, Inc. (a)(c) | 350,000 | 4,182,500 | |
Pfizer, Inc. | 7,000,000 | 122,850,000 | |
Piramal Healthcare Ltd. | 287,326 | 2,479,398 | |
Pronova BioPharma ASA (a) | 1,378,500 | 4,151,898 | |
Shire PLC sponsored ADR | 460,000 | 29,679,200 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 340,000 | 20,403,400 | |
Valeant Pharmaceuticals International (a) | 200,000 | 7,444,000 | |
ViroPharma, Inc. (a) | 1,100,000 | 13,706,000 | |
| 388,157,836 | ||
TOTAL COMMON STOCKS (Cost $1,430,510,114) | 1,705,850,250 | ||
Money Market Funds - 7.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (e) | 12,969,277 | 12,969,277 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 116,055,014 | 116,055,014 | |
TOTAL MONEY MARKET FUNDS (Cost $129,024,291) | 129,024,291 | ||
TOTAL INVESTMENT PORTFOLIO - 106.2% (Cost $1,559,534,405) | 1,834,874,541 | ||
NET OTHER ASSETS - (6.2)% | (107,132,077) | ||
NET ASSETS - 100% | $ 1,727,742,464 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated company |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 60,622 |
Fidelity Securities Lending Cash Central Fund | 118,871 |
Total | $ 179,493 |
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, | Purchases | Sales | Dividend | Value, |
Carriage Services, Inc. | $ 2,335,450 | $ 30,391 | $ 76,951 | $ - | $ 3,744,692 |
InfuSystems Holdings, Inc. | 2,706,550 | - | 1,646,743 | - | - |
Total | $ 5,042,000 | $ 30,391 | $ 1,723,694 | $ - | $ 3,744,692 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 1,444 |
Total Realized Gain (Loss) | (33,083) |
Total Unrealized Gain (Loss) | 31,639 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.0% |
Ireland | 5.8% |
Netherlands | 2.2% |
Bailiwick of Jersey | 1.7% |
Israel | 1.2% |
Others (individually less than 1%) | 2.1% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $146,767,055 of which $134,642,451 and $12,124,604 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $115,097,254) - See accompanying schedule: Unaffiliated issuers (cost $1,425,175,669) | $ 1,702,105,558 |
|
Fidelity Central Funds (cost $129,024,291) | 129,024,291 |
|
Other affiliated issuers (cost $5,334,445) | 3,744,692 |
|
Total Investments (cost $1,559,534,405) |
| $ 1,834,874,541 |
Receivable for investments sold | 15,081,966 | |
Receivable for fund shares sold | 3,717,530 | |
Dividends receivable | 1,609,567 | |
Distributions receivable from Fidelity Central Funds | 26,657 | |
Prepaid expenses | 4,835 | |
Other receivables | 209,869 | |
Total assets | 1,855,524,965 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,122,427 | |
Payable for fund shares redeemed | 1,372,261 | |
Accrued management fee | 786,390 | |
Other affiliated payables | 365,614 | |
Other payables and accrued expenses | 80,795 | |
Collateral on securities loaned, at value | 116,055,014 | |
Total liabilities | 127,782,501 | |
|
|
|
Net Assets | $ 1,727,742,464 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,616,612,683 | |
Distributions in excess of net investment income | (31,404) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (164,160,807) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 275,321,992 | |
Net Assets, for 15,826,604 shares outstanding | $ 1,727,742,464 | |
Net Asset Value, offering price and redemption price per share ($1,727,742,464 ÷ 15,826,604 shares) | $ 109.17 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 13,279,670 |
Interest |
| 306,136 |
Income from Fidelity Central Funds (including $118,871 from security lending) |
| 179,493 |
Total income |
| 13,765,299 |
|
|
|
Expenses | ||
Management fee | $ 8,223,197 | |
Transfer agent fees | 3,894,731 | |
Accounting and security lending fees | 517,285 | |
Custodian fees and expenses | 88,168 | |
Independent trustees' compensation | 9,997 | |
Appreciation in deferred trustee compensation account | 261 | |
Registration fees | 39,509 | |
Audit | 55,487 | |
Legal | 8,163 | |
Miscellaneous | 27,358 | |
Total expenses before reductions | 12,864,156 | |
Expense reductions | (102,821) | 12,761,335 |
Net investment income (loss) | 1,003,964 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 169,051,237 | |
Other affiliated issuers | (2,645,049) |
|
Capital gain distributions from Fidelity Central Funds | 1,405 |
|
Foreign currency transactions | 90,145 | |
Total net realized gain (loss) |
| 166,497,738 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 388,919,050 | |
Assets and liabilities in foreign currencies | 58,575 | |
Total change in net unrealized appreciation (depreciation) |
| 388,977,625 |
Net gain (loss) | 555,475,363 | |
Net increase (decrease) in net assets resulting from operations | $ 556,479,327 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Health Care Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,003,964 | $ 7,051,983 |
Net realized gain (loss) | 166,497,738 | (324,474,517) |
Change in net unrealized appreciation (depreciation) | 388,977,625 | (279,609,070) |
Net increase (decrease) in net assets resulting from operations | 556,479,327 | (597,031,604) |
Distributions to shareholders from net investment income | (3,816,801) | (6,124,045) |
Distributions to shareholders from net realized gain | (76,430) | (77,726,943) |
Total distributions | (3,893,231) | (83,850,988) |
Share transactions | 274,942,512 | 251,717,005 |
Reinvestment of distributions | 3,676,939 | 79,184,139 |
Cost of shares redeemed | (294,634,876) | (407,072,802) |
Net increase (decrease) in net assets resulting from share transactions | (16,015,425) | (76,171,658) |
Redemption fees | 29,014 | 50,497 |
Total increase (decrease) in net assets | 536,599,685 | (757,003,753) |
|
|
|
Net Assets | ||
Beginning of period | 1,191,142,779 | 1,948,146,532 |
End of period (including distributions in excess of net investment income of $31,404 and undistributed net investment income of $2,778,486, respectively) | $ 1,727,742,464 | $ 1,191,142,779 |
Other Information Shares | ||
Sold | 2,790,134 | 2,656,352 |
Issued in reinvestment of distributions | 42,377 | 777,486 |
Redeemed | (3,179,440) | (4,313,844) |
Net increase (decrease) | (346,929) | (880,006) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 73.65 | $ 114.24 | $ 126.78 | $ 139.09 | $ 127.07 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .42 | .39 F | .39 | (.17) |
Net realized and unrealized gain (loss) | 35.71 | (35.98) | 1.63 | 4.49 | 25.97 |
Total from investment operations | 35.77 | (35.56) | 2.02 | 4.88 | 25.80 |
Distributions from net investment income | (.25) | (.37) | (.39) | (.20) | (.04) |
Distributions from net realized gain | (.01) | (4.66) | (14.17) | (16.99) | (13.75) |
Total distributions | (.25) J | (5.03) | (14.56) | (17.19) | (13.79) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 109.17 | $ 73.65 | $ 114.24 | $ 126.78 | $ 139.09 |
Total Return A,B | 48.65% | (32.34)% | .72% | 4.13% | 20.42% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .88% | .86% | .85% | .88% | .91% |
Expenses net of fee waivers, if any | .88% | .86% | .85% | .88% | .91% |
Expenses net of all reductions | .87% | .86% | .84% | .87% | .87% |
Net investment income (loss) | .07% | .44% | .30% F | .31% | (.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,727,742 | $ 1,191,143 | $ 1,948,147 | $ 2,073,783 | $ 2,380,323 |
Portfolio turnover rate E | 116% | 173% | 120% | 91% | 120% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.13 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .20%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $.25 per share is comprised of distributions from net investment income of $.245 and distributions from net realized gain of $.005 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Delivery Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Medical Delivery Portfolio | 73.83% | 3.89% | 13.95% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Delivery Portfolio on February 29, 2000. 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.
Annual Report
Medical Delivery Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Andrew Hatem, Portfolio Manager of Select Medical Delivery Portfolio: For the year ending February 28, 2010, the fund returned 73.83%, outperforming the S&P 500 and the 60.55% return of the MSCI® U.S. IM Health Care Providers & Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, the fund benefited from strong security selection in the health care services, health care facilities and managed health care groups, and from stock picks and an underweighting in health care distributors. On the down side, the fund's relative return was dampened somewhat by a small cash position and the poor performance of an out-of-benchmark holding in life science tools and services. Contributors to performance included ambulance operator Rural/Metro; hospital firms Tenet Healthcare and Health Management Associates; health insurer Cigna; underweighting two index constituents that underperformed - health care service provider Quest Diagnostics and heath care distributor Cardinal Health - and not owning index component and health care service provider Omnicare, which lagged significantly. Among the detractors were life science tools and services firm Sequenom, underweighting managed health care firm Coventry Health Care, funeral services firm Carriage Services, pharmacy benefit manager Medco Health Solutions and biotechnology company Myriad Genetics. Some of the stocks mentioned in this report were not part of the MSCI benchmark and/or were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Medical Delivery Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
UnitedHealth Group, Inc. | 14.3 | 12.0 |
Medco Health Solutions, Inc. | 11.3 | 12.6 |
Express Scripts, Inc. | 9.7 | 9.0 |
WellPoint, Inc. | 8.6 | 8.6 |
Aetna, Inc. | 6.2 | 7.4 |
CIGNA Corp. | 4.3 | 4.7 |
McKesson Corp. | 4.3 | 4.8 |
Humana, Inc. | 4.2 | 4.7 |
AmerisourceBergen Corp. | 3.7 | 2.8 |
Health Net, Inc. | 3.5 | 1.8 |
| 70.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Health Care | 88.2% |
|
![]() | Life Sciences Tools & Services | 2.6% |
|
![]() | Food & Staples Retailing | 2.5% |
|
![]() | Health Care Technology | 2.5% |
|
![]() | Health Care | 1.1% |
|
![]() | All Others* | 3.1% |
|
As of August 31, 2009 | |||
![]() | Health Care | 89.5% |
|
![]() | Food & Staples Retailing | 2.2% |
|
![]() | Health Care | 1.8% |
|
![]() | Life Sciences Tools & Services | 1.8% |
|
![]() | Biotechnology | 0.4% |
|
![]() | All Others* | 4.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Delivery Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.3% | |||
Biotechnology - 0.3% | |||
Myriad Genetics, Inc. (a) | 60,000 | $ 1,380,000 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
Agilent Technologies, Inc. (a) | 39,500 | 1,242,670 | |
FOOD & STAPLES RETAILING - 2.5% | |||
Drug Retail - 2.5% | |||
CVS Caremark Corp. | 56,983 | 1,923,176 | |
Rite Aid Corp. (a)(d) | 3,025,900 | 4,599,368 | |
Walgreen Co. | 153,200 | 5,398,768 | |
| 11,921,312 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1% | |||
Health Care Equipment - 1.1% | |||
CareFusion Corp. (a) | 212,200 | 5,355,928 | |
Natus Medical, Inc. (a) | 1,000 | 13,480 | |
| 5,369,408 | ||
HEALTH CARE PROVIDERS & SERVICES - 87.6% | |||
Health Care Distributors & Services - 8.8% | |||
AmerisourceBergen Corp. | 618,500 | 17,342,740 | |
Cardinal Health, Inc. | 56,300 | 1,912,511 | |
Henry Schein, Inc. (a) | 34,600 | 1,966,318 | |
McKesson Corp. | 333,700 | 19,738,355 | |
| 40,959,924 | ||
Health Care Facilities - 8.3% | |||
Brookdale Senior Living, Inc. (a)(d) | 334,000 | 6,005,320 | |
Community Health Systems, Inc. (a) | 207,100 | 7,097,317 | |
Emeritus Corp. (a)(d) | 158,124 | 2,773,495 | |
Hanger Orthopedic Group, Inc. (a) | 145,000 | 2,704,250 | |
LifePoint Hospitals, Inc. (a) | 45,000 | 1,372,500 | |
Sunrise Senior Living, Inc. (a) | 1,125,152 | 4,421,847 | |
Tenet Healthcare Corp. (a) | 1,564,300 | 8,243,861 | |
Universal Health Services, Inc. Class B | 190,200 | 5,900,004 | |
| 38,518,594 | ||
Health Care Services - 27.3% | |||
Catalyst Health Solutions, Inc. (a) | 115,400 | 4,349,426 | |
Emergency Medical Services Corp. | 100,400 | 5,226,824 | |
Express Scripts, Inc. (a) | 470,700 | 45,191,907 | |
Health Grades, Inc. (a) | 490,869 | 2,626,149 | |
IPC The Hospitalist Co., Inc. (a) | 35,000 | 1,157,100 | |
| |||
Shares | Value | ||
Laboratory Corp. of America Holdings (a) | 14,800 | $ 1,084,988 | |
Lincare Holdings, Inc. (a) | 81,900 | 3,289,104 | |
Medco Health Solutions, Inc. (a) | 832,741 | 52,662,541 | |
Quest Diagnostics, Inc. | 12,500 | 709,375 | |
RehabCare Group, Inc. (a) | 19,800 | 551,232 | |
Rural/Metro Corp. (a) | 544,450 | 3,228,589 | |
Team Health Holdings, Inc. | 493,400 | 7,154,300 | |
| 127,231,535 | ||
Managed Health Care - 43.2% | |||
Aetna, Inc. | 968,156 | 29,034,998 | |
CIGNA Corp. | 586,000 | 20,076,360 | |
Coventry Health Care, Inc. (a) | 110,900 | 2,570,662 | |
Health Net, Inc. (a) | 704,700 | 16,271,523 | |
Humana, Inc. (a) | 411,172 | 19,460,771 | |
Molina Healthcare, Inc. (a) | 36,000 | 769,680 | |
Triple-S Management Corp. (a) | 141,100 | 2,445,263 | |
UnitedHealth Group, Inc. | 1,969,697 | 66,693,941 | |
Universal American Financial Corp. (a) | 292,096 | 4,209,103 | |
WellPoint, Inc. (a) | 647,300 | 40,048,451 | |
| 201,580,752 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 408,290,805 | ||
HEALTH CARE TECHNOLOGY - 2.5% | |||
Health Care Technology - 2.5% | |||
Cerner Corp. (a) | 74,200 | 6,154,890 | |
SXC Health Solutions Corp. (a) | 110,300 | 5,530,461 | |
| 11,685,351 | ||
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
WebMD Health Corp. (a) | 8,400 | 361,872 | |
LIFE SCIENCES TOOLS & SERVICES - 2.6% | |||
Life Sciences Tools & Services - 2.6% | |||
Illumina, Inc. (a) | 109,400 | 3,973,408 | |
Life Technologies Corp. (a) | 65,900 | 3,345,084 | |
Medtox Scientific, Inc. (a) | 177,800 | 1,621,536 | |
QIAGEN NV (a) | 86,200 | 1,880,022 | |
Thermo Fisher Scientific, Inc. (a) | 24,800 | 1,209,496 | |
| 12,029,546 | ||
TOTAL COMMON STOCKS (Cost $357,227,196) | 452,280,964 |
Nonconvertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
HEALTH CARE PROVIDERS & SERVICES - 0.6% | ||||
Health Care Services - 0.6% | ||||
Rural/Metro Corp. 0% 3/15/16 (c) | $ 2,790,000 | $ 2,915,550 |
Money Market Funds - 3.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (e) | 13,503,847 | $ 13,503,847 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 3,105,675 | 3,105,675 | |
TOTAL MONEY MARKET FUNDS (Cost $16,609,522) | 16,609,522 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $376,612,841) | 471,806,036 | ||
NET OTHER ASSETS - (1.2)% | (5,696,503) | ||
NET ASSETS - 100% | $ 466,109,533 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,941 |
Fidelity Securities Lending Cash Central Fund | 21,647 |
Total | $ 41,588 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Rural/Metro Corp. | $ 2,642,490 | $ - | $ 4,406,528 | $ - | $ - |
Total | $ 2,642,490 | $ - | $ 4,406,528 | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 452,280,964 | $ 452,280,964 | $ - | $ - |
Nonconvertible Bonds | 2,915,550 | - | 2,915,550 | - |
Money Market Funds | 16,609,522 | 16,609,522 | - | - |
Total Investments in Securities: | $ 471,806,036 | $ 468,890,486 | $ 2,915,550 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 2,601 |
Total Realized Gain (Loss) | (59,599) |
Total Unrealized Gain (Loss) | 56,998 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $79,362,962 of which $28,045,847 and $51,317,115 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $2,854,230) - See accompanying schedule: Unaffiliated issuers (cost $360,003,319) | $ 455,196,514 |
|
Fidelity Central Funds (cost $16,609,522) | 16,609,522 |
|
Total Investments (cost $376,612,841) |
| $ 471,806,036 |
Cash | 25,308 | |
Receivable for fund shares sold | 374,645 | |
Dividends receivable | 120,897 | |
Distributions receivable from Fidelity Central Funds | 3,836 | |
Prepaid expenses | 1,081 | |
Other receivables | 6,940 | |
Total assets | 472,338,743 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,101,381 | |
Payable for fund shares redeemed | 653,860 | |
Accrued management fee | 215,842 | |
Other affiliated payables | 123,017 | |
Other payables and accrued expenses | 29,435 | |
Collateral on securities loaned, at value | 3,105,675 | |
Total liabilities | 6,229,210 | |
|
|
|
Net Assets | $ 466,109,533 | |
Net Assets consist of: |
| |
Paid in capital | $ 457,701,724 | |
Accumulated net investment loss | (221) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (86,785,041) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 95,193,071 | |
Net Assets, for 10,503,333 shares outstanding | $ 466,109,533 | |
Net Asset Value, offering price and redemption price per share ($466,109,533 ÷ 10,503,333 shares) | $ 44.38 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 611,603 |
Interest |
| 323,277 |
Income from Fidelity Central Funds (including $21,647 from security lending) |
| 41,588 |
Total income |
| 976,468 |
|
|
|
Expenses | ||
Management fee | $ 1,927,195 | |
Transfer agent fees | 1,111,583 | |
Accounting and security lending fees | 135,024 | |
Custodian fees and expenses | 14,567 | |
Independent trustees' compensation | 2,296 | |
Registration fees | 37,271 | |
Audit | 43,912 | |
Legal | 1,637 | |
Interest | 452 | |
Miscellaneous | 5,926 | |
Total expenses before reductions | 3,279,863 | |
Expense reductions | (11,066) | 3,268,797 |
Net investment income (loss) | (2,292,329) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (9,557,621) | |
Other affiliated issuers | (6,015,417) |
|
Foreign currency transactions | 1,588 | |
Total net realized gain (loss) |
| (15,571,450) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 187,453,330 | |
Assets and liabilities in foreign currencies | 18,461 | |
Total change in net unrealized appreciation (depreciation) |
| 187,471,791 |
Net gain (loss | 171,900,341 | |
Net increase (decrease) in net assets resulting from operations | $ 169,608,012 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,292,329) | $ (1,827,266) |
Net realized gain (loss) | (15,571,450) | (67,873,724) |
Change in net unrealized appreciation (depreciation) | 187,471,791 | (136,913,379) |
Net increase (decrease) in net assets resulting from operations | 169,608,012 | (206,614,369) |
Distributions to shareholders from net investment income | - | (331,975) |
Distributions to shareholders from net realized gain | - | (3,873,055) |
Total distributions | - | (4,205,030) |
Share transactions | 190,787,013 | 139,545,282 |
Reinvestment of distributions | - | 4,037,578 |
Cost of shares redeemed | (157,818,031) | (209,790,018) |
Net increase (decrease) in net assets resulting from share transactions | 32,968,982 | (66,207,158) |
Redemption fees | 29,133 | 32,689 |
Total increase (decrease) in net assets | 202,606,127 | (276,993,868) |
|
|
|
Net Assets | ||
Beginning of period | 263,503,406 | 540,497,274 |
End of period (including accumulated net investment loss of $221 and accumulated net investment loss of $149, respectively) | $ 466,109,533 | $ 263,503,406 |
Other Information Shares | ||
Sold | 4,746,289 | 4,123,547 |
Issued in reinvestment of distributions | - | 103,874 |
Redeemed | (4,565,603) | (5,842,893) |
Net increase (decrease | 180,686 | (1,615,472) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.53 | $ 45.27 | $ 51.02 | $ 54.98 | $ 46.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.24) | (.18) | .11 F | (.29) | (.31) |
Net realized and unrealized gain (loss) | 19.09 | (19.18) | (1.69) | 1.20 | 11.41 |
Total from investment operations | 18.85 | (19.36) | (1.58) | .91 | 11.10 |
Distributions from net investment income | - | (.03) | - | - | - |
Distributions from net realized gain | - | (.35) | (4.17) | (4.88) | (2.94) |
Total distributions | - | (.38) | (4.17) | (4.88) | (2.94) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | .02 |
Net asset value, end of period | $ 44.38 | $ 25.53 | $ 45.27 | $ 51.02 | $ 54.98 |
Total Return A,B | 73.83% | (43.05)% | (4.00)% | 2.23% | 24.54% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .96% | .94% | .92% | .95% | .95% |
Expenses net of fee waivers, if any | .96% | .94% | .92% | .95% | .95% |
Expenses net of all reductions | .96% | .94% | .91% | .94% | .91% |
Net investment income (loss) | (.67)% | (.50)% | .22% F | (.58)% | (.60)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 466,110 | $ 263,503 | $ 540,497 | $ 643,641 | $ 1,469,861 |
Portfolio turnover rate E | 50% | 122% | 113% | 92% | 106% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.38 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.52)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Equipment and Systems Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Medical Equipment and Systems Portfolio | 45.84% | 6.39% | 10.56% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 29, 2000. 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.
Annual Report
Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Edward Yoon, Portfolio Manager of Select Medical Equipment and Systems Portfolio: For the 12 months ending February 28, 2010, the fund returned 45.84%, underperforming the S&P 500 but outperforming the 44.34% return of the MSCI® U.S. IM Health Care Equipment & Supplies 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Stock picking in health care supplies, health care services and pharmaceuticals contributed versus the MSCI index, but the fund's modest cash position detracted during a period when share prices were rising rapidly. Micrus Endovascular, an out-of-benchmark holding, advanced on the strength of a new coil for treating aneurysms. Investments in surgical device maker Covidien and pharmacy benefits manager Express Scripts - another out-of-index position - also helped. Underweightings in Becton Dickinson (safety syringes) and Baxter International (blood-plasma proteins) contributed as well. We sold our position in Becton Dickinson by period end. An overweighting in contact lens maker Cooper Companies also added value. On the other hand, an underweighting in Intuitive Surgical, which makes the da Vinci robotic surgery system, hurt relative performance when the stock rallied. Underweightings in Zimmer Holdings (orthopedic implants) and Medtronic (cardiovascular devices) also hampered results when these stocks outperformed. A non-benchmark stake in biotechnology firm Illumina and an overweighting in medical device maker C. R. Bard detracted.
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.
Annual Report
Medical Equipment and Systems Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Covidien PLC | 11.9 | 12.1 |
Baxter International, Inc. | 7.7 | 11.7 |
C. R. Bard, Inc. | 6.4 | 5.6 |
Medtronic, Inc. | 6.3 | 8.8 |
Stryker Corp. | 3.7 | 0.0 |
St. Jude Medical, Inc. | 3.6 | 4.1 |
Edwards Lifesciences Corp. | 3.5 | 2.6 |
Hologic, Inc. | 3.1 | 2.5 |
Illumina, Inc. | 3.1 | 2.6 |
Express Scripts, Inc. | 2.8 | 1.5 |
| 52.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Health Care | 75.5% |
|
![]() | Life Sciences | 9.3% |
|
![]() | Health Care | 7.5% |
|
![]() | Health Care Technology | 2.5% |
|
![]() | Pharmaceuticals | 2.0% |
|
![]() | All Others* | 3.2% |
|
As of August 31, 2009 | |||
![]() | Health Care | 78.5% |
|
![]() | Life Sciences | 7.5% |
|
![]() | Health Care | 5.8% |
|
![]() | Pharmaceuticals | 4.3% |
|
![]() | Electronic Equipment & Components | 1.3% |
|
![]() | All Others* | 2.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Equipment and Systems Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.5% | |||
Biotechnology - 0.5% | |||
PDL BioPharma, Inc. (c) | 1,000,000 | $ 7,000,000 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.7% | |||
Electronic Equipment & Instruments - 1.7% | |||
Agilent Technologies, Inc. (a) | 750,000 | 23,595,000 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 75.5% | |||
Health Care Equipment - 69.6% | |||
Abiomed, Inc. (a) | 380,000 | 3,841,800 | |
American Medical Systems Holdings, Inc. (a) | 130,000 | 2,355,600 | |
Angiodynamics, Inc. (a) | 500,000 | 8,130,000 | |
ArthroCare Corp. (a) | 430,000 | 11,425,100 | |
Baxter International, Inc. | 1,870,000 | 106,459,100 | |
Beckman Coulter, Inc. | 80,000 | 5,244,800 | |
Boston Scientific Corp. (a) | 1,200,000 | 9,288,000 | |
C. R. Bard, Inc. | 1,060,000 | 88,806,800 | |
CareFusion Corp. (a) | 1,350,000 | 34,074,000 | |
Conceptus, Inc. (a)(c) | 550,000 | 10,796,500 | |
Covidien PLC | 3,350,000 | 164,552,001 | |
Edwards Lifesciences Corp. (a) | 520,000 | 47,751,600 | |
ev3, Inc. (a) | 1,075,400 | 15,647,070 | |
Fisher & Paykel Healthcare Corp. | 3,000,000 | 7,122,150 | |
HeartWare International, Inc. CDI unit (a) | 10,700,000 | 11,981,325 | |
Hill-Rom Holdings, Inc. | 100,000 | 2,624,000 | |
Hologic, Inc. (a) | 2,500,000 | 43,125,000 | |
Hospira, Inc. (a) | 440,000 | 23,025,200 | |
Integra LifeSciences Holdings Corp. (a) | 470,000 | 18,706,000 | |
Intuitive Surgical, Inc. (a) | 60,000 | 20,828,400 | |
Kinetic Concepts, Inc. (a) | 60,000 | 2,515,200 | |
Mako Surgical Corp. (a)(c) | 300,000 | 3,969,000 | |
Masimo Corp. | 550,000 | 15,229,500 | |
Medtronic, Inc. | 2,000,000 | 86,800,000 | |
Micrus Endovascular Corp. (a) | 650,010 | 13,149,702 | |
Nobel Biocare Holding AG (Switzerland) | 345,000 | 8,772,710 | |
NuVasive, Inc. (a)(c) | 400,000 | 15,980,000 | |
Orthofix International NV (a) | 200,700 | 6,841,863 | |
Orthovita, Inc. (a) | 2,600,000 | 9,984,000 | |
Osmetech PLC (a) | 75,000,000 | 2,207,582 | |
Sonova Holding AG Class B | 60,000 | 7,483,246 | |
St. Jude Medical, Inc. (a) | 1,295,000 | 49,494,900 | |
Stryker Corp. | 950,000 | 50,445,000 | |
Varian Medical Systems, Inc. (a) | 520,000 | 25,464,400 | |
Volcano Corp. (a) | 525,000 | 10,809,750 | |
| |||
Shares | Value | ||
Wright Medical Group, Inc. (a) | 700,000 | $ 11,795,000 | |
Zimmer Holdings, Inc. (a) | 50,000 | 2,866,500 | |
| 959,592,799 | ||
Health Care Supplies - 5.9% | |||
AGA Medical Holdings, Inc. | 200,000 | 2,680,000 | |
Cooper Companies, Inc. (c) | 680,000 | 27,240,800 | |
DENTSPLY International, Inc. | 520,000 | 17,206,800 | |
Inverness Medical Innovations, Inc. (a)(c) | 550,000 | 21,461,000 | |
OraSure Technologies, Inc. (a) | 891,854 | 4,905,197 | |
RTI Biologics, Inc. (a) | 1,995,000 | 7,481,250 | |
| 80,975,047 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,040,567,846 | ||
HEALTH CARE PROVIDERS & SERVICES - 7.5% | |||
Health Care Distributors & Services - 1.7% | |||
Henry Schein, Inc. (a) | 400,000 | 22,732,000 | |
Health Care Facilities - 0.5% | |||
Hanger Orthopedic Group, Inc. (a) | 400,000 | 7,460,000 | |
Health Care Services - 5.3% | |||
Express Scripts, Inc. (a) | 400,000 | 38,404,000 | |
Medco Health Solutions, Inc. (a) | 550,000 | 34,782,000 | |
| 73,186,000 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 103,378,000 | ||
HEALTH CARE TECHNOLOGY - 2.5% | |||
Health Care Technology - 2.5% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 620,000 | 11,091,800 | |
Cerner Corp. (a) | 200,000 | 16,590,000 | |
Omnicell, Inc. (a) | 460,000 | 6,223,800 | |
| 33,905,600 | ||
LIFE SCIENCES TOOLS & SERVICES - 9.3% | |||
Life Sciences Tools & Services - 9.3% | |||
Covance, Inc. (a) | 500,000 | 28,310,000 | |
ICON PLC sponsored ADR (a) | 300,000 | 7,065,000 | |
Illumina, Inc. (a)(c) | 1,163,300 | 42,251,056 | |
Life Technologies Corp. (a) | 130,000 | 6,598,800 | |
PAREXEL International Corp. (a) | 450,000 | 9,067,500 | |
PerkinElmer, Inc. | 300,000 | 6,663,000 | |
QIAGEN NV (a)(c) | 1,280,000 | 27,916,800 | |
| 127,872,156 | ||
PHARMACEUTICALS - 2.0% | |||
Pharmaceuticals - 2.0% | |||
Allergan, Inc. | 480,000 | 28,046,400 | |
TOTAL COMMON STOCKS (Cost $1,190,876,626) | 1,364,365,002 | ||
Money Market Funds - 7.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 16,849,372 | $ 16,849,372 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 88,281,913 | 88,281,913 | |
TOTAL MONEY MARKET FUNDS (Cost $105,131,285) | 105,131,285 | ||
TOTAL INVESTMENT PORTFOLIO - 106.6% (Cost $1,296,007,911) | 1,469,496,287 | ||
NET OTHER ASSETS - (6.6)% | (91,505,441) | ||
NET ASSETS - 100% | $ 1,377,990,846 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 51,676 |
Fidelity Securities Lending Cash Central Fund | 150,497 |
Total | $ 202,173 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.8% |
Ireland | 12.4% |
Netherlands | 2.0% |
Switzerland | 1.1% |
Others (individually less than 1%) | 0.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $57,953,100 of which $12,822,831 and $45,130,269 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $90,317,336) - See accompanying schedule: Unaffiliated issuers (cost $1,190,876,626) | $ 1,364,365,002 |
|
Fidelity Central Funds (cost $105,131,285) | 105,131,285 |
|
Total Investments (cost $1,296,007,911) |
| $ 1,469,496,287 |
Receivable for investments sold | 386,245 | |
Receivable for fund shares sold | 3,386,643 | |
Dividends receivable | 38,400 | |
Distributions receivable from Fidelity Central Funds | 15,006 | |
Prepaid expenses | 3,729 | |
Other receivables | 8,688 | |
Total assets | 1,473,334,998 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,210,501 | |
Payable for fund shares redeemed | 859,464 | |
Accrued management fee | 624,473 | |
Other affiliated payables | 321,445 | |
Other payables and accrued expenses | 46,356 | |
Collateral on securities loaned, at value | 88,281,913 | |
Total liabilities | 95,344,152 | |
|
|
|
Net Assets | $ 1,377,990,846 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,281,306,101 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (76,803,631) | |
Net unrealized appreciation (depreciation) on investments | 173,488,376 | |
Net Assets, for 54,614,015 shares outstanding | $ 1,377,990,846 | |
Net Asset Value, offering price and redemption price per share ($1,377,990,846 ÷ 54,614,015 shares) | $ 25.23 |
Statement of Operations
| Year ended February 28, 2010 | |
Investment Income |
|
|
Dividends |
| $ 8,676,928 |
Interest |
| 16 |
Income from Fidelity Central Funds (including $150,497 from security lending) |
| 202,173 |
Total income |
| 8,879,117 |
|
|
|
Expenses | ||
Management fee | $ 6,454,998 | |
Transfer agent fees | 3,365,518 | |
Accounting and security lending fees | 436,544 | |
Custodian fees and expenses | 46,794 | |
Independent trustees' compensation | 7,651 | |
Registration fees | 62,208 | |
Audit | 38,467 | |
Legal | 5,786 | |
Interest | 143 | |
Miscellaneous | 23,644 | |
Total expenses before reductions | 10,441,753 | |
Expense reductions | (57,554) | 10,384,199 |
Net investment income (loss) | (1,505,082) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 65,408,562 | |
Capital gain distributions from Fidelity Central Funds | 4,249 | |
Foreign currency transactions | 67,398 | |
Total net realized gain (loss) |
| 65,480,209 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 352,341,755 | |
Assets and liabilities in foreign currencies | (381) | |
Total change in net unrealized appreciation (depreciation) |
| 352,341,374 |
Net gain (loss) | 417,821,583 | |
Net increase (decrease) in net assets resulting from operations | $ 416,316,501 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Medical Equipment and Systems Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,505,082) | $ 767,386 |
Net realized gain (loss) | 65,480,209 | (138,688,512) |
Change in net unrealized appreciation (depreciation) | 352,341,374 | (312,583,518) |
Net increase (decrease) in net assets resulting from operations | 416,316,501 | (450,504,644) |
Distributions to shareholders from net investment income | - | (305,984) |
Distributions to shareholders from net realized gain | - | (36,663,628) |
Total distributions | - | (36,969,612) |
Share transactions | 423,109,536 | 1,025,190,451 |
Reinvestment of distributions | - | 35,608,206 |
Cost of shares redeemed | (473,964,290) | (731,022,154) |
Net increase (decrease) in net assets resulting from share transactions | (50,854,754) | 329,776,503 |
Redemption fees | 65,002 | 300,715 |
Total increase (decrease) in net assets | 365,526,749 | (157,397,038) |
|
|
|
Net Assets | ||
Beginning of period | 1,012,464,097 | 1,169,861,135 |
End of period | $ 1,377,990,846 | $ 1,012,464,097 |
Other Information Shares | ||
Sold | 19,019,915 | 43,960,563 |
Issued in reinvestment of distributions | - | 1,505,633 |
Redeemed | (22,924,188) | (34,870,564) |
Net increase (decrease) | (3,904,273) | 10,595,632 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.30 | $ 24.41 | $ 23.67 | $ 24.62 | $ 23.70 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.03) | .01 | (.05) | (.05) | (.04) |
Net realized and unrealized gain (loss) | 7.96 | (6.35) | 2.97 | 1.35 | 1.80 |
Total from investment operations | 7.93 | (6.34) | 2.92 | 1.30 | 1.76 |
Distributions from net investment income | - | (.01) | - | - | - |
Distributions from net realized gain | - | (.77) | (2.18) | (2.25) | (.84) |
Total distributions | - | (.78) | (2.18) | (2.25) | (.84) |
Redemption fees added to paid in capital C | - H | .01 | - H | - H | - H |
Net asset value, end of period | $ 25.23 | $ 17.30 | $ 24.41 | $ 23.67 | $ 24.62 |
Total Return A,B | 45.84% | (26.81)% | 12.57% | 5.66% | 7.36% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | .87% | .88% | .93% | .96% |
Expenses net of fee waivers, if any | .91% | .87% | .88% | .93% | .96% |
Expenses net of all reductions | .90% | .87% | .88% | .92% | .92% |
Net investment income (loss) | (.13)% | .06% | (.20)% | (.22)% | (.18)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,377,991 | $ 1,012,464 | $ 1,169,861 | $ 796,975 | $ 1,115,117 |
Portfolio turnover rate E | 83% | 116% | 129% | 71% | 99% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Pharmaceuticals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Life of |
Pharmaceuticals Portfolio | 46.05% | 7.39% | 2.44% |
A From June 18, 2001.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on June 18, 2001, when the fund started. 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.
Annual Report
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Andrew Oh, Portfolio Manager of Select Pharmaceuticals Portfolio: For the 12 months ending February 28, 2010, the fund rose 46.05%, underperforming the S&P 500 but outpacing the 41.22% return of the S&P® Custom Pharmaceuticals Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Good stock picking in the pharmaceuticals industry was the largest contributor, including smaller-than-index positions in benchmark heavyweights Johnson & Johnson, Abbott Laboratories and Eli Lilly. We had an overweighted position in Schering-Plough when its merger with Merck was announced, which also helped. We subsequently sold much of our Schering-Plough stock. An investment in U.K.-based drug maker AstraZeneca contributed as well, as did some good picks outside the benchmark in health care services, managed health care and health care supplies. Pharmacy benefit manager Express Scripts was a standout within health care services. Performance was hurt by stock selection in biotechnology companies such as Myriad Genetics, which makes a diagnostic test for cancer, and Vanda Pharmaceuticals, which produces an anti-schizophrenia drug. We sold our positions in Myriad Genetics and Vanda Pharmaceuticals by period end. An underweighting in U.S. large-cap drug maker Pfizer and an overweighting in Israeli generic drug maker Teva Pharmaceutical Industries also detracted.
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.
Annual Report
Pharmaceuticals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Merck & Co., Inc. | 7.6 | 9.3 |
Pfizer, Inc. | 7.2 | 15.5 |
Johnson & Johnson | 7.0 | 15.9 |
Novartis AG sponsored ADR | 6.5 | 0.1 |
GlaxoSmithKline PLC sponsored ADR | 5.0 | 0.5 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 4.8 | 0.5 |
Abbott Laboratories | 4.6 | 8.6 |
Sanofi-Aventis sponsored ADR | 4.4 | 0.1 |
Novo Nordisk AS Series B sponsored ADR | 3.8 | 0.9 |
Allergan, Inc. | 3.2 | 4.8 |
| 54.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Pharmaceuticals | 81.4% |
|
![]() | Health Care Equipment & Supplies | 5.4% |
|
![]() | Biotechnology | 5.2% |
|
![]() | Health Care Providers | 4.4% |
|
![]() | Life Sciences Tools & Services | 1.8% |
|
![]() | All Others* | 1.8% |
|
As of August 31, 2009 | |||
![]() | Pharmaceuticals | 78.6% |
|
![]() | Biotechnology | 6.6% |
|
![]() | Health Care Equipment & Supplies | 6.1% |
|
![]() | Health Care Providers | 5.0% |
|
![]() | Life Sciences Tools | 1.9% |
|
![]() | All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Pharmaceuticals Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
BIOTECHNOLOGY - 5.2% | |||
Biotechnology - 5.2% | |||
Acorda Therapeutics, Inc. (a) | 20,400 | $ 615,672 | |
Alexion Pharmaceuticals, Inc. (a) | 19,936 | 987,231 | |
Allos Therapeutics, Inc. (a)(c) | 12,600 | 98,028 | |
AMAG Pharmaceuticals, Inc. (a) | 16,000 | 611,040 | |
Amylin Pharmaceuticals, Inc. (a) | 21,360 | 403,704 | |
ARIAD Pharmaceuticals, Inc. (a) | 20,000 | 50,800 | |
Biogen Idec, Inc. (a) | 25,300 | 1,391,753 | |
BioMarin Pharmaceutical, Inc. (a) | 96,500 | 1,930,000 | |
Dendreon Corp. (a)(c) | 15,000 | 468,450 | |
Genzyme Corp. (a) | 28,800 | 1,647,360 | |
Human Genome Sciences, Inc. (a) | 13,000 | 365,950 | |
ImmunoGen, Inc. (a) | 19,100 | 126,251 | |
Incyte Corp. (a)(c) | 53,000 | 564,980 | |
Medivation, Inc. (a) | 3,803 | 136,946 | |
OSI Pharmaceuticals, Inc. (a) | 21,000 | 777,420 | |
Rigel Pharmaceuticals, Inc. (a) | 22,000 | 166,100 | |
United Therapeutics Corp. (a) | 31,100 | 1,785,451 | |
Zymogenetics, Inc. (a) | 14,100 | 75,294 | |
| 12,202,430 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.0% | |||
Electronic Equipment & Instruments - 1.0% | |||
Agilent Technologies, Inc. (a) | 72,100 | 2,268,266 | |
FOOD PRODUCTS - 0.1% | |||
Packaged Foods & Meats - 0.1% | |||
Ausnutria Dairy Hunan Co. Ltd. Class H | 301,000 | 214,441 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 5.4% | |||
Health Care Equipment - 4.8% | |||
C. R. Bard, Inc. | 19,100 | 1,600,198 | |
CareFusion Corp. (a) | 30,000 | 757,200 | |
Conceptus, Inc. (a) | 9,300 | 182,559 | |
Covidien PLC | 68,300 | 3,354,896 | |
Edwards Lifesciences Corp. (a) | 7,500 | 688,725 | |
ev3, Inc. (a) | 14,000 | 203,700 | |
Hospira, Inc. (a) | 23,400 | 1,224,522 | |
Mako Surgical Corp. (a) | 13,000 | 171,990 | |
Micrus Endovascular Corp. (a) | 59,600 | 1,205,708 | |
Mindray Medical International Ltd. sponsored ADR (c) | 15,600 | 595,296 | |
Nobel Biocare Holding AG (Switzerland) | 16,860 | 428,719 | |
Orthovita, Inc. (a) | 95,900 | 368,256 | |
Sonova Holding AG Class B | 2,627 | 327,641 | |
William Demant Holding AS (a) | 4,800 | 342,468 | |
| 11,451,878 | ||
| |||
Shares | Value | ||
Health Care Supplies - 0.6% | |||
Cooper Companies, Inc. | 30,800 | $ 1,233,848 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 24,000 | 92,757 | |
| 1,326,605 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 12,778,483 | ||
HEALTH CARE PROVIDERS & SERVICES - 4.4% | |||
Health Care Distributors & Services - 0.5% | |||
Cardinal Health, Inc. | 15,000 | 509,550 | |
Henry Schein, Inc. (a) | 6,200 | 352,346 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 6,500 | 64,743 | |
Sinopharm Group Co. Ltd. Class H | 80,200 | 361,108 | |
| 1,287,747 | ||
Health Care Facilities - 0.1% | |||
Hanger Orthopedic Group, Inc. (a) | 9,500 | 177,175 | |
Health Care Services - 2.3% | |||
Express Scripts, Inc. (a) | 27,500 | 2,640,275 | |
Medco Health Solutions, Inc. (a) | 43,100 | 2,725,644 | |
| 5,365,919 | ||
Managed Health Care - 1.5% | |||
Aetna, Inc. | 41,000 | 1,229,590 | |
CIGNA Corp. | 31,800 | 1,089,468 | |
Health Net, Inc. (a) | 38,200 | 882,038 | |
Universal American Financial Corp. (a) | 28,000 | 403,480 | |
| 3,604,576 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 10,435,417 | ||
LIFE SCIENCES TOOLS & SERVICES - 1.8% | |||
Life Sciences Tools & Services - 1.8% | |||
Covance, Inc. (a) | 23,000 | 1,302,260 | |
Illumina, Inc. (a) | 24,700 | 897,104 | |
PerkinElmer, Inc. | 20,000 | 444,200 | |
QIAGEN NV (a) | 50,877 | 1,109,627 | |
Wuxi Pharmatech Cayman, Inc. sponsored ADR (a) | 26,100 | 420,732 | |
| 4,173,923 | ||
PERSONAL PRODUCTS - 0.3% | |||
Personal Products - 0.3% | |||
Mead Johnson Nutrition Co. Class A | 12,207 | 577,391 | |
PHARMACEUTICALS - 81.4% | |||
Pharmaceuticals - 81.4% | |||
Abbott Laboratories | 199,100 | 10,807,148 | |
Akorn, Inc. (a) | 103,100 | 156,712 | |
Allergan, Inc. | 129,300 | 7,554,999 | |
Almirall SA | 11,500 | 154,380 | |
Angiotech Pharmaceuticals, Inc. (a) | 45,500 | 44,105 | |
Ardea Biosciences, Inc. (a) | 10,000 | 142,400 | |
AstraZeneca PLC sponsored ADR (c) | 103,400 | 4,562,008 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Auxilium Pharmaceuticals, Inc. (a) | 46,700 | $ 1,410,340 | |
BioMimetic Therapeutics, Inc. (a)(c) | 25,000 | 290,750 | |
Biovail Corp. | 130,100 | 1,925,072 | |
BMP Sunstone Corp. (a) | 15,000 | 81,000 | |
BMP Sunstone Corp. warrants 8/19/12 (a)(e) | 1,000 | 410 | |
Bristol-Myers Squibb Co. | 178,031 | 4,363,540 | |
Cadence Pharmaceuticals, Inc. (a) | 61,600 | 528,528 | |
Caraco Pharmaceutical Laboratories Ltd. (a) | 4,000 | 17,160 | |
Cardiome Pharma Corp. (a) | 138,000 | 714,754 | |
China Shineway Pharmaceutical Group Ltd. | 120,000 | 258,483 | |
Cypress Bioscience, Inc. (a) | 33,000 | 172,920 | |
DepoMed, Inc. (a) | 25,300 | 69,322 | |
Dr. Reddy's Laboratories Ltd. sponsored ADR (c) | 103,400 | 2,544,674 | |
Durect Corp. (a) | 65,500 | 156,545 | |
Elan Corp. PLC sponsored ADR (a) | 247,800 | 1,699,908 | |
Eli Lilly & Co. | 190,200 | 6,531,468 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 109,400 | 2,488,850 | |
Endo Pharmaceuticals Holdings, Inc. rights 2/27/12 (a) | 9,000 | 0 | |
Forest Laboratories, Inc. (a) | 64,720 | 1,933,834 | |
GlaxoSmithKline PLC sponsored ADR | 313,900 | 11,658,246 | |
Hi-Tech Pharmacal Co., Inc. (a) | 2,700 | 58,077 | |
Hikma Pharmaceuticals PLC | 7,032 | 58,985 | |
Impax Laboratories, Inc. (a) | 109,100 | 1,681,231 | |
Inspire Pharmaceuticals, Inc. (a) | 146,073 | 902,731 | |
Ipsen SA | 12,600 | 639,706 | |
Johnson & Johnson | 260,700 | 16,424,100 | |
King Pharmaceuticals, Inc. (a) | 155,900 | 1,753,875 | |
KV Pharmaceutical Co. Class A (a)(c) | 62,600 | 197,816 | |
MAP Pharmaceuticals, Inc. (a) | 27,112 | 371,977 | |
Medicis Pharmaceutical Corp. Class A | 39,200 | 882,000 | |
Merck & Co., Inc. | 485,736 | 17,913,944 | |
Mylan, Inc. (a)(c) | 151,200 | 3,226,608 | |
Nektar Therapeutics (a) | 140,000 | 1,734,600 | |
Novartis AG sponsored ADR (c) | 275,698 | 15,251,613 | |
Novo Nordisk AS Series B sponsored ADR (c) | 125,000 | 8,890,000 | |
Nuvo Research, Inc. (a) | 250,100 | 57,043 | |
Obagi Medical Products, Inc. (a) | 28,000 | 286,440 | |
Optimer Pharmaceuticals, Inc. (a)(c) | 112,000 | 1,338,400 | |
Pain Therapeutics, Inc. (a) | 39,200 | 237,160 | |
Paladin Labs, Inc. (a) | 28,600 | 541,966 | |
Par Pharmaceutical Companies, Inc. (a) | 12,800 | 320,384 | |
Perrigo Co. | 65,000 | 3,222,050 | |
Pfizer, Inc. | 970,000 | 17,023,500 | |
Piramal Healthcare Ltd. | 12,000 | 103,551 | |
Pozen, Inc. (a) | 19,100 | 114,791 | |
Questcor Pharmaceuticals, Inc. (a) | 57,900 | 270,972 | |
| |||
Shares | Value | ||
Roche Holding AG (participation certificate) | 4,909 | $ 819,690 | |
Salix Pharmaceuticals Ltd. (a) | 55,600 | 1,587,936 | |
Sanofi-Aventis sponsored ADR | 284,000 | 10,394,400 | |
Santarus, Inc. (a) | 62,500 | 263,125 | |
Shire PLC sponsored ADR | 93,000 | 6,000,360 | |
SuperGen, Inc. (a) | 104,500 | 288,420 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 187,289 | 11,239,213 | |
The Medicines Company (a) | 25,000 | 192,500 | |
Valeant Pharmaceuticals International (a)(c) | 72,400 | 2,694,728 | |
Virbac SA | 400 | 39,990 | |
ViroPharma, Inc. (a) | 175,700 | 2,189,222 | |
Vivus, Inc. (a)(c) | 12,000 | 100,800 | |
Watson Pharmaceuticals, Inc. (a) | 50,900 | 2,025,311 | |
XenoPort, Inc. (a) | 25,897 | 207,176 | |
| 191,813,947 | ||
TOTAL COMMON STOCKS (Cost $212,183,799) | 234,464,298 | ||
Money Market Funds - 16.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 665,971 | 665,971 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 37,049,600 | 37,049,600 | |
TOTAL MONEY MARKET FUNDS (Cost $37,715,571) | 37,715,571 | ||
TOTAL INVESTMENT PORTFOLIO - 115.6% (Cost $249,899,370) | 272,179,869 | ||
NET OTHER ASSETS - (15.6)% | (36,645,208) | ||
NET ASSETS - 100% | $ 235,534,661 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $410 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
BMP Sunstone Corp. warrants 8/19/12 | 8/17/07 | $ 125 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,132 |
Fidelity Securities Lending Cash Central Fund | 58,249 |
Total | $ 61,381 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 234,464,298 | $ 234,463,888 | $ 410 | $ - |
Money Market Funds | 37,715,571 | 37,715,571 | - | - |
Total Investments in Securities: | $ 272,179,869 | $ 272,179,459 | $ 410 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 64.1% |
Switzerland | 7.1% |
United Kingdom | 6.9% |
Israel | 4.8% |
France | 4.7% |
Denmark | 3.9% |
Bailiwick of Jersey | 2.5% |
Ireland | 2.1% |
Canada | 1.3% |
India | 1.1% |
Others (individually less than 1%) | 1.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $36,556,646) - See accompanying schedule: Unaffiliated issuers (cost $212,183,799) | $ 234,464,298 |
|
Fidelity Central Funds (cost $37,715,571) | 37,715,571 |
|
Total Investments (cost $249,899,370) |
| $ 272,179,869 |
Receivable for investments sold | 3,523,768 | |
Receivable for fund shares sold | 451,232 | |
Dividends receivable | 779,535 | |
Distributions receivable from Fidelity Central Funds | 15,071 | |
Prepaid expenses | 520 | |
Other receivables | 7,962 | |
Total assets | 276,957,957 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,987,157 | |
Payable for fund shares redeemed | 171,479 | |
Accrued management fee | 106,515 | |
Other affiliated payables | 66,089 | |
Other payables and accrued expenses | 42,456 | |
Collateral on securities loaned, at value | 37,049,600 | |
Total liabilities | 41,423,296 | |
|
|
|
Net Assets | $ 235,534,661 | |
Net Assets consist of: |
| |
Paid in capital | $ 214,519,668 | |
Undistributed net investment income | 414,255 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,682,271) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 22,283,009 | |
Net Assets, for 21,546,647 shares outstanding | $ 235,534,661 | |
Net Asset Value, offering price and redemption price per share ($235,534,661 ÷ 21,546,647 shares) | $ 10.93 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,209,827 |
Interest |
| 29 |
Income from Fidelity Central Funds (including $58,249 from security lending) |
| 61,381 |
Total income |
| 4,271,237 |
|
|
|
Expenses | ||
Management fee | $ 968,087 | |
Transfer agent fees | 583,044 | |
Accounting and security lending fees | 68,374 | |
Custodian fees and expenses | 48,571 | |
Independent trustees' compensation | 1,117 | |
Registration fees | 30,315 | |
Audit | 40,488 | |
Legal | 849 | |
Miscellaneous | 2,484 | |
Total expenses before reductions | 1,743,329 | |
Expense reductions | (28,749) | 1,714,580 |
Net investment income (loss) | 2,556,657 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 18,364,248 | |
Foreign currency transactions | (14,818) | |
Total net realized gain (loss) |
| 18,349,430 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 39,164,285 | |
Assets and liabilities in foreign currencies | 1,407 | |
Total change in net unrealized appreciation (depreciation) |
| 39,165,692 |
Net gain (loss) | 57,515,122 | |
Net increase (decrease) in net assets resulting from operations | $ 60,071,779 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,556,657 | $ 2,813,646 |
Net realized gain (loss) | 18,349,430 | (18,302,741) |
Change in net unrealized appreciation (depreciation) | 39,165,692 | (28,241,201) |
Net increase (decrease) in net assets resulting from operations | 60,071,779 | (43,730,296) |
Distributions to shareholders from net investment income | (2,794,173) | (2,273,856) |
Distributions to shareholders from net realized gain | - | (887,024) |
Total distributions | (2,794,173) | (3,160,880) |
Share transactions | 113,916,553 | 125,994,096 |
Reinvestment of distributions | 2,695,478 | 2,937,853 |
Cost of shares redeemed | (80,373,510) | (107,369,589) |
Net increase (decrease) in net assets resulting from share transactions | 36,238,521 | 21,562,360 |
Redemption fees | 7,643 | 10,142 |
Total increase (decrease) in net assets | 93,523,770 | (25,318,674) |
|
|
|
Net Assets | ||
Beginning of period | 142,010,891 | 167,329,565 |
End of period (including undistributed net investment income of $414,255 and undistributed net investment income of $665,921, respectively) | $ 235,534,661 | $ 142,010,891 |
Other Information Shares | ||
Sold | 11,305,331 | 13,808,334 |
Issued in reinvestment of distributions | 268,688 | 330,453 |
Redeemed | (8,706,324) | (11,372,234) |
Net increase (decrease) | 2,867,695 | 2,766,553 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.60 | $ 10.52 | $ 10.88 | $ 10.41 | $ 8.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .14 | .18 | .10 | .08 | .02 |
Net realized and unrealized gain (loss) | 3.35 | (2.91) | .13 | .74 | 1.77 |
Total from investment operations | 3.49 | (2.73) | .23 | .82 | 1.79 |
Distributions from net investment income | (.16) | (.13) | (.11) | (.04) | (.02) |
Distributions from net realized gain | - | (.06) | (.48) | (.31) | - |
Total distributions | (.16) | (.19) | (.59) | (.35) | (.02) |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 10.93 | $ 7.60 | $ 10.52 | $ 10.88 | $ 10.41 |
Total Return A,B | 46.05% | (26.23)% | 1.64% | 8.05% | 20.68% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.01% | 1.00% | .95% | 1.02% | 1.11% |
Expenses net of fee waivers, if any | 1.01% | 1.00% | .95% | 1.02% | 1.11% |
Expenses net of all reductions | 1.00% | .99% | .95% | 1.01% | 1.03% |
Net investment income (loss) | 1.49% | 1.89% | .85% | .73% | .23% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 235,535 | $ 142,011 | $ 167,330 | $ 195,128 | $ 142,471 |
Portfolio turnover rate E | 221% | 240% | 119% | 204% | 207% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 Health Care Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Biotechnology Portfolio | $ 1,270,807,846 | $ 113,363,485 | $ (167,466,356) | $ (54,102,871) |
Health Care Portfolio | 1,576,972,909 | 296,304,430 | (38,402,798) | 257,901,632 |
Medical Delivery Portfolio | 384,034,920 | 98,422,991 | (10,651,875) | 87,771,116 |
Medical Equipment and Systems Portfolio | 1,312,904,962 | 188,910,434 | (32,319,109) | 156,591,325 |
Pharmaceuticals Portfolio | 252,682,534 | 25,497,810 | (6,000,475) | 19,497,335 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed long-term | Capital loss | Net unrealized |
Biotechnology Portfolio | $ - | $ - | $ (250,129,788) | $ (54,102,871) |
Health Care Portfolio | 50,219 | - | (146,767,055) | 257,883,488 |
Medical Delivery Portfolio | - | - | (79,362,962) | 87,770,992 |
Medical Equipment and Systems Portfolio | - | - | (57,953,100) | 156,591,325 |
Pharmaceuticals Portfolio | 414,255 | 1,100,893 | - | 19,499,846 |
The tax character of distributions paid was as follows:
February 28, 2010 | Ordinary | Total |
Health Care Portfolio | $3,893,231 | $ 3,893,231 |
Pharmaceuticals Portfolio | 2,794,173 | 2,794,173 |
February 28, 2009 | Ordinary | Long-term | Total |
Health Care Portfolio | $6,124,045 | $77,726,943 | $83,850,988 |
Medical Delivery Portfolio | 331,975 | 3,873,055 | 4,205,030 |
Medical Equipment and Systems Portfolio | 11,257,458 | 25,712,154 | 36,969,612 |
Pharmaceuticals Portfolio | 2,273,856 | 887,024 | 3,160,880 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Biotechnology Portfolio | 1,171,283,791 | 1,447,268,204 |
Health Care Portfolio | 1,671,486,025 | 1,683,630,979 |
Medical Delivery Portfolio | 190,739,469 | 169,086,080 |
Medical Equipment and Systems Portfolio | 943,992,141 | 1,004,337,871 |
Pharmaceuticals Portfolio | 418,164,636 | 382,772,453 |
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the 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% | .26% | .56% |
Health Care Portfolio | .30% | .26% | .56% |
Medical Delivery Portfolio | .30% | .26% | .56% |
Medical Equipment and Systems Portfolio | .30% | .26% | .56% |
Pharmaceuticals Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .30% |
Health Care Portfolio | .27% |
Medical Delivery Portfolio | .33% |
Medical Equipment and Systems Portfolio | .29% |
Pharmaceuticals Portfolio | .34% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Biotechnology Portfolio | $ 10,412 |
Health Care Portfolio | 13,949 |
Medical Delivery Portfolio | 2,982 |
Medical Equipment and Systems Portfolio | 7,739 |
Pharmaceuticals Portfolio | 5,752 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Biotechnology Portfolio | Borrower | $ 6,045,803 | .41% | $ 4,173 |
Medical Delivery Portfolio | Borrower | 4,708,125 | .43% | 452 |
Medical Equipment and Systems Portfolio | Borrower | 11,880,000 | .43% | 143 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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 is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Biotechnology Portfolio | $ 3,960 |
Health Care Portfolio | 5,087 |
Medical Delivery Portfolio | 1,136 |
Medical Equipment and Systems Portfolio | 4,002 |
Pharmaceuticals Portfolio | 581 |
Annual Report
7. Committed Line of Credit - continued
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody |
Biotechnology Portfolio | $ 35,266 | $ - |
Health Care Portfolio | 102,732 | 89 |
Medical Delivery Portfolio | 11,066 | - |
Medical Equipment and Systems Portfolio | 57,477 | 77 |
Pharmaceuticals Portfolio | 28,749 | - |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the PAS U.S. Opportunity Fund of Funds was the owner of record of approximately 12% of the total outstanding shares of Pharmaceuticals Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity Funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 |
Health Care Portfolio | 04/12/10 | 04/09/10 | $- | $0.005 |
Pharmaceuticals Portfolio | 04/12/10 | 04/09/10 | $0.02 | $0.05 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2010, or, if subsequently determined to be different, the net capital gain of such year.
Pharmaceuticals Portfolio | $1,100,893 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2009 | December 2009 |
Health Care Portfolio | 100% | 100% |
Pharmaceuticals Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2009 | December 2009 |
Health Care Portfolio | 100% | 100% |
Pharmaceuticals Portfolio | 100% | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
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Fidelity®
Select Portfolios®
Industrials Sector
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environmental Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Notes to shareholders |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Industrials Sector |
|
|
Air Transportation |
| |
Defense and Aerospace |
| |
Environmental |
| |
Industrial Equipment |
| |
Industrials |
| |
Transportation |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
* Fund Updates for each Select Portfolio include: Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Notes to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Select Environmental
In January 2010, the Board of Trustees approved broadening Select Environmental Portfolio's investment policies and renaming the fund Select Environment and Alternative Energy Portfolio. The investment policy changes are subject to shareholder approval, at a meeting on or about June 15, 2010. If approved, the fund's name and investment policy changes will take effect on or about July 1, 2010, and the FTSE Environmental Opportunities & Alternative Energy Index will replace the MSCI® U.S. IM Industrials 25/50 Index as the fund's industry benchmark.
The note above is not a solicitation of any proxy. More detailed information will be contained in the proxy statement, which is expected to be available after April 19, 2010.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Air Transportation Portfolio | 1.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,320.40 | $ 5.75 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.84 | $ 5.01 |
Defense and Aerospace Portfolio | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,169.90 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Environmental Portfolio | 1.05% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,045.20 | $ 5.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.59 | $ 5.26 |
Industrial Equipment Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,157.60 | $ 4.87 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Industrials Portfolio | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,139.50 | $ 5.09 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
Transportation Portfolio | 1.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,207.00 | $ 5.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.79 | $ 5.06 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Air Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Air Transportation Portfolio | 103.57% | 6.18% | 7.46% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 29, 2000. 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.
Annual Report
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Mirshekari, Portfolio Manager of Select Air Transportation Portfolio: During the past year, the fund returned 103.57%, handily beating the S&P 500 and the 94.48% mark of the S&P® Custom Air Transportation Index, which was adopted in December 2009 as a better representation of the fund's investment universe. Relative to the industry index, we were rewarded by strong stock selection and a large overweighting in the airline group. Underweighting the relatively weak-performing air freight/logistics segment also helped but was largely offset by unfavorable picks in the group. In absolute terms, our foreign holdings were boosted by a weaker U.S. dollar. The top three contributors were Pinnacle Airlines, Delta Air Lines and Southwest Airlines. At the time of our original purchase, Pinnacle was one of the cheapest stocks I'd ever seen, trading at around one times the earnings per share the company was predicting in a couple of years. At period end, despite having appreciated to a price almost six times that of its low, it remained an extraordinary bargain, in my view. Our positions in Delta and Southwest reflected my confidence in an airline industry recovery, as well as favorable company-specific stories. Although Southwest had been out of favor with investors for the past couple of years because of delays in implementing its turnaround plan, some promising revenue initiatives, newfound discipline about containing its capacity and network restructuring drove the stock's gains. Elsewhere, underweighting and ultimately selling Expeditors International of Washington, a global freight logistics provider, was beneficial given the stock's lagging performance. Conversely, a modest cash position in a strong market weighed on performance, as did unrewarding security selection in the aerospace and defense industry. The three largest detractors during the period were airlines. Performance was dampened by underweightings in UAL, parent company of United Airlines, and AMR, parent company of American Airlines, and by an overweighting in AirTran Holdings. In UAL's case, the underweighted position was a function of being limited in how concentrated I could make the fund. I compensated for this restriction by increasing the overall airline industry overweightings, which led to strong fund outperformance. An early underweighting in United Parcel Service, when the stock was rallying vigorously, also hurt results.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Southwest Airlines Co. | 13.0 | 5.3 |
Delta Air Lines, Inc. | 9.6 | 10.2 |
Pinnacle Airlines Corp. | 8.5 | 7.9 |
AMR Corp. | 7.6 | 0.0 |
UAL Corp. | 7.1 | 0.0 |
Alaska Air Group, Inc. | 4.9 | 4.5 |
Precision Castparts Corp. | 4.9 | 4.5 |
United Parcel Service, Inc. Class B | 4.8 | 9.0 |
Continental Airlines, Inc. Class B | 3.9 | 0.0 |
Hawaiian Holdings, Inc. | 3.7 | 3.6 |
| 68.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Airlines | 66.0% |
|
![]() | Aerospace & Defense | 26.2% |
|
![]() | Air Freight & Logistics | 5.7% |
|
![]() | Industrial Conglomerates | 1.9% |
|
![]() | Oil, Gas & Consumable Fuels | 0.0% |
|
![]() | All Others* | 0.2% |
|
As of August 31, 2009 | |||
![]() | Airlines | 52.1% |
|
![]() | Aerospace & Defense | 23.8% |
|
![]() | Air Freight & Logistics | 17.5% |
|
![]() | Industrial Conglomerates | 4.6% |
|
![]() | Oil, Gas & Consumable Fuels | 0.0% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 26.2% | |||
Aerospace & Defense - 26.2% | |||
BE Aerospace, Inc. (a) | 46,300 | $ 1,199,170 | |
Bombardier, Inc. Class B (sub. vtg.) | 247,600 | 1,338,887 | |
Goodrich Corp. | 44,200 | 2,900,846 | |
Heico Corp. Class A | 25,900 | 960,890 | |
LMI Aerospace, Inc. (a) | 174,500 | 2,214,405 | |
Northrop Grumman Corp. | 12,500 | 765,750 | |
Precision Castparts Corp. | 40,700 | 4,588,925 | |
Raytheon Co. | 27,000 | 1,518,480 | |
Rockwell Collins, Inc. | 40,300 | 2,268,084 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 163,616 | 3,128,338 | |
The Boeing Co. | 43,600 | 2,753,776 | |
TransDigm Group, Inc. | 22,200 | 1,114,884 | |
| 24,752,435 | ||
AIR FREIGHT & LOGISTICS - 5.7% | |||
Air Freight & Logistics - 5.7% | |||
Atlas Air Worldwide Holdings, Inc. (a) | 19,000 | 856,520 | |
United Parcel Service, Inc. Class B | 77,400 | 4,546,476 | |
| 5,402,996 | ||
AIRLINES - 66.0% | |||
Airlines - 66.0% | |||
Air Canada: | |||
warrants 10/27/12 (a)(e) | 503,069 | 193,626 | |
Class A (a)(e) | 1,006,138 | 1,462,952 | |
AirTran Holdings, Inc. (a)(c) | 411,300 | 1,982,466 | |
Alaska Air Group, Inc. (a) | 132,000 | 4,620,000 | |
AMR Corp. (a) | 782,300 | 7,189,337 | |
Continental Airlines, Inc. Class B (a)(c) | 178,200 | 3,681,612 | |
Delta Air Lines, Inc. (a) | 697,766 | 9,015,137 | |
Hawaiian Holdings, Inc. (a) | 454,653 | 3,537,200 | |
Pinnacle Airlines Corp. (a)(d) | 984,126 | 8,000,944 | |
Republic Airways Holdings, Inc. (a) | 93,300 | 568,197 | |
SkyWest, Inc. | 71,300 | 1,052,388 | |
Southwest Airlines Co. | 971,900 | 12,226,502 | |
UAL Corp. (a)(c) | 392,300 | 6,727,945 | |
US Airways Group, Inc. (a)(c) | 274,850 | 2,014,651 | |
| 62,272,957 | ||
INDUSTRIAL CONGLOMERATES - 1.9% | |||
Industrial Conglomerates - 1.9% | |||
Textron, Inc. (c) | 91,000 | 1,812,720 | |
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 0.0% | |||
Oil & Gas Storage & Transport - 0.0% | |||
Ship Finance International Ltd. (NY Shares) | 18 | $ 286 | |
TOTAL COMMON STOCKS (Cost $77,286,131) | 94,241,394 |
Nonconvertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
AIRLINES - 0.0% | ||||
Airlines - 0.0% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 3,500,000 | 35,000 |
Money Market Funds - 15.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (f) | 3,681,611 | 3,681,611 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(f) | 10,719,087 | 10,719,087 | |
TOTAL MONEY MARKET FUNDS (Cost $14,400,698) | 14,400,698 |
TOTAL INVESTMENT PORTFOLIO - 115.1% (Cost $91,757,173) | 108,677,092 |
NET OTHER ASSETS - (15.1)% | (14,251,962) | ||
NET ASSETS - 100% | $ 94,425,130 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated company |
(e) 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 $1,656,578 or 1.8% of net assets. |
(f) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 3,434 |
Fidelity Securities Lending Cash Central Fund | 21,344 |
Total | $ 24,778 |
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, | Purchases | Sales | Dividend | Value, |
Pinnacle Airlines Corp. | $ 69,440 | $ 4,434,698 | $ 96,235 | $ - | $ 8,000,944 |
Total | $ 69,440 | $ 4,434,698 | $ 96,235 | $ - | $ 8,000,944 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 94,241,394 | $ 94,241,394 | $ - | $ - |
Nonconvertible Bonds | 35,000 | - | - | 35,000 |
Money Market Funds | 14,400,698 | 14,400,698 | - | - |
Total Investments in Securities: | $ 108,677,092 | $ 108,642,092 | $ - | $ 35,000 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 70,000 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (35,000) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | - |
Ending Balance | $ 35,000 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ (35,000) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $12,996,324 all of which will expire on February 28, 2018. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $10,924,610) - See accompanying schedule: Unaffiliated issuers (cost $72,841,916) | $ 86,275,450 |
|
Fidelity Central Funds (cost $14,400,698) | 14,400,698 |
|
Other affiliated issuers (cost $4,514,559) | 8,000,944 |
|
Total Investments (cost $91,757,173) |
| $ 108,677,092 |
Receivable for investments sold | 4,985,536 | |
Receivable for fund shares sold | 1,135,668 | |
Dividends receivable | 71,606 | |
Distributions receivable from Fidelity Central Funds | 1,307 | |
Prepaid expenses | 142 | |
Other receivables | 8,898 | |
Total assets | 114,880,249 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,388,288 | |
Payable for fund shares redeemed | 261,761 | |
Accrued management fee | 38,128 | |
Other affiliated payables | 19,771 | |
Other payables and accrued expenses | 28,084 | |
Collateral on securities loaned, at value | 10,719,087 | |
Total liabilities | 20,455,119 | |
|
|
|
Net Assets | $ 94,425,130 | |
Net Assets consist of: |
| |
Paid in capital | $ 91,598,521 | |
Accumulated net investment loss | (3) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,093,251) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 16,919,863 | |
Net Assets, for 2,673,149 shares outstanding | $ 94,425,130 | |
Net Asset Value, offering price and redemption price per share ($94,425,130 ÷ 2,673,149 shares) | $ 35.32 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 346,319 |
Interest |
| 2 |
Income from Fidelity Central Funds (including $21,344 from security lending) |
| 24,778 |
Total income |
| 371,099 |
|
|
|
Expenses | ||
Management fee | $ 289,632 | |
Transfer agent fees | 160,624 | |
Accounting and security lending fees | 20,924 | |
Custodian fees and expenses | 9,909 | |
Independent trustees' compensation | 335 | |
Registration fees | 22,759 | |
Audit | 35,493 | |
Legal | 248 | |
Miscellaneous | 605 | |
Total expenses before reductions | 540,529 | |
Expense reductions | (24,409) | 516,120 |
Net investment income (loss) | (145,021) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (9,175,373) | |
Other affiliated issuers | 28,219 |
|
Foreign currency transactions | 6,436 | |
Total net realized gain (loss) |
| (9,140,718) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 42,619,881 | |
Assets and liabilities in foreign currencies | 182 | |
Total change in net unrealized appreciation (depreciation) |
| 42,620,063 |
Net gain (loss) | 33,479,345 | |
Net increase (decrease) in net assets resulting from operations | $ 33,334,324 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (145,021) | $ (162,538) |
Net realized gain (loss) | (9,140,718) | (4,363,679) |
Change in net unrealized appreciation (depreciation) | 42,620,063 | (28,696,702) |
Net increase (decrease) in net assets resulting from operations | 33,334,324 | (33,222,919) |
Distributions to shareholders from net realized gain | - | (3,673,839) |
Share transactions | 76,201,239 | 76,536,947 |
Reinvestment of distributions | - | 3,509,136 |
Cost of shares redeemed | (50,030,435) | (55,210,430) |
Net increase (decrease) in net assets resulting from share transactions | 26,170,804 | 24,835,653 |
Redemption fees | 9,352 | 28,948 |
Total increase (decrease) in net assets | 59,514,480 | (12,032,157) |
|
|
|
Net Assets | ||
Beginning of period | 34,910,650 | 46,942,807 |
End of period (including accumulated net investment loss of $3 and undistributed net investment income of $4, respectively) | $ 94,425,130 | $ 34,910,650 |
Other Information Shares | ||
Sold | 2,564,524 | 2,864,984 |
Issued in reinvestment of distributions | - | 108,007 |
Redeemed | (1,903,208) | (2,213,883) |
Net increase (decrease) | 661,316 | 759,108 |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.35 | $ 37.47 | $ 50.74 | $ 43.14 | $ 33.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) | (.10) | (.04) F | (.06) | (.04) |
Net realized and unrealized gain (loss) | 18.04 | (17.05) | (7.61) | 8.48 | 10.44 |
Total from investment operations | 17.97 | (17.15) | (7.65) | 8.42 | 10.40 |
Distributions from net investment income | - | - | - | - | (.01) |
Distributions from net realized gain | - | (2.99) | (5.63) | (.86) | (.75) |
Total distributions | - | (2.99) | (5.63) | (.86) | (.76) |
Redemption fees added to paid in capital C | - I | .02 | .01 | .04 | .04 |
Net asset value, end of period | $ 35.32 | $ 17.35 | $ 37.47 | $ 50.74 | $ 43.14 |
Total Return A, B | 103.57% | (49.44)% | (16.72)% | 19.81% | 31.40% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.05% | 1.08% | 1.01% | 1.00% | 1.16% |
Expenses net of fee waivers, if any | 1.05% | 1.08% | 1.01% | 1.00% | 1.16% |
Expenses net of all reductions | 1.01% | 1.07% | 1.01% | .99% | 1.11% |
Net investment income (loss) | (.28)% | (.37)% | (.08)% F | (.12)% | (.11)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 94,425 | $ 34,911 | $ 46,943 | $ 147,302 | $ 117,641 |
Portfolio turnover rate E | 165% | 66% | 47% | 165% | 93% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.28)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Defense and Aerospace Portfolio | 62.05% | 4.47% | 10.03% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Sheehy, Portfolio Manager of Select Defense and Aerospace Portfolio: During the past year, the fund returned 62.05%, handily beating the S&P 500 but slightly trailing the 63.06% return of the MSCI® U.S. IM Aerospace & Defense 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Stock selection in the aerospace and defense segment detracted from performance relative to the MSCI index. Elsewhere, positions in the out-of-index groups of IT consulting/other services and airlines worked against us, and a modest cash position dampened our gains in a strongly rising market. The biggest detractor was an underweighting in Boeing, which rebounded strongly from its lows early in 2009 amid improving business fundamentals in the commercial aerospace industry and progress on the company's 787 Dreamliner development program. Alliant Techsystems - with its exposure to the NASA space program - also was a detractor, as was defense contractor Lockheed Martin and defense services provider Stanley. Weapons maker and index constituent Taser International hurt our results because we didn't own it and the stock surged in January. Aerospace and defense holding United Technologies, the fund's largest position, detracted modestly on a relative basis due to our underweighting but contributed significantly in absolute terms. An out-of-index stake in industrial conglomerates boosted fund performance, and our out-of-index picks in the steel industry also were helpful. Industrial conglomerate Textron, the fund's top contributor, was aided by an inexpensive valuation to start the period, improving credit markets and the company's decision to unwind its financing operations. Other individual contributors included aerospace holdings Goodrich, Precision Castparts and TransDigm Group, as well as underweighted exposure to defense contractor Raytheon. Not owning lagging industrials/defense stock ITT - a component of the benchmark - also aided our results.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Defense and Aerospace Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 19.4 | 18.5 |
The Boeing Co. | 11.5 | 4.9 |
Precision Castparts Corp. | 8.7 | 7.2 |
Raytheon Co. | 7.0 | 4.9 |
Goodrich Corp. | 5.0 | 4.8 |
Honeywell International, Inc. | 4.6 | 11.2 |
Lockheed Martin Corp. | 4.2 | 12.7 |
TransDigm Group, Inc. | 3.8 | 1.7 |
Heico Corp. | 2.9 | 1.3 |
Spirit AeroSystems Holdings, Inc. Class A | 2.7 | 1.0 |
| 69.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Aerospace & Defense | 90.5% |
|
![]() | Machinery | 2.2% |
|
![]() | Metals & Mining | 1.8% |
|
![]() | Communications Equipment | 1.7% |
|
![]() | Industrial Conglomerates | 1.0% |
|
![]() | All Others* | 2.8% |
|
As of August 31, 2009 | |||
![]() | Aerospace & Defense | 90.3% |
|
![]() | Machinery | 1.8% |
|
![]() | IT Services | 1.7% |
|
![]() | Communications Equipment | 1.5% |
|
![]() | Electronic Equipment & Components | 1.0% |
|
![]() | All Others* | 3.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Defense and Aerospace Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 90.5% | |||
Aerospace & Defense - 90.5% | |||
AeroVironment, Inc. (a) | 320,000 | $ 7,760,000 | |
Alliant Techsystems, Inc. (a) | 141,000 | 11,202,450 | |
BE Aerospace, Inc. (a) | 627,300 | 16,247,070 | |
Chemring Group PLC | 49,900 | 2,525,842 | |
DigitalGlobe, Inc. | 342,800 | 8,179,208 | |
Esterline Technologies Corp. (a) | 303,000 | 12,468,450 | |
European Aeronautic Defence and Space Co. EADS NV | 250,900 | 5,176,953 | |
General Dynamics Corp. | 64,230 | 4,659,887 | |
Goodrich Corp. | 460,050 | 30,193,082 | |
Heico Corp. (c) | 373,300 | 17,787,745 | |
Honeywell International, Inc. | 703,900 | 28,268,624 | |
Ladish Co., Inc. (a) | 446,200 | 7,505,084 | |
LMI Aerospace, Inc. (a) | 224,400 | 2,847,636 | |
Lockheed Martin Corp. | 327,500 | 25,466,400 | |
Meggitt PLC | 1,377,000 | 5,825,574 | |
Orbital Sciences Corp. (a) | 560,792 | 10,346,612 | |
Precision Castparts Corp. | 470,600 | 53,060,150 | |
Raytheon Co. | 763,752 | 42,953,412 | |
Rockwell Collins, Inc. | 153,500 | 8,638,980 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 858,900 | 16,422,168 | |
Stanley, Inc. (a) | 450,200 | 11,349,542 | |
Teledyne Technologies, Inc. (a) | 301,100 | 11,342,437 | |
The Boeing Co. | 1,105,017 | 69,792,874 | |
TransDigm Group, Inc. | 460,600 | 23,131,332 | |
United Technologies Corp. | 1,717,700 | 117,920,105 | |
| 551,071,617 | ||
COMMUNICATIONS EQUIPMENT - 1.7% | |||
Communications Equipment - 1.7% | |||
Harris Corp. | 173,700 | 7,854,714 | |
ViaSat, Inc. (a) | 88,000 | 2,675,200 | |
| 10,529,914 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.6% | |||
Electronic Equipment & Instruments - 0.6% | |||
FLIR Systems, Inc. (a) | 132,000 | 3,538,920 | |
HOUSEHOLD DURABLES - 0.6% | |||
Household Appliances - 0.6% | |||
iRobot Corp. (a)(c) | 228,000 | 3,691,320 | |
INDUSTRIAL CONGLOMERATES - 1.0% | |||
Industrial Conglomerates - 1.0% | |||
Textron, Inc. | 306,900 | 6,113,448 | |
| |||
Shares | Value | ||
MACHINERY - 2.2% | |||
Construction & Farm Machinery & Heavy Trucks - 0.6% | |||
Navistar International Corp. (a) | 92,000 | $ 3,602,720 | |
Industrial Machinery - 1.6% | |||
Barnes Group, Inc. | 275,100 | 4,418,106 | |
Crane Co. | 167,600 | 5,307,892 | |
| 9,725,998 | ||
TOTAL MACHINERY | 13,328,718 | ||
METALS & MINING - 1.8% | |||
Steel - 1.8% | |||
Allegheny Technologies, Inc. | 103,700 | 4,527,542 | |
Carpenter Technology Corp. | 226,100 | 6,753,607 | |
| 11,281,149 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.8% | |||
Trading Companies & Distributors - 0.8% | |||
Kaman Corp. | 194,000 | 4,646,300 | |
TOTAL COMMON STOCKS (Cost $572,503,333) | 604,201,386 | ||
Money Market Funds - 1.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 5,930,875 | 5,930,875 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 5,923,025 | 5,923,025 | |
TOTAL MONEY MARKET FUNDS (Cost $11,853,900) | 11,853,900 |
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $584,357,233) | 616,055,286 |
NET OTHER ASSETS - (1.1)% | (6,960,131) | ||
NET ASSETS - 100% | $ 609,095,155 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 18,689 |
Fidelity Securities Lending Cash Central Fund | 24,562 |
Total | $ 43,251 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $137,484,877 of which $19,754,144 and $117,730,733 will expire on February 28, 2017 and 2018, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2011 approximately $7,460,909 of losses recognized during the period November 1, 2009 to February 28, 2010. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $5,747,997) - See accompanying schedule: Unaffiliated issuers (cost $572,503,333) | $ 604,201,386 |
|
Fidelity Central Funds (cost $11,853,900) | 11,853,900 |
|
Total Investments (cost $584,357,233) |
| $ 616,055,286 |
Cash | 383,271 | |
Receivable for investments sold | 2,432,409 | |
Receivable for fund shares sold | 264,010 | |
Dividends receivable | 1,763,122 | |
Distributions receivable from Fidelity Central Funds | 2,497 | |
Prepaid expenses | 1,752 | |
Other receivables | 5,494 | |
Total assets | 620,907,841 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,738,102 | |
Payable for fund shares redeemed | 675,099 | |
Accrued management fee | 275,727 | |
Other affiliated payables | 165,701 | |
Other payables and accrued expenses | 35,032 | |
Collateral on securities loaned, at value | 5,923,025 | |
Total liabilities | 11,812,686 | |
|
|
|
Net Assets | $ 609,095,155 | |
Net Assets consist of: |
| |
Paid in capital | $ 724,091,460 | |
Undistributed net investment income | 924,640 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (147,619,251) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 31,698,306 | |
Net Assets, for 9,816,003 shares outstanding | $ 609,095,155 | |
Net Asset Value, offering price and redemption price per share ($609,095,155 ÷ 9,816,003 shares) | $ 62.05 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,546,496 |
Special dividends |
| 2,021,130 |
Interest |
| 9 |
Income from Fidelity Central Funds (including $24,562 from security lending) |
| 43,251 |
Total income |
| 12,610,886 |
|
|
|
Expenses | ||
Management fee | $ 3,039,499 | |
Transfer agent fees | 1,765,849 | |
Accounting and security lending fees | 211,191 | |
Custodian fees and expenses | 16,083 | |
Independent trustees' compensation | 3,702 | |
Registration fees | 32,000 | |
Audit | 36,829 | |
Legal | 2,721 | |
Miscellaneous | 11,625 | |
Total expenses before reductions | 5,119,499 | |
Expense reductions | (18,505) | 5,100,994 |
Net investment income (loss) | 7,509,892 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (98,843,121) | |
Foreign currency transactions | 8,667 | |
Total net realized gain (loss) |
| (98,834,454) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 339,243,322 | |
Assets and liabilities in foreign currencies | 253 | |
Total change in net unrealized appreciation (depreciation) |
| 339,243,575 |
Net gain (loss) | 240,409,121 | |
Net increase (decrease) in net assets resulting from operations | $ 247,919,013 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 7,509,892 | $ 7,694,796 |
Net realized gain (loss) | (98,834,454) | (47,459,839) |
Change in net unrealized appreciation (depreciation) | 339,243,575 | (427,448,553) |
Net increase (decrease) in net assets resulting from operations | 247,919,013 | (467,213,596) |
Distributions to shareholders from net investment income | (9,658,561) | (6,223,008) |
Distributions to shareholders from net realized gain | - | (69,243,502) |
Total distributions | (9,658,561) | (75,466,510) |
Share transactions | 86,172,859 | 122,993,316 |
Reinvestment of distributions | 9,247,495 | 71,936,256 |
Cost of shares redeemed | (160,886,627) | (423,855,861) |
Net increase (decrease) in net assets resulting from share transactions | (65,466,273) | (228,926,289) |
Redemption fees | 10,302 | 30,355 |
Total increase (decrease) in net assets | 172,804,481 | (771,576,040) |
|
|
|
Net Assets | ||
Beginning of period | 436,290,674 | 1,207,866,714 |
End of period (including undistributed net investment income of $924,640 and undistributed net investment income of $3,073,309, respectively) | $ 609,095,155 | $ 436,290,674 |
Other Information Shares | ||
Sold | 1,573,333 | 1,915,383 |
Issued in reinvestment of distributions | 168,852 | 1,006,601 |
Redeemed | (3,123,571) | (6,835,961) |
Net increase (decrease) | (1,381,386) | (3,913,977) |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 38.96 | $ 79.93 | $ 84.46 | $ 78.91 | $ 67.18 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .73 F | .58 | .24 | .08 | .13 |
Net realized and unrealized gain (loss) | 23.32 | (36.29) | 2.46 | 12.07 | 15.04 |
Total from investment operations | 24.05 | (35.71) | 2.70 | 12.15 | 15.17 |
Distributions from net investment income | (.96) | (.51) | (.14) | (.05) | (.11) |
Distributions from net realized gain | - | (4.75) | (7.10) | (6.56) | (3.34) |
Total distributions | (.96) | (5.26) | (7.24) | (6.61) | (3.45) |
Redemption fees added to paid in capital C | - I | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 62.05 | $ 38.96 | $ 79.93 | $ 84.46 | $ 78.91 |
Total Return A, B | 62.05% | (47.61)% | 2.80% | 15.90% | 23.02% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .95% | .88% | .87% | .92% | .97% |
Expenses net of fee waivers, if any | .95% | .88% | .87% | .92% | .97% |
Expenses net of all reductions | .94% | .88% | .87% | .92% | .95% |
Net investment income (loss) | 1.39% F | .91% | .27% | .10% | .19% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 609,095 | $ 436,291 | $ 1,207,867 | $ 1,203,294 | $ 902,049 |
Portfolio turnover rate E | 70% | 58% | 57% | 82% | 50% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.20 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.01%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Environmental Portfolio | 37.77% | 1.97% | 4.74% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Environmental Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Environmental Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Douglas Simmons, Portfolio Manager of Select Environmental Portfolio during the period covered by this report: For the year ending February 28, 2010, the fund returned 37.77%, underperforming the S&P 500 and the 72.53% return of the MSCI® U.S. IM Industrials 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. The fund was hurt relative to the MSCI index by unfavorable security selection and an overweighting in environmental/facility services. Out-of-benchmark holdings in specialty chemicals offered solid returns, but lagged the index. Our stocks in construction/farm machinery/heavy trucks and industrial machinery also underperformed, and industry-weighting decisions in those two groups also dampened performance. Not owning industrial conglomerates - which make up a big part of the broad sector benchmark - also hurt. The fund was helped by the solid performance of out-of-benchmark positions in auto parts and equipment, multi-utilities and food retail, and by not owning aerospace and defense stocks, which, like industrial conglomerates, lie outside of the fund's focus. The three main detractors lagged even though they posted positive performance: medical waste disposal company Stericycle, cleaning products manufacturer Ecolab and environmental and facility services firm Waste Management. Engineering and consulting firm Tetra Tech declined, and filtration product manufacturer Calgon Carbon underperformed. The fund also was hurt by not owning General Electric, a major index component. Contributions came from Fuel Systems Solutions, which provides technology and components for natural-gas-fired automobile engines; French water utility and waste disposal company Veolia Environnement; and organic food retailer Whole Foods Market. Some of the stocks mentioned in this report were not part of the MSCI benchmark and/or were not held at period end.
Note to shareholders: Anna Davydova will join Douglas Simmons as Co-Portfolio Manager on March 1, 2010.
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.
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Pall Corp. | 14.8 | 6.5 |
Ecolab, Inc. | 12.6 | 12.3 |
Stericycle, Inc. | 10.8 | 8.4 |
Nalco Holding Co. | 8.5 | 4.0 |
Calgon Carbon Corp. | 5.0 | 3.4 |
Clean Harbors, Inc. | 4.9 | 4.9 |
Covanta Holding Corp. | 4.9 | 5.1 |
United Natural Foods, Inc. | 4.8 | 4.8 |
Waste Management, Inc. | 4.7 | 12.7 |
Darling International, Inc. | 4.5 | 2.9 |
| 75.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Chemicals | 26.1% |
|
![]() | Commercial | 25.3% |
|
![]() | Machinery | 23.4% |
|
![]() | Food & Staples Retailing | 4.8% |
|
![]() | Food Products | 4.5% |
|
![]() | All Others* | 15.9% |
|
As of August 31, 2009 | |||
![]() | Commercial | 37.5% |
|
![]() | Chemicals | 19.7% |
|
![]() | Machinery | 12.1% |
|
![]() | Food & Staples Retailing | 5.6% |
|
![]() | Building Products | 4.7% |
|
![]() | All Others* | 20.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.7% | |||
Shares | Value | ||
CHEMICALS - 26.1% | |||
Commodity Chemicals - 5.0% | |||
Calgon Carbon Corp. (a)(c) | 151,700 | $ 2,352,867 | |
Specialty Chemicals - 21.1% | |||
Ecolab, Inc. | 140,778 | 5,932,385 | |
Nalco Holding Co. | 173,200 | 4,028,632 | |
| 9,961,017 | ||
TOTAL CHEMICALS | 12,313,884 | ||
COMMERCIAL SERVICES & SUPPLIES - 25.3% | |||
Environmental & Facility Services - 25.3% | |||
Clean Harbors, Inc. (a) | 40,300 | 2,290,652 | |
Covanta Holding Corp. (a)(c) | 135,600 | 2,284,860 | |
Stericycle, Inc. (a) | 92,660 | 5,112,979 | |
Waste Management, Inc. | 67,593 | 2,231,921 | |
| 11,920,412 | ||
CONSTRUCTION MATERIALS - 2.4% | |||
Construction Materials - 2.4% | |||
Headwaters, Inc. (a) | 227,100 | 1,133,229 | |
ELECTRICAL EQUIPMENT - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
Hydrogenics Corp. New (a) | 3,300 | 772 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 3.6% | |||
Electronic Equipment & Instruments - 3.6% | |||
Itron, Inc. (a) | 25,600 | 1,713,920 | |
ENERGY EQUIPMENT & SERVICES - 1.5% | |||
Oil & Gas Equipment & Services - 1.5% | |||
Newpark Resources, Inc. (a) | 137,100 | 708,807 | |
FOOD & STAPLES RETAILING - 4.8% | |||
Food Distributors - 4.8% | |||
United Natural Foods, Inc. (a) | 76,900 | 2,258,553 | |
FOOD PRODUCTS - 4.5% | |||
Agricultural Products - 4.5% | |||
Darling International, Inc. (a) | 262,600 | 2,116,556 | |
IT SERVICES - 3.2% | |||
IT Consulting & Other Services - 3.2% | |||
Telvent GIT SA | 52,500 | 1,483,125 | |
MACHINERY - 23.4% | |||
Construction & Farm Machinery & Heavy Trucks - 2.9% | |||
Lindsay Corp. (c) | 37,500 | 1,380,375 | |
| |||
Shares | Value | ||
Industrial Machinery - 20.5% | |||
Donaldson Co., Inc. | 20,500 | $ 845,830 | |
ESCO Technologies, Inc. | 10,000 | 327,100 | |
Kadant, Inc. (a) | 109,700 | 1,489,726 | |
Pall Corp. | 177,400 | 7,001,978 | |
| 9,664,634 | ||
TOTAL MACHINERY | 11,045,009 | ||
OIL, GAS & CONSUMABLE FUELS - 0.6% | |||
Oil & Gas Refining & Marketing - 0.6% | |||
Clean Energy Fuels Corp. (a)(c) | 16,000 | 288,640 | |
PERSONAL PRODUCTS - 2.3% | |||
Personal Products - 2.3% | |||
NBTY, Inc. (a) | 24,000 | 1,089,600 | |
TOTAL COMMON STOCKS (Cost $42,862,523) | 46,072,507 | ||
Money Market Funds - 13.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 879,088 | 879,088 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 5,692,125 | 5,692,125 | |
TOTAL MONEY MARKET FUNDS (Cost $6,571,213) | 6,571,213 |
TOTAL INVESTMENT PORTFOLIO - 111.6% (Cost $49,433,736) | 52,643,720 |
NET OTHER ASSETS - (11.6)% | (5,457,726) | ||
NET ASSETS - 100% | $ 47,185,994 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,962 |
Fidelity Securities Lending Cash Central Fund | 69,137 |
Total | $ 72,099 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $11,226,215 of which $657,634, $3,645,934 and $6,922,647 will expire on February 28, 2015, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environmental Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $5,789,342) - See accompanying schedule: Unaffiliated issuers (cost $42,862,523) | $ 46,072,507 |
|
Fidelity Central Funds (cost $6,571,213) | 6,571,213 |
|
Total Investments (cost $49,433,736) |
| $ 52,643,720 |
Cash | 18,757 | |
Receivable for investments sold | 881,460 | |
Receivable for fund shares sold | 106,466 | |
Distributions receivable from Fidelity Central Funds | 1,315 | |
Prepaid expenses | 157 | |
Other receivables | 15,421 | |
Total assets | 53,667,296 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 605,423 | |
Payable for fund shares redeemed | 118,474 | |
Accrued management fee | 21,501 | |
Other affiliated payables | 16,063 | |
Other payables and accrued expenses | 27,716 | |
Collateral on securities loaned, at value | 5,692,125 | |
Total liabilities | 6,481,302 | |
|
|
|
Net Assets | $ 47,185,994 | |
Net Assets consist of: |
| |
Paid in capital | $ 56,699,384 | |
Accumulated net investment loss | (54) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,723,320) | |
Net unrealized appreciation (depreciation) on investments | 3,209,984 | |
Net Assets, for 3,158,988 shares outstanding | $ 47,185,994 | |
Net Asset Value, offering price and redemption price per share ($47,185,994 ÷ 3,158,988 shares) | $ 14.94 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 890,416 |
Interest |
| 5 |
Income from Fidelity Central Funds (including $69,137 from security lending) |
| 72,099 |
|
| 962,520 |
Less foreign taxes withheld |
| (83,968) |
Total income |
| 878,552 |
|
|
|
Expenses | ||
Management fee | $ 260,296 | |
Transfer agent fees | 162,104 | |
Accounting and security lending fees | 18,841 | |
Custodian fees and expenses | 4,413 | |
Independent trustees' compensation | 325 | |
Registration fees | 18,694 | |
Audit | 35,759 | |
Legal | 323 | |
Miscellaneous | 650 | |
Total expenses before reductions | 501,405 | |
Expense reductions | (2,163) | 499,242 |
Net investment income (loss) | 379,310 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (1,392,487) | |
Foreign currency transactions | (2,122) | |
Total net realized gain (loss) |
| (1,394,609) |
Change in net unrealized appreciation (depreciation) on investment securities | 14,891,963 | |
Net gain (loss) | 13,497,354 | |
Net increase (decrease) in net assets resulting from operations | $ 13,876,664 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environmental Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 379,310 | $ 168,487 |
Net realized gain (loss) | (1,394,609) | (10,391,476) |
Change in net unrealized appreciation (depreciation) | 14,891,963 | (11,224,683) |
Net increase (decrease) in net assets resulting from operations | 13,876,664 | (21,447,672) |
Distributions to shareholders from net investment income | (428,453) | (218,293) |
Share transactions | 21,183,763 | 61,995,113 |
Reinvestment of distributions | 413,836 | 201,149 |
Cost of shares redeemed | (26,868,543) | (40,040,427) |
Net increase (decrease) in net assets resulting from share transactions | (5,270,944) | 22,155,835 |
Redemption fees | 4,429 | 4,917 |
Total increase (decrease) in net assets | 8,181,696 | 494,787 |
|
|
|
Net Assets | ||
Beginning of period | 39,004,298 | 38,509,511 |
End of period (including Accumulated net investment loss of $54 and accumulated net investment loss of $43, respectively) | $ 47,185,994 | $ 39,004,298 |
Other Information Shares | ||
Sold | 1,547,962 | 3,936,887 |
Issued in reinvestment of distributions | 27,084 | 16,194 |
Redeemed | (1,982,874) | (2,561,068) |
Net increase (decrease) | (407,828) | 1,392,013 |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.94 | $ 17.71 | $ 17.21 | $ 17.35 | $ 13.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .11 | .06 | .04 | (.02) | (.02) |
Net realized and unrealized gain (loss) | 4.03 | (6.76) | .53 | (.14) | 3.55 |
Total from investment operations | 4.14 | (6.70) | .57 | (.16) | 3.53 |
Distributions from net investment income | (.14) | (.07) | (.07) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | .02 | .02 |
Net asset value, end of period | $ 14.94 | $ 10.94 | $ 17.71 | $ 17.21 | $ 17.35 |
Total Return A, B | 37.77% | (37.88)% | 3.27% | (.81)% | 25.72% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.08% | 1.06% | 1.08% | 1.11% | 1.40% |
Expenses net of fee waivers, if any | 1.08% | 1.06% | 1.08% | 1.11% | 1.25% |
Expenses net of all reductions | 1.08% | 1.06% | 1.07% | 1.09% | 1.16% |
Net investment income (loss) | .82% | .37% | .22% | (.12)% | (.14)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 47,186 | $ 39,004 | $ 38,510 | $ 46,377 | $ 55,397 |
Portfolio turnover rate E | 132% | 107% | 76% | 224% | 166% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Industrial Equipment Portfolio | 89.06% | 3.21% | 3.36% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Jonathan Kasen, Portfolio Manager of Select Industrial Equipment Portfolio during the period covered by this report: During the year, the fund returned 89.06%, well ahead of the S&P 500 and the 76.41% mark of the MSCI® U.S. IM Capital Goods 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, holdings within the out-of-index auto parts/equipment group aided the fund's results, as did favorable stock selection in industrial conglomerates, although the latter was partially offset by an underweighting in that strong-performing group. Security selection had a positive impact in several other industries, including industrial machinery, household appliances, electrical components/equipment and building products. I'll also mention underweightings in two relatively weak-performing groups: construction/engineering and aerospace/defense. Two out-of-index holdings topped our list of relative contributors. Johnson Controls, a maker of auto interiors, emerged as a likely winner from the turbulence suffered by the auto industry, gaining market share and enjoying firmer pricing on sales to customers. Household-tool maker Black & Decker had been extremely inexpensive early in the period and agreed to be acquired by rival Stanley Works at an attractive selling price. We also benefited from our stakes in Cummins, which manufactures engines for heavy trucks, and factory automation equipment maker Rockwell Automation, the latter of which I sold. On the negative side, a modest cash position weighed on performance in a strongly rising market. To a lesser extent, unfavorable picks in construction and farm machinery/heavy trucks hindered our results. The top relative detractor was an underweighting in heavy equipment maker and index component Caterpillar. I was concerned about the company's financial subsidiary and thought there were better ways to play the heavy machinery segment, but thawing credit conditions and renewed investor optimism boosted the stock to a triple-digit gain. Underweighting commercial aerospace holding Boeing was costly. Our position in heavy equipment manufacturer Navistar International, while attractively valued, in my view, suffered when the company lost a military contract.
Note to shareholders: Effective April 1, 2010, Steven Bullock will join Jonathan Kasen as Co-Portfolio Manager of Select Industrial Equipment Portfolio.
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.
Annual Report
Industrial Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 10.7 | 10.1 |
United Technologies Corp. | 7.6 | 7.4 |
3M Co. | 6.3 | 4.5 |
Ingersoll-Rand Co. Ltd. | 4.4 | 4.5 |
Honeywell International, Inc. | 4.3 | 5.6 |
Danaher Corp. | 4.0 | 2.7 |
Caterpillar, Inc. | 4.0 | 1.4 |
Cummins, Inc. | 3.7 | 2.6 |
Precision Castparts Corp. | 3.5 | 2.9 |
Deere & Co. | 3.2 | 2.5 |
| 51.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Machinery | 30.5% |
|
![]() | Aerospace & Defense | 25.0% |
|
![]() | Industrial Conglomerates | 18.7% |
|
![]() | Electrical Equipment | 7.3% |
|
![]() | Building Products | 4.2% |
|
![]() | All Others* | 14.3% |
|
As of August 31, 2009 | |||
![]() | Aerospace & Defense | 24.8% |
|
![]() | Machinery | 22.3% |
|
![]() | Industrial Conglomerates | 19.1% |
|
![]() | Electrical Equipment | 11.9% |
|
![]() | Auto Components | 4.8% |
|
![]() | All Others* | 17.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Industrial Equipment Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 25.0% | |||
Aerospace & Defense - 25.0% | |||
Alliant Techsystems, Inc. (a) | 6,400 | $ 508,480 | |
Goodrich Corp. | 33,600 | 2,205,168 | |
Heico Corp. Class A | 28,100 | 1,042,510 | |
Honeywell International, Inc. | 128,500 | 5,160,560 | |
LMI Aerospace, Inc. (a) | 29,900 | 379,431 | |
Lockheed Martin Corp. | 10,500 | 816,480 | |
Precision Castparts Corp. | 37,500 | 4,228,125 | |
Raytheon Co. | 55,600 | 3,126,944 | |
The Boeing Co. | 46,800 | 2,955,888 | |
TransDigm Group, Inc. | 9,600 | 482,112 | |
United Technologies Corp. | 133,500 | 9,164,775 | |
| 30,070,473 | ||
AUTO COMPONENTS - 3.6% | |||
Auto Parts & Equipment - 3.6% | |||
BorgWarner, Inc. | 37,500 | 1,404,750 | |
Johnson Controls, Inc. | 93,100 | 2,895,410 | |
| 4,300,160 | ||
BUILDING PRODUCTS - 4.2% | |||
Building Products - 4.2% | |||
Gibraltar Industries, Inc. (a) | 34,800 | 406,464 | |
Lennox International, Inc. | 42,900 | 1,810,380 | |
Masco Corp. | 210,233 | 2,810,815 | |
| 5,027,659 | ||
CONSTRUCTION & ENGINEERING - 2.8% | |||
Construction & Engineering - 2.8% | |||
Fluor Corp. | 37,600 | 1,609,280 | |
Jacobs Engineering Group, Inc. (a) | 46,800 | 1,815,840 | |
| 3,425,120 | ||
ELECTRICAL EQUIPMENT - 7.3% | |||
Electrical Components & Equipment - 7.3% | |||
Acuity Brands, Inc. | 23,700 | 923,826 | |
AMETEK, Inc. | 69,750 | 2,723,040 | |
Cooper Industries PLC Class A | 41,200 | 1,868,832 | |
Regal-Beloit Corp. | 22,000 | 1,241,240 | |
Roper Industries, Inc. | 28,000 | 1,552,320 | |
Saft Groupe SA | 13,861 | 506,895 | |
| 8,816,153 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.6% | |||
Electronic Equipment & Instruments - 0.3% | |||
Itron, Inc. (a) | 5,600 | 374,920 | |
Electronic Manufacturing Services - 1.3% | |||
Tyco Electronics Ltd. | 61,300 | 1,571,119 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 1,946,039 | ||
| |||
Shares | Value | ||
HOUSEHOLD DURABLES - 2.1% | |||
Household Appliances - 2.1% | |||
Black & Decker Corp. | 35,061 | $ 2,540,871 | |
INDUSTRIAL CONGLOMERATES - 18.7% | |||
Industrial Conglomerates - 18.7% | |||
3M Co. | 94,500 | 7,574,175 | |
Carlisle Companies, Inc. | 25,100 | 860,930 | |
General Electric Co. | 805,555 | 12,937,213 | |
Textron, Inc. | 60,000 | 1,195,200 | |
| 22,567,518 | ||
MACHINERY - 30.5% | |||
Construction & Farm Machinery & Heavy Trucks - 15.0% | |||
Bucyrus International, Inc. Class A | 16,500 | 1,032,240 | |
Caterpillar, Inc. | 83,700 | 4,775,085 | |
Commercial Vehicle Group, Inc. (a) | 98,800 | 491,036 | |
Cummins, Inc. | 77,700 | 4,411,806 | |
Deere & Co. | 67,200 | 3,850,560 | |
Joy Global, Inc. | 23,400 | 1,188,720 | |
Navistar International Corp. (a) | 33,300 | 1,304,028 | |
PACCAR, Inc. | 28,400 | 1,003,940 | |
| 18,057,415 | ||
Industrial Machinery - 15.5% | |||
Altra Holdings, Inc. (a) | 148,645 | 1,716,850 | |
Blount International, Inc. (a) | 86,700 | 956,301 | |
Crane Co. | 49,600 | 1,570,832 | |
Danaher Corp. | 64,900 | 4,800,653 | |
Ingersoll-Rand Co. Ltd. | 167,400 | 5,341,734 | |
SPX Corp. | 29,600 | 1,760,904 | |
Timken Co. | 44,100 | 1,156,743 | |
Weg SA | 133,500 | 1,301,646 | |
| 18,605,663 | ||
TOTAL MACHINERY | 36,663,078 | ||
TRADING COMPANIES & DISTRIBUTORS - 2.8% | |||
Trading Companies & Distributors - 2.8% | |||
Interline Brands, Inc. (a) | 74,100 | 1,311,570 | |
Rush Enterprises, Inc. Class A (a) | 70,400 | 769,472 | |
W.W. Grainger, Inc. | 12,500 | 1,270,625 | |
| 3,351,667 | ||
TOTAL COMMON STOCKS (Cost $97,128,678) | 118,708,738 | ||
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (b) | 2,013,361 | $ 2,013,361 |
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $99,142,039) | 120,722,099 |
NET OTHER ASSETS - (0.3)% | (353,667) | ||
NET ASSETS - 100% | $ 120,368,432 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,185 |
Fidelity Securities Lending Cash Central Fund | 9,398 |
Total | $ 18,583 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $22,459,319 of which $15,456,118 and $7,003,201 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $97,128,678) | $ 118,708,738 |
|
Fidelity Central Funds (cost $2,013,361) | 2,013,361 |
|
Total Investments (cost $99,142,039) |
| $ 120,722,099 |
Receivable for investments sold | 1,951,423 | |
Receivable for fund shares sold | 1,333,666 | |
Dividends receivable | 348,311 | |
Distributions receivable from Fidelity Central Funds | 151 | |
Prepaid expenses | 325 | |
Other receivables | 540 | |
Total assets | 124,356,515 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,767,298 | |
Payable for fund shares redeemed | 106,763 | |
Accrued management fee | 53,509 | |
Other affiliated payables | 27,484 | |
Other payables and accrued expenses | 33,029 | |
Total liabilities | 3,988,083 | |
|
|
|
Net Assets | $ 120,368,432 | |
Net Assets consist of: |
| |
Paid in capital | $ 135,097,740 | |
Undistributed net investment income | 141,018 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,448,095) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 21,577,769 | |
Net Assets, for 4,600,989 shares outstanding | $ 120,368,432 | |
Net Asset Value, offering price and redemption price per share ($120,368,432 ÷ 4,600,989 shares) | $ 26.16 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,717,886 |
Interest |
| 2 |
Income from Fidelity Central Funds (including $9,398 from security lending) |
| 18,583 |
Total income |
| 1,736,471 |
|
|
|
Expenses | ||
Management fee | $ 538,672 | |
Transfer agent fees | 262,226 | |
Accounting and security lending fees | 37,690 | |
Custodian fees and expenses | 8,526 | |
Independent trustees' compensation | 613 | |
Registration fees | 18,232 | |
Audit | 39,469 | |
Legal | 418 | |
Miscellaneous | 1,451 | |
Total expenses before reductions | 907,297 | |
Expense reductions | (3,792) | 903,505 |
Net investment income (loss) | 832,966 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (1,491,052) | |
Foreign currency transactions | (21,901) | |
Total net realized gain (loss) |
| (1,512,953) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 51,981,633 | |
Assets and liabilities in foreign currencies | (379) | |
Total change in net unrealized appreciation (depreciation) |
| 51,981,254 |
Net gain (loss) | 50,468,301 | |
Net increase (decrease) in net assets resulting from operations | $ 51,301,267 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 832,966 | $ 1,408,292 |
Net realized gain (loss) | (1,512,953) | (34,231,319) |
Change in net unrealized appreciation (depreciation) | 51,981,254 | (34,351,350) |
Net increase (decrease) in net assets resulting from operations | 51,301,267 | (67,174,377) |
Distributions to shareholders from net investment income | (975,812) | (1,289,984) |
Distributions to shareholders from net realized gain | - | (2,684,730) |
Total distributions | (975,812) | (3,974,714) |
Share transactions | 49,021,581 | 48,262,573 |
Reinvestment of distributions | 954,775 | 3,849,298 |
Cost of shares redeemed | (27,195,052) | (102,754,244) |
Net increase (decrease) in net assets resulting from share transactions | 22,781,304 | (50,642,373) |
Redemption fees | 1,867 | 6,077 |
Total increase (decrease) in net assets | 73,108,626 | (121,785,387) |
|
|
|
Net Assets | ||
Beginning of period | 47,259,806 | 169,045,193 |
End of period (including undistributed net investment income of $141,018 and undistributed net investment income of $305,731, respectively) | $ 120,368,432 | $ 47,259,806 |
Other Information Shares | ||
Sold | 2,390,272 | 1,720,009 |
Issued in reinvestment of distributions | 43,393 | 145,108 |
Redeemed | (1,214,279) | (3,693,123) |
Net increase (decrease) | 1,219,386 | (1,828,006) |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 13.98 | $ 32.45 | $ 31.50 | $ 29.15 | $ 26.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .19 | .33 | .28 | .18 | .07 |
Net realized and unrealized gain (loss) | 12.22 | (17.96) | 2.73 | 2.59 | 4.02 |
Total from investment operations | 12.41 | (17.63) | 3.01 | 2.77 | 4.09 |
Distributions from net investment income | (.23) | (.34) | (.23) | (.10) | (.02) |
Distributions from net realized gain | - | (.50) | (1.83) | (.33) | (1.78) |
Total distributions | (.23) | (.84) | (2.06) | (.43) | (1.80) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 26.16 | $ 13.98 | $ 32.45 | $ 31.50 | $ 29.15 |
Total Return A, B | 89.06% | (55.46)% | 9.25% | 9.59% | 16.17% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .95% | .90% | .88% | .99% | 1.03% |
Expenses net of fee waivers, if any | .95% | .90% | .88% | .99% | 1.03% |
Expenses net of all reductions | .94% | .90% | .88% | .98% | 1.02% |
Net investment income (loss) | .87% | 1.22% | .80% | .60% | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 120,368 | $ 47,260 | $ 169,045 | $ 82,528 | $ 74,770 |
Portfolio turnover rate E | 74% | 136% | 92% | 104% | 40% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Industrials Portfolio A | 82.95% | 4.51% | 8.56% |
A Prior to October 1, 2006, Industrials Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Tobias Welo, Portfolio Manager of Select Industrials Portfolio: During the past year, the fund returned 82.95%, well ahead of the S&P 500 and the 72.53% mark of the MSCI® U.S. IM Industrials 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, an out-of-benchmark stake in the tires and rubber industry - represented entirely by one holding, Goodyear Tire & Rubber - contributed to performance. A surge in auto sales related to the government's Cash for Clunkers incentive program boosted demand for tires and aided the stock. The combination of Goodyear's cost cutting, debt restructuring, new products and lower raw materials costs also had a hand in making the stock more attractive to investors. I sold Goodyear, the fund's top relative contributor during the period, to lock in profits. Underweightings and favorable stock picks in construction/engineering and environmental/facility services also aided our results, as did security selection in several out-of-index subsectors: specialty chemicals, household appliances and auto parts/equipment. I'll also mention overweighting construction and farm machinery/heavy trucks, although weak stock picking counterbalanced the positive impact. Other holdings that contributed included Cummins, which makes engines for heavy trucks, auto interior manufacturer Johnson Controls, household-tool maker Black & Decker - which agreed to be acquired by rival Stanley Works during the period - and specialty chemicals supplier W.R. Grace, the last of which I sold. All of the contributors I mentioned, except for Cummins, were out-of-index positions. Conversely, a modest cash position worked against us in a strongly advancing market. Not owning any airline stocks also detracted, as the group posted a triple-digit gain. Our top relative detractor was heavy equipment maker and index component Caterpillar, which I underweighted. Although I thought there were better ways to play the heavy machinery segment, easing credit markets and renewed investor optimism lifted the stock to a triple-digit gain. Other notable detractors were Rush Enterprises, a seller of new and used heavy- and medium-duty trucks, and heavy equipment manufacturer Navistar. Underweighting aerospace heavyweight Boeing also was counterproductive.
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.
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 7.1 | 3.6 |
United Technologies Corp. | 6.2 | 6.4 |
Union Pacific Corp. | 4.5 | 5.0 |
3M Co. | 4.2 | 4.5 |
Cummins, Inc. | 3.5 | 3.0 |
Honeywell International, Inc. | 3.3 | 4.3 |
Ingersoll-Rand Co. Ltd. | 3.3 | 3.4 |
Danaher Corp. | 3.0 | 2.8 |
Raytheon Co. | 2.4 | 1.6 |
Deere & Co. | 2.4 | 1.8 |
| 39.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Machinery | 22.6% |
|
![]() | Aerospace & Defense | 20.0% |
|
![]() | Industrial Conglomerates | 14.2% |
|
![]() | Road & Rail | 11.3% |
|
![]() | Electrical Equipment | 5.9% |
|
![]() | All Others* | 26.0% |
|
As of August 31, 2009 | |||
![]() | Aerospace & Defense | 19.7% |
|
![]() | Machinery | 17.4% |
|
![]() | Road & Rail | 14.0% |
|
![]() | Industrial Conglomerates | 11.6% |
|
![]() | Electrical Equipment | 6.6% |
|
![]() | All Others* | 30.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.1% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 20.0% | |||
Aerospace & Defense - 20.0% | |||
BE Aerospace, Inc. (a) | 63,819 | $ 1,652,912 | |
Honeywell International, Inc. | 210,900 | 8,469,744 | |
Lockheed Martin Corp. | 61,800 | 4,805,568 | |
Precision Castparts Corp. | 50,200 | 5,660,050 | |
Raytheon Co. | 108,053 | 6,076,901 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 157,800 | 3,017,136 | |
The Boeing Co. | 83,700 | 5,286,492 | |
United Technologies Corp. | 228,501 | 15,686,594 | |
| 50,655,397 | ||
AUTO COMPONENTS - 1.5% | |||
Auto Parts & Equipment - 1.5% | |||
BorgWarner, Inc. | 50,400 | 1,887,984 | |
Johnson Controls, Inc. | 43,200 | 1,343,520 | |
Stoneridge, Inc. (a) | 55,900 | 466,206 | |
| 3,697,710 | ||
BEVERAGES - 0.3% | |||
Soft Drinks - 0.3% | |||
Heckmann Corp. (a)(c) | 121,700 | 727,766 | |
BUILDING PRODUCTS - 4.5% | |||
Building Products - 4.5% | |||
AAON, Inc. | 30,837 | 648,810 | |
Armstrong World Industries, Inc. (a) | 37,106 | 1,366,243 | |
Lennox International, Inc. | 37,300 | 1,574,060 | |
Masco Corp. | 394,510 | 5,274,599 | |
Owens Corning (a) | 106,726 | 2,511,263 | |
| 11,374,975 | ||
COMMERCIAL SERVICES & SUPPLIES - 4.2% | |||
Diversified Support Services - 0.7% | |||
Cintas Corp. | 73,000 | 1,809,670 | |
Environmental & Facility Services - 1.9% | |||
Casella Waste Systems, Inc. Class A (a) | 206,300 | 934,539 | |
Republic Services, Inc. | 113,895 | 3,205,005 | |
RINO International Corp. (a)(c) | 28,100 | 567,901 | |
| 4,707,445 | ||
Office Services & Supplies - 0.9% | |||
Avery Dennison Corp. | 31,600 | 998,560 | |
United Stationers, Inc. (a) | 23,532 | 1,343,913 | |
| 2,342,473 | ||
Security & Alarm Services - 0.7% | |||
The Brink's Co. | 72,824 | 1,855,556 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 10,715,144 | ||
CONSTRUCTION & ENGINEERING - 3.5% | |||
Construction & Engineering - 3.5% | |||
AECOM Technology Corp. (a) | 39,200 | 1,062,320 | |
Fluor Corp. | 78,219 | 3,347,773 | |
| |||
Shares | Value | ||
Jacobs Engineering Group, Inc. (a) | 69,884 | $ 2,711,499 | |
MasTec, Inc. (a) | 124,500 | 1,648,380 | |
| 8,769,972 | ||
ELECTRICAL EQUIPMENT - 5.9% | |||
Electrical Components & Equipment - 5.9% | |||
Acuity Brands, Inc. (c) | 57,400 | 2,237,452 | |
AMETEK, Inc. | 76,750 | 2,996,320 | |
Cooper Industries PLC Class A | 73,600 | 3,338,496 | |
Fushi Copperweld, Inc. (a) | 152,539 | 1,392,681 | |
General Cable Corp. (a) | 52,800 | 1,289,904 | |
Regal-Beloit Corp. | 53,900 | 3,041,038 | |
Zumtobel AG (a) | 28,534 | 605,268 | |
| 14,901,159 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 2.2% | |||
Electronic Components - 0.2% | |||
Omron Corp. | 28,700 | 625,536 | |
Electronic Equipment & Instruments - 0.8% | |||
Agilent Technologies, Inc. (a) | 41,200 | 1,296,152 | |
Keyence Corp. | 2,900 | 636,972 | |
| 1,933,124 | ||
Electronic Manufacturing Services - 0.5% | |||
Tyco Electronics Ltd. | 49,200 | 1,260,996 | |
Technology Distributors - 0.7% | |||
Anixter International, Inc. (a) | 43,674 | 1,822,953 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 5,642,609 | ||
HOUSEHOLD DURABLES - 2.0% | |||
Homebuilding - 0.4% | |||
PDG Realty S.A. Empreendimentos e Participacoes | 112,300 | 991,166 | |
Household Appliances - 1.6% | |||
Black & Decker Corp. | 56,600 | 4,101,802 | |
TOTAL HOUSEHOLD DURABLES | 5,092,968 | ||
INDUSTRIAL CONGLOMERATES - 14.2% | |||
Industrial Conglomerates - 14.2% | |||
3M Co. | 131,700 | 10,555,755 | |
Carlisle Companies, Inc. | 43,243 | 1,483,235 | |
General Electric Co. | 1,123,207 | 18,038,704 | |
Koninklijke Philips Electronics NV | 21,800 | 637,370 | |
Textron, Inc. | 141,400 | 2,816,688 | |
Tyco International Ltd. | 63,636 | 2,294,714 | |
| 35,826,466 | ||
IT SERVICES - 0.3% | |||
Data Processing & Outsourced Services - 0.3% | |||
Hewitt Associates, Inc. Class A (a) | 21,156 | 803,716 | |
MACHINERY - 22.6% | |||
Construction & Farm Machinery & Heavy Trucks - 11.3% | |||
Bucyrus International, Inc. Class A | 45,450 | 2,843,352 | |
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - CONTINUED | |||
Construction & Farm Machinery & Heavy Trucks - continued | |||
Caterpillar, Inc. | 43,700 | $ 2,493,085 | |
Cummins, Inc. | 155,671 | 8,838,999 | |
Deere & Co. | 104,100 | 5,964,930 | |
Joy Global, Inc. | 19,300 | 980,440 | |
Navistar International Corp. (a) | 73,226 | 2,867,530 | |
PACCAR, Inc. | 116,600 | 4,121,810 | |
Sany Heavy Equipment International Holdings Co. Ltd. | 534,000 | 546,232 | |
| 28,656,378 | ||
Industrial Machinery - 11.3% | |||
Actuant Corp. Class A | 8,600 | 155,746 | |
Altra Holdings, Inc. (a) | 108,215 | 1,249,883 | |
Barnes Group, Inc. | 75,921 | 1,219,291 | |
Blount International, Inc. (a) | 8,285 | 91,384 | |
Danaher Corp. | 102,900 | 7,611,513 | |
Ingersoll-Rand Co. Ltd. | 261,900 | 8,357,229 | |
Kennametal, Inc. | 69,540 | 1,811,517 | |
NSK Ltd. | 110,000 | 775,232 | |
SmartHeat, Inc. (a) | 48,899 | 585,321 | |
SPX Corp. | 25,300 | 1,505,097 | |
The Weir Group PLC | 19,500 | 232,265 | |
Timken Co. | 89,838 | 2,356,451 | |
TriMas Corp. (a) | 179,143 | 1,090,981 | |
Weg SA | 169,300 | 1,650,702 | |
| 28,692,612 | ||
TOTAL MACHINERY | 57,348,990 | ||
MARINE - 0.2% | |||
Marine - 0.2% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 74,486 | 384,348 | |
PROFESSIONAL SERVICES - 2.0% | |||
Human Resource & Employment Services - 0.7% | |||
Manpower, Inc. | 35,230 | 1,815,050 | |
Research & Consulting Services - 1.3% | |||
Equifax, Inc. | 80,000 | 2,580,800 | |
ICF International, Inc. (a) | 31,442 | 736,686 | |
| 3,317,486 | ||
TOTAL PROFESSIONAL SERVICES | 5,132,536 | ||
ROAD & RAIL - 11.3% | |||
Railroads - 8.6% | |||
America Latina Logistica SA unit | 123,400 | 1,099,377 | |
| |||
Shares | Value | ||
CSX Corp. | 99,400 | $ 4,717,524 | |
Norfolk Southern Corp. | 88,000 | 4,525,840 | |
Union Pacific Corp. | 170,200 | 11,466,374 | |
| 21,809,115 | ||
Trucking - 2.7% | |||
Arkansas Best Corp. | 29,000 | 760,960 | |
Avis Budget Group, Inc. (a) | 296,800 | 3,122,336 | |
Con-way, Inc. | 21,300 | 692,037 | |
Hertz Global Holdings, Inc. (a)(c) | 141,300 | 1,328,220 | |
Saia, Inc. (a) | 78,700 | 996,342 | |
| 6,899,895 | ||
TOTAL ROAD & RAIL | 28,709,010 | ||
TRADING COMPANIES & DISTRIBUTORS - 2.4% | |||
Trading Companies & Distributors - 2.4% | |||
Interline Brands, Inc. (a) | 111,123 | 1,966,877 | |
Rush Enterprises, Inc. Class A (a) | 379,744 | 4,150,602 | |
| 6,117,479 | ||
TOTAL COMMON STOCKS (Cost $213,959,185) | 245,900,245 | ||
Money Market Funds - 3.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 5,621,457 | 5,621,457 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 2,180,400 | 2,180,400 | |
TOTAL MONEY MARKET FUNDS (Cost $7,801,857) | 7,801,857 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $221,761,042) | 253,702,102 | ||
NET OTHER ASSETS - (0.2)% | (415,184) | ||
NET ASSETS - 100% | $ 253,286,918 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 18,544 |
Fidelity Securities Lending Cash Central Fund | 51,953 |
Total | $ 70,497 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 245,900,245 | $ 245,262,875 | $ 637,370 | $ - |
Money Market Funds | 7,801,857 | 7,801,857 | - | - |
Total Investments in Securities: | $ 253,702,102 | $ 253,064,732 | $ 637,370 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 13,400 |
Total Realized Gain (Loss) | (8,789) |
Total Unrealized Gain (Loss) | (423) |
Cost of Purchases | - |
Proceeds of Sales | (4,188) |
Amortization/Accretion | - |
Transfers in/out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $15,655,060 of which $12,506,212 and $3,148,848 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,155,080) - See accompanying schedule: Unaffiliated issuers (cost $213,959,185) | $ 245,900,245 |
|
Fidelity Central Funds (cost $7,801,857) | 7,801,857 |
|
Total Investments (cost $221,761,042) |
| $ 253,702,102 |
Receivable for investments sold | 2,833,985 | |
Receivable for fund shares sold | 1,287,265 | |
Dividends receivable | 698,401 | |
Distributions receivable from Fidelity Central Funds | 4,979 | |
Prepaid expenses | 649 | |
Other receivables | 1,610 | |
Total assets | 258,528,991 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,729,406 | |
Payable for fund shares redeemed | 115,787 | |
Accrued management fee | 113,255 | |
Other affiliated payables | 68,142 | |
Other payables and accrued expenses | 35,083 | |
Collateral on securities loaned, at value | 2,180,400 | |
Total liabilities | 5,242,073 | |
|
|
|
Net Assets | $ 253,286,918 | |
Net Assets consist of: |
| |
Paid in capital | $ 239,592,785 | |
Undistributed net investment income | 216,667 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,463,403) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 31,940,869 | |
Net Assets, for 13,775,786 shares outstanding | $ 253,286,918 | |
Net Asset Value, offering price and redemption price per share ($253,286,918 ÷ 13,775,786 shares) | $ 18.39 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,100,643 |
Interest |
| 4 |
Income from Fidelity Central Funds (including $51,953 from security lending) |
| 70,497 |
Total income |
| 3,171,144 |
|
|
|
Expenses | ||
Management fee | $ 1,065,885 | |
Transfer agent fees | 606,501 | |
Accounting and security lending fees | 74,729 | |
Custodian fees and expenses | 25,687 | |
Independent trustees' compensation | 1,144 | |
Registration fees | 24,802 | |
Audit | 41,430 | |
Legal | 756 | |
Miscellaneous | 2,299 | |
Total expenses before reductions | 1,843,233 | |
Expense reductions | (9,297) | 1,833,936 |
Net investment income (loss) | 1,337,208 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 17,951,254 | |
Foreign currency transactions | (48,352) | |
Total net realized gain (loss) |
| 17,902,902 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 71,576,874 | |
Assets and liabilities in foreign currencies | 2,021 | |
Total change in net unrealized appreciation (depreciation) |
| 71,578,895 |
Net gain (loss) | 89,481,797 | |
Net increase (decrease) in net assets resulting from operations | $ 90,819,005 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,337,208 | $ 1,304,782 |
Net realized gain (loss) | 17,902,902 | (35,410,399) |
Change in net unrealized appreciation (depreciation) | 71,578,895 | (41,578,602) |
Net increase (decrease) in net assets resulting from operations | 90,819,005 | (75,684,219) |
Distributions to shareholders from net investment income | (1,344,452) | (1,096,997) |
Distributions to shareholders from net realized gain | - | (383,781) |
Total distributions | (1,344,452) | (1,480,778) |
Share transactions | 152,810,869 | 101,692,231 |
Reinvestment of distributions | 1,313,478 | 1,429,794 |
Cost of shares redeemed | (73,864,430) | (66,872,108) |
Net increase (decrease) in net assets resulting from share transactions | 80,259,917 | 36,249,917 |
Redemption fees | 10,490 | 13,781 |
Total increase (decrease) in net assets | 169,744,960 | (40,901,299) |
|
|
|
Net Assets | ||
Beginning of period | 83,541,958 | 124,443,257 |
End of period (including undistributed net investment income of $216,667 and undistributed net investment income of $272,154, respectively) | $ 253,286,918 | $ 83,541,958 |
Other Information Shares | ||
Sold | 10,033,014 | 5,994,821 |
Issued in reinvestment of distributions | 79,541 | 100,146 |
Redeemed | (4,595,193) | (3,907,588) |
Net increase (decrease) | 5,517,362 | 2,187,379 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.12 | $ 20.50 | $ 20.70 | $ 20.97 | $ 19.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .11 | .18 | .11 | .14 | .06 |
Net realized and unrealized gain (loss) | 8.27 | (10.35) | 1.40 | 1.55 | 3.06 |
Total from investment operations | 8.38 | (10.17) | 1.51 | 1.69 | 3.12 |
Distributions from net investment income | (.11) | (.15) | (.09) | (.08) | (.05) |
Distributions from net realized gain | - | (.06) | (1.62) | (1.89) | (1.32) |
Total distributions | (.11) | (.21) | (1.71) | (1.97) | (1.37) |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 18.39 | $ 10.12 | $ 20.50 | $ 20.70 | $ 20.97 |
Total Return A,B | 82.95% | (49.92)% | 7.14% | 8.34% | 17.23% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .97% | 1.00% | 1.00% | 1.10% | 1.12% |
Expenses net of fee waivers, if any | .97% | 1.00% | 1.00% | 1.10% | 1.12% |
Expenses net of all reductions | .97% | .99% | .99% | 1.09% | 1.07% |
Net investment income (loss) | .71% | 1.08% | .49% | .66% | .34% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 253,287 | $ 83,542 | $ 124,443 | $ 76,011 | $ 83,680 |
Portfolio turnover rate E | 106% | 132% | 108% | 185% | 168% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Transportation Portfolio | 77.62% | 3.51% | 9.37% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 29, 2000. 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.
Annual Report
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending Febru-ary 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from John Mirshekari, Portfolio Manager of Select Transportation Portfolio: During the past year, the fund returned 77.62%, topping the S&P 500 and the 76.01% mark of the MSCI® U.S. IM Transportation 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Versus the MSCI index, we were rewarded by a large overweighting - tempered to some extent by security selection - in the airline group, which hit bottom shortly after the period began and was one of the market's best-performing industries thereafter. Several out-of-index picks in trucking also added value, as did overweighting the railroad industry and underweighting air freight/logistics. In absolute terms, our foreign holdings were boosted by a weaker U.S. dollar. Railroad CSX was the fund's largest individual contributor to relative performance. A large overweighted position since I began managing the fund in February 2009, CSX benefited from the "rail renaissance" that began around 2003. An out-of-index stake in Canadian trucking company Contrans Income Fund - renamed Contrans Group - also contributed to performance. I thought the stock was exceptionally undervalued, and I was extremely impressed with the firm's CEO. Additionally, last December Contrans converted from an income trust to a corporation, which I thought would provide the company with greater financial flexibility. Another large contributor was Southwest Airlines. On the negative side, our cash position dampened results when the market rebounded strongly during the spring. Unfavorable security selection within air freight/logistics also held back the fund's return. The two largest individual detractors were package carrier FedEx and Goodyear Tire & Rubber. Selling our underweighted position in FedEx, a strong performer during the period, was a consequence of investing in other stocks I thought had more promise. I expected Goodyear's earnings to come in above investor expectations due to a decline in the cost of raw materials, as well as cost-cutting initiatives undertaken by the company. Unfortunately, these catalysts were offset by an unexpectedly large stockpile of commercial tire inventory. Goodyear was an out-of-index holding and was sold during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Union Pacific Corp. | 16.9 | 22.9 |
CSX Corp. | 9.0 | 15.2 |
UAL Corp. | 6.9 | 0.0 |
Delta Air Lines, Inc. | 6.8 | 4.3 |
Quality Distribution, Inc. | 5.6 | 3.1 |
Southwest Airlines Co. | 4.9 | 2.8 |
Contrans Group, Inc. Class A | 4.6 | 5.2 |
United Parcel Service, Inc. Class B | 4.5 | 1.0 |
Continental Airlines, Inc. Class B | 4.4 | 0.0 |
Pinnacle Airlines Corp. | 4.3 | 6.3 |
| 67.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Road & Rail | 49.1% |
|
![]() | Airlines | 43.7% |
|
![]() | Air Freight & Logistics | 6.0% |
|
![]() | Marine | 0.3% |
|
![]() | Machinery | 0.2% |
|
![]() | All Others* | 0.7% |
|
As of August 31, 2009 | |||
![]() | Road & Rail | 69.5% |
|
![]() | Airlines | 20.8% |
|
![]() | Air Freight & Logistics | 4.9% |
|
![]() | Marine | 1.1% |
|
![]() | Aerospace & Defense | 0.1% |
|
![]() | All Others* | 3.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
AIR FREIGHT & LOGISTICS - 6.0% | |||
Air Freight & Logistics - 6.0% | |||
AutoInfo, Inc. (a) | 511,095 | $ 204,438 | |
Dynamex, Inc. (a) | 20,615 | 358,701 | |
United Parcel Service, Inc. Class B | 82,700 | 4,857,798 | |
UTI Worldwide, Inc. | 68,400 | 1,021,212 | |
| 6,442,149 | ||
AIRLINES - 43.7% | |||
Airlines - 43.7% | |||
Air Canada: | |||
warrants 10/27/12 (a)(e) | 525,850 | 202,394 | |
Class A (a)(e) | 1,251,700 | 1,820,006 | |
AirTran Holdings, Inc. (a)(c) | 441,300 | 2,127,066 | |
Alaska Air Group, Inc. (a) | 110,000 | 3,850,000 | |
AMR Corp. (a) | 456,900 | 4,198,911 | |
Continental Airlines, Inc. Class B (a)(c) | 231,440 | 4,781,550 | |
Delta Air Lines, Inc. (a) | 564,602 | 7,294,658 | |
Hawaiian Holdings, Inc. (a) | 305,124 | 2,373,865 | |
Pinnacle Airlines Corp. (a) | 571,215 | 4,643,978 | |
Republic Airways Holdings, Inc. (a) | 87,900 | 535,311 | |
SkyWest, Inc. | 48,800 | 720,288 | |
Southwest Airlines Co. | 423,600 | 5,328,888 | |
UAL Corp. (a)(c) | 435,712 | 7,472,461 | |
US Airways Group, Inc. (a)(c) | 236,300 | 1,732,079 | |
| 47,081,455 | ||
MACHINERY - 0.2% | |||
Construction & Farm Machinery & Heavy Trucks - 0.2% | |||
Wabash National Corp. (a) | 73,785 | 216,928 | |
MARINE - 0.3% | |||
Marine - 0.3% | |||
Horizon Lines, Inc. Class A (c) | 79,000 | 319,160 | |
ROAD & RAIL - 49.1% | |||
Railroads - 30.8% | |||
CSX Corp. | 204,773 | 9,718,527 | |
Kansas City Southern (a) | 56,900 | 1,951,670 | |
Norfolk Southern Corp. | 65,800 | 3,384,094 | |
Union Pacific Corp. | 270,368 | 18,214,691 | |
| 33,268,982 | ||
Trucking - 18.3% | |||
Arkansas Best Corp. (c) | 39,100 | 1,025,984 | |
| |||
Shares | Value | ||
Con-way, Inc. | 58,200 | $ 1,890,918 | |
Contrans Group, Inc. Class A | 682,600 | 4,995,030 | |
Frozen Food Express Industries, Inc. | 286,129 | 1,001,452 | |
Quality Distribution, Inc. (a)(d) | 1,477,113 | 6,070,934 | |
Saia, Inc. (a) | 123,000 | 1,557,180 | |
US 1 Industries, Inc. (a) | 800 | 640 | |
Vitran Corp., Inc. (a) | 328,500 | 3,186,452 | |
| 19,728,590 | ||
TOTAL ROAD & RAIL | 52,997,572 | ||
TOTAL COMMON STOCKS (Cost $90,204,395) | 107,057,264 | ||
Money Market Funds - 15.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (f) | 4,065,905 | 4,065,905 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(f) | 13,015,370 | 13,015,370 | |
TOTAL MONEY MARKET FUNDS (Cost $17,081,275) | 17,081,275 |
TOTAL INVESTMENT PORTFOLIO - 115.1% (Cost $107,285,670) | 124,138,539 |
NET OTHER ASSETS - (15.1)% | (16,296,675) | ||
NET ASSETS - 100% | $ 107,841,864 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated company |
(e) 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 $2,022,400 or 1.9% of net assets. |
(f) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,967 |
Fidelity Securities Lending Cash Central Fund | 20,270 |
Total | $ 30,237 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Quality Distribution, Inc. | $ - | $ 4,346,109 | $ - | $ - | $ 6,070,934 |
Total | $ - | $ 4,346,109 | $ - | $ - | $ 6,070,934 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.5% |
Canada | 9.5% |
British Virgin Islands | 1.0% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $17,240,109 of which $4,423,937 and $12,816,172 will expire on February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,362,456) - See accompanying schedule: Unaffiliated issuers (cost $85,858,286) | $ 100,986,330 |
|
Fidelity Central Funds (cost $17,081,275) | 17,081,275 |
|
Other affiliated issuers (cost $4,346,109) | 6,070,934 |
|
Total Investments (cost $107,285,670) |
| $ 124,138,539 |
Receivable for investments sold |
| 1,659,131 |
Delayed delivery |
| 38,014 |
Receivable for fund shares sold | 4,028,374 | |
Dividends receivable | 190,057 | |
Distributions receivable from Fidelity Central Funds | 1,367 | |
Prepaid expenses | 268 | |
Other receivables | 3,416 | |
Total assets | 130,059,166 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,041,242 | |
Payable for fund shares redeemed | 62,146 | |
Accrued management fee | 42,845 | |
Other affiliated payables | 26,105 | |
Other payables and accrued expenses | 29,594 | |
Collateral on securities loaned, at value | 13,015,370 | |
Total liabilities | 22,217,302 | |
|
|
|
Net Assets | $ 107,841,864 | |
Net Assets consist of: |
| |
Paid in capital | $ 115,865,469 | |
Undistributed net investment income | 28,264 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (24,904,738) | |
Net unrealized appreciation (depreciation) on investments | 16,852,869 | |
Net Assets, for 2,567,259 shares outstanding | $ 107,841,864 | |
Net Asset Value, offering price and redemption price per share ($107,841,864 ÷ 2,567,259 shares) | $ 42.01 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,577,607 |
Interest |
| 2 |
Income from Fidelity Central Funds (including $20,270 from security lending) |
| 30,237 |
Total income |
| 1,607,846 |
|
|
|
Expenses | ||
Management fee | $ 475,381 | |
Transfer agent fees | 280,153 | |
Accounting and security lending fees | 33,419 | |
Custodian fees and expenses | 14,484 | |
Independent trustees' compensation | 588 | |
Registration fees | 25,493 | |
Audit | 41,460 | |
Legal | 449 | |
Interest | 310 | |
Miscellaneous | 1,482 | |
Total expenses before reductions | 873,219 | |
Expense reductions | (25,313) | 847,906 |
Net investment income (loss) | 759,940 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (13,803,453) | |
Foreign currency transactions | 26,368 | |
Total net realized gain (loss) |
| (13,777,085) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 59,150,909 | |
Assets and liabilities in foreign currencies | (90) | |
Total change in net unrealized appreciation (depreciation) |
| 59,150,819 |
Net gain (loss) | 45,373,734 | |
Net increase (decrease) in net assets resulting from operations | $ 46,133,674 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 759,940 | $ 687,743 |
Net realized gain (loss) | (13,777,085) | (9,279,032) |
Change in net unrealized appreciation (depreciation) | 59,150,819 | (49,256,175) |
Net increase (decrease) in net assets resulting from operations | 46,133,674 | (57,847,464) |
Distributions to shareholders from net investment income | (803,963) | (707,330) |
Distributions to shareholders from net realized gain | (42,688) | (1,981,663) |
Total distributions | (846,651) | (2,688,993) |
Share transactions | 64,949,271 | 145,988,565 |
Reinvestment of distributions | 822,278 | 2,597,393 |
Cost of shares redeemed | (82,931,981) | (100,791,576) |
Net increase (decrease) in net assets resulting from share transactions | (17,160,432) | 47,794,382 |
Redemption fees | 9,849 | 15,389 |
Total increase (decrease) in net assets | 28,136,440 | (12,726,686) |
|
|
|
Net Assets | ||
Beginning of period | 79,705,424 | 92,432,110 |
End of period (including undistributed net investment income of $28,264 and undistributed net investment income of $88,502, respectively) | $ 107,841,864 | $ 79,705,424 |
Other Information Shares | ||
Sold | 1,857,783 | 3,860,524 |
Issued in reinvestment of distributions | 22,055 | 65,814 |
Redeemed | (2,649,455) | (2,674,176) |
Net increase (decrease) | (769,617) | 1,252,162 |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 23.89 | $ 44.34 | $ 53.00 | $ 50.22 | $ 42.08 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 | .29 | .19 F | .04 | .17 |
Net realized and unrealized gain (loss) | 18.21 | (19.29) | (4.66) | 3.72 | 8.99 |
Total from investment operations | 18.50 | (19.00) | (4.47) | 3.76 | 9.16 |
Distributions from net investment income | (.36) | (.25) | (.07) | (.02) | (.10) |
Distributions from net realized gain | (.02) | (1.21) | (4.13) | (1.01) | (.96) |
Total distributions | (.38) | (1.46) | (4.20) | (1.03) | (1.06) |
Redemption fees added to paid in capital C | - I | .01 | .01 | .05 | .04 |
Net asset value, end of period | $ 42.01 | $ 23.89 | $ 44.34 | $ 53.00 | $ 50.22 |
Total Return A, B | 77.62% | (44.20)% | (8.89)% | 7.65% | 22.24% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.03% | 1.03% | .99% | 1.03% | 1.13% |
Expenses net of fee waivers, if any | 1.03% | 1.03% | .99% | 1.03% | 1.13% |
Expenses net of all reductions | 1.00% | 1.03% | .99% | 1.02% | 1.11% |
Net investment income (loss) | .90% | .79% | .36% F | .09% | .40% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 107,842 | $ 79,705 | $ 92,432 | $ 105,027 | $ 103,927 |
Portfolio turnover rate E | 265% | 81% | 84% | 133% | 142% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .21%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross | Gross | Net unrealized |
Air Transportation Portfolio | $ 92,349,151 | $ 17,273,716 | $ (945,775) | $ 16,327,941 |
Defense and Aerospace Portfolio | 587,073,107 | 92,759,976 | (63,777,797) | 28,982,179 |
Environmental Portfolio | 50,930,841 | 4,385,471 | (2,672,592) | 1,712,879 |
Industrial Equipment Portfolio | 113,130,815 | 18,523,366 | (10,932,082) | 7,591,284 |
Industrials Portfolio | 223,870,292 | 36,514,897 | (6,683,087) | 29,831,810 |
Transportation Portfolio | 114,950,300 | 13,066,823 | (3,878,584) | 9,188,239 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Capital loss | Net unrealized |
Air Transportation Portfolio | $ - | $ (12,996,324) | $ 16,327,885 |
Defense and Aerospace Portfolio | 933,570 | (137,484,877) | 28,982,432 |
Environmental Portfolio | - | (11,226,215) | 1,712,879 |
Industrial Equipment Portfolio | 141,018 | (22,459,319) | 7,588,993 |
Industrials Portfolio | 216,667 | (15,655,060) | 29,831,619 |
Transportation Portfolio | 28,263 | (17,240,109) | 9,188,239 |
The tax character of distributions paid was as follows:
February 28, 2010 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ - | $ - | $ - |
Defense and Aerospace Portfolio | 9,658,561 | - | 9,658,561 |
Environmental Portfolio | 428,453 | - | 428,453 |
Industrial Equipment Portfolio | 975,812 | - | 975,812 |
Industrials Portfolio | 1,344,452 | - | 1,344,452 |
Transportation Portfolio | 846,651 | - | 846,651 |
February 28, 2009 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ - | $ 3,673,839 | $ 3,673,839 |
Defense and Aerospace Portfolio | 6,223,008 | 69,243,502 | 75,466,510 |
Environmental Portfolio | 218,293 | - | 218,293 |
Industrial Equipment Portfolio | 1,289,984 | 2,684,730 | 3,974,714 |
Industrials Portfolio | 1,096,997 | 383,781 | 1,480,778 |
Transportation Portfolio | 707,330 | 1,981,663 | 2,688,993 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. Certain Funds may purchase or sell 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. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. Certain Funds may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. 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. Losses may arise due to changes in the
Annual Report
4. Operating Policies - continued
Delayed Delivery Transactions and When-Issued Securities - continued
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. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Air Transportation Portfolio | 109,593,886 | 84,219,931 |
Defense and Aerospace Portfolio | 368,575,442 | 429,863,019 |
Environmental Portfolio | 59,070,502 | 61,243,128 |
Industrial Equipment Portfolio | 93,099,575 | 68,255,072 |
Industrials Portfolio | 267,752,140 | 191,409,655 |
Transportation Portfolio | 218,612,205 | 234,836,371 |
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Air Transportation Portfolio | .30% | .26% | .56% |
Defense and Aerospace Portfolio | .30% | .26% | .56% |
Environmental Portfolio | .30% | .26% | .56% |
Industrial Equipment Portfolio | .30% | .26% | .56% |
Industrials Portfolio | .30% | .26% | .56% |
Transportation Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .31% |
Defense and Aerospace Portfolio | .33% |
Environmental Portfolio | .35% |
Industrial Equipment Portfolio | .27% |
Industrials Portfolio | .32% |
Transportation Portfolio | .33% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Air Transportation Portfolio | $ 683 |
Defense and Aerospace Portfolio | 2,991 |
Environmental Portfolio | 1,857 |
Industrial Equipment Portfolio | 6,024 |
Industrials Portfolio | 7,839 |
Transportation Portfolio | 3,339 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average | Weighted | Interest |
Transportation Portfolio | Borrower | $ 6,060,800 | .37% | $ 310 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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 is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Air Transportation Portfolio | $ 166 |
Defense and Aerospace Portfolio | 1,901 |
Environmental Portfolio | 165 |
Industrial Equipment Portfolio | 322 |
Industrials Portfolio | 620 |
Transportation Portfolio | 302 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
Annual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's custody expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody expense |
Air Transportation Portfolio | $ 24,409 | $ - |
Defense and Aerospace Portfolio | 18,505 | - |
Environmental Portfolio | 2,163 | - |
Industrial Equipment Portfolio | 3,789 | 3 |
Industrials Portfolio | 9,289 | 8 |
Transportation Portfolio | 25,313 | - |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, VIP FundsManager 60% Portfolio was the owner of record of approximately 12% of the total outstanding shares of Industrials Portfolio. The VIP FundsManager Portfolios were the owners of record, in the aggregate, of approximately 23% of the total outstanding shares of Industrials Portfolio. In addition, at the end of the period, PAS U.S. Opportunity Fund of Funds was the owner of record of approximately 11% and 10%, respectively, of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006- |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 2009 | December 2009 |
Defense and Aerospace Portfolio | 100% | 100% |
Environmental Portfolio | - | 81% |
Industrial Equipment Portfolio | 100% | 100% |
Industrials Portfolio | 100% | 100% |
Transportation Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2009 | December 2009 |
Defense and Aerospace Portfolio | 100% | 90% |
Environmental Portfolio | - | 95% |
Industrial Equipment Portfolio | 100% | 100% |
Industrials Portfolio | 100% | 100% |
Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELCI-UANNPRO-0410
1.910422.100
Fidelity®
Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Note to shareholders | An explanation of the changes to the fund. | |
Chemicals | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Chemicals Portfolio | 79.15% | 6.32% | 11.63% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 29, 2000. 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.
Annual Report
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Matthew Schuldt, Portfolio Manager of Select Chemicals Portfolio during the period covered by this report: The fund returned 79.15% during the past year, solidly outperforming the S&P 500 and the 68.99% return of the MSCI® U.S. IM Chemicals 25/50 Index - - which was adopted in January 2010 as a better representation of the fund's investment universe. Security selection within specialty, diversified and commodity chemicals and within fertilizers/agricultural chemicals fueled much of the fund's outperformance versus the MSCI index. Additionally, a slight underweighting in fertilizers/agricultural chemicals and an overweighting in commodity chemicals helped. Detractors included underweightings in diversified chemicals and specialty chemicals, and a modest cash position in a rising market. Commodity chemicals company Celanese was the top contributor, boosted partly by better-than-expected profits. Diversified chemicals firm Solutia saw its shares jump higher thanks to some positive earnings surprises, while specialty chemicals firm W.R. Grace rose on successful cost cutting and improved earnings. Individual detractors included an underweighting in major index component Dow Chemical early in the period, as shares of the diversified chemicals producer increased on aggressive debt-reduction and cost-cutting measures. An underweighting in diversified chemicals maker PPG hurt as well, as this firm also benefited from cost cuts. Some holdings mentioned in this review were sold by period end.
Note to shareholders: Mahmoud Sharaf will become Portfolio Manager of the fund on April 1, 2010, replacing Matthew Schuldt.
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 personin 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.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .93% | $ 1,000.00 | $ 1,128.20 | $ 4.91 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 15.3 | 18.2 |
Dow Chemical Co. | 11.6 | 10.7 |
E.I. du Pont de Nemours & Co. | 8.8 | 9.6 |
Praxair, Inc. | 7.3 | 11.0 |
Air Products & Chemicals, Inc. | 4.6 | 4.9 |
Albemarle Corp. | 4.2 | 3.3 |
The Mosaic Co. | 4.1 | 3.8 |
Celanese Corp. Class A | 3.9 | 3.7 |
Ecolab, Inc. | 3.5 | 1.8 |
CF Industries Holdings, Inc. | 3.5 | 1.0 |
| 66.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Chemicals | 93.0% |
|
![]() | Food Products | 1.7% |
|
![]() | Metals & Mining | 1.1% |
|
![]() | Building Products | 0.8% |
|
![]() | Containers & Packaging | 0.4% |
|
![]() | All Others* | 3.0% |
|
As of August 31, 2009 | |||
![]() | Chemicals | 92.1% |
|
![]() | Food Products | 3.3% |
|
![]() | Metals & Mining | 0.7% |
|
![]() | Road & Rail | 0.5% |
|
![]() | All Others* | 3.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.8% | |||
Building Products - 0.8% | |||
Masco Corp. | 250,400 | $ 3,347,848 | |
CHEMICALS - 92.2% | |||
Commodity Chemicals - 3.9% | |||
Calgon Carbon Corp. (a) | 30 | 465 | |
Celanese Corp. Class A | 526,061 | 16,407,843 | |
| 16,408,308 | ||
Diversified Chemicals - 31.7% | |||
Ashland, Inc. | 206,500 | 9,722,020 | |
Cabot Corp. | 79,500 | 2,310,270 | |
Dow Chemical Co. | 1,705,138 | 48,272,457 | |
E.I. du Pont de Nemours & Co. | 1,088,000 | 36,687,360 | |
FMC Corp. | 237,426 | 13,573,644 | |
Huntsman Corp. | 235,000 | 3,226,550 | |
Orica Ltd. | 85,000 | 1,904,336 | |
PPG Industries, Inc. | 108,900 | 6,701,706 | |
Solutia, Inc. (a) | 715,313 | 10,064,454 | |
| 132,462,797 | ||
Fertilizers & Agricultural Chemicals - 25.6% | |||
CF Industries Holdings, Inc. | 137,200 | 14,576,128 | |
Fertilizantes Heringer SA (a) | 319,900 | 2,039,260 | |
Monsanto Co. | 902,740 | 63,778,582 | |
Terra Industries, Inc. | 129,000 | 5,310,930 | |
The Mosaic Co. | 297,090 | 17,347,085 | |
Yara International ASA | 90,000 | 3,706,662 | |
| 106,758,647 | ||
Industrial Gases - 13.5% | |||
Air Products & Chemicals, Inc. | 278,400 | 19,092,672 | |
Airgas, Inc. | 108,200 | 6,939,948 | |
Praxair, Inc. | 404,060 | 30,361,068 | |
| 56,393,688 | ||
Specialty Chemicals - 17.5% | |||
Albemarle Corp. | 468,000 | 17,545,320 | |
Cytec Industries, Inc. | 50,000 | 2,133,500 | |
Ecolab, Inc. | 350,400 | 14,765,856 | |
Ferro Corp. | 559,400 | 4,581,486 | |
H.B. Fuller Co. | 90,000 | 1,889,100 | |
Innophos Holdings, Inc. | 165,000 | 3,831,300 | |
Kraton Performance Polymers, Inc. | 152,600 | 2,058,574 | |
Lubrizol Corp. | 90,700 | 7,166,207 | |
Nalco Holding Co. | 50,000 | 1,163,000 | |
OM Group, Inc. (a) | 1 | 34 | |
OMNOVA Solutions, Inc. (a) | 2 | 12 | |
Valspar Corp. | 162,500 | 4,446,000 | |
W.R. Grace & Co. (a) | 461,997 | 13,379,433 | |
Zep, Inc. | 46 | 1,016 | |
| 72,960,838 | ||
TOTAL CHEMICALS | 384,984,278 | ||
| |||
Shares | Value | ||
CONTAINERS & PACKAGING - 0.4% | |||
Metal & Glass Containers - 0.4% | |||
Owens-Illinois, Inc. (a) | 55,000 | $ 1,630,200 | |
FOOD PRODUCTS - 1.7% | |||
Agricultural Products - 1.5% | |||
Bunge Ltd. | 85,000 | 5,065,150 | |
Origin Agritech Ltd. (a) | 110,000 | 973,500 | |
| 6,038,650 | ||
Packaged Foods & Meats - 0.2% | |||
Westway Group, Inc. | 200,000 | 900,000 | |
TOTAL FOOD PRODUCTS | 6,938,650 | ||
METALS & MINING - 1.1% | |||
Diversified Metals & Mining - 1.1% | |||
Globe Specialty Metals, Inc. | 254,306 | 2,609,180 | |
Gulf Resources, Inc. (a)(c) | 219,500 | 2,122,565 | |
| 4,731,745 | ||
OIL, GAS & CONSUMABLE FUELS - 0.3% | |||
Oil & Gas Refining & Marketing - 0.3% | |||
CVR Energy, Inc. (a) | 175,000 | 1,438,500 | |
TOTAL COMMON STOCKS (Cost $425,711,673) | 403,071,221 |
Floating Rate Loans - 0.8% | ||||
| Principal Amount |
| ||
MATERIALS - 0.8% | ||||
Chemicals - 0.8% | ||||
Lyondell Chemical Co. term loan 5.7973% 12/20/13 (d) | $ 5,140,460 | 3,624,024 | ||
TOTAL FLOATING RATE LOANS (Cost $3,991,956) | 3,624,024 |
Money Market Funds - 3.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (e) | 15,005,989 | $ 15,005,989 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 369,000 | 369,000 | |
TOTAL MONEY MARKET FUNDS (Cost $15,374,989) | 15,374,989 |
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $445,078,618) | 422,070,234 |
NET OTHER ASSETS - (1.0)% | (4,308,754) | ||
NET ASSETS - 100% | $ 417,761,480 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 40,383 |
Fidelity Securities Lending Cash Central Fund | 12,890 |
Total | $ 53,273 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 403,071,221 | $ 403,071,221 | $ - | $ - |
Floating Rate Loans | 3,624,024 | - | 3,624,024 | - |
Money Market Funds | 15,374,989 | 15,374,989 | - | - |
Total Investments in Securities: | $ 422,070,234 | $ 418,446,210 | $ 3,624,024 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $359,033) - See accompanying schedule: Unaffiliated issuers (cost $429,703,629) | $ 406,695,245 |
|
Fidelity Central Funds (cost $15,374,989) | 15,374,989 |
|
Total Investments (cost $445,078,618) |
| $ 422,070,234 |
Cash | 197,132 | |
Receivable for investments sold | 6,096,343 | |
Receivable for fund shares sold | 3,561,888 | |
Dividends receivable | 619,123 | |
Interest receivable | 44,740 | |
Distributions receivable from Fidelity Central Funds | 2,452 | |
Prepaid expenses | 1,227 | |
Other receivables | 7,687 | |
Total assets | 432,600,826 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 13,741,889 | |
Payable for fund shares redeemed | 390,733 | |
Accrued management fee | 189,841 | |
Other affiliated payables | 113,216 | |
Other payables and accrued expenses | 34,667 | |
Collateral on securities loaned, at value | 369,000 | |
Total liabilities | 14,839,346 | |
|
|
|
Net Assets | $ 417,761,480 | |
Net Assets consist of: |
| |
Paid in capital | $ 467,134,065 | |
Undistributed net investment income | 273,032 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (26,637,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (23,008,449) | |
Net Assets, for 5,538,585 shares outstanding | $ 417,761,480 | |
Net Asset Value, offering price and redemption price per share ($417,761,480 ÷ 5,538,585 shares) | $ 75.43 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,346,362 |
Special dividends |
| 1,016,220 |
Interest |
| 506,414 |
Income from Fidelity Central Funds |
| 53,273 |
Total income |
| 8,922,269 |
|
|
|
Expenses | ||
Management fee | $ 2,023,685 | |
Transfer agent fees | 1,147,662 | |
Accounting and security lending fees | 140,519 | |
Custodian fees and expenses | 31,063 | |
Independent trustees' compensation | 2,378 | |
Registration fees | 38,925 | |
Audit | 47,895 | |
Legal | 1,779 | |
Miscellaneous | 6,619 | |
Total expenses before reductions | 3,440,525 | |
Expense reductions | (31,323) | 3,409,202 |
Net investment income (loss) | 5,513,067 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 89,461,337 | |
Foreign currency transactions | (18,862) | |
Total net realized gain (loss) |
| 89,442,475 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 90,229,319 | |
Assets and liabilities in foreign currencies | 7,000 | |
Total change in net unrealized appreciation (depreciation) |
| 90,236,319 |
Net gain (loss) | 179,678,794 | |
Net increase (decrease) in net assets resulting from operations | $ 185,191,861 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Chemicals Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,513,067 | $ 4,173,903 |
Net realized gain (loss) | 89,442,475 | (109,648,533) |
Change in net unrealized appreciation (depreciation) | 90,236,319 | (161,755,269) |
Net increase (decrease) in net assets resulting from operations | 185,191,861 | (267,229,899) |
Distributions to shareholders from net investment income | (5,851,052) | (3,797,773) |
Distributions to shareholders from net realized gain | - | (85,400) |
Total distributions | (5,851,052) | (3,883,173) |
Share transactions | 175,471,010 | 540,452,849 |
Reinvestment of distributions | 5,679,451 | 3,770,991 |
Cost of shares redeemed | (185,896,303) | (350,954,109) |
Net increase (decrease) in net assets resulting from share transactions | (4,745,842) | 193,269,731 |
Redemption fees | 22,053 | 152,793 |
Total increase (decrease) in net assets | 174,617,020 | (77,690,548) |
|
|
|
Net Assets | ||
Beginning of period | 243,144,460 | 320,835,008 |
End of period (including undistributed net investment income of $273,032 and undistributed net investment income of $593,361, respectively) | $ 417,761,480 | $ 243,144,460 |
Other Information Shares | ||
Sold | 2,723,419 | 6,725,611 |
Issued in reinvestment of distributions | 79,491 | 78,641 |
Redeemed | (2,953,275) | (5,061,028) |
Net increase (decrease) | (150,365) | 1,743,224 |
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.74 | $ 81.31 | $ 70.60 | $ 69.50 | $ 71.52 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.00 F | .73 | .85 | .82 G | .52 |
Net realized and unrealized gain (loss) | 32.77 | (38.63) | 12.80 | 11.08 | (.33) |
Total from investment operations | 33.77 | (37.90) | 13.65 | 11.90 | .19 |
Distributions from net investment income | (1.08) | (.68) | (.49) | (.87) | (.52) |
Distributions from net realized gain | - | (.02) | (2.46) | (9.96) | (1.72) |
Total distributions | (1.08) | (.70) | (2.95) | (10.83) | (2.24) |
Redemption fees added to paid in capital C | - J | .03 | .01 | .03 | .03 |
Net asset value, end of period | $ 75.43 | $ 42.74 | $ 81.31 | $ 70.60 | $ 69.50 |
Total Return A, B | 79.15% | (46.68)% | 19.40% | 18.51% | .51% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .96% | .91% | .93% | 1.06% | 1.04% |
Expenses net of fee waivers, if any | .96% | .91% | .93% | 1.06% | 1.04% |
Expenses net of all reductions | .95% | .90% | .93% | 1.06% | .99% |
Net investment income (loss) | 1.53% F | 1.05% | 1.08% | 1.19% G | .78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 417,761 | $ 243,144 | $ 320,835 | $ 119,675 | $ 114,729 |
Portfolio turnover rate E | 228% | 201% | 65% | 90% | 141% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.18 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.25%. G Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..82%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
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. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For floating rate loans, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, defaulted bonds, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 14,188,110 |
Gross unrealized depreciation | $ (74,146,722) |
Net unrealized appreciation (depreciation) | $ (59,958,612) |
|
|
Tax Cost | $ 482,028,846 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 364,550 |
Undistributed long-term capital gain | $ 10,221,633 |
Net unrealized appreciation (depreciation) | $ (59,958,677) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
|
|
|
Ordinary Income | $ 5,851,052 | $ 3,883,173 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $783,222,683 and $791,474,708, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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 .32% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $15,543 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,241 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $12,890.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $31,163 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $160.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Gold Portfolio | 35.52% | 17.69% | 17.64% |
$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, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Select Gold Portfolio: During the past year, the fund's Retail Class shares returned 35.52%, trailing the S&P 500 but beating the 32.34% mark of the S&P® Global BMI Gold Capped Index, which was adopted in December 2009 as a better representation of the fund's investment universe. Versus its industry index, the fund was aided most by its diversification outside the gold market, especially its out-of-index investments in non-gold precious metals, coal and steel producers. These securities and their underlying commodities outperformed gold bullion and gold equities for a majority of the period. In absolute terms, our foreign holdings were bolstered by weakness in the U.S. dollar versus most major currencies, especially the Canadian dollar. At the stock level, out-of-index positions in Impala Platinum and Aquarius Platinum - both with operations in South Africa - provided strong performance, as that metal's two primary end-markets, jewelry and automobile catalytic converters, rebounded on improving demand and tightening supply. Other contributors were coal producer Massey Energy and diversified metals/mining holding Buenaventura, the latter based in Peru. Randgold Resources - a U.K.-based company with most of its assets in West Africa - and Aquiline Resources, a miner with projects in South America that was acquired on very favorable terms, also aided performance. Impala, Aquarius and Massey were reduced or sold by period end. Underweighting three large index constituents also benefited performance, as Newmont Mining and Canadian holdings Goldcorp and Barrick Gold all underperformed our industry benchmark. In the case of Goldcorp, I felt the company's potential improved significantly, leading me to make that stock the fund's largest position by period end. Conversely, underweighted exposure to outperforming emerging market and exploration gold names, such as SEMAFO and Centerra Gold, with operations in West Africa and Asia, respectively, and Russia-based Polyus Gold, detracted from our results. Another area of relative underperformance came from the fund's out-of-index exposure to gold bullion. While our bullion holdings delivered a return of approximately 18%, that result lagged the return of gold equities.
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.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.16% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,113.50 | $ 6.08 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,111.70 | $ 7.70 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.00 | $ 10.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.30 | $ 9.99 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Gold | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,114.60 | $ 4.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,115.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 9.8 | 9.9 |
Newmont Mining Corp. | 7.8 | 4.7 |
AngloGold Ashanti Ltd. sponsored ADR | 7.2 | 7.1 |
Newcrest Mining Ltd. | 6.8 | 7.1 |
Agnico-Eagle Mines Ltd. (Canada) | 6.1 | 6.7 |
Randgold Resources Ltd. sponsored ADR | 5.2 | 4.5 |
Barrick Gold Corp. | 4.9 | 10.0 |
Kinross Gold Corp. | 4.9 | 4.8 |
Eldorado Gold Corp. | 3.5 | 2.4 |
Yamana Gold, Inc. | 3.5 | 4.2 |
| 59.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Gold | 92.6% |
|
![]() | Precious | 4.5% |
|
![]() | Coal & | 0.4% |
|
![]() | Diversified | 0.1% |
|
![]() | Oil & Gas Exploration & Production | 0.0% |
|
![]() | All Others* | 2.4% |
|
As of August 31, 2009 | |||
![]() | Gold | 92.2% |
|
![]() | Precious | 3.3% |
|
![]() | Diversified | 2.4% |
|
![]() | Coal & | 0.5% |
|
![]() | Steel | 0.3% |
|
![]() | All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 90.8% | |||
Shares | Value | ||
Australia - 8.3% | |||
METALS & MINING - 8.3% | |||
Gold - 8.3% | |||
Andean Resources Ltd. (a) | 4,807,514 | $ 11,067,888 | |
Avoca Resources Ltd. (a) | 2,035,474 | 3,263,846 | |
Centamin Egypt Ltd. (a) | 4,197,000 | 7,440,982 | |
Dominion Mining Ltd. | 595,594 | 1,392,521 | |
Kingsgate Consolidated NL | 1,260,123 | 9,944,888 | |
Mineral Deposits Ltd. (a) | 3,151,255 | 2,681,750 | |
Newcrest Mining Ltd. | 7,350,648 | 206,364,826 | |
Perseus Mining Ltd. (c) | 1,939,308 | 3,040,156 | |
Resolute Mining Ltd. (a) | 2,052,147 | 1,709,631 | |
St Barbara Ltd. (a) | 14,110,000 | 2,780,742 | |
Troy Resources NL (a)(d) | 2,300,000 | 4,043,716 | |
| 253,730,946 | ||
Bailiwick of Jersey - 5.2% | |||
METALS & MINING - 5.2% | |||
Gold - 5.2% | |||
Randgold Resources Ltd. sponsored ADR (c) | 2,203,667 | 158,686,061 | |
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,981,752 | 10,974,225 | |
Canada - 49.1% | |||
METALS & MINING - 49.0% | |||
Diversified Metals & Mining - 0.1% | |||
Anatolia Minerals Development Ltd. (a) | 70,000 | 239,487 | |
Clifton Star Resources, Inc. (a) | 5,000 | 37,254 | |
Kimber Resources, Inc. (a) | 16,100 | 16,219 | |
Kimber Resources, Inc. (a)(d) | 3,888,000 | 3,916,636 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(d) | 1,944,000 | 29,962 | |
| 4,239,558 | ||
Gold - 45.6% | |||
Agnico-Eagle Mines Ltd. (Canada) | 3,232,900 | 186,677,124 | |
Alamos Gold, Inc. (a) | 2,143,800 | 26,016,941 | |
Aurizon Mines Ltd. (a) | 2,234,600 | 8,982,996 | |
B2Gold Corp. (a)(c) | 880,000 | 1,145,735 | |
Barrick Gold Corp. | 3,924,519 | 147,880,426 | |
Centerra Gold, Inc. (a) | 280,000 | 3,408,696 | |
Colossus Minerals, Inc. (a) | 370,000 | 1,860,109 | |
Crocodile Gold Corp. (a) | 10,000 | 19,482 | |
Detour Gold Corp. (a)(d) | 615,000 | 9,953,386 | |
Eldorado Gold Corp. (a) | 8,475,213 | 107,042,605 | |
European Goldfields Ltd. (a) | 1,229,600 | 6,800,924 | |
Exeter Resource Corp. (a) | 233,000 | 1,882,157 | |
Franco-Nevada Corp. | 1,529,300 | 39,793,047 | |
Gammon Gold, Inc. (a) | 1,207,500 | 11,831,148 | |
Gleichen Resources Ltd. (a) | 230,000 | 209,836 | |
| |||
Shares | Value | ||
Goldcorp, Inc. | 7,880,300 | $ 298,211,970 | |
Golden Star Resources Ltd. (a) | 3,375,769 | 10,522,711 | |
Great Basin Gold Ltd. (a)(c) | 5,107,900 | 8,349,335 | |
Great Basin Gold Ltd. warrants 10/15/10 (a) | 850,000 | 246,377 | |
Greystar Resources Ltd. (a) | 75,000 | 360,656 | |
Guyana Goldfields, Inc. (a) | 878,000 | 5,440,304 | |
Guyana Goldfields, Inc. (a)(d) | 155,000 | 960,418 | |
IAMGOLD Corp. | 5,009,000 | 73,689,066 | |
International Tower Hill Mines Ltd. (a) | 236,700 | 1,561,129 | |
Jaguar Mining, Inc. (a) | 1,105,500 | 10,443,022 | |
Kinross Gold Corp. | 8,150,100 | 147,704,830 | |
Lake Shore Gold Corp. (a) | 500,000 | 1,458,779 | |
Minefinders Corp. Ltd. (a) | 1,060,000 | 10,476,598 | |
New Gold, Inc. (a) | 4,826,900 | 21,330,563 | |
New Gold, Inc. warrants 4/3/12 (a)(d) | 2,928,500 | 97,408 | |
Northgate Minerals Corp. (a) | 2,874,900 | 7,868,579 | |
Novagold Resources, Inc. (a) | 50,000 | 288,430 | |
Osisko Mining Corp. (a) | 682,000 | 5,800,808 | |
Osisko Mining Corp. (a)(d) | 3,000,000 | 25,516,750 | |
Premier Gold Mines Ltd. (a) | 460,200 | 1,640,057 | |
Rainy River Resources Ltd. (a) | 40,000 | 188,168 | |
Red Back Mining, Inc. (a) | 2,753,100 | 53,060,459 | |
Red Back Mining, Inc. (a)(d) | 270,000 | 5,203,706 | |
Romarco Minerals, Inc. (a) | 125,000 | 198,384 | |
Rubicon Minerals Corp. (a) | 914,500 | 3,936,978 | |
San Gold Corp. (a) | 1,581,400 | 5,470,464 | |
Seabridge Gold, Inc. (a) | 631,105 | 15,367,408 | |
SEMAFO, Inc. (a) | 786,100 | 3,608,328 | |
Ventana Gold Corp. (a) | 943,300 | 7,413,724 | |
Yamana Gold, Inc. | 10,050,900 | 106,120,693 | |
| 1,386,040,714 | ||
Precious Metals & Minerals - 3.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 474,115 | |
Etruscan Resources, Inc. (a)(d) | 1,549,400 | 603,710 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(d) | 774,700 | 7,362 | |
Pan American Silver Corp. | 1,029,987 | 22,144,725 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,312,639 | |
Silver Standard Resources, Inc. (a) | 976,800 | 16,615,375 | |
Silver Wheaton Corp. (a) | 3,970,000 | 60,592,255 | |
| 101,750,181 | ||
TOTAL METALS & MINING | 1,492,030,453 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Fronteer Development Group, Inc. (a) | 500,000 | 2,228,558 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - 0.0% | |||
Comaplex Minerals Corp. (a) | 7,000 | $ 52,488 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,281,046 | ||
TOTAL CANADA | 1,494,311,499 | ||
China - 1.3% | |||
METALS & MINING - 1.3% | |||
Gold - 1.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) (c) | 7,800,500 | 15,616,677 | |
Zijin Mining Group Co. Ltd. (H Shares) | 28,818,000 | 24,651,712 | |
| 40,268,389 | ||
Papua New Guinea - 3.4% | |||
METALS & MINING - 3.4% | |||
Gold - 3.4% | |||
Lihir Gold Ltd. | 43,495,881 | 103,253,567 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 750,000 | 25,207,500 | |
Russia - 0.9% | |||
METALS & MINING - 0.9% | |||
Gold - 0.9% | |||
Polyus Gold OJSC sponsored ADR | 941,566 | 25,281,047 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 63,300 | 605,781 | |
TOTAL METALS & MINING | 25,886,828 | ||
South Africa - 11.7% | |||
METALS & MINING - 11.7% | |||
Gold - 11.7% | |||
AngloGold Ashanti Ltd. sponsored ADR (c) | 6,012,452 | 218,733,004 | |
Gold Fields Ltd. sponsored ADR | 7,553,659 | 86,791,542 | |
Harmony Gold Mining Co. Ltd. | 1,549,000 | 13,978,909 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (c) | 4,126,800 | 37,677,684 | |
| 357,181,139 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Petropavlovsk PLC | 640,000 | 9,214,044 | |
| |||
Shares | Value | ||
United States of America - 9.4% | |||
METALS & MINING - 9.1% | |||
Gold - 9.1% | |||
Allied Nevada Gold Corp. (a)(c) | 592,800 | $ 8,156,928 | |
Newmont Mining Corp. | 4,801,450 | 236,615,456 | |
Royal Gold, Inc. (c) | 649,413 | 29,184,620 | |
US Gold Corp. (a) | 1,165,900 | 3,136,271 | |
| 277,093,275 | ||
Precious Metals & Minerals - 0.0% | |||
Hecla Mining Co. (a)(c) | 150,000 | 780,000 | |
TOTAL METALS & MINING | 277,873,275 | ||
OIL, GAS & CONSUMABLE FUELS - 0.3% | |||
Coal & Consumable Fuels - 0.3% | |||
Arch Coal, Inc. | 325,000 | 7,309,250 | |
TOTAL UNITED STATES OF AMERICA | 285,182,525 | ||
TOTAL COMMON STOCKS (Cost $2,241,570,065) | 2,763,896,723 | ||
Commodities - 6.8% | |||
Troy |
| ||
Gold Bullion (a) | 185,500 | 207,184,950 | |
Money Market Funds - 2.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (e) | 884,915 | 884,915 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 67,460,954 | 67,460,954 | |
TOTAL MONEY MARKET FUNDS (Cost $68,345,869) | 68,345,869 |
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $2,472,238,834) | 3,039,427,542 |
NET OTHER ASSETS - 0.1% | 3,906,479 | ||
NET ASSETS - 100% | $ 3,043,334,021 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $50,333,054 or 1.7% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 180,857 |
Fidelity Securities Lending Cash Central Fund | 499,028 |
Total | $ 679,885 |
Other Affiliated Issuers |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 154,880,326 | $ 42,460,530 | $ 27,469,000 | $ - | $ 207,130,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 2,763,896,723 | $ 2,746,715,104 | $ 17,181,619 | $ - |
Commodities | 207,184,950 | 207,184,950 | - | - |
Money Market Funds | 68,345,869 | 68,345,869 | - | - |
Total Investments: | $ 3,039,427,542 | $ 3,022,245,923 | $ 17,181,619 | $ - |
The following is a reconciliation of Investments for which Level 3 inputs were used in determining value: |
Investments: | |
Beginning Balance | $ 30,448 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (23,086) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | (7,362) |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Investment or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $12,954,352 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $66,348,802) - See accompanying schedule: Unaffiliated issuers (cost $2,241,570,065) | $ 2,763,896,723 |
|
Fidelity Central Funds (cost $68,345,869) | 68,345,869 |
|
Commodities (cost $162,322,900) | 207,184,950 |
|
Total Investments (cost $2,472,238,834) |
| $ 3,039,427,542 |
Cash | 6,462 | |
Receivable for investments sold | 156,345,630 | |
Receivable for fund shares sold | 4,261,845 | |
Dividends receivable | 1,520,832 | |
Distributions receivable from Fidelity Central Funds | 16,298 | |
Prepaid expenses | 8,347 | |
Receivable from investment adviser for expense reductions | 53,706 | |
Other receivables | 65,565 | |
Total assets | 3,201,706,227 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 85,096,066 | |
Payable for fund shares redeemed | 3,239,466 | |
Accrued management fee | 1,447,456 | |
Distribution fees payable | 74,328 | |
Other affiliated payables | 918,135 | |
Other payables and accrued expenses | 135,801 | |
Collateral on securities loaned, at value | 67,460,954 | |
Total liabilities | 158,372,206 | |
|
|
|
Net Assets | $ 3,043,334,021 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,601,815,526 | |
Accumulated net investment loss | (919) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (125,663,002) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 567,182,416 | |
Net Assets | $ 3,043,334,021 |
Consolidated Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 40.50 | |
|
|
|
Maximum offering price per share (100/94.25 of $40.50) | $ 42.97 | |
Class T: | $ 40.34 | |
|
|
|
Maximum offering price per share (100/96.50 of $40.34) | $ 41.80 | |
Class B: | $ 39.87 | |
|
|
|
Class C: | $ 39.75 | |
|
|
|
Gold: | $ 40.85 | |
|
|
|
Institutional Class: | $ 40.77 |
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.
Annual Report
Consolidated Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,179,836 |
Interest |
| 74 |
Income from Fidelity Central Funds |
| 679,885 |
Total income |
| 14,859,795 |
|
|
|
Expenses | ||
Management fee | $ 16,105,508 | |
Transfer agent fees | 8,951,189 | |
Distribution fees | 717,754 | |
Accounting and security lending fees | 1,212,567 | |
Custodian fees and expenses | 323,942 | |
Independent trustees' compensation | 17,951 | |
Registration fees | 289,277 | |
Audit | 71,070 | |
Legal | 13,823 | |
Miscellaneous | 34,226 | |
Total expenses before reductions | 27,737,307 | |
Expense reductions | (1,109,754) | 26,627,553 |
Net investment income (loss) | (11,767,758) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 137,360,027 | |
Commodities | 4,098,700 |
|
Foreign currency transactions | 276,376 | |
Capital gain distribution from Fidelity Central Funds | 4,434 | |
Total net realized gain (loss) |
| 141,739,537 |
Change in net unrealized appreciation (depreciation) on: Investments | 548,783,486 | |
Assets and liabilities in foreign currencies | (41,908) | |
Commodities | 33,817,640 | |
Total change in net unrealized appreciation (depreciation) |
| 582,559,218 |
Net gain (loss) | 724,298,755 | |
Net increase (decrease) in net assets resulting from operations | $ 712,530,997 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (11,767,758) | $ (2,690,363) |
Net realized gain (loss) | 141,739,537 | (179,917,786) |
Change in net unrealized appreciation (depreciation) | 582,559,218 | (711,142,287) |
Net increase (decrease) in net assets resulting from operations | 712,530,997 | (893,750,436) |
Distributions to shareholders from net realized gain | (56,010,412) | (9,542,341) |
Share transactions - net increase (decrease) | 418,234,847 | 430,558,697 |
Redemption fees | 514,829 | 852,427 |
Total increase (decrease) in net assets | 1,075,270,261 | (471,881,653) |
|
|
|
Net Assets | ||
Beginning of period | 1,968,063,760 | 2,439,945,413 |
End of period (including accumulated net investment loss of $919 and accumulated net investment loss of $714, respectively) | $ 3,043,334,021 | $ 1,968,063,760 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.71) | (.17) | (5.01) | - |
Total distributions | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.63) | (.17) | (4.97) | - |
Total distributions | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.51) | (.17) | (4.84) | - |
Total distributions | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | (.17) | - |
Distributions from net realized gain | (.53) | (.17) | (4.89) | - |
Total distributions | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Gold
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.04) | (.02) | .22 F | .04 |
Net realized and unrealized gain (loss) | 11.10 | (15.51) | 15.05 | 5.49 | 12.21 |
Total from investment operations | 10.94 | (15.55) | 15.03 | 5.71 | 12.25 |
Distributions from net investment income | - | - | (.18) | (.02) | (.02) |
Distributions from net realized gain | (.77) | (.17) | (5.03) | (5.10) | (3.84) |
Total distributions | (.77) | (.17) | (5.21) | (5.12) | (3.86) |
Redemption fees added to paid in capital C | .01 | .02 | .01 | .04 | .06 |
Net asset value, end of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Total Return A, B | 35.52% | (33.59)% | 45.10% | 16.19% | 48.84% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .98% | .89% | .85% | .90% | .97% |
Expenses net of fee waivers, if any | .96% | .87% | .85% | .90% | .97% |
Expenses net of all reductions | .94% | .86% | .81% | .87% | .82% |
Net investment income (loss) | (.40)% | (.13)% | (.05)% | .62% F | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 |
Portfolio turnover rate E | 46% | 42% | 55% | 85% | 108% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.82) | (.17) | (5.04) | - |
Total distributions | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2010
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2010, the Fund held $207,130,454 in the Subsidiary, representing 6.8% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are 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 Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying consolidated financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 587,307,975 |
Gross unrealized depreciation | (162,095,828) |
Net unrealized appreciation (depreciation) | $ 425,212,147 |
|
|
Tax Cost | $ 2,614,215,395 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 29,267,911 |
Capital loss carryforward | $ (12,954,352) |
Net unrealized appreciation (depreciation) | $ 425,205,855 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 56,010,412 | $ - |
Long-term Capital Gains | - | 9,542,341 |
Total | $ 56,010,412 | $ 9,542,341 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,666,765,327 and $1,222,401,265, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its average net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period, FMR reimbursed the Fund $617,017.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 165,404 | $ 12,406 |
Class T | .25% | .25% | 109,284 | 706 |
Class B | .75% | .25% | 148,843 | 111,714 |
Class C | .75% | .25% | 294,223 | 150,118 |
|
|
| $ 717,754 | $ 274,944 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 128,737 |
Class T | 17,837 |
Class B* | 40,323 |
Class C* | 21,509 |
| $ 208,406 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 201,509 | .31 |
Class T | 77,008 | .35 |
Class B | 50,520 | .34 |
Class C | 88,998 | .30 |
Gold | 8,484,126 | .33 |
Institutional Class | 49,028 | .29 |
| $ 8,951,189 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,032 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $9,533 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $499,028.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $492,362 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $375.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ 1,356,457 | $ 120,234 |
Class T | 386,094 | 52,921 |
Class B | 226,465 | 30,037 |
Class C | 480,176 | 48,372 |
Gold | 53,033,502 | 9,277,078 |
Institutional Class | 527,718 | 13,699 |
Total | $ 56,010,412 | $ 9,542,341 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,548,727 | 1,309,698 | $ 60,979,204 | $ 44,660,266 |
Reinvestment of distributions | 28,941 | 2,750 | 1,258,667 | 115,078 |
Shares redeemed | (828,099) | (603,399) | (32,946,669) | (19,759,071) |
Net increase (decrease) | 749,569 | 709,049 | $ 29,291,202 | $ 25,016,273 |
Class T |
|
|
|
|
Shares sold | 410,718 | 490,596 | $ 16,022,649 | $ 16,725,703 |
Reinvestment of distributions | 8,602 | 1,250 | 372,822 | 52,336 |
Shares redeemed | (271,824) | (233,926) | (10,198,558) | (7,642,955) |
Net increase (decrease) | 147,496 | 257,920 | $ 6,196,913 | $ 9,135,084 |
Class B |
|
|
|
|
Shares sold | 271,111 | 268,687 | $ 10,287,423 | $ 9,041,240 |
Reinvestment of distributions | 4,654 | 619 | 199,620 | 25,767 |
Shares redeemed | (95,719) | (138,798) | (3,721,090) | (4,716,395) |
Net increase (decrease) | 180,046 | 130,508 | $ 6,765,953 | $ 4,350,612 |
Class C |
|
|
|
|
Shares sold | 698,249 | 585,858 | $ 27,513,842 | $ 18,965,561 |
Reinvestment of distributions | 9,039 | 1,077 | 386,528 | 44,699 |
Shares redeemed | (320,512) | (238,490) | (12,323,085) | (7,504,831) |
Net increase (decrease) | 386,776 | 348,445 | $ 15,577,285 | $ 11,505,429 |
Annual Report
Notes to Consolidated Financial Statements - continued
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Gold |
|
|
|
|
Shares sold | 40,468,485 | 46,487,078 | $ 1,581,099,363 | $ 1,611,564,135 |
Reinvestment of distributions | 1,174,296 | 212,477 | 51,481,173 | 8,930,407 |
Shares redeemed | (33,470,388) | (36,708,151) | (1,303,757,681) | (1,244,304,895) |
Net increase (decrease) | 8,172,393 | 9,991,404 | $ 328,822,855 | $ 376,189,647 |
Institutional Class |
|
|
|
|
Shares sold | 933,259 | 256,180 | $ 39,237,749 | $ 8,523,938 |
Reinvestment of distributions | 10,089 | 259 | 441,486 | 10,894 |
Shares redeemed | (208,491) | (126,881) | (8,098,596) | (4,173,180) |
Net increase (decrease) | 734,857 | 129,558 | $ 31,580,639 | $ 4,361,652 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Materials Portfolio A | 91.77% | 9.44% | 13.24% |
A Prior to October 1, 2006, Materials operated under certain different investment policies. The historical performance for this fund may not represent its current investment policies.
$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, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Tobias Welo, Portfolio Manager of Select Materials Portfolio: For the 12 months ending February 28, 2010, the fund's Retail Class shares returned 91.77%, significantly outperforming the S&P 500 and the 73.30% return of the MSCI® U.S. IM Materials 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Security selection boosted results relative to the MSCI index, particularly within specialty chemicals, paper packaging, commodity and diversified chemicals, and coal/consumable fuels. An underweighting in fertilizers/agricultural chemicals and an overweighting in commodity chemicals also helped. Conversely, an underweighting in paper products and lack of exposure to the aluminum group detracted, as did a modest cash position in a rising market. Specialty chemicals firm W.R. Grace was the top contributor, helped by better-than-expected earnings. Commodity chemicals firm Celanese rose sharply on improved earnings and an uptick in demand, while paper packaging company Temple-Inland jumped due to the firm's stable earnings. Detractors included underweightings in International Paper, whose stock rose on improved profit margins thanks to aggressive cost-cutting, and steel concern Cliffs Natural Resources, which rose on brightening prospects for the iron ore and coal industries. Some holdings mentioned in this update were sold by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.60 | $ 6.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.51% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,123.90 | $ 7.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 2.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.20 | $ 10.57 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.83 | $ 10.04 |
Class C | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Materials | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.30 | $ 4.85 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.40 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 9.3 | 7.5 |
Monsanto Co. | 9.3 | 5.1 |
E.I. du Pont de Nemours & Co. | 8.1 | 7.9 |
Praxair, Inc. | 5.9 | 5.8 |
Freeport-McMoRan Copper & Gold, Inc. | 5.0 | 7.6 |
Air Products & Chemicals, Inc. | 4.1 | 4.4 |
Newmont Mining Corp. | 3.7 | 1.2 |
Weyerhaeuser Co. | 3.5 | 2.7 |
Nucor Corp. | 3.3 | 4.2 |
Owens-Illinois, Inc. | 3.1 | 2.6 |
| 55.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Chemicals | 56.9% |
|
![]() | Metals & Mining | 24.7% |
|
![]() | Containers & Packaging | 4.6% |
|
![]() | Paper & Forest Products | 4.0% |
|
![]() | Construction Materials | 3.4% |
|
![]() | All Others* | 6.4% |
|
As of August 31, 2009 | |||
![]() | Chemicals | 52.9% |
|
![]() | Metals & Mining | 22.3% |
|
![]() | Containers & Packaging | 8.6% |
|
![]() | Construction Materials | 4.0% |
|
![]() | Paper & Forest Products | 3.6% |
|
![]() | All Others* | 8.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 1.8% | |||
Building Products - 1.8% | |||
Masco Corp. | 954,300 | $ 12,758,991 | |
CHEMICALS - 56.9% | |||
Commodity Chemicals - 3.1% | |||
Celanese Corp. Class A | 709,406 | 22,126,373 | |
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 275,036 | 12,948,695 | |
Dow Chemical Co. | 2,351,618 | 66,574,305 | |
E.I. du Pont de Nemours & Co. | 1,711,400 | 57,708,408 | |
FMC Corp. | 179,800 | 10,279,166 | |
Huntsman Corp. | 589,100 | 8,088,343 | |
Solutia, Inc. (a) | 447,713 | 6,299,322 | |
| 161,898,239 | ||
Fertilizers & Agricultural Chemicals - 14.1% | |||
CF Industries Holdings, Inc. | 76,300 | 8,106,112 | |
Monsanto Co. | 941,744 | 66,534,214 | |
Potash Corp. of Saskatchewan, Inc. | 16,300 | 1,796,911 | |
The Mosaic Co. | 357,300 | 20,862,747 | |
Yara International ASA | 87,900 | 3,620,173 | |
| 100,920,157 | ||
Industrial Gases - 10.0% | |||
Air Products & Chemicals, Inc. | 424,400 | 29,105,352 | |
Praxair, Inc. | 560,541 | 42,119,051 | |
| 71,224,403 | ||
Specialty Chemicals - 7.1% | |||
Albemarle Corp. | 401,535 | 15,053,547 | |
Ferro Corp. | 1,055,300 | 8,642,907 | |
Innophos Holdings, Inc. | 231,500 | 5,375,430 | |
Johnson Matthey PLC | 74,505 | 1,804,406 | |
Kraton Performance Polymers, Inc. | 111,300 | 1,501,437 | |
W.R. Grace & Co. (a) | 637,900 | 18,473,584 | |
| 50,851,311 | ||
TOTAL CHEMICALS | 407,020,483 | ||
CONSTRUCTION MATERIALS - 3.4% | |||
Construction Materials - 3.4% | |||
Cemex SA de CV sponsored ADR | 564,700 | 5,398,532 | |
HeidelbergCement AG | 89,810 | 4,576,191 | |
Martin Marietta Materials, Inc. (c) | 69,322 | 5,491,689 | |
Vulcan Materials Co. (c) | 197,000 | 8,551,770 | |
| 24,018,182 | ||
CONTAINERS & PACKAGING - 4.6% | |||
Metal & Glass Containers - 4.6% | |||
Crown Holdings, Inc. (a) | 388,599 | 10,616,525 | |
Owens-Illinois, Inc. (a) | 764,600 | 22,662,744 | |
| 33,279,269 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Bunge Ltd. | 120,400 | $ 7,174,637 | |
MARINE - 0.2% | |||
Marine - 0.2% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 1,441,652 | |
METALS & MINING - 24.7% | |||
Diversified Metals & Mining - 7.9% | |||
Anglo American PLC (United Kingdom) (a) | 125,151 | 4,561,740 | |
Freeport-McMoRan Copper & Gold, Inc. | 474,865 | 35,690,853 | |
RTI International Metals, Inc. (a) | 219,600 | 5,276,988 | |
Teck Resources Ltd. Class B (sub. vtg.) (a) | 98,400 | 3,618,988 | |
Vale SA sponsored ADR | 258,450 | 7,200,417 | |
| 56,348,986 | ||
Gold - 7.0% | |||
Agnico-Eagle Mines Ltd. (Canada) | 117,300 | 6,773,246 | |
AngloGold Ashanti Ltd. sponsored ADR | 301,020 | 10,951,108 | |
Newcrest Mining Ltd. | 95,764 | 2,688,514 | |
Newmont Mining Corp. | 531,000 | 26,167,680 | |
Randgold Resources Ltd. sponsored ADR | 50,300 | 3,622,103 | |
| 50,202,651 | ||
Precious Metals & Minerals - 0.6% | |||
Aquarius Platinum Ltd. (United Kingdom) | 264,400 | 1,464,152 | |
Impala Platinum Holdings Ltd. | 63,155 | 1,536,247 | |
Pan American Silver Corp. | 75,200 | 1,616,800 | |
| 4,617,199 | ||
Steel - 9.2% | |||
Allegheny Technologies, Inc. | 248,500 | 10,849,510 | |
Carpenter Technology Corp. | 202,800 | 6,057,636 | |
Commercial Metals Co. | 441,355 | 7,238,222 | |
Nucor Corp. | 568,400 | 23,531,760 | |
Reliance Steel & Aluminum Co. | 194,900 | 8,641,866 | |
Steel Dynamics, Inc. | 412,700 | 6,739,391 | |
Ternium SA sponsored ADR (a)(c) | 71,600 | 2,450,868 | |
| 65,509,253 | ||
TOTAL METALS & MINING | 176,678,089 | ||
OIL, GAS & CONSUMABLE FUELS - 0.4% | |||
Coal & Consumable Fuels - 0.4% | |||
Centennial Coal Co. Ltd. | 894,316 | 2,924,118 | |
Common Stocks - continued | |||
Shares | Value | ||
PAPER & FOREST PRODUCTS - 4.0% | |||
Forest Products - 4.0% | |||
Louisiana-Pacific Corp. (a) | 502,700 | $ 3,825,547 | |
Weyerhaeuser Co. | 619,400 | 25,023,760 | |
| 28,849,307 | ||
TOTAL COMMON STOCKS (Cost $645,126,262) | 694,144,728 | ||
Money Market Funds - 7.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 37,931,793 | 37,931,793 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 11,995,375 | 11,995,375 | |
TOTAL MONEY MARKET FUNDS (Cost $49,927,168) | 49,927,168 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $695,053,430) | 744,071,896 |
NET OTHER ASSETS - (4.0)% | (28,856,109) | ||
NET ASSETS - 100% | $ 715,215,787 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 47,364 |
Fidelity Securities Lending Cash Central Fund | 15,907 |
Total | $ 63,271 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 694,144,728 | $ 694,144,727 | $ - | $ - |
Money Market Funds | 49,927,168 | 49,927,168 | - | - |
Total Investments in Securities: | $ 744,071,896 | $ 744,071,895 | $ - | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.5% |
Canada | 1.9% |
South Africa | 1.7% |
Bermuda | 1.2% |
Brazil | 1.0% |
Others (individually less than 1%) | 4.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $22,356,874 of which $21,745,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. |
A capital loss carryforward of approximately $5,315,874 was acquired from Paper and Forest Products Portfolio, of which $4,704,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,487,690) - See accompanying schedule: Unaffiliated issuers (cost $645,126,262) | $ 694,144,728 |
|
Fidelity Central Funds (cost $49,927,168) | 49,927,168 |
|
Total Investments (cost $695,053,430) |
| $ 744,071,896 |
Receivable for investments sold | 4,649,528 | |
Receivable for fund shares sold | 3,258,849 | |
Dividends receivable | 866,889 | |
Distributions receivable from Fidelity Central Funds | 4,218 | |
Prepaid expenses | 1,392 | |
Other receivables | 12,590 | |
Total assets | 752,865,362 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 22,498,973 | |
Payable for fund shares redeemed | 2,560,693 | |
Accrued management fee | 326,982 | |
Distribution fees payable | 40,913 | |
Other affiliated payables | 178,872 | |
Other payables and accrued expenses | 47,767 | |
Collateral on securities loaned, at value | 11,995,375 | |
Total liabilities | 37,649,575 | |
|
|
|
Net Assets | $ 715,215,787 | |
Net Assets consist of: |
| |
Paid in capital | $ 694,034,904 | |
Undistributed net investment income | 21,306 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (27,857,336) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 49,016,913 | |
Net Assets | $ 715,215,787 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 52.54 | |
|
|
|
Maximum offering price per share (100/94.25 of $52.54) | $ 55.75 | |
Class T: | $ 52.35 | |
|
|
|
Maximum offering price per share (100/96.50 of $52.35) | $ 54.25 | |
Class B: | $ 51.86 | |
|
|
|
Class C: | $ 51.79 | |
|
|
|
Materials: | $ 52.61 | |
|
|
|
Institutional Class: | $ 52.58 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,172,926 |
Special dividends |
| 960,460 |
Interest |
| 10,741 |
Income from Fidelity Central Funds |
| 63,271 |
Total income |
| 8,207,398 |
|
|
|
Expenses | ||
Management fee | $ 2,489,211 | |
Transfer agent fees | 1,294,368 | |
Distribution fees | 335,450 | |
Accounting and security lending fees | 172,078 | |
Custodian fees and expenses | 46,360 | |
Independent trustees' compensation | 2,554 | |
Registration fees | 147,450 | |
Audit | 52,688 | |
Legal | 7,458 | |
Miscellaneous | 10,834 | |
Total expenses before reductions | 4,558,451 | |
Expense reductions | (46,718) | 4,511,733 |
Net investment income (loss) | 3,695,665 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 54,971,145 | |
Foreign currency transactions | (17,050) | |
Total net realized gain (loss) |
| 54,954,095 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 118,180,912 | |
Assets and liabilities in foreign currencies | (969) | |
Total change in net unrealized appreciation (depreciation) |
| 118,179,943 |
Net gain (loss) | 173,134,038 | |
Net increase (decrease) in net assets resulting from operations | $ 176,829,703 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,695,665 | $ 2,259,809 |
Net realized gain (loss) | 54,954,095 | (75,667,547) |
Change in net unrealized appreciation (depreciation) | 118,179,943 | (119,409,812) |
Net increase (decrease) in net assets resulting from operations | 176,829,703 | (192,817,550) |
Distributions to shareholders from net investment income | (4,024,717) | (976,789) |
Share transactions - net increase (decrease) | 390,197,683 | (41,426,103) |
Redemption fees | 93,068 | 46,748 |
Total increase (decrease) in net assets | 563,095,737 | (235,173,694) |
|
|
|
Net Assets | ||
Beginning of period | 152,120,050 | 387,293,744 |
End of period (including undistributed net investment income of $21,306 and undistributed net investment income of $350,358, respectively) | $ 715,215,787 | $ 152,120,050 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .30 H | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.32) | (.12) | (2.53) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .65% H | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .43%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .16 H | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.19) | (.03) | (2.42) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .35% H | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.07) H | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.25) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.15)% H | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.36)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.253 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.06) H | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.33) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.13)% H | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.334 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 F | .38 | .64 | .42 | .32 |
Net realized and unrealized gain (loss) | 24.91 | (29.54) | 8.01 | 9.36 | 6.40 |
Total from investment operations | 25.34 | (29.16) | 8.65 | 9.78 | 6.72 |
Distributions from net investment income | (.40) | (.20) | (.36) | (.48) | (.25) |
Distributions from net realized gain | - | - | (2.21) | (4.79) | (.93) |
Total distributions | (.40) | (.20) | (2.57) J | (5.27) | (1.18) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .06 | .03 |
Net asset value, end of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Total Return A, B | 91.77% | (51.15)% | 17.10% | 22.29% | 17.01% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .96% | .90% | .91% | 1.01% | 1.05% |
Expenses net of fee waivers, if any | .96% | .90% | .90% | .98% | 1.05% |
Expenses net of all reductions | .94% | .90% | .89% | .96% | 1.01% |
Net investment income (loss) | .92% F | .78% | 1.14% | .87% | .78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 |
Portfolio turnover rate E | 104% H | 117% | 77% | 185% | 124% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 K | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .46 G | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.44) | (.20) | (2.56) L | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, I |
|
|
|
|
Expenses before reductions | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | .94% G | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 104% J | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J The portfolio turnover rate does not include the assets acquired in the merger. K For the year ended February 29. L Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund.
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gains are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 81,661,128 |
Gross unrealized depreciation | (38,497,461) |
Net unrealized appreciation (depreciation) | $ 43,163,667 |
|
|
Tax Cost | $ 700,908,229 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 375,642 |
Capital loss carryforward | $ (22,356,874) |
Net unrealized appreciation (depreciation) | $ 43,162,114 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
|
|
|
Ordinary Income | $ 4,024,717 | $ 976,789 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $801,356,820 and $441,665,671, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .57% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 79,488 | $ 2,143 |
Class T | .25% | .25% | 54,942 | 277 |
Class B | .75% | .25% | 62,120 | 46,655 |
Class C | .75% | .25% | 138,900 | 49,199 |
|
|
| $ 335,450 | $ 98,274 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 92,688 |
Class T | 9,956 |
Class B* | 8,978 |
Class C* | 4,361 |
| $ 115,983 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each applicable class were as follows:
| Amount | % of |
Class A | $ 98,217 | .31 |
Class T | 38,681 | .35 |
Class B | 21,492 | .35 |
Class C | 46,333 | .34 |
Materials | 1,076,261 | .29 |
Institutional Class | 13,384 | .27 |
| $ 1,294,368 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8,934 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,333 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $15,907.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $46,675 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $43.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 238,202 | $ 43,307 |
Class T | 47,220 | 5,182 |
Class B | 5,848 | - |
Class C | 12,908 | - |
Materials | 3,662,178 | 923,202 |
Institutional Class | 58,361 | 5,098 |
Total | $ 4,024,717 | $ 976,789 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 858,136 | 400,579 | $ 40,135,680 | $ 21,052,656 |
Reinvestment of distributions | 4,377 | 1,376 | 220,619 | 40,415 |
Shares redeemed | (256,610) | (231,192) | (11,780,339) | (9,966,206) |
Net increase (decrease) | 605,903 | 170,763 | $ 28,575,960 | $ 11,126,865 |
Class T |
|
|
|
|
Shares sold | 167,992 | 127,856 | $ 7,326,294 | $ 6,586,988 |
Reinvestment of distributions | 941 | 169 | 45,756 | 4,976 |
Shares redeemed | (67,330) | (69,236) | (3,005,643) | (3,081,211) |
Net increase (decrease) | 101,603 | 58,789 | $ 4,366,407 | $ 3,510,753 |
Class B |
|
|
|
|
Shares sold | 131,820 | 70,236 | $ 5,954,562 | $ 3,670,456 |
Reinvestment of distributions | 103 | - | 4,824 | - |
Shares redeemed | (43,087) | (48,886) | (1,785,370) | (2,112,869) |
Net increase (decrease) | 88,836 | 21,350 | $ 4,174,016 | $ 1,557,587 |
Class C |
|
|
|
|
Shares sold | 299,617 | 186,111 | $ 13,304,163 | $ 9,519,248 |
Reinvestment of distributions | 234 | (8) | 10,972 | (480) |
Shares redeemed | (106,334) | (139,135) | (4,538,206) | (5,956,182) |
Net increase (decrease) | 193,517 | 46,968 | $ 8,776,929 | $ 3,562,586 |
Materials |
|
|
|
|
Shares sold | 11,253,841 | 3,524,569 | $ 539,188,177 | $ 186,250,882 |
Issued in exchange for shares of Paper and Forest Products Portfolio | 337,332 | - | 13,304,373 | - |
Reinvestment of distributions | 68,039 | 29,537 | 3,440,550 | 866,336 |
Shares redeemed | (4,780,310) | (5,137,192) | (223,285,260) | (248,168,306) |
Net increase (decrease) | 6,878,902 | (1,583,086) | $ 332,647,840 | $ (61,051,088) |
Institutional Class |
|
|
|
|
Shares sold | 269,782 | 41,845 | $ 13,383,120 | $ 2,204,347 |
Reinvestment of distributions | 839 | 156 | 43,347 | 4,588 |
Shares redeemed | (36,606) | (47,942) | (1,769,936) | (2,341,741) |
Net increase (decrease) | 234,015 | (5,941) | $ 11,656,531 | $ (132,806) |
Annual Report
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
12. Merger Information.
On June 19, 2009, the Fund acquired all of the assets and assumed all of the liabilities of Paper and Forest Products Portfolio ("Target Fund") pursuant to an agreement and plan of reorganization approved by the Board of Trustees ("The Board") on November 18, 2008. The reorganization provides shareholders access to a larger portfolio with better historical performance and lower expenses. The acquisition was accomplished by an exchange of 337,332 shares of Materials (the original retail class shares of the Fund), for 697,705 shares then outstanding (valued at $19.07) of the Target Fund. 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. The Target Fund net assets, including securities of $13,445,190, unrealized depreciation of $3,465,168, cash of $45,230 and net other liabilities of $186,047 were combined with the Fund's net assets of $314,623,676 for total net assets after the acquisition of $327,928,049.
Pro forma results of operations of the combined entity for the entire year ended February 28, 2010, 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) | $ 3,777,997 |
Total net realized gain (loss) | 51,950,136 |
Total change in net unrealized appreciation (depreciation) | 125,269,592 |
Net increase (decrease) in net assets resulting from operations | $ 180,997,725 |
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 Fund's accompanying Statement of Operations since June 19, 2009.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio, and Materials Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio) including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial position of Chemical Portfolio, Gold Portfolio and Materials Portfolio (funds of Fidelity Select Portfolios) and Gold Portfolio's wholly owned subsidiary at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Bruce T. Herring (44) | |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 | 04/12/10 | 04/09/10 | $0.045 | $1.895 |
Gold Portfolio | 04/12/10 | 04/09/10 | $0.00 | $0.397 |
Materials Portfolio | 04/12/10 | 04/09/10 | $0.002 | $0.03 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2010, or, if subsequently determined to be different, the net capital gain of such year.
Chemicals Portfolio | $10,221,633 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2009 | December 2009 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | - | - |
Materials Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2009 | December 2009 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | - | 15% |
Materials Portfolio | 100% | 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 | 12/14/2009 | $.088 | $.0062 |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(Hong Kong) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
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and Account Assistance 1-800-544-6666
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Fidelity®
Select Portfolios®
Information Technology Sector
Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Information Technology Sector |
|
|
Communications Equipment Portfolio |
| |
Computers Portfolio |
| |
Electronics Portfolio |
| |
IT Services Portfolio |
| |
Software and Computer Services Portfolio |
| |
Technology Portfolio |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
* Fund Updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 toFebruary 28, 2010).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Communications Equipment Portfolio | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.70 | $ 5.04 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Computers Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,120.60 | $ 4.78 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Electronics Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,081.60 | $ 4.59 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
IT Services Portfolio | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,147.10 | $ 5.06 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Software and Computer Services Portfolio | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,150.40 | $ 4.59 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.53 | $ 4.31 |
Technology Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,153.10 | $ 4.70 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Communications Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Communications Equipment Portfolio A | 94.47% | 3.45% | -9.05% |
A Prior to October 1, 2006, Communications Equipment Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communications Equipment Portfolio on February 29, 2000. 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.
Annual Report
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Charlie Chai, Portfolio Manager of Select Communications Equipment Portfolio: During the past year, the fund returned 94.47%, far exceeding the S&P 500 and the 62.43% mark of the S&P® Custom Communications Equipment Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Relative to our industry index, favorable stock selection in communications equipment alone accounted for more than 20 percentage points of outperformance. Out-of-index stakes in semiconductors, Internet software and services, application software, and electronic manufacturing services also added materially to our results. QUALCOMM was the fund's top relative contributor due to the fund's large underweighting and the stock's relatively lackluster performance. Other contributors included an out-of-index position in German chip maker Infineon Technologies; ADC Telecommunications, a maker of broadband infrastructure products and services; Acme Packet, which makes session border controllers that facilitate interactive voice and video communications over Internet Protocol networks for telecom carriers and enterprise customers; and longtime holding Starent Networks, a provider of infrastructure hardware and software products for cellular service providers that was acquired on favorable terms in December. Fortunately, the negative factors had a relatively muted impact on fund performance. A small cash position worked against us in a strongly advancing market. Moreover, positions in wireless telecommunication services and advertising - both out-of-index groups - and electronic components detracted modestly. Our much-lighter-than-index weighting in communications infrastructure kingpin Cisco Systems, which beat the industry benchmark, made it the fund's biggest relative detractor. LM Ericsson, another maker of infrastructure equipment that hampered our results, didn't do much after I increased the fund's position. My timing in Finnish cellular handset maker Nokia could have been better. The fund did not own Nokia at period end. Additionally, the shares of communications network software provider Tekelec did well but lagged the extremely robust performance of our benchmark.
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.
Annual Report
Communications Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 12.2 | 17.7 |
QUALCOMM, Inc. | 8.5 | 8.9 |
Research In Motion Ltd. | 6.7 | 0.0 |
Juniper Networks, Inc. | 5.9 | 4.8 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 4.7 | 0.0 |
Polycom, Inc. | 4.2 | 3.2 |
Acme Packet, Inc. | 3.1 | 1.3 |
F5 Networks, Inc. | 2.9 | 2.9 |
Adtran, Inc. | 2.8 | 3.2 |
Motorola, Inc. | 2.4 | 2.8 |
| 53.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Communications Equipment | 78.3% |
|
![]() | Semiconductors & Semiconductor Equipment | 6.6% |
|
![]() | Software | 4.3% |
|
![]() | Wireless Telecommunication Services | 2.9% |
|
![]() | Electronic Equipment & Components | 2.5% |
|
![]() | All Others* | 5.4% |
|
As of August 31, 2009 | |||
![]() | Communications Equipment | 76.5% |
|
![]() | Semiconductors & Semiconductor Equipment | 9.9% |
|
![]() | Software | 5.5% |
|
![]() | Internet Software & Services | 3.5% |
|
![]() | Wireless Telecommunication Services | 1.5% |
|
![]() | All Others* | 3.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Communications Equipment Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 95.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 78.1% | |||
Communications Equipment - 78.1% | |||
Acme Packet, Inc. (a) | 631,421 | $ 10,525,788 | |
ADC Telecommunications, Inc. (a)(c) | 336,400 | 2,132,776 | |
Adtran, Inc. | 401,500 | 9,387,070 | |
ADVA AG Optical Networking (a) | 217,060 | 830,431 | |
Alcatel-Lucent SA sponsored ADR (a)(c) | 246,100 | 748,144 | |
Arris Group, Inc. (a) | 61,029 | 629,819 | |
Aruba Networks, Inc. (a) | 22,349 | 262,154 | |
AudioCodes Ltd. (a) | 114,390 | 398,077 | |
Aviat Networks, Inc. (a) | 74,065 | 455,500 | |
BigBand Networks, Inc. (a) | 419,200 | 1,207,296 | |
Black Box Corp. | 9,800 | 283,514 | |
Blue Coat Systems, Inc. (a) | 168,500 | 4,883,130 | |
Brocade Communications Systems, Inc. (a) | 1,172,991 | 6,826,808 | |
BYD Electronic International Co. Ltd. (a) | 626,000 | 517,755 | |
Ceragon Networks Ltd. (a) | 150,200 | 1,751,332 | |
Ciena Corp. (a)(c) | 72,641 | 1,041,672 | |
Cisco Systems, Inc. (a) | 1,685,631 | 41,011,403 | |
CommScope, Inc. (a) | 293,700 | 7,486,413 | |
Comverse Technology, Inc. (a) | 89,910 | 773,226 | |
DragonWave, Inc. (a)(c) | 204,000 | 2,502,865 | |
EchoStar Holding Corp. Class A (a) | 52,180 | 1,050,905 | |
Emulex Corp. (a) | 344,300 | 4,372,610 | |
F5 Networks, Inc. (a) | 173,470 | 9,679,626 | |
Finisar Corp. (a)(c) | 214,599 | 2,688,925 | |
Harmonic, Inc. (a) | 889,700 | 5,836,432 | |
Infinera Corp. (a) | 54,774 | 415,187 | |
JDS Uniphase Corp. (a) | 545,687 | 5,855,222 | |
Juniper Networks, Inc. (a) | 707,486 | 19,795,458 | |
Motorola, Inc. (a) | 1,180,309 | 7,978,889 | |
Oclaro, Inc. (a) | 225,900 | 438,246 | |
Oplink Communications, Inc. (a) | 102,826 | 1,587,633 | |
Opnext, Inc. (a) | 541,899 | 1,105,474 | |
Palm, Inc. (a) | 41,700 | 254,370 | |
Polycom, Inc. (a) | 546,300 | 14,263,893 | |
QUALCOMM, Inc. | 778,880 | 28,577,107 | |
Research In Motion Ltd. (a) | 317,500 | 22,504,400 | |
Riverbed Technology, Inc. (a) | 229,321 | 6,248,997 | |
Sandvine Corp. (a) | 440,684 | 678,459 | |
Sandvine Corp. (U.K.) (a) | 1,993,800 | 3,010,337 | |
ShoreTel, Inc. (a) | 272,796 | 1,636,776 | |
Sierra Wireless, Inc. (a) | 133,400 | 1,097,880 | |
Sonus Networks, Inc. (a) | 439,432 | 935,990 | |
Tekelec (a) | 361,200 | 5,967,024 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (c) | 1,574,500 | 15,760,745 | |
Tellabs, Inc. | 1,106,333 | 7,644,761 | |
| 263,040,519 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Hardware - 0.0% | |||
Compal Electronics, Inc. | 1,250 | 1,790 | |
| |||
Shares | Value | ||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 600 | $ 4,434 | |
TOTAL COMPUTERS & PERIPHERALS | 6,224 | ||
ELECTRICAL EQUIPMENT - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
A123 Systems, Inc. | 1,400 | 23,058 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 2.5% | |||
Electronic Components - 0.2% | |||
BYD Co. Ltd. (H Shares) (a) | 102,500 | 793,622 | |
Electronic Manufacturing Services - 2.3% | |||
Foxconn International Holdings Ltd. (a) | 99,000 | 101,523 | |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 1,716 | 6,783 | |
Plexus Corp. | 27,200 | 938,128 | |
Trimble Navigation Ltd. (a) | 249,300 | 6,698,691 | |
| 7,745,125 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 8,538,747 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
athenahealth, Inc. (a) | 400 | 14,736 | |
INTERNET SOFTWARE & SERVICES - 0.6% | |||
Internet Software & Services - 0.6% | |||
DivX, Inc. (a) | 500 | 3,020 | |
Equinix, Inc. (a) | 500 | 47,235 | |
OpenTable, Inc. | 100 | 3,408 | |
Tencent Holdings Ltd. | 96,000 | 1,882,353 | |
| 1,936,016 | ||
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.1% | |||
NeuStar, Inc. Class A (a) | 16,400 | 380,152 | |
IT Consulting & Other Services - 0.1% | |||
Yucheng Technologies Ltd. (a) | 60,300 | 217,080 | |
TOTAL IT SERVICES | 597,232 | ||
MEDIA - 0.4% | |||
Advertising - 0.4% | |||
VisionChina Media, Inc. ADR (a)(c) | 182,369 | 1,404,241 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.6% | |||
Semiconductor Equipment - 0.3% | |||
Tessera Technologies, Inc. (a) | 45,800 | 822,568 | |
Semiconductors - 6.3% | |||
Actel Corp. (a) | 19,449 | 249,142 | |
Applied Micro Circuits Corp. (a) | 143,550 | 1,283,337 | |
Avago Technologies Ltd. | 143,300 | 2,600,895 | |
Cavium Networks, Inc. (a) | 184,546 | 4,410,649 | |
Ceva, Inc. (a) | 57,200 | 668,668 | |
CSR PLC (a) | 154,780 | 1,121,261 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Cypress Semiconductor Corp. (a) | 32,800 | $ 388,352 | |
Exar Corp. (a) | 6,701 | 49,520 | |
Hittite Microwave Corp. (a) | 54,300 | 2,266,482 | |
Ikanos Communications, Inc. (a) | 183,615 | 464,546 | |
Infineon Technologies AG (a) | 6,084 | 33,219 | |
LSI Corp. (a) | 78,000 | 420,420 | |
Netlogic Microsystems, Inc. (a)(c) | 38,484 | 2,085,448 | |
ON Semiconductor Corp. (a) | 316,257 | 2,517,406 | |
Pericom Semiconductor Corp. (a) | 45,400 | 426,306 | |
Pixelplus Co. Ltd. ADR (a) | 30,925 | 17,009 | |
PLX Technology, Inc. (a) | 21,500 | 97,610 | |
Standard Microsystems Corp. (a) | 55,597 | 1,085,253 | |
Volterra Semiconductor Corp. (a) | 49,300 | 1,076,219 | |
| 21,261,742 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 22,084,310 | ||
SOFTWARE - 4.3% | |||
Application Software - 3.5% | |||
AsiaInfo Holdings, Inc. (a) | 45,400 | 1,108,668 | |
Citrix Systems, Inc. (a) | 54,708 | 2,352,991 | |
NetScout Systems, Inc. (a) | 41,800 | 609,862 | |
Nuance Communications, Inc. (a) | 119,400 | 1,718,166 | |
Smith Micro Software, Inc. (a) | 65,032 | 569,680 | |
SolarWinds, Inc. (c) | 79,900 | 1,502,919 | |
Synchronoss Technologies, Inc. (a) | 69,800 | 1,215,218 | |
Taleo Corp. Class A (a) | 1,800 | 42,372 | |
Ulticom, Inc. | 159,400 | 1,538,210 | |
Voltaire Ltd. (a) | 208,700 | 1,066,457 | |
| 11,724,543 | ||
Home Entertainment Software - 0.1% | |||
Giant Interactive Group, Inc. ADR | 50,800 | 394,208 | |
Systems Software - 0.7% | |||
Allot Communications Ltd. (a) | 11,800 | 47,200 | |
Opnet Technologies, Inc. | 14,100 | 209,103 | |
Rovi Corp. (a) | 27,200 | 911,200 | |
TeleCommunication Systems, Inc. Class A (a) | 166,423 | 1,268,143 | |
| 2,435,646 | ||
TOTAL SOFTWARE | 14,554,397 | ||
| |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - 2.9% | |||
Wireless Telecommunication Services - 2.9% | |||
American Tower Corp. Class A (a) | 39,110 | $ 1,668,433 | |
Crown Castle International Corp. (a) | 43,700 | 1,651,860 | |
SBA Communications Corp. Class A (a) | 48,364 | 1,710,151 | |
SOFTBANK CORP. | 17,400 | 455,838 | |
Sprint Nextel Corp. (a) | 599,400 | 1,996,002 | |
Syniverse Holdings, Inc. (a) | 138,179 | 2,324,171 | |
| 9,806,455 | ||
TOTAL COMMON STOCKS (Cost $329,071,233) | 322,005,935 |
Convertible Bonds - 0.2% | ||||
| Principal Amount |
| ||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 930,000 | 758,415 |
Money Market Funds - 10.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (d) | 13,672,786 | 13,672,786 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 22,872,680 | 22,872,680 | |
TOTAL MONEY MARKET FUNDS (Cost $36,545,466) | 36,545,466 | ||
TOTAL INVESTMENT PORTFOLIO - 106.6% (Cost $366,546,699) | 359,309,816 | ||
NET OTHER ASSETS - (6.6)% | (22,399,800) | ||
NET ASSETS - 100% | $ 336,910,016 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 12,428 |
Fidelity Securities Lending Cash Central Fund | 104,130 |
Total | $ 116,558 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 322,005,935 | $ 321,955,707 | $ 33,219 | $ 17,009 |
Convertible Bonds | 758,415 | - | 758,415 | - |
Money Market Funds | 36,545,466 | 36,545,466 | - | - |
Total Investments in Securities: | $ 359,309,816 | $ 358,501,173 | $ 791,634 | $ 17,009 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 16,390 |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 619 |
Ending Balance | $ 17,009 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ 16,390 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.4% |
Canada | 8.8% |
Sweden | 4.7% |
Others (individually less than 1%) | 4.1% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $387,660,109 of which $355,447,951, $3,347,694, $1,904,449, $13,297,103 and $13,662,912 will expire on February 28, 2011, February 29, 2012, February 28, 2015, February 29, 2016, and February 28, 2017, respectively. |
A capital loss carryforward of approximately $17,899,915 was acquired from the Networking and Infrastructure Portfolio, of which $3,347,694, $1,904,449, $8,250,126 and $4,397,646 will expire on February 29, 2012, February 28, 2015, February 29, 2016 and February 28, 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $22,268,834) - See accompanying schedule: Unaffiliated issuers (cost $330,001,233) | $ 322,764,350 |
|
Fidelity Central Funds (cost $36,545,466) | 36,545,466 |
|
Total Investments (cost $366,546,699) |
| $ 359,309,816 |
Receivable for investments sold | 279,049 | |
Receivable for fund shares sold | 1,116,441 | |
Dividends receivable | 132,409 | |
Interest receivable | 769 | |
Distributions receivable from Fidelity Central Funds | 4,225 | |
Prepaid expenses | 1,254 | |
Other receivables | 12,258 | |
Total assets | 360,856,221 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 787,476 | |
Accrued management fee | 150,544 | |
Other affiliated payables | 99,888 | |
Other payables and accrued expenses | 35,617 | |
Collateral on securities loaned, at value | 22,872,680 | |
Total liabilities | 23,946,205 | |
|
|
|
Net Assets | $ 336,910,016 | |
Net Assets consist of: |
| |
Paid in capital | $ 739,157,237 | |
Accumulated net investment loss | (1,821,419) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (393,188,919) | |
Net unrealized appreciation (depreciation) on investments | (7,236,883) | |
Net Assets, for 16,209,140 shares outstanding | $ 336,910,016 | |
Net Asset Value, offering price and redemption price per share ($336,910,016 ÷ 16,209,140 shares) | $ 20.79 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 865,726 |
Special dividends |
| 672,552 |
Interest |
| 2,150 |
Income from Fidelity Central Funds (including $104,130 from security lending) |
| 116,558 |
Total income |
| 1,656,986 |
|
|
|
Expenses | ||
Management fee | $ 1,717,569 | |
Transfer agent fees | 1,000,498 | |
Accounting and security lending fees | 122,609 | |
Custodian fees and expenses | 26,695 | |
Independent trustees' compensation | 2,116 | |
Registration fees | 26,188 | |
Audit | 47,826 | |
Legal | 10,060 | |
Interest | 1,386 | |
Miscellaneous | 14,817 | |
Total expenses before reductions | 2,969,764 | |
Expense reductions | (52,902) | 2,916,862 |
Net investment income (loss) | (1,259,876) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 54,600,371 | |
Investment not meeting investment restrictions | (384) | |
Foreign currency transactions | (118) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 384 | |
Total net realized gain (loss) |
| 54,600,253 |
Change in net unrealized appreciation (depreciation) on investment securities | 100,949,585 | |
Net gain (loss) | 155,549,838 | |
Net increase (decrease) in net assets resulting from operations | $ 154,289,962 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,259,876) | $ 510,576 |
Net realized gain (loss) | 54,600,253 | (47,042,536) |
Change in net unrealized appreciation (depreciation) | 100,949,585 | (61,760,318) |
Net increase (decrease) in net assets resulting from operations | 154,289,962 | (108,292,278) |
Distributions to shareholders from net investment income | (937,682) | (497,720) |
Share transactions |
|
|
Proceeds from sales of shares | 227,078,826 | 90,532,492 |
Net asset value of shares issued in exchange for the net assets of Networking and Infrastructure Portfolio (note 12) | 66,583,971 | - |
Reinvestment of distributions | 900,738 | 477,121 |
Cost of shares redeemed | (236,954,161) | (97,531,101) |
Net increase (decrease) in net assets resulting from share transactions | 57,609,374 | (6,521,488) |
Redemption fees | 30,144 | 16,560 |
Total increase (decrease) in net assets | 210,991,798 | (115,294,926) |
|
|
|
Net Assets | ||
Beginning of period | 125,918,218 | 241,213,144 |
End of period (including accumulated net investment loss of $1,821,419 and accumulated net investment loss of $67, respectively) | $ 336,910,016 | $ 125,918,218 |
Other Information Shares | ||
Sold | 13,101,569 | 4,763,695 |
Issued in exchange for the shares of Networking and Infrastructure Portfolio (note 12) | 3,975,162 | - |
Issued in reinvestment of distributions | 44,790 | 45,106 |
Redeemed | (12,657,351) | (5,434,215) |
Net increase (decrease) | 4,464,170 | (625,414) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.72 | $ 19.50 | $ 20.64 | $ 21.67 | $ 17.67 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) F | .04 | (.12) | (.13) | (.09) |
Net realized and unrealized gain (loss) | 10.20 | (8.77) | (1.02) | (.90) | 4.09 |
Total from investment operations | 10.13 | (8.73) | (1.14) | (1.03) | 4.00 |
Distributions from net investment income | (.06) | (.05) | - | - | - |
Redemption fees added to paid in capital C,I | - | - | - | - | - |
Net asset value, end of period | $ 20.79 | $ 10.72 | $ 19.50 | $ 20.64 | $ 21.67 |
Total Return A,B | 94.47% | (44.79)% | (5.52)% | (4.75)% | 22.64% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .97% | .95% | .93% | 1.01% | 1.06% |
Expenses net of fee waivers, if any | .97% | .95% | .93% | 1.01% | 1.06% |
Expenses net of all reductions | .95% | .94% | .93% | 1.00% | .94% |
Net investment income (loss) | (.41)% F | .25% | (.55)% | (.63)% | (.48)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 336,910 | $ 125,918 | $ 241,213 | $ 321,967 | $ 480,127 |
Portfolio turnover rate E | 143% J | 120% | 39% | 122% | 167% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.63)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. J 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.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Computers Portfolio | 85.96% | 4.70% | -7.20% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Heather Lawrence Carrillo, who managed Select Computers Portfolio during the period covered by this report: During the past year, the fund returned 85.96%, well ahead of the S&P 500 and the 79.89% mark of the S&P® Custom Computers & Peripherals Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Compared with our industry-specific benchmark, favorable stock picking in computer storage/peripherals and computer hardware bolstered performance, as did our representation in the out-of-index area of semiconductors. Lesser - but still significant - contributions came from overweighting computer storage/peripherals, markedly underweighting computer hardware and a small position in technology distributors. Our top contributor by far was International Business Machines (IBM), in which the fund had a large underweighting. While IBM performed well, it lagged our benchmark's result by a considerable margin. A trio of companies tied to the computer disk-drive market - Hutchinson Technology, Seagate Technology and Western Digital - lifted the fund's performance. Advanced Micro Devices also had a positive impact. In this case, the fund owned a position in the common stock and the convertible bonds, both of which recorded triple-digit gains and were sold. Micron Technology, which makes DRAM computer memory, was in financial distress early in the period but subsequently made a comeback. Advanced Micro Devices and Micron Technology were out-of-index positions. Conversely, our gains were limited by holding even a small cash position in a strongly rising market. Positions in communications equipment, semiconductor equipment and systems software also worked against us. Unrewarding timing in computer maker and major index component Hewlett-Packard detracted from performance, although the stock was our second-largest contributor in absolute terms. Likewise, underweighted exposure to smart phone and computer manufacturer Apple hurt versus the industry benchmark but helped on an absolute basis. Silicon Graphics International and Super Micro Computer are relatively small benchmark components that hurt because we didn't own them and they performed well during the first two months of 2010.
Note to shareholders: Matthew Schuldt will become Portfolio Manager of Select Computers Portfolio on April 1, 2010.
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.
Annual Report
Computers Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 13.4 | 24.4 |
Hewlett-Packard Co. | 13.0 | 23.9 |
International Business Machines Corp. | 10.2 | 4.3 |
Dell, Inc. | 5.9 | 5.0 |
EMC Corp. | 5.1 | 4.5 |
Seagate Technology | 4.3 | 2.9 |
NetApp, Inc. | 4.1 | 1.4 |
Western Digital Corp. | 3.5 | 2.0 |
SanDisk Corp. | 3.2 | 0.8 |
Teradata Corp. | 3.1 | 0.0 |
| 65.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Computers & Peripherals | 80.0% |
|
![]() | Semiconductors & Semiconductor Equipment | 6.2% |
|
![]() | Software | 4.3% |
|
![]() | Electronic Equipment & Components | 3.8% |
|
![]() | Internet Software & Services | 2.3% |
|
![]() | All Others* | 3.4% |
|
As of August 31, 2009 | |||
![]() | Computers & Peripherals | 75.7% |
|
![]() | Semiconductors & Semiconductor Equipment | 11.4% |
|
![]() | Electronic Equipment & Components | 4.3% |
|
![]() | Software | 3.0% |
|
![]() | Communications Equipment | 2.0% |
|
![]() | All Others* | 3.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Computers Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 1.3% | |||
Communications Equipment - 1.3% | |||
Adtran, Inc. | 38,000 | $ 888,440 | |
Cisco Systems, Inc. (a) | 107,200 | 2,608,176 | |
Emulex Corp. (a) | 219,200 | 2,783,840 | |
Palm, Inc. (a) | 83,800 | 511,180 | |
| 6,791,636 | ||
COMPUTERS & PERIPHERALS - 80.0% | |||
Computer Hardware - 50.1% | |||
3PAR, Inc. (a)(c) | 112,500 | 1,038,375 | |
Apple, Inc. (a) | 329,600 | 67,442,751 | |
Avid Technology, Inc. (a) | 203,600 | 2,738,420 | |
Dell, Inc. (a) | 2,227,707 | 29,472,564 | |
Diebold, Inc. | 169,700 | 4,914,512 | |
Hewlett-Packard Co. | 1,286,255 | 65,328,891 | |
International Business Machines Corp. | 401,248 | 51,022,696 | |
NCR Corp. (a) | 861,300 | 10,869,606 | |
Stratasys, Inc. (a) | 117,831 | 3,107,203 | |
Teradata Corp. (a) | 515,800 | 15,726,742 | |
| 251,661,760 | ||
Computer Storage & Peripherals - 29.9% | |||
Compellent Technologies, Inc. (a) | 334,100 | 5,188,573 | |
Electronics for Imaging, Inc. (a) | 203,024 | 2,407,865 | |
EMC Corp. (a) | 1,479,678 | 25,879,568 | |
Hutchinson Technology, Inc. (a) | 232,583 | 1,535,048 | |
Hypercom Corp. (a) | 793,600 | 2,753,792 | |
Intevac, Inc. (a) | 170,100 | 2,410,317 | |
Lexmark International, Inc. Class A (a) | 461,300 | 15,550,423 | |
NetApp, Inc. (a) | 686,900 | 20,613,869 | |
Netezza Corp. (a) | 244,000 | 2,230,160 | |
QLogic Corp. (a) | 135,000 | 2,457,000 | |
Quantum Corp. (a) | 2,279,800 | 5,653,904 | |
SanDisk Corp. (a) | 543,300 | 15,826,329 | |
Seagate Technology | 1,075,500 | 21,413,205 | |
SIMPLO Technology Co. Ltd. | 425,000 | 2,228,836 | |
STEC, Inc. (a)(c) | 139,800 | 1,437,144 | |
Western Digital Corp. (a) | 449,184 | 17,351,978 | |
Xyratex Ltd. (a) | 423,000 | 5,587,830 | |
| 150,525,841 | ||
TOTAL COMPUTERS & PERIPHERALS | 402,187,601 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 3.8% | |||
Electronic Equipment & Instruments - 0.3% | |||
Agilent Technologies, Inc. (a) | 43,200 | 1,359,072 | |
Electronic Manufacturing Services - 0.9% | |||
Flextronics International Ltd. (a) | 357,300 | 2,486,808 | |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 550,000 | 2,173,981 | |
| 4,660,789 | ||
Technology Distributors - 2.6% | |||
Arrow Electronics, Inc. (a) | 66,300 | 1,870,323 | |
| |||
Shares | Value | ||
Avnet, Inc. (a) | 45,000 | $ 1,242,450 | |
Digital China Holdings Ltd. (H Shares) | 3,118,000 | 4,900,621 | |
Ingram Micro, Inc. Class A (a) | 139,000 | 2,460,300 | |
Tech Data Corp. (a) | 58,800 | 2,518,992 | |
| 12,992,686 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 19,012,547 | ||
INTERNET SOFTWARE & SERVICES - 2.3% | |||
Internet Software & Services - 2.3% | |||
NetEase.com, Inc. sponsored ADR (a) | 68,800 | 2,673,568 | |
Open Text Corp. (a) | 77,600 | 3,804,594 | |
Rackspace Hosting, Inc. (a) | 262,900 | 5,213,307 | |
| 11,691,469 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.2% | |||
Semiconductor Equipment - 2.8% | |||
Aixtron AG | 89,000 | 2,617,348 | |
Amkor Technology, Inc. (a) | 374,500 | 2,254,490 | |
ASML Holding NV (NY Shares) | 71,900 | 2,216,677 | |
Cymer, Inc. (a) | 58,500 | 1,832,220 | |
Novellus Systems, Inc. (a) | 117,000 | 2,588,040 | |
Ultratech, Inc. (a) | 172,200 | 2,221,380 | |
| 13,730,155 | ||
Semiconductors - 3.4% | |||
Altera Corp. | 105,700 | 2,582,251 | |
Applied Micro Circuits Corp. (a) | 248,100 | 2,218,014 | |
Avago Technologies Ltd. | 5,400 | 98,010 | |
Intel Corp. | 183,400 | 3,765,202 | |
MediaTek, Inc. | 147,000 | 2,310,458 | |
Micron Technology, Inc. (a) | 275,000 | 2,491,500 | |
NVIDIA Corp. (a) | 152,100 | 2,464,020 | |
Xilinx, Inc. | 50,200 | 1,296,666 | |
| 17,226,121 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 30,956,276 | ||
SOFTWARE - 4.3% | |||
Application Software - 2.2% | |||
Informatica Corp. (a) | 151,500 | 3,866,280 | |
Magma Design Automation, Inc. (a) | 1,212,700 | 2,995,369 | |
Salesforce.com, Inc. (a) | 26,300 | 1,787,085 | |
Taleo Corp. Class A (a) | 15,200 | 357,808 | |
TIBCO Software, Inc. (a) | 216,500 | 1,985,305 | |
| 10,991,847 | ||
Systems Software - 2.1% | |||
Microsoft Corp. | 84,200 | 2,413,172 | |
Oracle Corp. | 52,400 | 1,291,660 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - continued | |||
Red Hat, Inc. (a) | 145,600 | $ 4,084,080 | |
VMware, Inc. Class A (a) | 59,000 | 2,921,090 | |
| 10,710,002 | ||
TOTAL SOFTWARE | 21,701,849 | ||
TOTAL COMMON STOCKS (Cost $487,997,585) | 492,341,378 | ||
Money Market Funds - 2.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 7,784,182 | 7,784,182 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 2,241,125 | 2,241,125 | |
TOTAL MONEY MARKET FUNDS (Cost $10,025,307) | 10,025,307 | ||
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $498,022,892) | 502,366,685 | ||
NET OTHER ASSETS - 0.1% | 341,410 | ||
NET ASSETS - 100% | $ 502,708,095 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 26,728 |
Fidelity Securities Lending Cash Central Fund | 272,993 |
Total | $ 299,721 |
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, | Purchases | Sales | Dividend | Value, |
Hutchinson Technology, Inc. | $ 466,920 | $ 6,724,579 | $ 12,781,397 | $ - | $ - |
Total | $ 466,920 | $ 6,724,579 | $ 12,781,397 | $ - | $ - |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $275,475,001 of which $251,780,199 and $23,694,802 will expire on February 28, 2011 and 2017, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,159,420) - See accompanying schedule: Unaffiliated issuers (cost $487,997,585) | $ 492,341,378 |
|
Fidelity Central Funds (cost $10,025,307) | 10,025,307 |
|
Total Investments (cost $498,022,892) |
| $ 502,366,685 |
Receivable for investments sold | 2,459,151 | |
Receivable for fund shares sold | 662,117 | |
Dividends receivable | 319,654 | |
Distributions receivable from Fidelity Central Funds | 16,851 | |
Prepaid expenses | 1,349 | |
Other receivables | 214,840 | |
Total assets | 506,040,647 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 694,849 | |
Accrued management fee | 230,890 | |
Other affiliated payables | 132,020 | |
Other payables and accrued expenses | 33,668 | |
Collateral on securities loaned, at value | 2,241,125 | |
Total liabilities | 3,332,552 | |
|
|
|
Net Assets | $ 502,708,095 | |
Net Assets consist of: |
| |
Paid in capital | $ 796,806,260 | |
Accumulated net investment loss | (128) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (298,409,628) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 4,311,591 | |
Net Assets, for 11,532,287 shares outstanding | $ 502,708,095 | |
Net Asset Value, offering price and redemption price per share ($502,708,095 ÷ 11,532,287 shares) | $ 43.59 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,734,393 |
Interest |
| 1,003,843 |
Income from Fidelity Central Funds (including $272,993 from security lending) |
| 299,721 |
Total income |
| 3,037,957 |
|
|
|
Expenses | ||
Management fee | $ 2,315,117 | |
Transfer agent fees | 1,260,795 | |
Accounting and security lending fees | 162,537 | |
Custodian fees and expenses | 32,650 | |
Independent trustees' compensation | 2,751 | |
Registration fees | 32,438 | |
Audit | 58,181 | |
Legal | 31,390 | |
Interest | 119 | |
Miscellaneous | 6,080 | |
Total expenses before reductions | 3,902,058 | |
Expense reductions | (121,283) | 3,780,775 |
Net investment income (loss) | (742,818) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 94,983,915 | |
Other affiliated issuers | 6,839,587 |
|
Foreign currency transactions | (122,774) | |
Total net realized gain (loss) |
| 101,700,728 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 112,079,881 | |
Assets and liabilities in foreign currencies | 18,842 | |
Total change in net unrealized appreciation (depreciation) |
| 112,098,723 |
Net gain (loss) | 213,799,451 | |
Net increase (decrease) in net assets resulting from operations | $ 213,056,633 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (742,818) | $ (187,044) |
Net realized gain (loss) | 101,700,728 | (88,261,786) |
Change in net unrealized appreciation (depreciation) | 112,098,723 | (62,424,997) |
Net increase (decrease) in net assets resulting from operations | 213,056,633 | (150,873,827) |
Share transactions | 207,562,448 | 52,960,888 |
Cost of shares redeemed | (125,093,210) | (132,192,597) |
Net increase (decrease) in net assets resulting from share transactions | 82,469,238 | (79,231,709) |
Redemption fees | 19,148 | 17,677 |
Total increase (decrease) in net assets | 295,545,019 | (230,087,859) |
|
|
|
Net Assets | ||
Beginning of period | 207,163,076 | 437,250,935 |
End of period (including accumulated net investment loss of $128 and undistributed net investment income of $29,684, respectively) | $ 502,708,095 | $ 207,163,076 |
Other Information Shares | ||
Sold | 5,953,260 | 1,486,599 |
Redeemed | (3,259,453) | (3,507,997) |
Net increase (decrease) | 2,693,807 | (2,021,398) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 23.44 | $ 40.26 | $ 39.29 | $ 37.55 | $ 34.65 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) | (.02) | (.12) | (.10) | (.20) |
Net realized and unrealized gain (loss) | 20.22 | (16.80) | 1.09 | 1.83 | 3.10 |
Total from investment operations | 20.15 | (16.82) | .97 | 1.73 | 2.90 |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | - H |
Net asset value, end of period | $ 43.59 | $ 23.44 | $ 40.26 | $ 39.29 | $ 37.55 |
Total Return A,B | 85.96% | (41.78)% | 2.47% | 4.63% | 8.37% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .95% | .92% | .92% | 1.02% | 1.04% |
Expenses net of fee waivers, if any | .95% | .92% | .92% | 1.02% | 1.04% |
Expenses net of all reductions | .92% | .91% | .91% | 1.00% | .98% |
Net investment income (loss) | (.18)% | (.05)% | (.26)% | (.28)% | (.56)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 502,708 | $ 207,163 | $ 437,251 | $ 460,532 | $ 531,707 |
Portfolio turnover rate E | 269% | 183% | 234% | 214% | 112% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Electronics Portfolio | 89.51% | 0.89% | -8.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Electronics Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Electronics Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Select Electronics Portfolio: During the past year, the fund returned 89.51%, handily beating the S&P 500 and the 72.37% mark of the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Relative to the MSCI index, favorable stock selection in semiconductors accounted for more than 11 percentage points of the fund's outperformance. Stock picking and an overweighting in semiconductor equipment also was beneficial. Additionally, our security selection in several out-of-index groups - particularly electronic manufacturing services, computer storage/peripherals and electronic components - aided the fund's results. The share price of chip maker Infineon Technologies bounced back nicely following the company's near-death experience earlier in the year, when a shaky balance sheet and tight credit markets threatened to drive the German firm out of business. Underweighting index heavyweight and personal computer chip maker Intel had a positive impact on performance, in view of the stock's failure to keep pace with the MSCI index. Other contributors included Fairchild Semiconductor International, Amkor Technology, which offers subcontracted chip packaging and test services, Marvell Technology Group, a chip manufacturer for the PC disk-drive and cellular handset markets, and Germany's Aixtron, a semiconductor equipment maker with a rapidly growing business in equipment for manufacturing light-emitting diode (LED) lights. Infineon and Aixtron were out-of-index holdings, and both stocks were sold by period end. On the negative side, holdings in communications equipment dampened the fund's gain, as did a modest cash position against the backdrop of a strongly advancing market. Our largest relative detractor was a benchmark component in which the fund had a large underweighting: LED maker Cree. Despite what we thought was a rich valuation, the stock posted a triple-digit gain amid growing demand for LEDs in the general lighting, display backlighting and automotive markets. A large out-of-benchmark stake in wireless infrastructure provider QUALCOMM also detracted, as did holdings in chip maker Atmel and an underweighting in PC chip manufacturer Advanced Micro Devices.
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.
Annual Report
Electronics Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 23.1 | 24.0 |
Texas Instruments, Inc. | 6.4 | 8.8 |
Applied Materials, Inc. | 5.4 | 5.3 |
Micron Technology, Inc. | 4.9 | 3.6 |
Marvell Technology Group Ltd. | 4.5 | 3.6 |
Altera Corp. | 3.3 | 0.8 |
Fairchild Semiconductor International, Inc. | 3.2 | 2.1 |
Xilinx, Inc. | 3.0 | 1.6 |
Avago Technologies Ltd. | 2.7 | 0.8 |
Amkor Technology, Inc. | 2.7 | 1.7 |
| 59.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Semiconductors & Semiconductor Equipment | 91.1% |
|
![]() | Electronic Equipment & Components | 3.8% |
|
![]() | Computers & Peripherals | 2.5% |
|
![]() | Communications Equipment | 1.8% |
|
![]() | Electrical Equipment | 0.3% |
|
![]() | All Others* | 0.5% |
|
As of August 31, 2009 | |||
![]() | Semiconductors & Semiconductor Equipment | 87.5% |
|
![]() | Electronic Equipment & Components | 4.0% |
|
![]() | Computers & Peripherals | 2.9% |
|
![]() | Communications Equipment | 1.9% |
|
![]() | Software | 0.6% |
|
![]() | All Others* | 3.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Electronics Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 1.8% | |||
Communications Equipment - 1.8% | |||
QUALCOMM, Inc. | 545,824 | $ 20,026,283 | |
COMPUTERS & PERIPHERALS - 2.5% | |||
Computer Hardware - 0.1% | |||
Hewlett-Packard Co. | 24,375 | 1,238,006 | |
Computer Storage & Peripherals - 2.4% | |||
SanDisk Corp. (a) | 292,800 | 8,529,264 | |
Seagate Technology | 464,313 | 9,244,472 | |
Western Digital Corp. (a) | 209,800 | 8,104,574 | |
| 25,878,310 | ||
TOTAL COMPUTERS & PERIPHERALS | 27,116,316 | ||
ELECTRICAL EQUIPMENT - 0.3% | |||
Electrical Components & Equipment - 0.3% | |||
Motech Industries, Inc. | 1 | 4 | |
SunPower Corp. Class B (a) | 237,000 | 3,870,210 | |
| 3,870,214 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 3.8% | |||
Electronic Components - 0.2% | |||
Vishay Intertechnology, Inc. (a) | 204,001 | 2,091,010 | |
Electronic Manufacturing Services - 3.1% | |||
Benchmark Electronics, Inc. (a) | 248,935 | 4,928,913 | |
DDi Corp. (a) | 976,434 | 4,930,992 | |
Flextronics International Ltd. (a) | 2,047,093 | 14,247,767 | |
Jabil Circuit, Inc. | 288,372 | 4,374,603 | |
TTM Technologies, Inc. (a) | 258,158 | 2,204,669 | |
Tyco Electronics Ltd. | 145,600 | 3,731,728 | |
| 34,418,672 | ||
Technology Distributors - 0.5% | |||
Arrow Electronics, Inc. (a) | 71,100 | 2,005,731 | |
Avnet, Inc. (a) | 120,431 | 3,325,100 | |
| 5,330,831 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 41,840,513 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a) | 285,468 | 3 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 91.0% | |||
Semiconductor Equipment - 17.8% | |||
Advanced Energy Industries, Inc. (a) | 14,100 | 204,732 | |
Amkor Technology, Inc. (a)(c) | 4,971,805 | 29,930,266 | |
Applied Materials, Inc. | 4,891,300 | 59,869,512 | |
ASM International NV (NASDAQ) (a) | 175,800 | 4,126,026 | |
ASML Holding NV (NY Shares) | 293,800 | 9,057,854 | |
ATMI, Inc. (a) | 86,400 | 1,454,976 | |
Brooks Automation, Inc. (a) | 26,400 | 228,096 | |
Cabot Microelectronics Corp. (a) | 11,300 | 400,020 | |
| |||
Shares | Value | ||
Cohu, Inc. | 9,700 | $ 129,980 | |
Cymer, Inc. (a) | 249,071 | 7,800,904 | |
Entegris, Inc. (a) | 445,239 | 1,994,671 | |
FEI Co. (a) | 9,700 | 206,416 | |
KLA-Tencor Corp. | 192,500 | 5,607,525 | |
Kulicke & Soffa Industries, Inc. (a) | 890,835 | 5,861,694 | |
Lam Research Corp. (a) | 609,200 | 20,657,972 | |
Mattson Technology, Inc. (a) | 562,070 | 2,074,038 | |
MEMC Electronic Materials, Inc. (a) | 1,177,764 | 14,262,722 | |
Novellus Systems, Inc. (a) | 62,700 | 1,386,924 | |
Teradyne, Inc. (a)(c) | 871,500 | 8,706,285 | |
Tessera Technologies, Inc. (a) | 307,054 | 5,514,690 | |
Ultratech, Inc. (a) | 13,600 | 175,440 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 361,800 | 10,882,944 | |
Verigy Ltd. (a) | 569,200 | 5,669,232 | |
| 196,202,919 | ||
Semiconductors - 73.2% | |||
Actel Corp. (a) | 10,400 | 133,224 | |
Advanced Analogic Technologies, Inc. (a) | 447,661 | 1,468,328 | |
Advanced Micro Devices, Inc. (a) | 2,310,506 | 18,276,102 | |
Altera Corp. | 1,485,162 | 36,282,508 | |
Analog Devices, Inc. | 55,300 | 1,616,972 | |
Applied Micro Circuits Corp. (a) | 813,972 | 7,276,910 | |
ARM Holdings PLC sponsored ADR | 287,500 | 2,670,875 | |
Atheros Communications, Inc. (a) | 110,522 | 3,966,635 | |
Atmel Corp. (a) | 4,690,329 | 21,153,384 | |
Avago Technologies Ltd. | 1,666,103 | 30,239,769 | |
Broadcom Corp. Class A | 816,110 | 25,560,565 | |
Cree, Inc. (a) | 11,200 | 759,696 | |
Cypress Semiconductor Corp. (a) | 131,000 | 1,551,040 | |
Diodes, Inc. (a) | 12,200 | 239,242 | |
Exar Corp. (a) | 15,000 | 110,850 | |
Fairchild Semiconductor International, Inc. (a) | 3,466,946 | 35,778,883 | |
Himax Technologies, Inc. sponsored ADR | 1,116,400 | 3,271,052 | |
Integrated Device Technology, Inc. (a) | 1,117,400 | 6,112,178 | |
Intel Corp. | 12,436,932 | 255,330,214 | |
International Rectifier Corp. (a) | 448,537 | 9,073,904 | |
Intersil Corp. Class A | 1,002,840 | 14,882,146 | |
Linear Technology Corp. | 2,100 | 57,057 | |
LSI Corp. (a) | 746,697 | 4,024,697 | |
Marvell Technology Group Ltd. (a) | 2,594,086 | 50,117,742 | |
Micron Technology, Inc. (a) | 5,991,738 | 54,285,146 | |
Microsemi Corp. (a) | 354,734 | 5,501,924 | |
Monolithic Power Systems, Inc. (a) | 260,432 | 5,289,374 | |
National Semiconductor Corp. | 1,299,632 | 18,818,671 | |
NVIDIA Corp. (a) | 1,785,270 | 28,921,374 | |
O2Micro International Ltd. sponsored ADR (a) | 213,200 | 1,277,068 | |
Omnivision Technologies, Inc. (a) | 437,100 | 6,351,063 | |
ON Semiconductor Corp. (a) | 2,156,141 | 17,162,882 | |
PMC-Sierra, Inc. (a) | 800,500 | 6,644,150 | |
RF Micro Devices, Inc. (a) | 762,114 | 3,208,500 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Samsung Electronics Co. Ltd. | 8,180 | $ 5,246,483 | |
Silicon Storage Technology, Inc. (a) | 39,300 | 125,367 | |
Skyworks Solutions, Inc. (a) | 622,524 | 9,505,941 | |
Standard Microsystems Corp. (a) | 315,383 | 6,156,276 | |
STATS ChipPAC Ltd. (a) | 2,479,000 | 1,834,076 | |
Texas Instruments, Inc. | 2,921,559 | 71,227,608 | |
Volterra Semiconductor Corp. (a) | 165,905 | 3,621,706 | |
Xilinx, Inc. | 1,279,500 | 33,049,485 | |
Zoran Corp. (a) | 63,300 | 717,822 | |
| 808,898,889 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,005,101,808 | ||
TOTAL COMMON STOCKS (Cost $1,190,160,066) | 1,097,955,137 |
Convertible Bonds - 0.1% | ||||
| Principal Amount |
| ||
ELECTRICAL EQUIPMENT - 0.0% | ||||
Electrical Components & Equipment - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 470,000 | 462,997 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.1% | ||||
Semiconductor Equipment - 0.1% | ||||
Amkor Technology, Inc. 6% 4/15/14 (d) | 610,000 | 1,329,068 | ||
TOTAL CONVERTIBLE BONDS (Cost $1,080,000) | 1,792,065 |
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (e) | 784 | $ 784 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 18,372,375 | 18,372,375 | |
TOTAL MONEY MARKET FUNDS (Cost $18,373,159) | 18,373,159 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $1,209,613,225) | 1,118,120,361 | ||
NET OTHER ASSETS - (1.2)% | (13,579,206) | ||
NET ASSETS - 100% | $ 1,104,541,155 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $1,329,068 or 0.1% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 56,022 |
Fidelity Securities Lending Cash Central Fund | 91,497 |
Total | $ 147,519 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 1,097,955,137 | $ 1,097,955,134 | $ - | $ 3 |
Convertible Bonds | 1,792,065 | - | 1,792,065 | - |
Money Market Funds | 18,373,159 | 18,373,159 | - | - |
Total Investments in Securities: | $ 1,118,120,361 | $ 1,116,328,293 | $ 1,792,065 | $ 3 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (75,776) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 75,779 |
Ending Balance | $ 3 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ (75,776) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.3% |
Singapore | 4.7% |
Bermuda | 4.5% |
Cayman Islands | 1.3% |
Netherlands | 1.2% |
Others (individually less than 1%) | 1.0% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $1,912,166,439 of which $1,514,779,921, $67,503,898, $258,803,490 and $71,079,130 will expire on February 28, 2011, February 29, 2012, February 28, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $17,724,634) - See accompanying schedule: Unaffiliated issuers (cost $1,191,240,066) | $ 1,099,747,202 |
|
Fidelity Central Funds (cost $18,373,159) | 18,373,159 |
|
Total Investments (cost $1,209,613,225) |
| $ 1,118,120,361 |
Receivable for investments sold | 12,480,269 | |
Receivable for fund shares sold | 260,069 | |
Dividends receivable | 2,943,952 | |
Interest receivable | 22,097 | |
Distributions receivable from Fidelity Central Funds | 2,202 | |
Prepaid expenses | 3,388 | |
Other receivables | 41,243 | |
Total assets | 1,133,873,581 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 774,816 | |
Payable for investments purchased | 7,413,438 | |
Payable for fund shares redeemed | 1,902,687 | |
Accrued management fee | 512,880 | |
Other affiliated payables | 284,494 | |
Other payables and accrued expenses | 71,736 | |
Collateral on securities loaned, at value | 18,372,375 | |
Total liabilities | 29,332,426 | |
|
|
|
Net Assets | $ 1,104,541,155 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,125,608,706 | |
Undistributed net investment income | 1,608,523 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,931,183,651) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (91,492,423) | |
Net Assets, for 27,849,258 shares outstanding | $ 1,104,541,155 | |
Net Asset Value, offering price and redemption price per share ($1,104,541,155 ÷ 27,849,258 shares) | $ 39.66 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 13,882,207 |
Interest |
| 3,662,816 |
Income from Fidelity Central Funds (including $91,497 from security lending) |
| 147,519 |
Total income |
| 17,692,542 |
|
|
|
Expenses | ||
Management fee | $ 5,426,701 | |
Transfer agent fees | 2,888,149 | |
Accounting and security lending fees | 368,713 | |
Custodian fees and expenses | 82,588 | |
Independent trustees' compensation | 6,680 | |
Appreciation in deferred trustee compensation account | 90 | |
Registration fees | 48,236 | |
Audit | 42,529 | |
Legal | 8,043 | |
Interest | 213 | |
Miscellaneous | 16,403 | |
Total expenses before reductions | 8,888,345 | |
Expense reductions | (63,502) | 8,824,843 |
Net investment income (loss) | 8,867,699 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 103,595,563 | |
Foreign currency transactions | (1,621) | |
Capital gain distributions from Fidelity Central Funds | 1,070 | |
Total net realized gain (loss) |
| 103,595,012 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 401,700,722 | |
Assets and liabilities in foreign currencies | 25,992 | |
Total change in net unrealized appreciation (depreciation) |
| 401,726,714 |
Net gain (loss) | 505,321,726 | |
Net increase (decrease) in net assets resulting from operations | $ 514,189,425 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 8,867,699 | $ 10,153,348 |
Net realized gain (loss) | 103,595,012 | (338,107,375) |
Change in net unrealized appreciation (depreciation) | 401,726,714 | (139,562,154) |
Net increase (decrease) in net assets resulting from operations | 514,189,425 | (467,516,181) |
Distributions to shareholders from net investment income | (9,465,569) | (5,135,720) |
Distributions to shareholders from net realized gain | (285,675) | - |
Total distributions | (9,751,244) | (5,135,720) |
Share transactions | 344,238,190 | 85,955,651 |
Reinvestment of distributions | 9,290,540 | 4,870,280 |
Cost of shares redeemed | (316,936,032) | (256,580,265) |
Net increase (decrease) in net assets resulting from share transactions | 36,592,698 | (165,754,334) |
Redemption fees | 56,833 | 35,043 |
Total increase (decrease) in net assets | 541,087,712 | (638,371,192) |
|
|
|
Net Assets | ||
Beginning of period | 563,453,443 | 1,201,824,635 |
End of period (including undistributed net investment income of $1,608,523 and undistributed net investment income of $2,316,529, respectively) | $ 1,104,541,155 | $ 563,453,443 |
Other Information Shares | ||
Sold | 9,995,209 | 2,625,746 |
Issued in reinvestment of distributions | 258,297 | 236,536 |
Redeemed | (9,071,377) | (8,528,536) |
Net increase (decrease) | 1,182,129 | (5,666,254) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.13 | $ 37.17 | $ 46.14 | $ 46.60 | $ 38.93 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .31 | .34 | .17 | .05 | (.07) |
Net realized and unrealized gain (loss) | 18.57 | (16.19) | (8.85) | (.48) | 7.73 |
Total from investment operations | 18.88 | (15.85) | (8.68) | (.43) | 7.66 |
Distributions from net investment income | (.34) | (.19) | (.17) | (.03) | - |
Distributions from net realized gain | (.01) | - | (.12) | - | - |
Total distributions | (.35) | (.19) | (.29) | (.03) | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 39.66 | $ 21.13 | $ 37.17 | $ 46.14 | $ 46.60 |
Total Return A,B | 89.51% | (42.63)% | (18.95)% | (.92)% | 19.70% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .92% | .89% | .87% | .91% | .95% |
Expenses net of fee waivers, if any | .92% | .89% | .87% | .91% | .95% |
Expenses net of all reductions | .91% | .88% | .86% | .89% | .88% |
Net investment income (loss) | .92% | 1.05% | .36% | .11% | (.17)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,104,541 | $ 563,453 | $ 1,201,825 | $ 1,944,223 | $ 2,840,570 |
Portfolio turnover rate E | 71% | 91% | 87% | 97% | 80% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 years |
IT Services Portfolio A | 60.83% | 7.68% | 6.14% |
A Prior to October 1, 2006, IT Services Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Kyle Weaver, Portfolio Manager of Select IT Services Portfolio: During the past year, the fund returned 60.83%, well ahead of the S&P 500 and the 50.24% return of the MSCI® U.S. IM IT Services 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Favorable stock selection in data processing/outsourced services was the primary reason the fund topped the MSCI index, although my picks in two out-of-index groups - application software and technology distributors - also helped. Large underweightings in two benchmark components, payroll processor Automatic Data Processing and money transfer agent Western Union, aided fund performance, as both stocks posted nice gains but significantly underperformed the benchmark. An overweighted position in Alliance Data Systems, which offers a variety of outsourced marketing, credit and customer-loyalty solutions, also lifted performance, as did electronic bill payment processing provider Metavante Technologies, which was acquired during the period at a healthy premium to its market price. Other contributors included VeriFone Holdings, which supplies electronic point-of-sale (POS) terminals, and VanceInfo Technologies, a pure play on the Chinese information technology (IT) services industry. Conversely, having a modest cash position detracted. My security selection in Internet software/services and in IT consulting/other services also hurt a bit. Individual detractors included Yucheng Technologies, which was hurt by changing regulations regarding the deployment of POS terminals in China. Other detractors were Affiliated Computer Services, which provides outsourced services to corporations as well as state and local governments, networking and data communications holding TNS and Fidelity National Information Services, a provider of bank payment processing technology and related solutions, which acquired Metavante.
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.
Annual Report
IT Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Visa, Inc. Class A | 13.9 | 18.2 |
MasterCard, Inc. Class A | 11.0 | 4.9 |
Accenture PLC Class A | 9.5 | 10.5 |
Cognizant Technology Solutions Corp. Class A | 6.3 | 5.6 |
Fidelity National Information Services, Inc. | 5.6 | 5.0 |
Alliance Data Systems Corp. | 4.9 | 5.9 |
Automatic Data Processing, Inc. | 4.1 | 3.9 |
Fiserv, Inc. | 3.7 | 1.7 |
TNS, Inc. | 2.9 | 2.2 |
Wright Express Corp. | 2.6 | 1.6 |
| 64.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | IT Services | 90.2% |
|
![]() | Software | 5.1% |
|
![]() | Office Electronics | 2.3% |
|
![]() | Internet Software & Services | 2.1% |
|
![]() | Electronic Equipment & Components | 0.9% |
|
![]() | All Others* | (0.6)%† |
|
As of August 31, 2009 | |||
![]() | IT Services | 95.3% |
|
![]() | Software | 2.9% |
|
![]() | Internet Software & Services | 1.1% |
|
![]() | Wireless Telecommunication Services | 0.4% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets. |
† Short-term Investments and Net Other Assets are not included in the pie chart. |
Annual Report
IT Services Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 100.9% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 0.3% | |||
Specialized Consumer Services - 0.3% | |||
Coinstar, Inc. (a) | 9,300 | $ 276,024 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.9% | |||
Technology Distributors - 0.9% | |||
Digital China Holdings Ltd. (H Shares) | 544,000 | 855,015 | |
INTERNET SOFTWARE & SERVICES - 2.1% | |||
Internet Software & Services - 2.1% | |||
j2 Global Communications, Inc. (a) | 75,500 | 1,638,350 | |
LivePerson, Inc. (a) | 54,500 | 379,865 | |
| 2,018,215 | ||
IT SERVICES - 90.2% | |||
Data Processing & Outsourced Services - 66.4% | |||
Alliance Data Systems Corp. (a)(c) | 85,448 | 4,737,237 | |
Automatic Data Processing, Inc. | 94,600 | 3,936,306 | |
Cass Information Systems, Inc. | 2,200 | 66,594 | |
Convergys Corp. (a) | 84,600 | 1,043,964 | |
CSG Systems International, Inc. (a) | 13,100 | 263,572 | |
CyberSource Corp. (a) | 62,100 | 1,063,773 | |
DST Systems, Inc. (a) | 9,100 | 349,713 | |
Euronet Worldwide, Inc. (a) | 18,200 | 329,784 | |
ExlService Holdings, Inc. (a) | 29,000 | 498,800 | |
Fidelity National Information Services, Inc. | 238,500 | 5,375,790 | |
Fiserv, Inc. (a) | 74,900 | 3,612,427 | |
Genpact Ltd. (a) | 138,900 | 2,096,001 | |
Global Cash Access Holdings, Inc. (a) | 13,800 | 103,362 | |
Heartland Payment Systems, Inc. | 56,800 | 868,472 | |
Hewitt Associates, Inc. Class A (a) | 58,800 | 2,233,812 | |
infoGROUP, Inc. (a) | 162,700 | 1,306,481 | |
MasterCard, Inc. Class A | 47,215 | 10,593,630 | |
NeuStar, Inc. Class A (a) | 26,000 | 602,680 | |
Syntel, Inc. | 45,000 | 1,525,500 | |
Teletech Holdings, Inc. (a) | 14,900 | 260,601 | |
The Western Union Co. | 155,800 | 2,458,524 | |
TNS, Inc. (a) | 118,000 | 2,788,340 | |
VeriFone Holdings, Inc. (a) | 56,800 | 1,096,240 | |
Visa, Inc. Class A (c) | 157,612 | 13,441,151 | |
WNS Holdings Ltd. sponsored ADR (a)(c) | 62,200 | 927,402 | |
Wright Express Corp. (a) | 89,700 | 2,540,304 | |
| 64,120,460 | ||
IT Consulting & Other Services - 23.8% | |||
Accenture PLC Class A | 229,600 | 9,177,112 | |
Acxiom Corp. (a) | 84,400 | 1,422,984 | |
China Information Security Technology, Inc. (a)(c) | 154,600 | 760,632 | |
Ciber, Inc. (a) | 34,500 | 128,685 | |
Cognizant Technology Solutions Corp. Class A (a) | 126,116 | 6,069,963 | |
Computer Task Group, Inc. (a) | 47,500 | 359,575 | |
iGate Corp. | 6,900 | 63,066 | |
| |||
Shares | Value | ||
Integral Systems, Inc. (a) | 140,700 | $ 1,204,392 | |
ManTech International Corp. Class A (a) | 200 | 9,876 | |
Maximus, Inc. | 5,800 | 333,964 | |
NCI, Inc. Class A (a) | 2,200 | 61,974 | |
Ness Technologies, Inc. (a) | 256,400 | 1,461,480 | |
RightNow Technologies, Inc. (a) | 6,400 | 99,584 | |
Sapient Corp. | 69,700 | 628,694 | |
SRA International, Inc. Class A (a) | 13,400 | 255,404 | |
Unisys Corp. (a) | 12,520 | 437,073 | |
Yucheng Technologies Ltd. (a) | 153,800 | 553,680 | |
| 23,028,138 | ||
TOTAL IT SERVICES | 87,148,598 | ||
OFFICE ELECTRONICS - 2.3% | |||
Office Electronics - 2.3% | |||
Xerox Corp. | 238,921 | 2,238,690 | |
SOFTWARE - 5.1% | |||
Application Software - 4.6% | |||
AsiaInfo Holdings, Inc. (a) | 3,500 | 85,470 | |
Epicor Software Corp. (a) | 62,900 | 539,053 | |
Longtop Financial Technologies Ltd. ADR (a) | 32,450 | 1,077,340 | |
Monotype Imaging Holdings, Inc. (a) | 58,200 | 553,482 | |
Pegasystems, Inc. | 13,400 | 482,400 | |
VanceInfo Technologies, Inc. ADR (a)(c) | 86,900 | 1,719,751 | |
| 4,457,496 | ||
Systems Software - 0.5% | |||
MICROS Systems, Inc. (a) | 15,800 | 474,632 | |
TOTAL SOFTWARE | 4,932,128 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.0% | |||
Wireless Telecommunication Services - 0.0% | |||
Syniverse Holdings, Inc. (a) | 600 | 10,092 | |
TOTAL COMMON STOCKS (Cost $87,019,966) | 97,478,762 | ||
Money Market Funds - 19.8% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 19,178,800 | 19,178,800 | |
TOTAL INVESTMENT PORTFOLIO - 120.7% (Cost $106,198,766) | 116,657,562 | ||
NET OTHER ASSETS - (20.7)% | (20,026,516) | ||
NET ASSETS - 100% | $ 96,631,046 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 4,795 |
Fidelity Securities Lending Cash Central Fund | 35,838 |
Total | $ 40,633 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.9% |
Ireland | 9.5% |
Cayman Islands | 2.9% |
Bermuda | 2.2% |
Bailiwick of Jersey | 1.0% |
Others (individually less than 1%) | 1.5% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $8,570,233 of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $18,800,790) - See accompanying schedule: Unaffiliated issuers (cost $87,019,966) | $ 97,478,762 |
|
Fidelity Central Funds (cost $19,178,800) | 19,178,800 |
|
Total Investments (cost $106,198,766) |
| $ 116,657,562 |
Cash | 16,629 | |
Receivable for investments sold | 2,178,950 | |
Receivable for fund shares sold | 59,925 | |
Dividends receivable | 44,618 | |
Distributions receivable from Fidelity Central Funds | 1,936 | |
Prepaid expenses | 231 | |
Other receivables | 10,315 | |
Total assets | 118,970,166 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 3,056,198 | |
Accrued management fee | 48,066 | |
Other affiliated payables | 26,552 | |
Other payables and accrued expenses | 29,504 | |
Collateral on securities loaned, at value | 19,178,800 | |
Total liabilities | 22,339,120 | |
|
|
|
Net Assets | $ 96,631,046 | |
Net Assets consist of: |
| |
Paid in capital | $ 96,034,655 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (9,861,390) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 10,457,781 | |
Net Assets, for 5,656,743 shares outstanding | $ 96,631,046 | |
Net Asset Value, offering price and redemption price per share ($96,631,046 ÷ 5,656,743 shares) | $ 17.08 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 487,469 |
Income from Fidelity Central Funds (including $35,838 from security lending) |
| 40,633 |
Total income |
| 528,102 |
|
|
|
Expenses | ||
Management fee | $ 437,725 | |
Transfer agent fees | 227,144 | |
Accounting and security lending fees | 31,781 | |
Custodian fees and expenses | 9,034 | |
Independent trustees' compensation | 481 | |
Registration fees | 23,967 | |
Audit | 36,579 | |
Legal | 328 | |
Miscellaneous | 1,030 | |
Total expenses before reductions | 768,069 | |
Expense reductions | (1,679) | 766,390 |
Net investment income (loss) | (238,288) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 9,622,292 | |
Foreign currency transactions | (134) | |
Total net realized gain (loss) |
| 9,622,158 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 20,861,625 | |
Assets and liabilities in foreign currencies | 925 | |
Total change in net unrealized appreciation (depreciation) |
| 20,862,550 |
Net gain (loss) | 30,484,708 | |
Net increase (decrease) in net assets resulting from operations | $ 30,246,420 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (238,288) | $ (78,729) |
Net realized gain (loss) | 9,622,158 | (17,667,815) |
Change in net unrealized appreciation (depreciation) | 20,862,550 | (8,351,839) |
Net increase (decrease) in net assets resulting from operations | 30,246,420 | (26,098,383) |
Share transactions | 73,302,554 | 94,940,325 |
Cost of shares redeemed | (54,961,487) | (59,676,679) |
Net increase (decrease) in net assets resulting from share transactions | 18,341,067 | 35,263,646 |
Redemption fees | 5,004 | 30,945 |
Total increase (decrease) in net assets | 48,592,491 | 9,196,208 |
|
|
|
Net Assets | ||
Beginning of period | 48,038,555 | 38,842,347 |
End of period | $ 96,631,046 | $ 48,038,555 |
Other Information Shares | ||
Sold | 4,765,050 | 6,271,982 |
Redeemed | (3,632,823) | (4,378,124) |
Net increase (decrease) | 1,132,227 | 1,893,858 |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.62 | $ 14.77 | $ 17.40 | $ 17.43 | $ 15.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | (.02) | (.06) | (.07) | (.03) F |
Net realized and unrealized gain (loss) | 6.51 | (4.14) | (.25) | 1.73 | 2.59 |
Total from investment operations | 6.46 | (4.16) | (.31) | 1.66 | 2.56 |
Distributions from net realized gain | - | - | (2.32) | (1.70) | (.63) |
Redemption fees added to paid in capital C | - I | .01 | - I | .01 | - I |
Net asset value, end of period | $ 17.08 | $ 10.62 | $ 14.77 | $ 17.40 | $ 17.43 |
Total Return A,B | 60.83% | (28.10)% | (2.94)% | 10.11% | 17.14% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .99% | 1.00% | 1.06% | 1.19% | 1.22% |
Expenses net of fee waivers, if any | .99% | 1.00% | 1.06% | 1.16% | 1.22% |
Expenses net of all reductions | .99% | 1.00% | 1.06% | 1.15% | 1.18% |
Net investment income (loss) | (.31)% | (.14)% | (.32)% | (.42)% | (.17)% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 96,631 | $ 48,039 | $ 38,842 | $ 34,104 | $ 39,392 |
Portfolio turnover rate E | 131% | 140% | 212% | 200% | 73% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.50)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Software and Computer Services Portfolio | 62.89% | 8.72% | 0.48% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and Computer Services Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Software and Computer Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Brian Lempel, Portfolio Manager of Select Software and Computer Services Portfolio: The fund gained 62.89% during the past year, beating the S&P 500 and the 61.54% return of the MSCI® U.S. IM Software & Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Stock selection drove the fund's outperformance of the MSCI index, with particularly strong results coming from our holdings in information technology (IT) consulting/other services and data processing/outsourced services. The fund also gained from underweighting data processing/outsourced services stocks, which lagged the benchmark. Conversely, security selection in systems software offset some of the fund's gains. The two biggest individual contributors relative to the index were Cognizant Technology Solutions and out-of-index firm WNS Holdings. Both outsourcing services providers were attractively valued and had very strong results. Another positive was underweighting money-transfer firm Western Union, whose fortunes are closely tied to employment, which continued to lag. Taleo's stock had a strong bounce-back after this maker of talent management software resolved accounting problems. Underweightings in weak-performing Internet giant Yahoo! and payroll service provider Automatic Data Processing also helped. The No. 1 detractor was a large overweighting in business management software maker BMC Software. Not owning strong-performing index component Salesforce.com also hurt results, as did Japanese video-game maker Nintendo - an out-of-benchmark position - and application software firms Adobe Systems and Epiq Systems. I sold Nintendo during the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Software & Computer Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 24.4 | 25.0 |
Google, Inc. Class A | 12.4 | 13.7 |
Oracle Corp. | 7.5 | 9.8 |
BMC Software, Inc. | 3.7 | 3.7 |
Visa, Inc. Class A | 3.5 | 3.9 |
eBay, Inc. | 3.3 | 3.2 |
Cognizant Technology Solutions Corp. Class A | 3.1 | 3.8 |
Adobe Systems, Inc. | 3.0 | 3.8 |
Citrix Systems, Inc. | 3.0 | 2.0 |
Nuance Communications, Inc. | 2.8 | 1.5 |
| 66.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Software | 66.1% |
|
![]() | Internet Software | 18.6% |
|
![]() | IT Services | 14.1% |
|
![]() | Media | 0.6% |
|
![]() | Computers & Peripherals | 0.4% |
|
![]() | All Others* | 0.2% |
|
As of August 31, 2009 | |||
![]() | Software | 62.5% |
|
![]() | Internet Software | 18.6% |
|
![]() | IT Services | 18.5% |
|
![]() | Specialty Retail | 0.2% |
|
![]() | Media | 0.1% |
|
![]() | All Others* | 0.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Software & Computer Services Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
COMPUTERS & PERIPHERALS - 0.4% | |||
Computer Storage & Peripherals - 0.4% | |||
EMC Corp. (a) | 201,300 | $ 3,520,737 | |
INTERNET SOFTWARE & SERVICES - 18.6% | |||
Internet Software & Services - 18.6% | |||
Akamai Technologies, Inc. (a) | 197,400 | 5,191,620 | |
Baidu.com, Inc. sponsored ADR (a) | 1,000 | 518,680 | |
Constant Contact, Inc. (a)(c) | 279,250 | 5,213,598 | |
eBay, Inc. (a) | 1,415,500 | 32,584,810 | |
Google, Inc. Class A (a) | 232,400 | 122,428,320 | |
NetEase.com, Inc. sponsored ADR (a) | 26,100 | 1,014,246 | |
Rackspace Hosting, Inc. (a) | 119,600 | 2,371,668 | |
Saba Software, Inc. (a)(c) | 685,158 | 3,466,899 | |
Sina Corp. (a) | 52,800 | 1,996,896 | |
Tencent Holdings Ltd. | 147,800 | 2,898,039 | |
VeriSign, Inc. (a) | 79,400 | 1,978,648 | |
Yahoo!, Inc. (a) | 242,700 | 3,715,737 | |
| 183,379,161 | ||
IT SERVICES - 14.1% | |||
Data Processing & Outsourced Services - 8.7% | |||
Alliance Data Systems Corp. (a) | 54,600 | 3,027,024 | |
Automatic Data Processing, Inc. | 2,800 | 116,508 | |
Fidelity National Information Services, Inc. | 552,600 | 12,455,604 | |
Fiserv, Inc. (a) | 140,400 | 6,771,492 | |
Genpact Ltd. (a) | 148,100 | 2,234,829 | |
Lender Processing Services, Inc. | 60,548 | 2,311,723 | |
MasterCard, Inc. Class A | 89,700 | 20,125,989 | |
The Western Union Co. | 200 | 3,156 | |
Visa, Inc. Class A | 401,900 | 34,274,032 | |
WNS Holdings Ltd. sponsored ADR (a) | 280,402 | 4,180,794 | |
| 85,501,151 | ||
IT Consulting & Other Services - 5.4% | |||
Accenture PLC Class A | 410,000 | 16,387,700 | |
Cognizant Technology Solutions Corp. Class A (a) | 643,500 | 30,971,655 | |
Infosys Technologies Ltd. sponsored ADR | 1,400 | 79,660 | |
Patni Computer Systems Ltd. sponsored ADR | 900 | 18,693 | |
RightNow Technologies, Inc. (a) | 199,800 | 3,108,888 | |
Sapient Corp. | 182,800 | 1,648,856 | |
Yucheng Technologies Ltd. (a) | 198,800 | 715,680 | |
| 52,931,132 | ||
TOTAL IT SERVICES | 138,432,283 | ||
| |||
Shares | Value | ||
MEDIA - 0.6% | |||
Advertising - 0.6% | |||
Focus Media Holding Ltd. ADR (a)(c) | 157,200 | $ 2,425,596 | |
VisionChina Media, Inc. ADR (a) | 503,200 | 3,874,640 | |
| 6,300,236 | ||
OFFICE ELECTRONICS - 0.0% | |||
Office Electronics - 0.0% | |||
Xerox Corp. | 49 | 459 | |
SOFTWARE - 66.1% | |||
Application Software - 19.3% | |||
Adobe Systems, Inc. (a) | 865,400 | 29,986,110 | |
ANSYS, Inc. (a) | 26,300 | 1,153,518 | |
Autodesk, Inc. (a) | 1,700 | 47,396 | |
Autonomy Corp. PLC (a) | 25,477 | 594,481 | |
Blackboard, Inc. (a)(c) | 185,200 | 7,237,616 | |
Citrix Systems, Inc. (a) | 675,500 | 29,053,255 | |
EPIQ Systems, Inc. (a) | 1,900 | 22,078 | |
Informatica Corp. (a) | 663,200 | 16,924,864 | |
Kenexa Corp. (a) | 227,700 | 2,247,399 | |
Longtop Financial Technologies Ltd. ADR (a) | 18,500 | 614,200 | |
Magma Design Automation, Inc. (a)(c)(d) | 4,844,500 | 11,965,915 | |
Mentor Graphics Corp. (a) | 1,603,900 | 13,344,448 | |
Nuance Communications, Inc. (a) | 1,945,300 | 27,992,867 | |
Parametric Technology Corp. (a) | 312,900 | 5,447,589 | |
Quest Software, Inc. (a) | 1,114 | 18,771 | |
Taleo Corp. Class A (a) | 1,170,554 | 27,554,841 | |
TIBCO Software, Inc. (a) | 1,429,200 | 13,105,764 | |
VanceInfo Technologies, Inc. ADR (a) | 165,400 | 3,273,266 | |
| 190,584,378 | ||
Home Entertainment Software - 0.9% | |||
Activision Blizzard, Inc. | 604,800 | 6,429,024 | |
Electronic Arts, Inc. (a) | 4,100 | 67,978 | |
Giant Interactive Group, Inc. ADR (c) | 201,100 | 1,560,536 | |
Take-Two Interactive Software, Inc. (a)(c) | 80,200 | 771,524 | |
| 8,829,062 | ||
Systems Software - 45.9% | |||
Ariba, Inc. (a) | 2,174,600 | 26,116,946 | |
BMC Software, Inc. (a) | 999,100 | 36,806,844 | |
CA, Inc. | 90,300 | 2,031,750 | |
CommVault Systems, Inc. (a) | 43,400 | 950,460 | |
Fortinet, Inc. | 2,800 | 48,104 | |
McAfee, Inc. (a) | 66,900 | 2,655,261 | |
Microsoft Corp. | 8,366,700 | 239,789,622 | |
Novell, Inc. (a) | 637,800 | 2,991,282 | |
Oracle Corp. | 3,014,700 | 74,312,355 | |
Phoenix Technologies Ltd. (a) | 71,547 | 198,185 | |
Progress Software Corp. (a) | 54,100 | 1,515,882 | |
Radiant Systems, Inc. (a) | 500,637 | 5,592,115 | |
Red Hat, Inc. (a) | 402,700 | 11,295,735 | |
Rovi Corp. (a) | 609,600 | 20,421,600 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - continued | |||
Sybase, Inc. (a) | 163,400 | $ 7,253,326 | |
Symantec Corp. (a) | 726,200 | 12,018,610 | |
VMware, Inc. Class A (a) | 158,200 | 7,832,482 | |
| 451,830,559 | ||
TOTAL SOFTWARE | 651,243,999 | ||
SPECIALTY RETAIL - 0.0% | |||
Computer & Electronics Retail - 0.0% | |||
Gamestop Corp. Class A (a) | 2,300 | 39,560 | |
TOTAL COMMON STOCKS (Cost $796,642,390) | 982,916,435 | ||
Money Market Funds - 2.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (e) | 704,334 | 704,334 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 19,556,000 | 19,556,000 | |
TOTAL MONEY MARKET FUNDS (Cost $20,260,334) | 20,260,334 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $816,902,724) | 1,003,176,769 | ||
NET OTHER ASSETS - (1.9)% | (18,374,033) | ||
NET ASSETS - 100% | $ 984,802,736 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated company |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 44,899 |
Fidelity Securities Lending Cash Central Fund | 60,636 |
Total | $ 105,535 |
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, | Purchases | Sales | Dividend | Value, |
Magma Design Automation, Inc. | $ - | $ 11,061,477 | $ 124,287 | $ - | $ 11,965,915 |
Total | $ - | $ 11,061,477 | $ 124,287 | $ - | $ 11,965,915 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $83,477,756 of which $10,982,618, $29,206,865 and $43,288,273 will expire on February 28, 2011, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
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Assets | ||
Investment in securities, at value (including securities loaned of $19,226,674) - See accompanying schedule: Unaffiliated issuers (cost $785,707,055) | $ 970,950,520 |
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Fidelity Central Funds (cost $20,260,334) | 20,260,334 |
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Other affiliated issuers (cost $10,935,335) | 11,965,915 |
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Total Investments (cost $816,902,724) |
| $ 1,003,176,769 |
Receivable for investments sold | 3,958,353 | |
Receivable for fund shares sold | 678,554 | |
Dividends receivable | 1,296,221 | |
Distributions receivable from Fidelity Central Funds | 10,333 | |
Prepaid expenses | 2,352 | |
Other receivables | 179,926 | |
Total assets | 1,009,302,508 | |
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Liabilities | ||
Payable for investments purchased | $ 3,459,585 | |
Payable for fund shares redeemed | 778,434 | |
Accrued management fee | 451,371 | |
Other affiliated payables | 222,857 | |
Other payables and accrued expenses | 31,525 | |
Collateral on securities loaned, at value | 19,556,000 | |
Total liabilities | 24,499,772 | |
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Net Assets | $ 984,802,736 | |
Net Assets consist of: |
| |
Paid in capital | $ 882,839,877 | |
Accumulated net investment loss | (286) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (84,288,252) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 186,251,397 | |
Net Assets, for 13,623,756 shares outstanding | $ 984,802,736 | |
Net Asset Value, offering price and redemption price per share ($984,802,736 ÷ 13,623,756 shares) | $ 72.29 |
Statement of Operations
| Year ended February 28, 2010 | |
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Investment Income |
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Dividends |
| $ 6,202,038 |
Interest |
| 4 |
Income from Fidelity Central Funds (including $60,636 from security lending) |
| 105,535 |
Total income |
| 6,307,577 |
|
|
|
Expenses | ||
Management fee | $ 4,316,595 | |
Transfer agent fees | 2,063,617 | |
Accounting and security lending fees | 297,317 | |
Custodian fees and expenses | 22,581 | |
Independent trustees' compensation | 5,043 | |
Registration fees | 55,172 | |
Audit | 60,793 | |
Legal | 34,927 | |
Interest | 87 | |
Miscellaneous | 11,637 | |
Total expenses before reductions | 6,867,769 | |
Expense reductions | (22,962) | 6,844,807 |
Net investment income (loss) | (537,230) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 9,665,626 | |
Other affiliated issuers | (1,854) |
|
Foreign currency transactions | 7,238 | |
Total net realized gain (loss) |
| 9,671,010 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 312,184,610 | |
Assets and liabilities in foreign currencies | 16,989 | |
Total change in net unrealized appreciation (depreciation) |
| 312,201,599 |
Net gain (loss) | 321,872,609 | |
Net increase (decrease) in net assets resulting from operations | $ 321,335,379 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (537,230) | $ (792,362) |
Net realized gain (loss) | 9,671,010 | (79,375,953) |
Change in net unrealized appreciation (depreciation) | 312,201,599 | (166,741,891) |
Net increase (decrease) in net assets resulting from operations | 321,335,379 | (246,910,206) |
Share transactions | 388,679,187 | 173,674,255 |
Cost of shares redeemed | (214,224,835) | (205,589,713) |
Net increase (decrease) in net assets resulting from share transactions | 174,454,352 | (31,915,458) |
Redemption fees | 32,753 | 29,126 |
Total increase (decrease) in net assets | 495,822,484 | (278,796,538) |
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Net Assets | ||
Beginning of period | 488,980,252 | 767,776,790 |
End of period (including accumulated net investment loss of $286 and accumulated net investment loss of $177, respectively) | $ 984,802,736 | $ 488,980,252 |
Other Information Shares | ||
Sold | 5,962,082 | 2,890,908 |
Redeemed | (3,355,441) | (3,372,645) |
Net increase (decrease) | 2,606,641 | (481,737) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 44.38 | $ 66.77 | $ 65.47 | $ 53.94 | $ 47.60 |
Income from Investment Operations |
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Net investment income (loss) C | (.04) | (.07) | (.20) | (.21) | (.25) |
Net realized and unrealized gain (loss) | 27.95 | (22.32) | 1.49 | 11.73 | 6.58 |
Total from investment operations | 27.91 | (22.39) | 1.29 | 11.52 | 6.33 |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 72.29 | $ 44.38 | $ 66.77 | $ 65.47 | $ 53.94 |
Total Return A,B | 62.89% | (33.53)% | 1.99% | 21.38% | 13.32% |
Ratios to Average Net Assets D,F |
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Expenses before reductions | .90% | .87% | .86% | .92% | .96% |
Expenses net of fee waivers, if any | .90% | .87% | .86% | .92% | .96% |
Expenses net of all reductions | .89% | .87% | .86% | .91% | .91% |
Net investment income (loss) | (.07)% | (.12)% | (.27)% | (.34)% | (.49)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 984,803 | $ 488,980 | $ 767,777 | $ 924,664 | $ 563,799 |
Portfolio turnover rate E | 56% | 49% | 38% | 139% | 59% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Technology Portfolio | 94.61% | 4.69% | -8.07% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Charlie Chai, Portfolio Manager of Select Technology Portfolio: During the past year, the fund returned 94.61%, far exceeding the S&P 500 and the 68.09% mark of the MSCI® U.S. IM Information Technology 25/50 Index, which was adopted in January 2010 as a better representation of the fund's investment universe. Favorable stock selection was responsible for virtually all of our outperformance of the MSCI index. The semiconductors group alone added more than nine percentage points, with solid picks in semiconductor equipment, communications equipment, computer hardware, Internet software and services, and application software adding value. At the stock level, not owning major index component International Business Machines (IBM) bolstered performance the most. Although the stock performed well, it lagged the extremely robust result of our benchmark. Similar comments apply to another contributor, wireless infrastructure provider QUALCOMM. An out-of-index position in German chip maker Infineon Technologies performed well. Out-of-index positions in two Chinese Internet companies - Tencent Holdings and Baidu - lifted our results. Disk-drive maker Seagate Technology benefited from tight supply and firming demand in its market. On the negative side, security selection in some out-of-index groups - notably, electrical components/equipment and advertising - modestly detracted from performance, as did an overweighting in home entertainment software and a small cash position in a strong market. Among our individual holdings, underweighting Microsoft detracted, as the stock was aided by the successful launch of the Windows 7 upgrade of its flagship computer operating system. I increased our stake in Microsoft, making it our largest holding by period end. BMC Software posted a gain but trailed the MSCI index, which hurt performance because of the fund's overweighted exposure. Underweighting the resurgent shares of computer maker Hewlett-Packard was costly. Meanwhile, our out-of-index stake in solar products company SunPower was hurt by sluggish demand and allegations of accounting irregularities. An out-of-index position in VisionChina Media, which uses technology to deliver advertising messages on buses and subways, also disappointed.
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.
Annual Report
Technology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 10.6 | 5.6 |
Apple, Inc. | 9.7 | 8.1 |
Google, Inc. Class A | 4.3 | 4.7 |
Hewlett-Packard Co. | 4.1 | 3.0 |
Cisco Systems, Inc. | 4.1 | 5.7 |
Oracle Corp. | 3.1 | 3.0 |
Intel Corp. | 2.5 | 4.8 |
BMC Software, Inc. | 1.9 | 2.0 |
SanDisk Corp. | 1.5 | 0.9 |
ASML Holding NV (NY Shares) | 1.4 | 1.2 |
| 43.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Software | 28.1% |
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![]() | Semiconductors & Semiconductor Equipment | 19.1% |
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![]() | Computers & Peripherals | 18.4% |
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![]() | Communications Equipment | 10.0% |
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![]() | Internet Software & Services | 9.4% |
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![]() | All Others* | 15.0% |
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As of August 31, 2009 | |||
![]() | Semiconductors & Semiconductor Equipment | 24.6% |
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![]() | Software | 23.4% |
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![]() | Computers & Peripherals | 15.4% |
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![]() | Communications Equipment | 13.3% |
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![]() | Internet Software & Services | 10.9% |
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![]() | All Others* | 12.4% |
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* Includes short-term investments and net other assets. |
Annual Report
Technology Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 100.2% | |||
Shares | Value | ||
CHEMICALS - 0.1% | |||
Specialty Chemicals - 0.1% | |||
Shin-Etsu Chemical Co., Ltd. | 35,800 | $ 1,926,530 | |
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Commercial Printing - 0.0% | |||
Nissha Printing Co. Ltd. (c) | 17,600 | 623,158 | |
COMMUNICATIONS EQUIPMENT - 10.0% | |||
Communications Equipment - 10.0% | |||
Acme Packet, Inc. (a) | 281,900 | 4,699,273 | |
Adtran, Inc. | 190,200 | 4,446,876 | |
Brocade Communications Systems, Inc. (a) | 369,600 | 2,151,072 | |
Cisco Systems, Inc. (a) | 3,354,900 | 81,624,717 | |
Comverse Technology, Inc. (a) | 105,800 | 909,880 | |
Emulex Corp. (a) | 171,066 | 2,172,538 | |
F5 Networks, Inc. (a) | 220,000 | 12,276,000 | |
Infinera Corp. (a) | 206,300 | 1,563,754 | |
Juniper Networks, Inc. (a) | 730,200 | 20,430,996 | |
Motorola, Inc. (a) | 866,800 | 5,859,568 | |
Netronix, Inc. (a) | 300,000 | 914,099 | |
Palm, Inc. (a) | 301,900 | 1,841,590 | |
Polycom, Inc. (a) | 438,400 | 11,446,624 | |
QUALCOMM, Inc. | 527,311 | 19,347,041 | |
Research In Motion Ltd. (a) | 97,700 | 6,924,976 | |
Riverbed Technology, Inc. (a) | 320,700 | 8,739,075 | |
Sandvine Corp. (a) | 3,066,216 | 4,720,618 | |
Sandvine Corp. (U.K.) (a) | 1,941,200 | 2,930,919 | |
Tekelec (a) | 337,900 | 5,582,108 | |
| 198,581,724 | ||
COMPUTERS & PERIPHERALS - 18.4% | |||
Computer Hardware - 14.2% | |||
3PAR, Inc. (a) | 236,176 | 2,179,904 | |
Apple, Inc. (a) | 945,930 | 193,556,197 | |
Hewlett-Packard Co. | 1,629,500 | 82,762,305 | |
Stratasys, Inc. (a)(c) | 176,315 | 4,649,427 | |
Toshiba Corp. (a) | 194,000 | 971,911 | |
| 284,119,744 | ||
Computer Storage & Peripherals - 4.2% | |||
EMC Corp. (a) | 598,500 | 10,467,765 | |
NetApp, Inc. (a) | 117,500 | 3,526,175 | |
Netezza Corp. (a) | 170,300 | 1,556,542 | |
SanDisk Corp. (a) | 1,061,600 | 30,924,408 | |
Seagate Technology | 1,096,800 | 21,837,288 | |
SIMPLO Technology Co. Ltd. | 220,000 | 1,153,750 | |
Synaptics, Inc. (a) | 287,195 | 7,668,107 | |
Western Digital Corp. (a) | 171,800 | 6,636,634 | |
| 83,770,669 | ||
TOTAL COMPUTERS & PERIPHERALS | 367,890,413 | ||
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Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||
Education Services - 0.0% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a)(c) | 2,792 | $ 218,306 | |
ELECTRICAL EQUIPMENT - 1.2% | |||
Electrical Components & Equipment - 1.2% | |||
A123 Systems, Inc. (c) | 50,600 | 833,382 | |
Canadian Solar, Inc. (a) | 125,200 | 2,393,824 | |
centrotherm photovoltaics AG (a) | 62,038 | 2,506,491 | |
Energy Conversion Devices, Inc. (a)(c) | 125,649 | 904,673 | |
First Solar, Inc. (a) | 1,500 | 158,850 | |
GT Solar International, Inc. (a)(c) | 743,600 | 4,424,420 | |
JA Solar Holdings Co. Ltd. ADR (a) | 46,200 | 229,152 | |
Q-Cells SE (a) | 100 | 954 | |
Roth & Rau AG (a) | 47,977 | 1,610,808 | |
SunPower Corp. Class B (a) | 244,783 | 3,997,306 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(c) | 9,500 | 125,970 | |
Trina Solar Ltd. ADR (a)(c) | 313,700 | 6,901,400 | |
| 24,087,230 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 6.9% | |||
Electronic Components - 2.3% | |||
Amphenol Corp. Class A | 4,200 | 174,930 | |
BYD Co. Ltd. (H Shares) (a)(c) | 296,500 | 2,295,696 | |
Corning, Inc. | 855,750 | 15,086,873 | |
DTS, Inc. (a) | 64,900 | 2,076,800 | |
Prime View International Co. Ltd. (a) | 8,915,000 | 17,508,139 | |
Prime View International Co. Ltd. sponsored GDR (a)(d) | 14,900 | 293,141 | |
TDK Corp. | 31,300 | 1,931,033 | |
Vishay Intertechnology, Inc. (a) | 639,700 | 6,556,925 | |
| 45,923,537 | ||
Electronic Equipment & Instruments - 1.4% | |||
Agilent Technologies, Inc. (a) | 320,000 | 10,067,200 | |
Cando Corp. (a) | 1,267,896 | 1,077,297 | |
China Security & Surveillance Technology, Inc. warrants 8/25/10 (a)(f) | 126,425 | 76,717 | |
Chroma ATE, Inc. | 2,589,407 | 5,117,564 | |
Itron, Inc. (a) | 47,300 | 3,166,735 | |
National Instruments Corp. | 210,700 | 6,662,334 | |
Wasion Group Holdings Ltd. | 3,104,000 | 2,223,370 | |
| 28,391,217 | ||
Electronic Manufacturing Services - 2.0% | |||
Benchmark Electronics, Inc. (a) | 96,700 | 1,914,660 | |
Flextronics International Ltd. (a) | 1,194,400 | 8,313,024 | |
Ju Teng International Holdings Ltd. | 1,000,000 | 847,698 | |
Trimble Navigation Ltd. (a) | 1,051,963 | 28,266,246 | |
| 39,341,628 | ||
Technology Distributors - 1.2% | |||
Digital China Holdings Ltd. (H Shares) | 9,411,000 | 14,791,451 | |
Inspur International Ltd. | 8,592,000 | 1,195,455 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Technology Distributors - continued | |||
Supreme Electronics Co. Ltd. (a) | 2,051,000 | $ 1,704,379 | |
Synnex Technology International Corp. | 877,800 | 1,846,850 | |
WPG Holding Co. Ltd. | 3,155,000 | 5,076,673 | |
| 24,614,808 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 138,271,190 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1% | |||
Health Care Equipment - 0.1% | |||
China Medical Technologies, Inc. sponsored ADR (c) | 5,306 | 73,382 | |
Mindray Medical International Ltd. sponsored ADR (c) | 63,100 | 2,407,896 | |
Mingyuan Medicare Development Co. Ltd. (a) | 890,000 | 138,736 | |
| 2,620,014 | ||
HEALTH CARE TECHNOLOGY - 0.3% | |||
Health Care Technology - 0.3% | |||
athenahealth, Inc. (a) | 1,500 | 55,260 | |
Cerner Corp. (a) | 74,600 | 6,188,070 | |
| 6,243,330 | ||
HOTELS, RESTAURANTS & LEISURE - 0.7% | |||
Hotels, Resorts & Cruise Lines - 0.7% | |||
Ctrip.com International Ltd. sponsored ADR (a) | 353,000 | 13,495,190 | |
eLong, Inc. sponsored ADR (a) | 100 | 1,101 | |
| 13,496,291 | ||
HOUSEHOLD DURABLES - 0.5% | |||
Consumer Electronics - 0.5% | |||
Sharp Corp. | 322,000 | 3,733,859 | |
Sony Corp. sponsored ADR | 173,925 | 5,932,582 | |
TomTom Group BV (a) | 160 | 1,250 | |
| 9,667,691 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.0% | |||
Independent Power Producers & Energy Traders - 0.0% | |||
GCL-Poly Energy Holdings Ltd. | 641,000 | 156,901 | |
INTERNET & CATALOG RETAIL - 1.3% | |||
Internet Retail - 1.3% | |||
Amazon.com, Inc. (a) | 119,364 | 14,132,698 | |
Priceline.com, Inc. (a) | 48,100 | 10,907,156 | |
| 25,039,854 | ||
INTERNET SOFTWARE & SERVICES - 9.4% | |||
Internet Software & Services - 9.4% | |||
Akamai Technologies, Inc. (a) | 112,000 | 2,945,600 | |
Alibaba.com Ltd. | 1,780,500 | 3,899,474 | |
Art Technology Group, Inc. (a) | 248,306 | 985,775 | |
| |||
Shares | Value | ||
Baidu.com, Inc. sponsored ADR (a) | 15,000 | $ 7,780,200 | |
Blinkx PLC (a) | 500,000 | 108,663 | |
DealerTrack Holdings, Inc. (a) | 7,000 | 99,540 | |
eBay, Inc. (a) | 1,050,300 | 24,177,906 | |
Google, Inc. Class A (a) | 161,312 | 84,979,162 | |
GREE, Inc. | 52,000 | 3,202,252 | |
LogMeIn, Inc. | 11,700 | 219,492 | |
LoopNet, Inc. (a) | 150,000 | 1,417,500 | |
Mercadolibre, Inc. (a)(c) | 145,345 | 5,979,493 | |
NetEase.com, Inc. sponsored ADR (a) | 116,600 | 4,531,076 | |
NHN Corp. (a) | 12,423 | 1,938,416 | |
Open Text Corp. (a) | 195,400 | 9,580,125 | |
OpenTable, Inc. | 1,100 | 37,488 | |
Rackspace Hosting, Inc. (a) | 47,600 | 943,908 | |
Saba Software, Inc. (a) | 10,000 | 50,600 | |
Tencent Holdings Ltd. | 547,600 | 10,737,255 | |
VeriSign, Inc. (a) | 413,800 | 10,311,896 | |
VistaPrint Ltd. (a)(c) | 219,200 | 12,652,224 | |
Vocus, Inc. (a) | 30,000 | 426,900 | |
| 187,004,945 | ||
IT SERVICES - 2.1% | |||
Data Processing & Outsourced Services - 1.0% | |||
MasterCard, Inc. Class A | 12,200 | 2,737,314 | |
Visa, Inc. Class A | 186,400 | 15,896,192 | |
WNS Holdings Ltd. sponsored ADR (a) | 41,900 | 624,729 | |
| 19,258,235 | ||
IT Consulting & Other Services - 1.1% | |||
Accenture PLC Class A | 47,400 | 1,894,578 | |
Atos Origin SA (a) | 68,489 | 3,191,405 | |
Cognizant Technology Solutions Corp. Class A (a) | 165,200 | 7,951,076 | |
RightNow Technologies, Inc. (a) | 566,900 | 8,820,964 | |
Yucheng Technologies Ltd. (a) | 294,800 | 1,061,280 | |
| 22,919,303 | ||
TOTAL IT SERVICES | 42,177,538 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Life Technologies Corp. (a) | 19,400 | 984,744 | |
MACHINERY - 0.3% | |||
Industrial Machinery - 0.3% | |||
CKD Corp. | 242,500 | 1,861,920 | |
Meyer Burger Technology AG (a) | 39,700 | 846,175 | |
Shin Zu Shing Co. Ltd. | 647,778 | 2,419,339 | |
| 5,127,434 | ||
MEDIA - 0.7% | |||
Advertising - 0.7% | |||
AirMedia Group, Inc. ADR (a) | 388,000 | 2,545,280 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Advertising - continued | |||
Focus Media Holding Ltd. ADR (a)(c) | 341,300 | $ 5,266,259 | |
VisionChina Media, Inc. ADR (a) | 708,947 | 5,458,892 | |
| 13,270,431 | ||
METALS & MINING - 0.0% | |||
Diversified Metals & Mining - 0.0% | |||
Globe Specialty Metals, Inc. | 65,600 | 673,056 | |
Timminco Ltd. (a) | 13,700 | 16,535 | |
| 689,591 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 19.1% | |||
Semiconductor Equipment - 3.9% | |||
Aixtron AG | 132,700 | 3,902,495 | |
Amkor Technology, Inc. (a)(c) | 910,600 | 5,481,812 | |
ASM International NV (NASDAQ) (a) | 41,200 | 966,964 | |
ASML Holding NV (NY Shares) | 933,605 | 28,783,042 | |
ATMI, Inc. (a) | 11,200 | 188,608 | |
Cymer, Inc. (a) | 52,522 | 1,644,989 | |
Lam Research Corp. (a) | 232,475 | 7,883,227 | |
LTX-Credence Corp. (a) | 1,191,690 | 3,706,156 | |
MEMC Electronic Materials, Inc. (a) | 204,300 | 2,474,073 | |
Photronics, Inc. (a)(c) | 206,900 | 910,360 | |
Sumco Corp. | 118,200 | 2,143,768 | |
Tessera Technologies, Inc. (a) | 549,966 | 9,877,389 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 316,100 | 9,508,288 | |
Veeco Instruments, Inc. (a) | 29,400 | 1,002,540 | |
| 78,473,711 | ||
Semiconductors - 15.2% | |||
Advanced Micro Devices, Inc. (a) | 773,600 | 6,119,176 | |
Altera Corp. | 593,600 | 14,501,648 | |
ANADIGICS, Inc. (a) | 100 | 411 | |
Applied Micro Circuits Corp. (a) | 19,125 | 170,978 | |
Atmel Corp. (a) | 695,086 | 3,134,838 | |
Avago Technologies Ltd. | 1,513,800 | 27,475,470 | |
Broadcom Corp. Class A | 643,600 | 20,157,552 | |
Cavium Networks, Inc. (a) | 781,893 | 18,687,243 | |
Cree, Inc. (a) | 281,300 | 19,080,579 | |
CSR PLC (a) | 632,141 | 4,579,372 | |
Cypress Semiconductor Corp. (a) | 636,800 | 7,539,712 | |
Epistar Corp. | 651,000 | 1,744,510 | |
Fairchild Semiconductor International, Inc. (a) | 236,200 | 2,437,584 | |
Global Unichip Corp. | 547,608 | 2,411,657 | |
Hittite Microwave Corp. (a) | 130,900 | 5,463,766 | |
Hynix Semiconductor, Inc. (a) | 200,800 | 3,635,173 | |
Infineon Technologies AG (a) | 360,132 | 1,966,321 | |
Inotera Memories, Inc. (a) | 3,628,846 | 2,490,385 | |
Integrated Device Technology, Inc. (a) | 701,633 | 3,837,933 | |
Intel Corp. | 2,411,606 | 49,510,271 | |
International Rectifier Corp. (a) | 365,245 | 7,388,906 | |
| |||
Shares | Value | ||
Intersil Corp. Class A | 430,300 | $ 6,385,652 | |
LSI Corp. (a) | 374,300 | 2,017,477 | |
Marvell Technology Group Ltd. (a) | 1,035,700 | 20,009,724 | |
MediaTek, Inc. | 52,104 | 818,939 | |
Micron Technology, Inc. (a) | 1,567,715 | 14,203,498 | |
Microsemi Corp. (a) | 13,100 | 203,181 | |
Monolithic Power Systems, Inc. (a) | 156,900 | 3,186,639 | |
Netlogic Microsystems, Inc. (a)(c) | 65,700 | 3,560,283 | |
NVIDIA Corp. (a) | 1,345,700 | 21,800,340 | |
O2Micro International Ltd. sponsored ADR (a) | 100 | 599 | |
Omnivision Technologies, Inc. (a) | 144,100 | 2,093,773 | |
Power Integrations, Inc. | 34,200 | 1,229,832 | |
Radiant Opto-Electronics Corp. | 898,160 | 1,097,192 | |
Rambus, Inc. (a) | 117,400 | 2,576,930 | |
RF Micro Devices, Inc. (a) | 100 | 421 | |
Silicon Laboratories, Inc. (a) | 130,000 | 5,907,200 | |
Skyworks Solutions, Inc. (a) | 152,000 | 2,321,040 | |
Spreadtrum Communications, Inc. ADR (a)(c) | 371,600 | 2,433,980 | |
Standard Microsystems Corp. (a) | 246,500 | 4,811,680 | |
TriQuint Semiconductor, Inc. (a) | 100 | 719 | |
Volterra Semiconductor Corp. (a) | 39,400 | 860,102 | |
Xilinx, Inc. | 164,800 | 4,256,784 | |
YoungTek Electronics Corp. | 250,000 | 552,443 | |
| 302,661,913 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 381,135,624 | ||
SOFTWARE - 28.1% | |||
Application Software - 9.4% | |||
Adobe Systems, Inc. (a) | 207,000 | 7,172,550 | |
ANSYS, Inc. (a) | 2,700 | 118,422 | |
AsiaInfo Holdings, Inc. (a) | 95,800 | 2,339,436 | |
Citrix Systems, Inc. (a) | 479,400 | 20,618,994 | |
Concur Technologies, Inc. (a) | 208,700 | 8,210,258 | |
Epicor Software Corp. (a) | 620,200 | 5,315,114 | |
Informatica Corp. (a) | 682,400 | 17,414,848 | |
Intuit, Inc. (a) | 6,500 | 210,340 | |
JDA Software Group, Inc. (a) | 170,600 | 4,827,980 | |
Kingdee International Software Group Co. Ltd. | 38,022,000 | 10,237,559 | |
Longtop Financial Technologies Ltd. ADR (a) | 156,900 | 5,209,080 | |
Manhattan Associates, Inc. (a) | 43,300 | 1,094,191 | |
Mentor Graphics Corp. (a) | 484,000 | 4,026,880 | |
MicroStrategy, Inc. Class A (a) | 75,034 | 6,654,765 | |
Nuance Communications, Inc. (a) | 739,645 | 10,643,492 | |
Parametric Technology Corp. (a) | 806,300 | 14,037,683 | |
Pegasystems, Inc. | 155,100 | 5,583,600 | |
Salesforce.com, Inc. (a) | 392,100 | 26,643,195 | |
Smith Micro Software, Inc. (a) | 393,882 | 3,450,406 | |
SolarWinds, Inc. | 7,600 | 142,956 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
SuccessFactors, Inc. (a) | 565,000 | $ 10,232,150 | |
Synchronoss Technologies, Inc. (a) | 232,806 | 4,053,152 | |
Synopsys, Inc. (a) | 100 | 2,190 | |
Taleo Corp. Class A (a) | 380,736 | 8,962,525 | |
TIBCO Software, Inc. (a) | 850,400 | 7,798,168 | |
Ulticom, Inc. | 37,455 | 361,441 | |
VanceInfo Technologies, Inc. ADR (a) | 74,600 | 1,476,334 | |
| 186,837,709 | ||
Home Entertainment Software - 0.6% | |||
Activision Blizzard, Inc. | 197,600 | 2,100,488 | |
Changyou.com Ltd. (A Shares) ADR | 2,000 | 66,400 | |
Giant Interactive Group, Inc. ADR | 100,000 | 776,000 | |
NCsoft Corp. | 71,099 | 8,151,868 | |
Neowiz Games Corp. | 10,551 | 310,163 | |
| 11,404,919 | ||
Systems Software - 18.1% | |||
Ariba, Inc. (a) | 455,551 | 5,471,168 | |
BMC Software, Inc. (a) | 1,031,300 | 37,993,092 | |
Check Point Software Technologies Ltd. (a) | 61,900 | 2,017,940 | |
CommVault Systems, Inc. (a) | 8,800 | 192,720 | |
Fortinet, Inc. | 29,400 | 505,092 | |
Insyde Software Corp. | 825,267 | 2,992,331 | |
Microsoft Corp. | 7,365,804 | 211,103,940 | |
Oracle Corp. | 2,481,700 | 61,173,905 | |
Red Hat, Inc. (a) | 839,300 | 23,542,365 | |
Rovi Corp. (a) | 97,900 | 3,279,650 | |
TeleCommunication Systems, Inc. | 105,200 | 801,624 | |
VMware, Inc. Class A (a) | 267,674 | 13,252,540 | |
| 362,326,367 | ||
TOTAL SOFTWARE | 560,568,995 | ||
WIRELESS TELECOMMUNICATION SERVICES - 1.0% | |||
Wireless Telecommunication Services - 1.0% | |||
American Tower Corp. Class A (a) | 72,700 | 3,101,382 | |
Crown Castle International Corp. (a) | 83,100 | 3,141,180 | |
SBA Communications Corp. Class A (a) | 89,353 | 3,159,522 | |
| |||
Shares | Value | ||
Sprint Nextel Corp. (a) | 1,547,000 | $ 5,151,510 | |
Syniverse Holdings, Inc. (a) | 294,470 | 4,952,985 | |
| 19,506,579 | ||
TOTAL COMMON STOCKS (Cost $1,767,262,015) | 1,999,288,513 | ||
Money Market Funds - 1.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (e) | 3,759,893 | 3,759,893 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 33,195,614 | 33,195,614 | |
TOTAL MONEY MARKET FUNDS (Cost $36,955,507) | 36,955,507 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $1,804,217,522) | 2,036,244,020 | ||
NET OTHER ASSETS - (2.1)% | (41,350,445) | ||
NET ASSETS - 100% | $ 1,994,893,575 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $293,141 or 0.0% of net assets. |
(e) Affiliated fund that is 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. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $76,717 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
China Security & Surveillance Technology, Inc. warrants 8/25/10 | 8/25/09 | $ 13 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 49,490 |
Fidelity Securities Lending Cash Central Fund | 657,046 |
Total | $ 706,536 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 1,999,288,513 | $ 1,997,245,475 | $ 2,043,038 | $ - |
Money Market Funds | 36,955,507 | 36,955,507 | - | - |
Total Investments in Securities: | $ 2,036,244,020 | $ 2,034,200,982 | $ 2,043,038 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 698,400 |
Total Realized Gain (Loss) | (1,464,114) |
Total Unrealized Gain (Loss) | 1,589,758 |
Cost of Purchases | - |
Proceeds of Sales | (824,044) |
Amortization/Accretion | - |
Transfers in/out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.8% |
Cayman Islands | 4.2% |
Taiwan | 2.4% |
China | 2.2% |
Singapore | 1.8% |
Bermuda | 1.6% |
Netherlands | 1.4% |
Canada | 1.4% |
Japan | 1.2% |
Others (individually less than 1%) | 2.0% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $1,100,044,786 of which $778,450,488, $266,401,775 and $55,192,523 will expire on February 28, 2011, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $32,639,413) - See accompanying schedule: Unaffiliated issuers (cost $1,767,262,015) | $ 1,999,288,513 |
|
Fidelity Central Funds (cost $36,955,507) | 36,955,507 |
|
Total Investments (cost $1,804,217,522) |
| $ 2,036,244,020 |
Receivable for investments sold | 44,114,867 | |
Receivable for fund shares sold | 1,791,483 | |
Dividends receivable | 1,734,714 | |
Distributions receivable from Fidelity Central Funds | 34,621 | |
Prepaid expenses | 5,129 | |
Other receivables | 54,072 | |
Total assets | 2,083,978,906 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 50,781,840 | |
Payable for fund shares redeemed | 3,647,791 | |
Accrued management fee | 913,266 | |
Other affiliated payables | 486,173 | |
Other payables and accrued expenses | 60,647 | |
Collateral on securities loaned, at value | 33,195,614 | |
Total liabilities | 89,085,331 | |
|
|
|
Net Assets | $ 1,994,893,575 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,876,534,976 | |
Accumulated net investment loss | (260) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,113,667,676) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 232,026,535 | |
Net Assets, for 27,615,113 shares outstanding | $ 1,994,893,575 | |
Net Asset Value, offering price and redemption price per share ($1,994,893,575 ÷ 27,615,113 shares) | $ 72.24 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,476,408 |
Interest |
| 1,557,280 |
Income from Fidelity Central Funds (including $657,046 from security lending) |
| 706,536 |
Total income |
| 10,740,224 |
|
|
|
Expenses | ||
Management fee | $ 8,791,333 | |
Transfer agent fees | 4,577,032 | |
Accounting and security lending fees | 547,671 | |
Custodian fees and expenses | 172,113 | |
Independent trustees' compensation | 10,051 | |
Registration fees | 103,696 | |
Audit | 47,992 | |
Legal | 7,896 | |
Interest | 2,713 | |
Miscellaneous | 22,493 | |
Total expenses before reductions | 14,282,990 | |
Expense reductions | (339,124) | 13,943,866 |
Net investment income (loss) | (3,203,642) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 213,510,138 | |
Foreign currency transactions | 21,161 | |
Capital gain distributions from Fidelity Central Funds | 2,921 | |
Total net realized gain (loss) |
| 213,534,220 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 610,429,976 | |
Assets and liabilities in foreign currencies | 7,747 | |
Total change in net unrealized appreciation (depreciation) |
| 610,437,723 |
Net gain (loss) | 823,971,943 | |
Net increase (decrease) in net assets resulting from operations | $ 820,768,301 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (3,203,642) | $ 3,283,277 |
Net realized gain (loss) | 213,534,220 | (544,028,819) |
Change in net unrealized appreciation (depreciation) | 610,437,723 | (83,891,340) |
Net increase (decrease) in net assets resulting from operations | 820,768,301 | (624,636,882) |
Distributions to shareholders from net investment income | - | (2,183,683) |
Share transactions | 925,056,280 | 334,156,743 |
Reinvestment of distributions | - | 2,090,398 |
Cost of shares redeemed | (524,406,625) | (485,622,379) |
Net increase (decrease) in net assets resulting from share transactions | 400,649,655 | (149,375,238) |
Redemption fees | 102,995 | 69,235 |
Total increase (decrease) in net assets | 1,221,520,951 | (776,126,568) |
|
|
|
Net Assets | ||
Beginning of period | 773,372,624 | 1,549,499,192 |
End of period (including accumulated net investment loss of $260 and undistributed net investment income of $579,532, respectively) | $ 1,994,893,575 | $ 773,372,624 |
Other Information Shares | ||
Sold | 14,932,330 | 5,606,157 |
Issued in reinvestment of distributions | - | 56,186 |
Redeemed | (8,150,557) | (8,076,996) |
Net increase (decrease) | 6,781,773 | (2,414,653) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.12 | $ 66.65 | $ 69.84 | $ 65.24 | $ 57.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.13) | .15 | (.36) F | (.15) | (.27) |
Net realized and unrealized gain (loss) | 35.25 | (29.57) | (2.84) | 4.75 | 7.88 |
Total from investment operations | 35.12 | (29.42) | (3.20) | 4.60 | 7.61 |
Distributions from net investment income | - | (.11) | - | - | - |
Redemption fees added to paid in capital C | - I | - I | .01 | - I | .01 |
Net asset value, end of period | $ 72.24 | $ 37.12 | $ 66.65 | $ 69.84 | $ 65.24 |
Total Return A,B | 94.61% | (44.15)% | (4.57)% | 7.05% | 13.22% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .92% | .90% | .89% | .95% | .99% |
Expenses net of fee waivers, if any | .92% | .90% | .89% | .95% | .99% |
Expenses net of all reductions | .89% | .89% | .88% | .95% | .93% |
Net investment income (loss) | (.21)% | .26% | (.47)% F | (.24)% | (.44)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,994,894 | $ 773,373 | $ 1,549,499 | $ 1,696,389 | $ 1,923,316 |
Portfolio turnover rate E | 127% | 235% | 204% | 113% | 100% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. H For the year ended February 29. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio, and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Each Fund categorizes the inputs to valuation techniques used to value their investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of each Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 Electronics Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, each Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, market discount, net operating losses, non-taxable dividends, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax | Gross | Gross | Net unrealized |
Communications Equipment Portfolio | $ 371,323,693 | $ 36,147,997 | $ (48,161,874) | $ (12,013,877) |
Computers Portfolio | 520,751,652 | 33,716,183 | (52,101,150) | (18,384,967) |
Electronics Portfolio | 1,228,630,437 | 123,048,137 | (233,558,213) | (110,510,076) |
IT Services Portfolio | 107,489,923 | 11,612,767 | (2,445,128) | 9,167,639 |
Software and Computer Services Portfolio | 817,713,220 | 197,177,782 | (11,714,233) | 185,463,549 |
Technology Portfolio | 1,817,840,412 | 321,449,481 | (103,045,873) | 218,403,608 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Capital loss | Net unrealized |
Communications Equipment Portfolio | $ - | $ (387,660,109) | $ (12,013,877) |
Computers Portfolio | - | (275,475,001) | (18,417,169) |
Electronics Portfolio | 1,638,385 | (1,912,166,439) | (110,509,635) |
IT Services Portfolio | - | (8,570,233) | 9,167,639 |
Software and Computer Services Portfolio | - | (83,477,756) | 185,440,901 |
Technology Portfolio | - | (1,100,044,786) | 218,403,645 |
The tax character of distributions paid was as follows:
February 28, 2010 |
|
|
| Ordinary Income | Total |
Communications Equipment Portfolio | $ 937,682 | $ 937,682 |
Electronics Portfolio | 9,751,244 | 9,751,244 |
February 28, 2009 |
|
|
| Ordinary Income | Total |
Communications Equipment Portfolio | $ 497,720 | $ 497,720 |
Electronics Portfolio | 5,135,720 | 5,135,720 |
Technology Portfolio | 2,183,683 | 2,183,683 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Annual Report
Notes to Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Communications Equipment Portfolio | 415,816,056 | 432,703,364 |
Computers Portfolio | 1,143,729,471 | 1,067,162,386 |
Electronics Portfolio | 718,858,204 | 664,594,240 |
IT Services Portfolio | 119,577,849 | 99,582,488 |
Software and Computer Services Portfolio | 671,190,193 | 420,463,546 |
Technology Portfolio | 2,339,995,789 | 1,933,486,662 |
The Communications Equipment Portfolio realized a loss on the sale of an investment not meeting the investment restrictions of the Fund. The loss was fully reimbursed by the Fund's investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Communications Equipment Portfolio | .30% | .26% | .56% |
Computers Portfolio | .30% | .26% | .56% |
Electronics Portfolio | .30% | .26% | .56% |
IT Services Portfolio | .30% | .26% | .56% |
Software and Computer Services Portfolio | .30% | .26% | .56% |
Technology Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .33% |
|
Computers Portfolio | .31% |
|
Electronics Portfolio | .30% |
|
IT Services Portfolio | .29% |
|
Software and Computer Services Portfolio | .27% |
|
Technology Portfolio | .29% |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Communications Equipment Portfolio | $ 10,041 |
Computers Portfolio | 12,132 |
Electronics Portfolio | 43,027 |
IT Services Portfolio | 6,772 |
Software and Computer Services Portfolio | 11,943 |
Technology Portfolio | 37,189 |
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily | Weighted Average | Interest |
Communications Equipment Portfolio | Borrower | $ 3,877,333 | .44% | $ 1,136 |
Computers Portfolio | Borrower | $ 5,942,000 | .36% | $ 119 |
Electronics Portfolio | Borrower | $ 4,034,000 | .38% | $ 213 |
Software and Computer Services Portfolio | Borrower | $ 8,132,000 | .38% | $ 87 |
Technology Portfolio | Borrower | $ 10,108,846 | .37% | $ 2,713 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 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 is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Communications Equipment Portfolio | $ 1,044 |
Computers Portfolio | 1,376 |
Electronics Portfolio | 3,274 |
IT Services Portfolio | 254 |
Software and Computer Services Portfolio | 2,551 |
Technology Portfolio | 5,128 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Daily | Weighted Average | Interest |
Communications Equipment Portfolio | $ 3,430,250 | .66% | $ 250 |
Annual Report
Notes to Financial Statements - continued
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. All of the applicable expense reductions are noted in the table below.
| Brokerage |
Communications Equipment Portfolio | $ 52,902 |
Computers Portfolio | 121,283 |
Electronics Portfolio | 63,502 |
IT Services Portfolio | 1,679 |
Software and Computer Services Portfolio | 22,962 |
Technology Portfolio | 339,124 |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, PAS U.S. Opportunity Fidelity Fund of Funds was the owner of record of approximately 12% of the total outstanding shares of IT Services Portfolio.
12. Merger Information.
On June 19, 2009, the Communications Equipment Portfolio acquired all of the assets and assumed all of the liabilities of the Networking and Infrastructure Portfolio pursuant to an agreement and plan of reorganization approved by the Board of Trustees ("The Board") on November 18, 2008. The reorganization provides shareholders access to a larger portfolio with better historical performance and lower expenses. The acquisition was accomplished by an exchange of 3,975,162 shares of Communications Equipment Portfolio, for 35,599,072 shares then outstanding (valued at $1.87) of Networking and Infrastructure Portfolio. 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. Networking and Infrastructure Portfolio's net assets, including securities of $66,819,352, unrealized depreciation of $4,096,065, and net other liabilities of $235,381 were combined with Communications Equipment Portfolio's net assets of $279,957,975 for total net assets after the acquisition of $346,541,946.
Pro forma results of operations of the combined entity for the entire year ended February 28, 2010, 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) | $ (944,355) |
Total net realized gain (loss) | $ 55,930,441 |
Total change in net unrealized appreciation (depreciation) | $ 121,087,210 |
Net increase (decrease) in net assets resulting from operations | $ 176,073,296 |
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 Fund's accompanying Statement of Operations since June 19, 2009.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 16, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010- |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of the North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
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 2009 | December 2009 |
Communications Equipment Portfolio | - | 100% |
Electronics Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2009 | December 2009 |
Communications Equipment Portfolio | - | 100% |
Electronics Portfolio | 100% | 100% |
The funds will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
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Fidelity®
Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Note to shareholders | An explanation of the changes to the fund. | |
Telecommunications Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Wireless Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Telecommunications Portfolio | 42.43% | 2.86% | -7.76% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio on February 29, 2000. 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.
Annual Report
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Kristina Salen, Portfolio Manager of Select Telecommunications Portfolio: The fund's Retail Class shares returned 42.43% for the 12-month period ending February 28, 2010, handily beating the 18.67% return of the MSCI® U.S. IM Telecommunications Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but underperforming the S&P 500. Versus the MSCI index, the fund benefited from being well-positioned in smaller-cap companies that performed strongly when the market rallied between March and June 2009. Most notably, the fund was helped by an out-of-benchmark stake and strong stock selection in the cable and satellite group, especially U.K.-based Virgin Media. An early-period overweighting in wireless telecom services company Sprint Nextel also helped. In addition, the fund got a boost from being significantly underweighted in the integrated telecom services group, specifically in AT&T and Verizon Communications, which grew at a much lower rate than other telecom subsectors. AT&T and Verizon made up almost three-quarters of the MSCI index during the period. In addition, the fund benefited from holding an out-of-index position in Gameloft, a French company and dominant player in mobile gaming. Conversely, performance was hampered by unfavorable positioning in a few stocks. Specifically, it was hurt by holding an underweighted position in CenturyTel, a rural integrated telecom services provider that did well during the market rally and benefited from acquiring Embarq, another rural phone company, in the summer. British wireless telecom giant Vodafone Group also disappointed during the rally when large, liquid stocks fell out of favor as people invested in smaller, more growth-oriented names. Underweighting Level 3 Communications also dragged down performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.24% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,078.40 | $ 6.39 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,076.60 | $ 7.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.30 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.20 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Telecommunications | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,079.70 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,080.50 | $ 4.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 13.0 | 23.5 |
Verizon Communications, Inc. | 12.9 | 17.4 |
Sprint Nextel Corp. | 6.3 | 4.7 |
American Tower Corp. Class A | 6.3 | 4.8 |
Crown Castle International Corp. | 5.9 | 2.5 |
Qwest Communications International, Inc. | 5.2 | 3.0 |
SBA Communications Corp. Class A | 3.9 | 1.4 |
NII Holdings, Inc. | 3.7 | 1.6 |
tw telecom, inc. | 2.9 | 2.7 |
CenturyTel, Inc. | 2.5 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Diversified Telecommunication Services | 48.5% |
|
![]() | Wireless Telecommunication Services | 36.5% |
|
![]() | Media | 9.4% |
|
![]() | Software | 1.0% |
|
![]() | Communications Equipment | 0.3% |
|
![]() | All Others* | 4.3% |
|
As of August 31, 2009 | |||
![]() | Diversified Telecommunication Services | 61.9% |
|
![]() | Wireless Telecommunication Services | 23.7% |
|
![]() | Media | 9.3% |
|
![]() | Communications Equipment | 2.1% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 95.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.3% | |||
Communications Equipment - 0.3% | |||
Aruba Networks, Inc. (a) | 392 | $ 4,598 | |
F5 Networks, Inc. (a) | 1,600 | 89,280 | |
Infinera Corp. (a)(c) | 75,300 | 570,774 | |
Juniper Networks, Inc. (a) | 2,100 | 58,758 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 1,700 | 44,387 | |
Sandvine Corp. (a) | 3,200 | 4,927 | |
Sonus Networks, Inc. (a) | 56,800 | 120,984 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 6,006 | |
| 899,714 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 3,695 | |
NetApp, Inc. (a) | 700 | 21,007 | |
Synaptics, Inc. (a) | 450 | 12,015 | |
| 36,717 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 48.5% | |||
Alternative Carriers - 5.7% | |||
Cable & Wireless PLC | 19,405 | 40,367 | |
Cogent Communications Group, Inc. (a) | 64,802 | 637,652 | |
Global Crossing Ltd. (a) | 280,586 | 3,998,351 | |
Iliad Group SA (c) | 26,973 | 2,856,740 | |
Level 3 Communications, Inc. (a)(c) | 7,976 | 12,682 | |
PAETEC Holding Corp. (a) | 73,600 | 291,456 | |
tw telecom, inc. (a) | 532,857 | 8,467,098 | |
| 16,304,346 | ||
Integrated Telecommunication Services - 42.8% | |||
AT&T, Inc. | 1,514,019 | 37,562,805 | |
BT Group PLC | 5,351 | 9,386 | |
Cbeyond, Inc. (a)(c) | 165,098 | 2,047,215 | |
CenturyTel, Inc. | 210,190 | 7,203,211 | |
China Telecom Corp. Ltd. sponsored ADR | 50,600 | 2,226,906 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 317,800 | 3,867,626 | |
Cincinnati Bell, Inc. (a) | 225,000 | 666,000 | |
Deutsche Telekom AG (Reg.) | 92,923 | 1,196,848 | |
FairPoint Communications, Inc. (a) | 34,149 | 905 | |
Frontier Communications Corp. (c) | 366,900 | 2,858,151 | |
Hellenic Telecommunications Organization SA | 163 | 1,900 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,375,400 | 3,001,167 | |
Qwest Communications International, Inc. | 3,263,989 | 14,883,790 | |
Telecom Italia SpA sponsored ADR | 226 | 3,214 | |
Telefonica SA | 400 | 9,379 | |
Telefonica SA sponsored ADR | 85,300 | 5,986,354 | |
Telenor ASA (a) | 4,400 | 55,615 | |
Telenor ASA sponsored ADR (a) | 53,300 | 2,025,400 | |
Telkom SA Ltd. | 4,400 | 19,116 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 1,292,624 | $ 37,395,612 | |
Vimpel Communications sponsored ADR | 109,000 | 2,021,950 | |
Windstream Corp. | 73,415 | 743,694 | |
| 123,786,244 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 140,090,590 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 14,510 | |
INTERNET SOFTWARE & SERVICES - 0.2% | |||
Internet Software & Services - 0.2% | |||
Google, Inc. Class A (a) | 90 | 47,412 | |
SAVVIS, Inc. | 26,799 | 377,598 | |
| 425,010 | ||
MEDIA - 9.4% | |||
Broadcasting - 0.8% | |||
Ten Network Holdings Ltd. (a) | 1,539,470 | 2,392,664 | |
Cable & Satellite - 8.4% | |||
Cablevision Systems Corp. - NY Group Class A | 170,900 | 4,115,272 | |
Comcast Corp. Class A | 299,600 | 4,925,424 | |
DIRECTV (a) | 128,909 | 4,363,570 | |
Dish TV India Ltd. (a) | 5,888 | 4,744 | |
Liberty Global, Inc. Class A (a)(c) | 153,200 | 4,118,016 | |
Net Servicos de Comunicacao SA sponsored ADR (c) | 191,500 | 2,357,365 | |
Virgin Media, Inc. | 270,000 | 4,374,000 | |
| 24,258,391 | ||
Movies & Entertainment - 0.2% | |||
Madison Square Garden, Inc. Class A (a) | 22,925 | 447,038 | |
TOTAL MEDIA | 27,098,093 | ||
SOFTWARE - 1.0% | |||
Application Software - 1.0% | |||
Gameloft (a) | 648,786 | 2,791,298 | |
Nuance Communications, Inc. (a) | 800 | 11,512 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 102,075 | |
| 2,904,885 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 113,614 | 104,525 | |
TOTAL SOFTWARE | 3,009,410 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.5% | |||
Wireless Telecommunication Services - 36.5% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 13,371 | |
American Tower Corp. Class A (a) | 424,700 | 18,117,702 | |
Axiata Group Bhd | 1,126,600 | 1,234,948 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
China Mobile (Hong Kong) Ltd. sponsored ADR | 42,100 | $ 2,081,003 | |
Clearwire Corp.: | |||
rights 6/21/10 (a)(c) | 1,029,741 | 298,625 | |
Class A (a)(c) | 1,029,741 | 6,549,153 | |
Crown Castle International Corp. (a) | 449,983 | 17,009,357 | |
Idea Cellular Ltd. (a) | 3,710 | 4,917 | |
Leap Wireless International, Inc. (a)(c) | 364,158 | 5,196,535 | |
MetroPCS Communications, Inc. (a) | 400 | 2,468 | |
Millicom International Cellular SA | 19,400 | 1,643,956 | |
MTN Group Ltd. | 478,225 | 6,929,541 | |
NII Holdings, Inc. (a) | 289,300 | 10,825,606 | |
NTELOS Holdings Corp. | 632 | 10,795 | |
PT Indosat Tbk | 1,600 | 874 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 72,487 | |
SBA Communications Corp. Class A (a) | 317,382 | 11,222,628 | |
Sprint Nextel Corp. (a) | 5,503,750 | 18,327,488 | |
Syniverse Holdings, Inc. (a) | 30,468 | 512,472 | |
Telephone & Data Systems, Inc. | 15,045 | 469,554 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 53,700 | 1,524,543 | |
Vivo Participacoes SA sponsored ADR | 75,225 | 2,035,589 | |
Vodafone Group PLC sponsored ADR | 66,400 | 1,445,528 | |
| 105,529,140 | ||
TOTAL COMMON STOCKS (Cost $314,829,544) | 277,103,184 | ||
Money Market Funds - 11.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 11,655,757 | $ 11,655,757 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 21,925,413 | 21,925,413 | |
TOTAL MONEY MARKET FUNDS (Cost $33,581,170) | 33,581,170 |
TOTAL INVESTMENT PORTFOLIO - 107.5% (Cost $348,410,714) | 310,684,354 |
NET OTHER ASSETS - (7.5)% | (21,692,974) | ||
NET ASSETS - 100% | $ 288,991,380 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,187 |
Fidelity Securities Lending Cash Central Fund | 147,071 |
Total | $ 169,258 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 277,103,184 | $ 275,887,571 | $ 1,215,613 | $ - |
Money Market Funds | 33,581,170 | 33,581,170 | - | - |
Total Investments in Securities: | $ 310,684,354 | $ 309,468,741 | $ 1,215,613 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (666) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 666 |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ (666) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.2% |
South Africa | 2.4% |
Spain | 2.1% |
Hong Kong | 2.0% |
Brazil | 2.0% |
France | 2.0% |
Bermuda | 1.4% |
Indonesia | 1.0% |
Others (individually less than 1%) | 4.9% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $238,175,641 of which $161,866,685, $11,764,473, $52,002,796 and $12,541,687 will expire on February 28, 2011, 2012, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,670,597) - See accompanying schedule: Unaffiliated issuers (cost $314,829,544) | $ 277,103,184 |
|
Fidelity Central Funds (cost $33,581,170) | 33,581,170 |
|
Total Investments (cost $348,410,714) |
| $ 310,684,354 |
Receivable for fund shares sold | 209,095 | |
Dividends receivable | 273,897 | |
Distributions receivable from Fidelity Central Funds | 11,455 | |
Prepaid expenses | 911 | |
Other receivables | 83,241 | |
Total assets | 311,262,953 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 92,136 | |
Accrued management fee | 130,795 | |
Distribution fees payable | 3,919 | |
Other affiliated payables | 84,912 | |
Other payables and accrued expenses | 34,398 | |
Collateral on securities loaned, at value | 21,925,413 | |
Total liabilities | 22,271,573 | |
|
|
|
Net Assets | $ 288,991,380 | |
Net Assets consist of: |
| |
Paid in capital | $ 570,869,864 | |
Undistributed net investment income | 1,935,664 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (246,075,965) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (37,738,183) | |
Net Assets | $ 288,991,380 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 37.64 | |
|
|
|
Maximum offering price per share (100/94.25 of $37.64) | $ 39.94 | |
|
|
|
Class T: | $ 37.55 | |
|
|
|
Maximum offering price per share (100/96.50 of $37.55) | $ 38.91 | |
|
|
|
Class B: | $ 37.60 | |
|
|
|
Class C: | $ 37.61 | |
|
|
|
Telecommunications: | $ 37.73 | |
|
|
|
Institutional Class: | $ 37.69 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,611,898 |
Income from Fidelity Central Funds (including $147,071 from security lending) |
| 169,258 |
Total income |
| 8,781,156 |
|
|
|
Expenses | ||
Management fee | $ 1,575,725 | |
Transfer agent fees | 937,080 | |
Distribution fees | 40,496 | |
Accounting and security lending fees | 113,619 | |
Custodian fees and expenses | 17,680 | |
Independent trustees' compensation | 1,966 | |
Registration fees | 76,311 | |
Audit | 50,145 | |
Legal | 5,426 | |
Interest | 157 | |
Miscellaneous | 4,318 | |
Total expenses before reductions | 2,822,923 | |
Expense reductions | (38,062) | 2,784,861 |
Net investment income (loss) | 5,996,295 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,404,701 | |
Foreign currency transactions | 7,671 | |
Capital gain distributions from Fidelity Central Funds | 1,225 | |
Total net realized gain (loss) |
| 5,413,597 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 79,570,497 | |
Assets and liabilities in foreign currencies | 1,940 | |
Total change in net unrealized appreciation (depreciation) |
| 79,572,437 |
Net gain (loss) | 84,986,034 | |
Net increase (decrease) in net assets resulting from operations | $ 90,982,329 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,996,295 | $ 2,191,887 |
Net realized gain (loss) | 5,413,597 | (72,731,263) |
Change in net unrealized appreciation (depreciation) | 79,572,437 | (37,714,452) |
Net increase (decrease) in net assets resulting from operations | 90,982,329 | (108,253,828) |
Distributions to shareholders from net investment income | (2,355,415) | (2,892,731) |
Distributions to shareholders from net realized gain | (402,567) | (1,435,678) |
Total distributions | (2,757,982) | (4,328,409) |
Share transactions - net increase (decrease) | 989,027 | (28,183,681) |
Redemption fees | 12,272 | 6,604 |
Total increase (decrease) in net assets | 89,225,646 | (140,759,314) |
|
|
|
Net Assets | ||
Beginning of period | 199,765,734 | 340,525,048 |
End of period (including undistributed net investment income of $1,935,664 and distributions in excess of net investment income of $1,700,123, respectively) | $ 288,991,380 | $ 199,765,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.19) | (.35) M | (.51) | - |
Distributions from net realized gain | (.05) | (.18) M | - | - |
Total distributions | (.24) N | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.22) | (.24) M | (.42) | - |
Distributions from net realized gain | (.03) | (.13) M | - | - |
Total distributions | (.24) N | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.04) | (.11) M | (.20) | - |
Distributions from net realized gain | (.01) | (.06) M | - | - |
Total distributions | (.05) N | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications due to book to tax differences. N Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.10) | (.07) M | (.22) | - |
Distributions from net realized gain | (.02) | (.05) M | - | - |
Total distributions | (.12) N | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .76 | .30 | .43 | .61 F | .36 |
Net realized and unrealized gain (loss) | 10.59 | (15.65) | (8.12) | 8.85 | 7.11 |
Total from investment operations | 11.35 | (15.35) | (7.69) | 9.46 | 7.47 |
Distributions from net investment income | (.31) | (.41) K | (.52) | (.53) | (.33) |
Distributions from net realized gain | (.05) | (.20) K | - | - | - |
Total distributions | (.36) L | (.61) J | (.52) | (.53) | (.33) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Total Return A, B | 42.43% | (36.00)% | (15.30)% | 22.69% | 21.54% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .99% | .97% | .91% | .99% | 1.05% |
Expenses net of fee waivers, if any | .99% | .97% | .90% | .97% | 1.05% |
Expenses net of all reductions | .98% | .96% | .90% | .97% | .96% |
Net investment income (loss) | 2.15% | .85% | .79% | 1.34% F | .96% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 |
Portfolio turnover rate E | 90% | 168% | 134% | 162% | 148% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.11 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.09%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. K The amount shown reflects certain reclassifications related to book to tax differences. L Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.38) | (.40) L | (.62) | - |
Distributions from net realized gain | (.05) | (.20) L | - | - |
Total distributions | (.43) M | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - |
Net asset value, end of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. M Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 per share and distributions from net realized gain of $.051 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory and political uncertainties, and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 22,492,418 |
Gross unrealized depreciation | (66,549,245) |
Net unrealized appreciation (depreciation) | $ (44,056,827) |
|
|
Tax Cost | $ 354,741,181 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,935,859 |
Capital loss carryforward | $ (238,175,641) |
Net unrealized appreciation (depreciation) | $ (44,068,650) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 2,757,982 | $ 4,328,409 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $245,737,983 and $242,388,135, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 8,842 | $ 348 |
Class T | .25% | .25% | 7,956 | 10 |
Class B | .75% | .25% | 6,292 | 4,720 |
Class C | .75% | .25% | 17,406 | 6,228 |
|
|
| $ 40,496 | $ 11,306 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 7,518 |
Class T | 1,778 |
Class B* | 3,551 |
Class C* | 587 |
| $ 13,434 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 12,356 | .35 |
Class T | 6,117 | .39 |
Class B | 2,209 | .35 |
Class C | 6,068 | .35 |
Telecommunications | 908,946 | .33 |
Institutional Class | 1,384 | .20 |
| $ 937,080 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $546 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 6,365,000 | .44% | $ 157 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $38,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $61.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 15,094 | $ 25,664 |
Class T | 11,817 | 8,592 |
Class B | 821 | 2,117 |
Class C | 5,697 | 1,365 |
Telecommunications | 2,311,098 | 4,183,665 |
Institutional Class | 10,888 | 1,823 |
Total | $ 2,355,415 | $ 4,223,226 |
From net realized gain |
|
|
Class A | $ 4,245 | $ 735 |
Class T | 827 | 357 |
Class B | 139 | 203 |
Class C | 504 | 204 |
Telecommunications | 396,621 | 103,644 |
Institutional Class | 231 | 40 |
Total | $ 402,567 | $ 105,183 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 88,778 | 74,621 | $ 3,085,616 | $ 2,094,308 |
Reinvestment of distributions | 476 | 895 | 17,722 | 24,776 |
Shares redeemed | (79,650) | (61,881) | (2,900,645) | (2,346,705) |
Net increase (decrease) | 9,604 | 13,635 | $ 202,693 | $ (227,621) |
Class T |
|
|
|
|
Shares sold | 45,905 | 9,634 | $ 1,589,430 | $ 334,058 |
Reinvestment of distributions | 314 | 320 | 12,167 | 8,637 |
Shares redeemed | (14,845) | (16,594) | (532,433) | (641,649) |
Net increase (decrease) | 31,374 | (6,640) | $ 1,069,164 | $ (298,954) |
Class B |
|
|
|
|
Shares sold | 15,431 | 4,801 | $ 522,557 | $ 166,647 |
Reinvestment of distributions | 22 | 82 | 836 | 2,207 |
Shares redeemed | (11,987) | (8,780) | (408,765) | (330,007) |
Net increase (decrease) | 3,466 | (3,897) | $ 114,628 | $ (161,153) |
Class C |
|
|
|
|
Shares sold | 62,598 | 5,551 | $ 2,159,620 | $ 174,242 |
Reinvestment of distributions | 129 | 51 | 5,000 | 1,354 |
Shares redeemed | (19,418) | (12,987) | (702,765) | (456,301) |
Net increase (decrease) | 43,309 | (7,385) | $ 1,461,855 | $ (280,705) |
Telecommunications |
|
|
|
|
Shares sold | 3,331,732 | 1,724,964 | $ 111,276,252 | $ 54,824,085 |
Reinvestment of distributions | 68,653 | 146,701 | 2,606,513 | 4,105,779 |
Shares redeemed | (3,325,834) | (2,367,928) | (116,676,048) | (86,013,313) |
Net increase (decrease) | 74,551 | (496,263) | $ (2,793,283) | $ (27,083,449) |
Institutional Class |
|
|
|
|
Shares sold | 35,372 | 477 | $ 1,243,451 | $ 15,601 |
Reinvestment of distributions | 37 | 51 | 1,435 | 1,477 |
Shares redeemed | (8,744) | (3,964) | (310,916) | (148,877) |
Net increase (decrease) | 26,665 | (3,436) | $ 933,970 | $ (131,799) |
Annual Report
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Life of |
Wireless Portfolio | 47.06% | 5.01% | -3.31% |
A From September 21, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on September 21, 2000, when the fund started. 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.
Annual Report
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Gavin Baker and Kyle Weaver, Lead Portfolio Manager and Co-Portfolio Manager, respectively, of Select Wireless Portfolio: Select Wireless Portfolio returned 47.06% for the 12-month period ending February 28, 2010, trailing the S&P 500 but outperforming the 35.81% gain of the S&P® Custom Wireless Index, which was adopted in December 2009 as a better representation of the fund's investment universe. The fund performed strongly versus its industry benchmark because it was well-positioned when the market started rebounding in March 2009 and as it continued to do relatively well for the rest of the period. The fund was overweighted and held out-of-index positions in a number of highly leveraged, smaller-cap companies that were strong performers during this time. The best-performing of these holdings was French application software company Gameloft, a dominant player in mobile gaming. Semiconductor company NVIDIA also performed well for the fund, as did Starent Networks, which was tied to the fast-growing mobile data trend and was acquired by Cisco Systems during the period. All three companies were out-of-index positions. The fund also benefited from holding underweighted stakes in wireless telecom services providers MetroPCS Communications and China Mobile, both of which underperformed. In general, the fund benefited from foreign holdings, bolstered in part by a weaker dollar. Conversely, the fund's performance was hampered by a small cash position and some weak stock picks. Specifically, it was hurt by untimely ownership of Motorola, being underweighted when the stock did well and overweighted when it did poorly. Another decision that detracted was overweighting poor-performing Leap Wireless. Emerging-markets play Orascom Telecom, in which the fund held an out-of-benchmark position, also dragged down performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .94% | $ 1,000.00 | $ 1,075.70 | $ 4.84 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Wireless Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Vodafone Group PLC sponsored ADR | 12.0 | 5.8 |
Sprint Nextel Corp. | 6.8 | 7.8 |
NII Holdings, Inc. | 6.3 | 1.8 |
Research In Motion Ltd. | 6.1 | 4.9 |
QUALCOMM, Inc. | 5.7 | 6.5 |
China Mobile (Hong Kong) Ltd. sponsored ADR | 4.7 | 0.0 |
China Unicom (Hong Kong) Ltd. sponsored ADR | 4.4 | 8.2 |
American Tower Corp. Class A | 4.4 | 4.8 |
Verizon Communications, Inc. | 4.2 | 4.6 |
Telefonica SA sponsored ADR | 4.1 | 0.7 |
| 58.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Wireless Telecommunication Services | 52.3% |
|
![]() | Communications Equipment | 20.6% |
|
![]() | Diversified Telecommunication Services | 12.9% |
|
![]() | Semiconductors & Semiconductor Equipment | 7.7% |
|
![]() | Software | 2.3% |
|
![]() | All Others* | 4.2% |
|
As of August 31, 2009 | |||
![]() | Wireless Telecommunication Services | 37.5% |
|
![]() | Communications Equipment | 29.0% |
|
![]() | Diversified Telecommunication Services | 21.5% |
|
![]() | Software | 5.4% |
|
![]() | Computers & Peripherals | 2.6% |
|
![]() | All Others* | 4.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Wireless Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 20.6% | |||
Communications Equipment - 20.6% | |||
Airvana, Inc. (a) | 102,600 | $ 782,838 | |
Aruba Networks, Inc. (a) | 75,484 | 885,427 | |
Aviat Networks, Inc. (a) | 10,532 | 64,772 | |
Harris Corp. | 100,300 | 4,535,566 | |
Motorola, Inc. (a) | 420,680 | 2,843,797 | |
Nokia Corp. sponsored ADR | 372,200 | 5,013,534 | |
Palm, Inc. (a)(c) | 257,555 | 1,571,086 | |
Powerwave Technologies, Inc. (a) | 24,600 | 28,782 | |
QUALCOMM, Inc. | 469,650 | 17,231,459 | |
Research In Motion Ltd. (a) | 264,300 | 18,733,584 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (c) | 303,000 | 3,033,030 | |
ViaSat, Inc. (a) | 165,200 | 5,022,080 | |
ZTE Corp. (H Shares) (c) | 498,820 | 3,084,610 | |
| 62,830,565 | ||
COMPUTERS & PERIPHERALS - 2.2% | |||
Computer Hardware - 2.1% | |||
Apple, Inc. (a) | 30,400 | 6,220,448 | |
Computer Storage & Peripherals - 0.1% | |||
Synaptics, Inc. (a) | 15,800 | 421,860 | |
TOTAL COMPUTERS & PERIPHERALS | 6,642,308 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 12.9% | |||
Alternative Carriers - 0.0% | |||
Neutral Tandem, Inc. (a) | 1,900 | 30,628 | |
Integrated Telecommunication Services - 12.9% | |||
China Unicom (Hong Kong) Ltd. sponsored ADR | 1,109,500 | 13,502,615 | |
Deutsche Telekom AG (Reg.) | 100 | 1,288 | |
PT Telkomunikasi Indonesia Tbk Series B | 448,000 | 398,330 | |
Telefonica SA sponsored ADR (c) | 177,000 | 12,421,860 | |
Telenor ASA (a) | 1,000 | 12,640 | |
Telkom SA Ltd. | 6,400 | 27,804 | |
Verizon Communications, Inc. | 442,300 | 12,795,739 | |
| 39,160,276 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 39,190,904 | ||
ELECTRICAL EQUIPMENT - 1.1% | |||
Electrical Components & Equipment - 1.1% | |||
Fushi Copperweld, Inc. (a) | 364,900 | 3,331,537 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Components - 0.0% | |||
Prime View International Co. Ltd. sponsored GDR (a)(d) | 2,700 | 53,119 | |
INTERNET SOFTWARE & SERVICES - 0.0% | |||
Internet Software & Services - 0.0% | |||
Openwave Systems, Inc. (a) | 15,641 | 40,510 | |
| |||
Shares | Value | ||
IT SERVICES - 0.6% | |||
IT Consulting & Other Services - 0.6% | |||
Integral Systems, Inc. (a) | 199,600 | $ 1,708,576 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.7% | |||
Semiconductors - 7.7% | |||
Atheros Communications, Inc. (a) | 93,400 | 3,352,126 | |
Avago Technologies Ltd. | 88,500 | 1,606,275 | |
Cree, Inc. (a) | 11,500 | 780,045 | |
Himax Technologies, Inc. sponsored ADR | 51,600 | 151,188 | |
Marvell Technology Group Ltd. (a) | 159,800 | 3,087,336 | |
NVIDIA Corp. (a) | 581,300 | 9,417,060 | |
RF Micro Devices, Inc. (a) | 771,700 | 3,248,857 | |
Skyworks Solutions, Inc. (a) | 120,200 | 1,835,454 | |
| 23,478,341 | ||
SOFTWARE - 2.3% | |||
Application Software - 2.3% | |||
Gameloft (a) | 1,650,862 | 7,102,570 | |
Smith Micro Software, Inc. (a) | 3,900 | 34,164 | |
| 7,136,734 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 28,623 | 26,333 | |
TOTAL SOFTWARE | 7,163,067 | ||
WIRELESS TELECOMMUNICATION SERVICES - 52.3% | |||
Wireless Telecommunication Services - 52.3% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 17,828 | |
American Tower Corp. Class A (a) | 313,892 | 13,390,633 | |
China Mobile (Hong Kong) Ltd. sponsored ADR (c) | 291,500 | 14,408,845 | |
Clearwire Corp.: | |||
rights 6/21/10 (a)(c) | 1,097,800 | 318,362 | |
Class A (a)(c) | 952,000 | 6,054,720 | |
Crown Castle International Corp. (a) | 199,000 | 7,522,200 | |
Idea Cellular Ltd. (a) | 81,905 | 108,543 | |
KDDI Corp. | 6 | 32,018 | |
Leap Wireless International, Inc. (a)(c) | 311,250 | 4,441,538 | |
Millicom International Cellular SA | 143,700 | 12,177,138 | |
NII Holdings, Inc. (a) | 516,500 | 19,327,430 | |
NTELOS Holdings Corp. | 75,500 | 1,289,540 | |
NTT DoCoMo, Inc. | 2,501 | 3,863,285 | |
Orascom Telecom Holding SAE GDR | 361,620 | 1,923,818 | |
PT Indosat Tbk | 2,700 | 1,475 | |
SBA Communications Corp. Class A (a) | 227,000 | 8,026,720 | |
SOFTBANK CORP. | 7,300 | 191,242 | |
Sprint Nextel Corp. (a) | 6,263,031 | 20,855,893 | |
Syniverse Holdings, Inc. (a) | 119,500 | 2,009,990 | |
Telephone & Data Systems, Inc. | 72,627 | 2,266,689 | |
U.S. Cellular Corp. (a) | 39,800 | 1,457,874 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Vivo Participacoes SA sponsored ADR | 119,050 | $ 3,221,493 | |
Vodafone Group PLC sponsored ADR | 1,678,600 | 36,543,122 | |
| 159,450,396 | ||
TOTAL COMMON STOCKS (Cost $324,436,938) | 303,889,323 | ||
Money Market Funds - 7.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (e) | 750,752 | 750,752 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 22,679,088 | 22,679,088 | |
TOTAL MONEY MARKET FUNDS (Cost $23,429,840) | 23,429,840 |
TOTAL INVESTMENT PORTFOLIO - 107.4% (Cost $347,866,778) | 327,319,163 |
NET OTHER ASSETS - (7.4)% | (22,423,552) | ||
NET ASSETS - 100% | $ 304,895,611 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $53,119 or 0.0% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 28,086 |
Fidelity Securities Lending Cash Central Fund | 383,786 |
Total | $ 411,872 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 303,889,323 | $ 298,100,932 | $ 5,788,391 | $ - |
Money Market Funds | 23,429,840 | 23,429,840 | - | - |
Total Investments in Securities: | $ 327,319,163 | $ 321,530,772 | $ 5,788,391 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 54.0% |
United Kingdom | 12.0% |
Hong Kong | 9.1% |
Canada | 6.1% |
Spain | 4.1% |
Luxembourg | 4.0% |
France | 2.3% |
Finland | 1.6% |
Japan | 1.4% |
Brazil | 1.1% |
Bermuda | 1.0% |
China | 1.0% |
Sweden | 1.0% |
Others (individually less than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $26,624,026 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $21,394,711) - See accompanying schedule: Unaffiliated issuers (cost $324,436,938) | $ 303,889,323 |
|
Fidelity Central Funds (cost $23,429,840) | 23,429,840 |
|
Total Investments (cost $347,866,778) |
| $ 327,319,163 |
Receivable for investments sold | 590,994 | |
Receivable for fund shares sold | 126,935 | |
Dividends receivable | 115,873 | |
Distributions receivable from Fidelity Central Funds | 16,450 | |
Prepaid expenses | 1,224 | |
Other receivables | 34,531 | |
Total assets | 328,205,170 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 358,196 | |
Accrued management fee | 142,437 | |
Other affiliated payables | 94,086 | |
Other payables and accrued expenses | 35,752 | |
Collateral on securities loaned, at value | 22,679,088 | |
Total liabilities | 23,309,559 | |
|
|
|
Net Assets | $ 304,895,611 | |
Net Assets consist of: |
| |
Paid in capital | $ 360,381,492 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (34,935,855) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (20,550,026) | |
Net Assets, for 47,154,578 shares outstanding | $ 304,895,611 | |
Net Asset Value, offering price and redemption price per share ($304,895,611 ÷ 47,154,578 shares) | $ 6.47 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,789,697 |
Interest |
| 284 |
Income from Fidelity Central Funds (including $383,786 from security lending) |
| 411,872 |
Total income |
| 6,201,853 |
|
|
|
Expenses | ||
Management fee | $ 1,893,749 | |
Transfer agent fees | 1,088,662 | |
Accounting and security lending fees | 139,222 | |
Custodian fees and expenses | 33,097 | |
Independent trustees' compensation | 2,188 | |
Registration fees | 39,613 | |
Audit | 51,391 | |
Legal | 1,629 | |
Interest | 400 | |
Miscellaneous | 5,117 | |
Total expenses before reductions | 3,255,068 | |
Expense reductions | (94,149) | 3,160,919 |
Net investment income (loss) | 3,040,934 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 53,300,720 | |
Other affiliated issuers | (2,214,595) |
|
Foreign currency transactions | (8,237) | |
Capital gain distributions from Fidelity Central Funds | 2,322 | |
Total net realized gain (loss) |
| 51,080,210 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,892,004 | |
Assets and liabilities in foreign currencies | (2,450) | |
Total change in net unrealized appreciation (depreciation) |
| 56,889,554 |
Net gain (loss) | 107,969,764 | |
Net increase (decrease) in net assets resulting from operations | $ 111,010,698 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,040,934 | $ 2,385,843 |
Net realized gain (loss) | 51,080,210 | (54,284,168) |
Change in net unrealized appreciation (depreciation) | 56,889,554 | (70,651,848) |
Net increase (decrease) in net assets resulting from operations | 111,010,698 | (122,550,173) |
Distributions to shareholders from net investment income | (3,156,705) | (2,419,895) |
Share transactions | 237,928,725 | 54,809,550 |
Reinvestment of distributions | 3,059,703 | 2,321,962 |
Cost of shares redeemed | (225,090,166) | (185,981,995) |
Net increase (decrease) in net assets resulting from share transactions | 15,898,262 | (128,850,483) |
Redemption fees | 29,313 | 18,968 |
Total increase (decrease) in net assets | 123,781,568 | (253,801,583) |
|
|
|
Net Assets | ||
Beginning of period | 181,114,043 | 434,915,626 |
End of period | $ 304,895,611 | $ 181,114,043 |
Other Information Shares | ||
Sold | 41,992,382 | 9,268,630 |
Issued in reinvestment of distributions | 468,561 | 570,468 |
Redeemed | (36,067,880) | (29,194,679) |
Net increase (decrease) | 6,393,063 | (19,355,581) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 4.44 | $ 7.23 | $ 7.13 | $ 7.20 | $ 5.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .05 | .03 F | .05 G | - J |
Net realized and unrealized gain (loss) | 2.03 | (2.78) | .36 | .32 | 1.51 |
Total from investment operations | 2.09 | (2.73) | .39 | .37 | 1.51 |
Distributions from net investment income | (.06) | (.06) | (.03) | - | - |
Distributions from net realized gain | - | - | (.26) | (.44) | - |
Total distributions | (.06) | (.06) | (.29) | (.44) | - |
Redemption fees added to paid in capital C, J | - | - | - | - | - |
Net asset value, end of period | $ 6.47 | $ 4.44 | $ 7.23 | $ 7.13 | $ 7.20 |
Total Return A, B | 47.06% | (37.68)% | 4.71% | 5.16% | 26.54% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .96% | .95% | .91% | .97% | 1.00% |
Expenses net of fee waivers, if any | .96% | .95% | .91% | .97% | 1.00% |
Expenses net of all reductions | .94% | .94% | .91% | .96% | .89% |
Net investment income (loss) | .90% | .85% | .32% F | .69% G | .04% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 304,896 | $ 181,114 | $ 434,916 | $ 278,371 | $ 502,702 |
Portfolio turnover rate E | 154% | 191% | 191% | 124% | 162% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .19%. G Investment income per share reflects a special dividend which amounted to $.03 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..30%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
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. 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's investments is emerging markets can be subject to social, economic, regulatory and political uncertainties, and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 20,811,759 |
Gross unrealized depreciation | (49,671,204) |
Net unrealized appreciation (depreciation) | $ (28,859,445) |
|
|
Tax Cost | $ 356,178,608 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (26,624,026) |
Net unrealized appreciation (depreciation) | $ (28,861,856) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 3,156,705 | $ 2,419,895 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $511,170,313 and $494,855,172, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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 .32% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,026 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 4,941,000 | .36% | $ 400 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,209 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities
Annual Report
8. Security Lending - continued
loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $94,149 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Telecommunications Portfolio and Wireless Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Telecommunications Portfolio and Wireless Portfolio (funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
Telecommunications designates 100% and 100% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Telecommunications designates 100% and 100% of the dividends distributed in April and December, 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 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Distributions (Unaudited)
Wireless designates 39% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Wireless designates 100% of the dividends distributed in December, 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 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELTS-UANNPRO-0410
1.910426.100
Fidelity®
Select Portfolios®
Utilities Sector
Utilities Portfolio
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Performance |
| |
Management's Discussion |
| |
Shareholder Expense Example |
| |
Investment Changes |
| |
Investments |
| |
Financial Statements |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Select Portfolios. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Utilities Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's 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 $10,000 table and the fund's 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 returns 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Utilities Portfolio A | 24.50% | 3.16% | -1.92% |
A Prior to October 1, 2006, Utilities Portfolio operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 29, 2000. 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.
Annual Report
Utilities Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500 Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500 - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Douglas Simmons, Portfolio Manager of Select Utilities Portfolio: For the 12 months ending February 28, 2010, the fund returned 24.50%, underperforming the S&P 500 but outperforming the 22.31% return of the MSCI® U.S. IM Utilities 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Strong stock selection in the independent power/energy trade and multi-utilities groups helped the fund a lot versus the MSCI index, as did overweighting the former area. Unfavorable security selection and a significant underweighting in gas utilities dampened relative performance. Contributions came from Maryland-based independent power producer Constellation Energy Group; underweighting and timely ownership of Chicago-headquartered electric utility Exelon; TECO Energy, a multi-utility located in Florida; electric utility American Electric Power, based in Ohio; and CenterPoint Energy and CMS Energy, multi-utilities with operations in Houston and Mississippi, respectively. Among the detractors were FirstEnergy, an electric utility serving Ohio and Pennsylvania; underweighting and untimely ownership of Dominion Resources, a Virginia-based multi-utility that outperformed; Florida electric utility FPL Group; Allegheny Energy, a coal-based electric utility in Pennsylvania; and untimely ownership of Salt Lake City gas utility Questar. Some of the stocks mentioned in this report were not held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Utilities Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying tableprovides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying tableprovides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .93% | $ 1,000.00 | $ 1,007.00 | $ 4.63 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Utilities Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
American Electric Power Co., Inc. | 9.3 | 13.5 |
Entergy Corp. | 9.3 | 4.6 |
PG&E Corp. | 8.8 | 4.9 |
FirstEnergy Corp. | 8.0 | 12.2 |
CenterPoint Energy, Inc. | 7.3 | 6.2 |
Wisconsin Energy Corp. | 7.0 | 0.0 |
CMS Energy Corp. | 5.0 | 3.4 |
TECO Energy, Inc. | 4.9 | 4.8 |
UGI Corp. | 4.8 | 0.0 |
Alliant Energy Corp. | 4.7 | 0.0 |
| 69.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Electric Utilities | 37.9% |
|
![]() | Multi-utilities | 37.7% |
|
![]() | Independent Power Producers & Energy Traders | 10.9% |
|
![]() | Gas Utilities | 7.5% |
|
![]() | Oil, Gas & Consumable Fuels | 2.1% |
|
![]() | All Others* | 3.9% |
|
| |||
As of August 31, 2009 | |||
![]() | Electric Utilities | 49.0% |
|
![]() | Multi-utilities | 30.3% |
|
![]() | Independent Power Producers & Energy Traders | 18.5% |
|
![]() | Commercial Services & Supplies | 1.3% |
|
![]() | Gas Utilities | 0.0% |
|
![]() | All Others* | 0.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Utilities Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 37.9% | |||
Electric Utilities - 37.9% | |||
American Electric Power Co., Inc. | 932,479 | $ 31,349,943 | |
Entergy Corp. | 409,451 | 31,105,992 | |
FirstEnergy Corp. | 693,522 | 26,804,625 | |
FPL Group, Inc. | 91,283 | 4,232,793 | |
ITC Holdings Corp. | 242,678 | 12,954,152 | |
NV Energy, Inc. | 1,405,584 | 15,616,038 | |
Pinnacle West Capital Corp. | 147,658 | 5,376,228 | |
| 127,439,771 | ||
GAS UTILITIES - 7.5% | |||
Gas Utilities - 7.5% | |||
ONEOK, Inc. | 100 | 4,433 | |
Questar Corp. | 216,500 | 9,090,835 | |
UGI Corp. | 636,933 | 15,955,172 | |
| 25,050,440 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 10.9% | |||
Independent Power Producers & Energy Traders - 10.9% | |||
AES Corp. | 778,059 | 9,095,510 | |
Calpine Corp. (a) | 1,176,400 | 12,869,816 | |
Constellation Energy Group, Inc. | 422,200 | 14,806,554 | |
| 36,771,880 | ||
MULTI-UTILITIES - 37.7% | |||
Multi-Utilities - 37.7% | |||
Alliant Energy Corp. | 504,000 | 15,941,520 | |
CenterPoint Energy, Inc. | 1,823,300 | 24,395,754 | |
CMS Energy Corp. (c) | 1,094,800 | 16,717,596 | |
PG&E Corp. | 708,051 | 29,681,498 | |
TECO Energy, Inc. (c) | 1,074,120 | 16,466,260 | |
Wisconsin Energy Corp. | 487,500 | 23,609,625 | |
| 126,812,253 | ||
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 2.1% | |||
Oil & Gas Storage & Transport - 2.1% | |||
Southern Union Co. | 289,800 | $ 6,937,812 | |
TOTAL COMMON STOCKS (Cost $315,184,761) | 323,012,156 | ||
Money Market Funds - 12.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 970,639 | 970,639 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 40,970,500 | 40,970,500 | |
TOTAL MONEY MARKET FUNDS (Cost $41,941,139) | 41,941,139 |
TOTAL INVESTMENT PORTFOLIO - 108.6% (Cost $357,125,900) | 364,953,295 | |
NET OTHER ASSETS - (8.6)% | (28,961,443) | |
NET ASSETS - 100% | $ 335,991,852 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 17,705 |
Fidelity Securities Lending Cash Central Fund | 10,211 |
Total | $ 27,916 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $125,668,839 of which $15,561,006, $65,442,149 and $44,665,684 will expire on February 28, 2011, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Utilities Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $39,710,250) - See accompanying schedule: Unaffiliated issuers | $ 323,012,156 |
|
Fidelity Central Funds | 41,941,139 |
|
Total Investments |
| $ 364,953,295 |
Receivable for investments sold | 13,677,310 | |
Receivable for fund shares sold | 361,364 | |
Dividends receivable | 2,079,260 | |
Distributions receivable from Fidelity Central Funds | 3,000 | |
Prepaid expenses | 1,090 | |
Other receivables | 17,992 | |
Total assets | 381,093,311 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,361,564 | |
Payable for fund shares redeemed | 483,902 | |
Accrued management fee | 157,173 | |
Other affiliated payables | 97,863 | |
Other payables and accrued expenses | 30,457 | |
Collateral on securities loaned, at value | 40,970,500 | |
Total liabilities | 45,101,459 | |
|
|
|
Net Assets | $ 335,991,852 | |
Net Assets consist of: |
| |
Paid in capital | $ 463,427,630 | |
Undistributed net investment income | 1,464,587 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (136,727,760) | |
Net unrealized appreciation (depreciation) on investments | 7,827,395 | |
Net Assets, for 7,953,741 shares outstanding | $ 335,991,852 | |
Net Asset Value, offering price and redemption price per share ($335,991,852 ÷ 7,953,741 shares) | $ 42.24 |
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 12,648,134 |
Interest |
| 5,790 |
Income from Fidelity Central Funds |
| 27,916 |
Total income |
| 12,681,840 |
|
|
|
Expenses | ||
Management fee | $ 1,820,350 | |
Transfer agent fees | 1,051,028 | |
Accounting and security lending fees | 127,398 | |
Custodian fees and expenses | 15,406 | |
Independent trustees' compensation | 2,290 | |
Registration fees | 28,718 | |
Audit | 39,796 | |
Legal | 3,879 | |
Miscellaneous | 6,652 | |
Total expenses before reductions | 3,095,517 | |
Expense reductions | (74,400) | 3,021,117 |
Net investment income (loss) | 9,660,723 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (5,006,481) | |
Foreign currency transactions | 12,595 | |
Capital gain distributions from Fidelity Central Funds | 1,335 | |
Total net realized gain (loss) |
| (4,992,551) |
Change in net unrealized appreciation (depreciation) on investment securities | 62,908,435 | |
Net gain (loss) | 57,915,884 | |
Net increase (decrease) in net assets resulting from operations | $ 67,576,607 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 9,660,723 | $ 9,172,298 |
Net realized gain (loss) | (4,992,551) | (110,218,004) |
Change in net unrealized appreciation (depreciation) | 62,908,435 | (85,736,012) |
Net increase (decrease) in net assets resulting from operations | 67,576,607 | (186,781,718) |
Distributions to shareholders from net investment income | (9,685,916) | (7,699,468) |
Share transactions | 90,279,207 | 157,164,187 |
Reinvestment of distributions | 9,242,809 | 7,340,518 |
Cost of shares redeemed | (122,958,619) | (274,609,977) |
Net increase (decrease) in net assets resulting from share transactions | (23,436,603) | (110,105,272) |
Redemption fees | 8,819 | 32,052 |
Total increase (decrease) in net assets | 34,462,907 | (304,554,406) |
|
|
|
Net Assets | ||
Beginning of period | 301,528,945 | 606,083,351 |
End of period (including undistributed net investment income of $1,464,587 and undistributed net investment income of $1,471,324, respectively) | $ 335,991,852 | $ 301,528,945 |
Other Information Shares | ||
Sold | 2,151,894 | 3,346,843 |
Issued in reinvestment of distributions | 220,108 | 187,785 |
Redeemed | (3,048,247) | (5,521,130) |
Net increase (decrease) | (676,245) | (1,986,502) |
Financial Highlights
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 34.94 | $ 57.09 | $ 58.27 | $ 46.44 | $ 40.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.21 | .99 | .84 | 1.00 | .73 |
Net realized and unrealized gain (loss) | 7.34 | (22.29) | (.82) | 11.45 | 6.59 |
Total from investment operations | 8.55 | (21.30) | .02 | 12.45 | 7.32 |
Distributions from net investment income | (1.25) | (.85) | (1.21) | (.64) | (.93) |
Redemption fees added to paid in capital C | - H | - H | .01 | .02 | .01 |
Net asset value, end of period | $ 42.24 | $ 34.94 | $ 57.09 | $ 58.27 | $ 46.44 |
Total Return A, B | 24.50% | (37.47)% | (.22)% | 26.95% | 18.48% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .95% | .89% | .88% | .93% | .97% |
Expenses net of fee waivers, if any | .95% | .89% | .88% | .93% | .97% |
Expenses net of all reductions | .93% | .89% | .87% | .93% | .92% |
Net investment income (loss) | 2.98% | 1.95% | 1.35% | 1.93% | 1.71% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 335,992 | $ 301,529 | $ 606,083 | $ 795,683 | $ 298,371 |
Portfolio turnover rate E | 226% | 167% | 121% | 107% | 101% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the former sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Fidelity Select 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. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010 is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 18,752,900 |
Gross unrealized depreciation | (21,998,356) |
Net unrealized appreciation (depreciation) | $ (3,245,456) |
|
|
Tax Cost | $ 368,198,751 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,478,834 |
Capital loss carryforward | $ (125,668,839) |
Net unrealized appreciation (depreciation) | $ (3,245,456) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 9,685,916 | $ 7,699,468 |
Annual Report
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities, aggregated $717,387,792 and $744,660,027, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, 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 .32% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $11,129 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,151 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $10,211.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $74,400 for the period.
Annual Report
Notes to Financial Statements - continued
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Fidelity Select Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Fidelity Select Utilities Portfolio (a fund of Fidelity Select Portfolios) at February 28, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Utilities Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Fund's 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
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.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins also serves as President and Treasurer (2010-present) and Assistant Treasurer (2009-present) of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Deputy Treasurer of the Fidelity funds (2005-2008) and Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2006-2008). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
The fund designates 100% and 100% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% and 100% of the dividends distributed in April and December, 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 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELUTL-UANNPRO-0410
1.910427.100
Fidelity Advisor
Focus Funds®
Class A, Class T, Class B and Class C
Fidelity Advisor Consumer Staples Fund
Fidelity Advisor Gold Fund
Fidelity Advisor Materials Fund
Fidelity Advisor Telecommunications Fund
Each Advisor fund listed above is a class
of the Fidelity® Select Portfolios®.
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Note to Shareholders |
| |
Consumer Staples | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Advisor Focus Funds. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Fidelity Advisor Consumer Staples Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 years | Past 10 |
Class A (incl. 5.75% sales charge) A | 32.58% | 6.21% | 9.75% |
Class T (incl. 3.50% sales charge) B | 35.33% | 6.50% | 9.90% |
Class B (incl. contingent deferred | 34.48% | 6.60% | 10.11% |
Class C (incl. contingent deferred sales charge) D | 38.59% | 6.94% | 10.12% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Class A on February 29, 2000, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Portfolio: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 40.66%, 40.24%, 39.48% and 39.59%, respectively (excluding sales charges), trailing the S&P 500 but outperforming the 37.17% gain of the MSCI® U.S. IM Consumer Staples 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Leading the way in terms of performance relative to the MSCI index was strong stock picking and a modest underweighting in the soft drink industry, including stakes in bottlers Coca-Cola Enterprises and Mexico's Coca-Cola FEMSA, as well as Canada's private-label manufacturer Cott. Stock choices within packaged food/meats were significant contributors, particularly out-of-index holdings in Anglo-Dutch firm Unilever and Switzerland's Nestlé. Good stock selection in brewers also helped, including an out-of-index stake in Belgian brewer Anheuser-Busch InBev, which posted solid gains in response to the successful merger between two major brewers. Underweighting major index component Wal-Mart Stores also was a positive, when the stock lagged for much of the period. On the negative side, underweighting the strong-performing tobacco group - and index constituents within, including Philip Morris International - detracted, as did an overweighting and weak stock selection within food retailing, including an outsized stake in major grocery chain Kroger. Weak stock selection in the distillers and vintners industry also hurt, including a position in Constellation Brands. In other areas, not owning global cosmetic manufacturer and index component Estee Lauder was a negative when the stock performed very well near the end of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.11% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.90 | $ 5.74 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,085.40 | $ 7.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.50 | $ 10.07 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Class C | 1.87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.70 | $ 9.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Consumer Staples | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.20 | $ 4.56 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.30 | $ 4.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 14.6 | 11.5 |
CVS Caremark Corp. | 6.4 | 8.0 |
The Coca-Cola Co. | 5.8 | 6.6 |
British American Tobacco PLC sponsored ADR | 5.0 | 4.9 |
Wal-Mart Stores, Inc. | 4.6 | 5.0 |
Walgreen Co. | 4.3 | 2.7 |
PepsiCo, Inc. | 4.3 | 6.9 |
Altria Group, Inc. | 3.9 | 3.5 |
Avon Products, Inc. | 3.6 | 2.7 |
Safeway, Inc. | 3.3 | 2.5 |
| 55.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Beverages | 24.8% |
|
![]() | Food & Staples Retailing | 22.0% |
|
![]() | Household Products | 17.9% |
|
![]() | Food Products | 13.1% |
|
![]() | Tobacco | 11.5% |
|
![]() | All Others* | 10.7% |
|
As of August 31, 2009 | |||
![]() | Beverages | 29.5% |
|
![]() | Food & Staples Retailing | 21.4% |
|
![]() | Food Products | 14.7% |
|
![]() | Household Products | 14.6% |
|
![]() | Tobacco | 11.9% |
|
![]() | All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
BEVERAGES - 24.8% | |||
Brewers - 6.0% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 277,611 | $ 2,799,982 | |
Anheuser-Busch InBev SA NV | 566,622 | 28,358,717 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 65,200 | 6,321,140 | |
Molson Coors Brewing Co. Class B | 953,715 | 38,511,012 | |
| 75,990,851 | ||
Distillers & Vintners - 4.1% | |||
Brown-Forman Corp. Class B (non-vtg.) | 128,521 | 6,729,360 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,066,373 | 31,078,250 | |
Diageo PLC sponsored ADR | 217,663 | 14,209,041 | |
| 52,016,651 | ||
Soft Drinks - 14.7% | |||
Coca-Cola Bottling Co. Consolidated | 37,504 | 2,087,098 | |
Coca-Cola Enterprises, Inc. | 781,200 | 19,959,660 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 101,029 | 6,487,072 | |
Coca-Cola Icecek AS | 373,332 | 3,475,775 | |
Cott Corp. (a) | 21,000 | 151,076 | |
Dr Pepper Snapple Group, Inc. | 546,131 | 17,339,659 | |
Embotelladora Andina SA sponsored ADR (c) | 323,541 | 6,347,874 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 72,490 | 3,102,572 | |
PepsiCo, Inc. | 873,327 | 54,556,738 | |
The Coca-Cola Co. | 1,395,715 | 73,582,095 | |
| 187,089,619 | ||
TOTAL BEVERAGES | 315,097,121 | ||
FOOD & STAPLES RETAILING - 22.0% | |||
Drug Retail - 10.7% | |||
CVS Caremark Corp. | 2,404,926 | 81,166,253 | |
Walgreen Co. | 1,557,718 | 54,893,982 | |
| 136,060,235 | ||
Food Retail - 5.0% | |||
Kroger Co. | 878,068 | 19,405,303 | |
Safeway, Inc. | 1,681,396 | 41,900,388 | |
Susser Holdings Corp. (a) | 70,300 | 589,114 | |
The Pantry, Inc. (a) | 162,909 | 2,134,108 | |
| 64,028,913 | ||
Hypermarkets & Super Centers - 6.3% | |||
BJ's Wholesale Club, Inc. (a) | 586,299 | 21,206,435 | |
Wal-Mart Stores, Inc. | 1,076,480 | 58,205,274 | |
| 79,411,709 | ||
TOTAL FOOD & STAPLES RETAILING | 279,500,857 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 13.1% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 609,253 | $ 17,887,668 | |
Bunge Ltd. | 198,072 | 11,803,110 | |
Corn Products International, Inc. | 187,577 | 6,111,259 | |
SLC Agricola SA | 364,400 | 3,123,457 | |
Viterra, Inc. (a) | 331,300 | 3,060,334 | |
| 41,985,828 | ||
Packaged Foods & Meats - 9.8% | |||
Ausnutria Dairy Hunan Co. Ltd. Class H | 4,155,000 | 2,960,134 | |
Brasil Foods SA | 1,000 | 24,447 | |
Cermaq ASA (a) | 304,000 | 3,394,981 | |
Cosan Ltd. Class A (a) | 91,200 | 827,184 | |
Danone | 101,220 | 5,918,984 | |
Dean Foods Co. (a) | 1,918,268 | 27,987,530 | |
General Mills, Inc. | 116,923 | 8,419,625 | |
Kraft Foods, Inc. Class A | 310,062 | 8,815,063 | |
Lindt & Spruengli AG (c) | 109 | 2,535,792 | |
Nestle SA (Reg.) | 655,642 | 32,617,335 | |
Tyson Foods, Inc. Class A | 321,761 | 5,482,807 | |
Unilever NV (NY Shares) | 837,612 | 25,203,745 | |
| 124,187,627 | ||
TOTAL FOOD PRODUCTS | 166,173,455 | ||
HOUSEHOLD PRODUCTS - 17.9% | |||
Household Products - 17.9% | |||
Colgate-Palmolive Co. | 230,514 | 19,118,831 | |
Energizer Holdings, Inc. (a) | 390,266 | 22,615,915 | |
Procter & Gamble Co. | 2,928,338 | 185,305,226 | |
| 227,039,972 | ||
PERSONAL PRODUCTS - 4.1% | |||
Personal Products - 4.1% | |||
Avon Products, Inc. | 1,496,306 | 45,547,555 | |
Mead Johnson Nutrition Co. Class A | 86,926 | 4,111,600 | |
Natura Cosmeticos SA | 164,500 | 3,033,030 | |
| 52,692,185 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 595,924 | 37,543,212 | |
Perrigo Co. | 1,000 | 49,570 | |
| 37,592,782 | ||
TOBACCO - 11.5% | |||
Tobacco - 11.5% | |||
Altria Group, Inc. | 2,442,510 | 49,143,301 | |
British American Tobacco PLC sponsored ADR | 934,941 | 63,482,494 | |
KT&G Corp. | 56,270 | 3,114,254 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 540,657 | $ 26,481,380 | |
Souza Cruz Industria Comerico | 92,300 | 3,156,429 | |
| 145,377,858 | ||
TOTAL COMMON STOCKS (Cost $1,133,829,769) | 1,223,474,230 | ||
Money Market Funds - 3.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 42,479,890 | 42,479,890 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 830,658 | 830,658 | |
TOTAL MONEY MARKET FUNDS (Cost $43,310,548) | 43,310,548 | ||
TOTAL INVESTMENT PORTFOLIO - 99.8% (Cost $1,177,140,317) | 1,266,784,778 | ||
NET OTHER ASSETS - 0.2% | 2,782,497 | ||
NET ASSETS - 100% | $ 1,269,567,275 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 73,704 |
Fidelity Securities Lending Cash Central Fund | 140,195 |
Total | $ 213,899 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.4% |
United Kingdom | 6.1% |
Switzerland | 2.8% |
Belgium | 2.3% |
Netherlands | 2.0% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $2,242,566 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $803,687) - See accompanying schedule: Unaffiliated issuers (cost $1,133,829,769) | $ 1,223,474,230 |
|
Fidelity Central Funds (cost $43,310,548) | 43,310,548 |
|
Total Investments (cost $1,177,140,317) |
| $ 1,266,784,778 |
Foreign currency held at value (cost $108) | 108 | |
Receivable for investments sold | 12,862,525 | |
Receivable for fund shares sold | 1,923,204 | |
Dividends receivable | 1,615,280 | |
Distributions receivable from Fidelity Central Funds | 10,510 | |
Prepaid expenses | 3,545 | |
Other receivables | 3,944 | |
Total assets | 1,283,203,894 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,325,644 | |
Payable for fund shares redeemed | 1,419,802 | |
Accrued management fee | 577,290 | |
Distribution fees payable | 124,205 | |
Other affiliated payables | 294,964 | |
Other payables and accrued expenses | 64,056 | |
Collateral on securities loaned, at value | 830,658 | |
Total liabilities | 13,636,619 | |
|
|
|
Net Assets | $ 1,269,567,275 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,194,469,877 | |
Undistributed net investment income | 1,438,918 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (15,985,104) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 89,643,584 | |
Net Assets | $ 1,269,567,275 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
Calculation of Maximum Offering Price Class A: | $ 61.06 | |
|
|
|
Maximum offering price per share (100/94.25 of $61.06) | $ 64.79 | |
|
|
|
Class T: | $ 60.77 | |
|
|
|
Maximum offering price per share (100/96.50 of $60.77) | $ 62.97 | |
|
|
|
Class B: | $ 60.37 | |
|
|
|
Class C: | $ 60.29 | |
|
|
|
Consumer Staples: | $ 61.34 | |
|
|
|
Institutional Class: | $ 61.26 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 28,762,013 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 213,899 |
Total income |
| 28,975,917 |
|
|
|
Expenses | ||
Management fee | $ 6,157,861 | |
Transfer agent fees | 3,057,955 | |
Distribution fees | 1,411,256 | |
Accounting and security lending fees | 411,499 | |
Custodian fees and expenses | 127,130 | |
Independent trustees' compensation | 7,233 | |
Registration fees | 135,457 | |
Audit | 42,554 | |
Legal | 5,574 | |
Miscellaneous | 16,951 | |
Total expenses before reductions | 11,373,470 | |
Expense reductions | (27,975) | 11,345,495 |
Net investment income (loss) | 17,630,422 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,385,671 | |
Foreign currency transactions | (33,750) | |
Total net realized gain (loss) |
| 34,351,921 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 298,588,712 | |
Assets and liabilities in foreign currencies | 1,251 | |
Total change in net unrealized appreciation (depreciation) |
| 298,589,963 |
Net gain (loss) | 332,941,884 | |
Net increase (decrease) in net assets resulting from operations | $ 350,572,306 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 17,630,422 | $ 12,665,686 |
Net realized gain (loss) | 34,351,921 | (44,836,625) |
Change in net unrealized appreciation (depreciation) | 298,589,963 | (269,141,455) |
Net increase (decrease) in net assets resulting from operations | 350,572,306 | (301,312,394) |
Distributions to shareholders from net investment income | (15,962,478) | (11,887,776) |
Distributions to shareholders from net realized gain | - | (334,486) |
Total distributions | (15,962,478) | (12,222,262) |
Share transactions - net increase (decrease) | 33,089,434 | 494,877,505 |
Redemption fees | 34,831 | 113,075 |
Total increase (decrease) in net assets | 367,734,093 | 181,455,924 |
|
|
|
Net Assets | ||
Beginning of period | 901,833,182 | 720,377,258 |
End of period (including undistributed net investment income of $1,438,918 and undistributed net investment income of $512,356, respectively) | $ 1,269,567,275 | $ 901,833,182 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | - | (.02) | (2.44) | - |
Total distributions | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .96 | .88 | .71 | .56 | .50 |
Net realized and unrealized gain (loss) | 17.11 | (19.31) | 7.30 | 8.88 | 3.25 |
Total from investment operations | 18.07 | (18.43) | 8.01 | 9.44 | 3.75 |
Distributions from net investment income | (.87) | (.67) | (.46) | (.32) | (.44) |
Distributions from net realized gain | - | (.03) | (2.44) | (3.18) | (2.56) |
Total distributions | (.87) | (.69) I | (2.90) | (3.50) | (3.00) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Total Return A, B | 40.96% | (29.23)% | 13.72% | 18.43% | 7.50% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .92% | .91% | .91% | 1.01% | 1.04% |
Expenses net of fee waivers, if any | .92% | .91% | .90% | .99% | 1.04% |
Expenses net of all reductions | .91% | .90% | .90% | .98% | 1.03% |
Net investment income (loss) | 1.73% | 1.55% | 1.12% | .99% | .97% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 |
Portfolio turnover rate E | 69% | 70% | 71% | 99% | 75% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | - | (.03) | (2.44) | - |
Total distributions | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | .01 | .01 | - J |
Net asset value, end of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 117,013,594 |
Gross unrealized depreciation | (40,330,590) |
Net unrealized appreciation (depreciation) | $ 76,683,004 |
|
|
Tax Cost | $ 1,190,101,774 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,439,085 |
Capital loss carryforward | $ (2,242,566) |
Net unrealized appreciation (depreciation) | $ 76,682,972 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 15,962,478 | $ 12,222,262 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $749,813,665 and $739,748,758, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 396,506 | $ 13,397 |
Class T | .25% | .25% | 133,350 | 561 |
Class B | .75% | .25% | 193,963 | 145,659 |
Class C | .75% | .25% | 687,437 | 308,759 |
|
|
| $ 1,411,256 | $ 468,376 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 109,547 |
Class T | 12,607 |
Class B* | 51,810 |
Class C* | 24,728 |
| $ 198,692 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 402,842 | .25 |
Class T | 82,383 | .31 |
Class B | 65,652 | .34 |
Class C | 180,801 | .26 |
Consumer Staples | 2,245,942 | .28 |
Institutional Class | 80,335 | .23 |
| $ 3,057,955 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,379 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,814 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $140,195.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $27,863 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $112.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 2,068,687 | $ 1,409,006 |
Class T | 279,551 | 273,000 |
Class B | 121,683 | 118,536 |
Class C | 461,837 | 437,729 |
Consumer Staples | 12,515,444 | 9,279,861 |
Institutional Class | 515,276 | 369,644 |
Total | $ 15,962,478 | $ 11,887,776 |
From net realized gain |
|
|
Class A | $ - | $ 11,953 |
Consumer Staples | - | 317,666 |
Institutional Class | - | 4,867 |
Total | $ - | $ 334,486 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,132,943 | 2,896,213 | $ 59,482,737 | $ 154,503,507 |
Reinvestment of distributions | 31,495 | 27,496 | 1,903,559 | 1,327,859 |
Shares redeemed | (1,263,286) | (542,745) | (70,043,896) | (28,294,587) |
Net increase (decrease) | (98,848) | 2,380,964 | $ (8,657,600) | $ 127,536,779 |
Class T |
|
|
|
|
Shares sold | 173,895 | 520,546 | $ 9,112,154 | $ 27,382,626 |
Reinvestment of distributions | 4,329 | 5,430 | 262,823 | 260,678 |
Shares redeemed | (207,203) | (108,963) | (10,599,980) | (5,646,618) |
Net increase (decrease) | (28,979) | 417,013 | $ (1,225,003) | $ 21,996,686 |
Class B |
|
|
|
|
Shares sold | 104,786 | 323,554 | $ 5,439,880 | $ 17,593,411 |
Reinvestment of distributions | 1,610 | 1,967 | 97,230 | 94,022 |
Shares redeemed | (99,879) | (60,442) | (5,370,134) | (3,153,125) |
Net increase (decrease) | 6,517 | 265,079 | $ 166,976 | $ 14,534,308 |
Class C |
|
|
|
|
Shares sold | 378,183 | 1,133,018 | $ 19,816,576 | $ 59,347,217 |
Reinvestment of distributions | 5,180 | 6,095 | 312,378 | 290,992 |
Shares redeemed | (422,141) | (191,974) | (22,614,834) | (10,093,420) |
Net increase (decrease) | (38,778) | 947,139 | $ (2,485,880) | $ 49,544,789 |
Consumer Staples |
|
|
|
|
Shares sold | 6,969,074 | 13,482,265 | $ 390,940,582 | $ 765,828,751 |
Reinvestment of distributions | 198,030 | 185,893 | 11,983,104 | 9,096,289 |
Shares redeemed | (6,628,713) | (9,136,327) | (351,735,799) | (521,761,725) |
Net increase (decrease) | 538,391 | 4,531,831 | $ 51,187,887 | $ 253,163,315 |
Institutional Class |
|
|
|
|
Shares sold | 333,805 | 760,504 | $ 17,656,120 | $ 40,084,673 |
Reinvestment of distributions | 4,184 | 4,038 | 251,491 | 196,481 |
Shares redeemed | (449,527) | (227,140) | (23,804,557) | (12,179,526) |
Net increase (decrease) | (111,538) | 537,402 | $ (5,896,946) | $ 28,101,628 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Gold Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 27.42% | 16.09% | 16.84% |
Class T (incl. 3.50% sales charge) B | 30.07% | 16.46% | 17.02% |
Class B (incl. contingent deferred sales charge) C | 29.12% | 16.68% | 17.24% |
Class C (incl. contingent deferred sales charge) D | 33.15% | 16.88% | 17.23% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Gold Fund - Class A on February 29, 2000, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Select Gold Portfolio: During the past year, the fund's Class A, Class T, Class B and Class C shares returned 35.19%, 34.79%, 34.12%, 34.15%, respectively (excluding sales charges), trailing the S&P 500 but beating the 32.34% mark of the S&P® Global BMI Gold Capped Index, which was adopted in December 2009 as a better representation of the fund's investment universe. Versus its industry index, the fund was aided most by its diversification outside the gold market, especially its out-of-index investments in non-gold precious metals, coal and steel producers. These securities and their underlying commodities outperformed gold bullion and gold equities for a majority of the period. In absolute terms, our foreign holdings were bolstered by weakness in the U.S. dollar versus most major currencies, especially the Canadian dollar. At the stock level, out-of-index positions in Impala Platinum and Aquarius Platinum - both with operations in South Africa - provided strong performance, as that metal's two primary end-markets, jewelry and automobile catalytic converters, rebounded on improving demand and tightening supply. Other contributors were coal producer Massey Energy and diversified metals/mining holding Buenaventura, the latter based in Peru. Randgold Resources - a U.K.-based company with most of its assets in West Africa - and Aquiline Resources, a miner with projects in South America that was acquired on very favorable terms, also aided performance. Impala, Aquarius and Massey were reduced or sold by period end. Underweighting three large index constituents also benefited performance, as Newmont Mining and Canadian holdings Goldcorp and Barrick Gold all underperformed our industry benchmark. In the case of Goldcorp, I felt the company's potential improved significantly, leading me to make that stock the fund's largest position by period end. Conversely, underweighted exposure to outperforming emerging market and exploration gold names, such as SEMAFO and Centerra Gold, with operations in West Africa and Asia, respectively, and Russia-based Polyus Gold, detracted from our results. Another area of relative underperformance came from the fund's out-of-index exposure to gold bullion. While our bullion holdings delivered a return of approximately 18%, that result lagged the return of gold equities.
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.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.16% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,113.50 | $ 6.08 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,111.70 | $ 7.70 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.00 | $ 10.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.30 | $ 9.99 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Gold | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,114.60 | $ 4.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,115.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 9.8 | 9.9 |
Newmont Mining Corp. | 7.8 | 4.7 |
AngloGold Ashanti Ltd. sponsored ADR | 7.2 | 7.1 |
Newcrest Mining Ltd. | 6.8 | 7.1 |
Agnico-Eagle Mines Ltd. (Canada) | 6.1 | 6.7 |
Randgold Resources Ltd. sponsored ADR | 5.2 | 4.5 |
Barrick Gold Corp. | 4.9 | 10.0 |
Kinross Gold Corp. | 4.9 | 4.8 |
Eldorado Gold Corp. | 3.5 | 2.4 |
Yamana Gold, Inc. | 3.5 | 4.2 |
| 59.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Gold | 92.6% |
|
![]() | Precious | 4.5% |
|
![]() | Coal & | 0.4% |
|
![]() | Diversified | 0.1% |
|
![]() | Oil & Gas Exploration & Production | 0.0% |
|
![]() | All Others* | 2.4% |
|
As of August 31, 2009 | |||
![]() | Gold | 92.2% |
|
![]() | Precious | 3.3% |
|
![]() | Diversified | 2.4% |
|
![]() | Coal & | 0.5% |
|
![]() | Steel | 0.3% |
|
![]() | All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 90.8% | |||
Shares | Value | ||
Australia - 8.3% | |||
METALS & MINING - 8.3% | |||
Gold - 8.3% | |||
Andean Resources Ltd. (a) | 4,807,514 | $ 11,067,888 | |
Avoca Resources Ltd. (a) | 2,035,474 | 3,263,846 | |
Centamin Egypt Ltd. (a) | 4,197,000 | 7,440,982 | |
Dominion Mining Ltd. | 595,594 | 1,392,521 | |
Kingsgate Consolidated NL | 1,260,123 | 9,944,888 | |
Mineral Deposits Ltd. (a) | 3,151,255 | 2,681,750 | |
Newcrest Mining Ltd. | 7,350,648 | 206,364,826 | |
Perseus Mining Ltd. (c) | 1,939,308 | 3,040,156 | |
Resolute Mining Ltd. (a) | 2,052,147 | 1,709,631 | |
St Barbara Ltd. (a) | 14,110,000 | 2,780,742 | |
Troy Resources NL (a)(d) | 2,300,000 | 4,043,716 | |
| 253,730,946 | ||
Bailiwick of Jersey - 5.2% | |||
METALS & MINING - 5.2% | |||
Gold - 5.2% | |||
Randgold Resources Ltd. sponsored ADR (c) | 2,203,667 | 158,686,061 | |
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,981,752 | 10,974,225 | |
Canada - 49.1% | |||
METALS & MINING - 49.0% | |||
Diversified Metals & Mining - 0.1% | |||
Anatolia Minerals Development Ltd. (a) | 70,000 | 239,487 | |
Clifton Star Resources, Inc. (a) | 5,000 | 37,254 | |
Kimber Resources, Inc. (a) | 16,100 | 16,219 | |
Kimber Resources, Inc. (a)(d) | 3,888,000 | 3,916,636 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(d) | 1,944,000 | 29,962 | |
| 4,239,558 | ||
Gold - 45.6% | |||
Agnico-Eagle Mines Ltd. (Canada) | 3,232,900 | 186,677,124 | |
Alamos Gold, Inc. (a) | 2,143,800 | 26,016,941 | |
Aurizon Mines Ltd. (a) | 2,234,600 | 8,982,996 | |
B2Gold Corp. (a)(c) | 880,000 | 1,145,735 | |
Barrick Gold Corp. | 3,924,519 | 147,880,426 | |
Centerra Gold, Inc. (a) | 280,000 | 3,408,696 | |
Colossus Minerals, Inc. (a) | 370,000 | 1,860,109 | |
Crocodile Gold Corp. (a) | 10,000 | 19,482 | |
Detour Gold Corp. (a)(d) | 615,000 | 9,953,386 | |
Eldorado Gold Corp. (a) | 8,475,213 | 107,042,605 | |
European Goldfields Ltd. (a) | 1,229,600 | 6,800,924 | |
Exeter Resource Corp. (a) | 233,000 | 1,882,157 | |
Franco-Nevada Corp. | 1,529,300 | 39,793,047 | |
Gammon Gold, Inc. (a) | 1,207,500 | 11,831,148 | |
Gleichen Resources Ltd. (a) | 230,000 | 209,836 | |
| |||
Shares | Value | ||
Goldcorp, Inc. | 7,880,300 | $ 298,211,970 | |
Golden Star Resources Ltd. (a) | 3,375,769 | 10,522,711 | |
Great Basin Gold Ltd. (a)(c) | 5,107,900 | 8,349,335 | |
Great Basin Gold Ltd. warrants 10/15/10 (a) | 850,000 | 246,377 | |
Greystar Resources Ltd. (a) | 75,000 | 360,656 | |
Guyana Goldfields, Inc. (a) | 878,000 | 5,440,304 | |
Guyana Goldfields, Inc. (a)(d) | 155,000 | 960,418 | |
IAMGOLD Corp. | 5,009,000 | 73,689,066 | |
International Tower Hill Mines Ltd. (a) | 236,700 | 1,561,129 | |
Jaguar Mining, Inc. (a) | 1,105,500 | 10,443,022 | |
Kinross Gold Corp. | 8,150,100 | 147,704,830 | |
Lake Shore Gold Corp. (a) | 500,000 | 1,458,779 | |
Minefinders Corp. Ltd. (a) | 1,060,000 | 10,476,598 | |
New Gold, Inc. (a) | 4,826,900 | 21,330,563 | |
New Gold, Inc. warrants 4/3/12 (a)(d) | 2,928,500 | 97,408 | |
Northgate Minerals Corp. (a) | 2,874,900 | 7,868,579 | |
Novagold Resources, Inc. (a) | 50,000 | 288,430 | |
Osisko Mining Corp. (a) | 682,000 | 5,800,808 | |
Osisko Mining Corp. (a)(d) | 3,000,000 | 25,516,750 | |
Premier Gold Mines Ltd. (a) | 460,200 | 1,640,057 | |
Rainy River Resources Ltd. (a) | 40,000 | 188,168 | |
Red Back Mining, Inc. (a) | 2,753,100 | 53,060,459 | |
Red Back Mining, Inc. (a)(d) | 270,000 | 5,203,706 | |
Romarco Minerals, Inc. (a) | 125,000 | 198,384 | |
Rubicon Minerals Corp. (a) | 914,500 | 3,936,978 | |
San Gold Corp. (a) | 1,581,400 | 5,470,464 | |
Seabridge Gold, Inc. (a) | 631,105 | 15,367,408 | |
SEMAFO, Inc. (a) | 786,100 | 3,608,328 | |
Ventana Gold Corp. (a) | 943,300 | 7,413,724 | |
Yamana Gold, Inc. | 10,050,900 | 106,120,693 | |
| 1,386,040,714 | ||
Precious Metals & Minerals - 3.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 474,115 | |
Etruscan Resources, Inc. (a)(d) | 1,549,400 | 603,710 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(d) | 774,700 | 7,362 | |
Pan American Silver Corp. | 1,029,987 | 22,144,725 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,312,639 | |
Silver Standard Resources, Inc. (a) | 976,800 | 16,615,375 | |
Silver Wheaton Corp. (a) | 3,970,000 | 60,592,255 | |
| 101,750,181 | ||
TOTAL METALS & MINING | 1,492,030,453 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Fronteer Development Group, Inc. (a) | 500,000 | 2,228,558 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - 0.0% | |||
Comaplex Minerals Corp. (a) | 7,000 | $ 52,488 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,281,046 | ||
TOTAL CANADA | 1,494,311,499 | ||
China - 1.3% | |||
METALS & MINING - 1.3% | |||
Gold - 1.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) (c) | 7,800,500 | 15,616,677 | |
Zijin Mining Group Co. Ltd. (H Shares) | 28,818,000 | 24,651,712 | |
| 40,268,389 | ||
Papua New Guinea - 3.4% | |||
METALS & MINING - 3.4% | |||
Gold - 3.4% | |||
Lihir Gold Ltd. | 43,495,881 | 103,253,567 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 750,000 | 25,207,500 | |
Russia - 0.9% | |||
METALS & MINING - 0.9% | |||
Gold - 0.9% | |||
Polyus Gold OJSC sponsored ADR | 941,566 | 25,281,047 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 63,300 | 605,781 | |
TOTAL METALS & MINING | 25,886,828 | ||
South Africa - 11.7% | |||
METALS & MINING - 11.7% | |||
Gold - 11.7% | |||
AngloGold Ashanti Ltd. sponsored ADR (c) | 6,012,452 | 218,733,004 | |
Gold Fields Ltd. sponsored ADR | 7,553,659 | 86,791,542 | |
Harmony Gold Mining Co. Ltd. | 1,549,000 | 13,978,909 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (c) | 4,126,800 | 37,677,684 | |
| 357,181,139 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Petropavlovsk PLC | 640,000 | 9,214,044 | |
| |||
Shares | Value | ||
United States of America - 9.4% | |||
METALS & MINING - 9.1% | |||
Gold - 9.1% | |||
Allied Nevada Gold Corp. (a)(c) | 592,800 | $ 8,156,928 | |
Newmont Mining Corp. | 4,801,450 | 236,615,456 | |
Royal Gold, Inc. (c) | 649,413 | 29,184,620 | |
US Gold Corp. (a) | 1,165,900 | 3,136,271 | |
| 277,093,275 | ||
Precious Metals & Minerals - 0.0% | |||
Hecla Mining Co. (a)(c) | 150,000 | 780,000 | |
TOTAL METALS & MINING | 277,873,275 | ||
OIL, GAS & CONSUMABLE FUELS - 0.3% | |||
Coal & Consumable Fuels - 0.3% | |||
Arch Coal, Inc. | 325,000 | 7,309,250 | |
TOTAL UNITED STATES OF AMERICA | 285,182,525 | ||
TOTAL COMMON STOCKS (Cost $2,241,570,065) | 2,763,896,723 | ||
Commodities - 6.8% | |||
Troy |
| ||
Gold Bullion (a) | 185,500 | 207,184,950 | |
Money Market Funds - 2.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (e) | 884,915 | 884,915 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 67,460,954 | 67,460,954 | |
TOTAL MONEY MARKET FUNDS (Cost $68,345,869) | 68,345,869 |
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $2,472,238,834) | 3,039,427,542 |
NET OTHER ASSETS - 0.1% | 3,906,479 | ||
NET ASSETS - 100% | $ 3,043,334,021 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $50,333,054 or 1.7% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 180,857 |
Fidelity Securities Lending Cash Central Fund | 499,028 |
Total | $ 679,885 |
Other Affiliated Issuers |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 154,880,326 | $ 42,460,530 | $ 27,469,000 | $ - | $ 207,130,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 2,763,896,723 | $ 2,746,715,104 | $ 17,181,619 | $ - |
Commodities | 207,184,950 | 207,184,950 | - | - |
Money Market Funds | 68,345,869 | 68,345,869 | - | - |
Total Investments: | $ 3,039,427,542 | $ 3,022,245,923 | $ 17,181,619 | $ - |
The following is a reconciliation of Investments for which Level 3 inputs were used in determining value: |
Investments: | |
Beginning Balance | $ 30,448 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (23,086) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | (7,362) |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Investment or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $12,954,352 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $66,348,802) - See accompanying schedule: Unaffiliated issuers (cost $2,241,570,065) | $ 2,763,896,723 |
|
Fidelity Central Funds (cost $68,345,869) | 68,345,869 |
|
Commodities (cost $162,322,900) | 207,184,950 |
|
Total Investments (cost $2,472,238,834) |
| $ 3,039,427,542 |
Cash | 6,462 | |
Receivable for investments sold | 156,345,630 | |
Receivable for fund shares sold | 4,261,845 | |
Dividends receivable | 1,520,832 | |
Distributions receivable from Fidelity Central Funds | 16,298 | |
Prepaid expenses | 8,347 | |
Receivable from investment adviser for expense reductions | 53,706 | |
Other receivables | 65,565 | |
Total assets | 3,201,706,227 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 85,096,066 | |
Payable for fund shares redeemed | 3,239,466 | |
Accrued management fee | 1,447,456 | |
Distribution fees payable | 74,328 | |
Other affiliated payables | 918,135 | |
Other payables and accrued expenses | 135,801 | |
Collateral on securities loaned, at value | 67,460,954 | |
Total liabilities | 158,372,206 | |
|
|
|
Net Assets | $ 3,043,334,021 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,601,815,526 | |
Accumulated net investment loss | (919) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (125,663,002) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 567,182,416 | |
Net Assets | $ 3,043,334,021 |
Consolidated Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 40.50 | |
|
|
|
Maximum offering price per share (100/94.25 of $40.50) | $ 42.97 | |
Class T: | $ 40.34 | |
|
|
|
Maximum offering price per share (100/96.50 of $40.34) | $ 41.80 | |
Class B: | $ 39.87 | |
|
|
|
Class C: | $ 39.75 | |
|
|
|
Gold: | $ 40.85 | |
|
|
|
Institutional Class: | $ 40.77 |
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.
Annual Report
Gold Portfolio
Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,179,836 |
Interest |
| 74 |
Income from Fidelity Central Funds |
| 679,885 |
Total income |
| 14,859,795 |
|
|
|
Expenses | ||
Management fee | $ 16,105,508 | |
Transfer agent fees | 8,951,189 | |
Distribution fees | 717,754 | |
Accounting and security lending fees | 1,212,567 | |
Custodian fees and expenses | 323,942 | |
Independent trustees' compensation | 17,951 | |
Registration fees | 289,277 | |
Audit | 71,070 | |
Legal | 13,823 | |
Miscellaneous | 34,226 | |
Total expenses before reductions | 27,737,307 | |
Expense reductions | (1,109,754) | 26,627,553 |
Net investment income (loss) | (11,767,758) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 137,360,027 | |
Commodities | 4,098,700 |
|
Foreign currency transactions | 276,376 | |
Capital gain distribution from Fidelity Central Funds | 4,434 | |
Total net realized gain (loss) |
| 141,739,537 |
Change in net unrealized appreciation (depreciation) on: Investments | 548,783,486 | |
Assets and liabilities in foreign currencies | (41,908) | |
Commodities | 33,817,640 | |
Total change in net unrealized appreciation (depreciation) |
| 582,559,218 |
Net gain (loss) | 724,298,755 | |
Net increase (decrease) in net assets resulting from operations | $ 712,530,997 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (11,767,758) | $ (2,690,363) |
Net realized gain (loss) | 141,739,537 | (179,917,786) |
Change in net unrealized appreciation (depreciation) | 582,559,218 | (711,142,287) |
Net increase (decrease) in net assets resulting from operations | 712,530,997 | (893,750,436) |
Distributions to shareholders from net realized gain | (56,010,412) | (9,542,341) |
Share transactions - net increase (decrease) | 418,234,847 | 430,558,697 |
Redemption fees | 514,829 | 852,427 |
Total increase (decrease) in net assets | 1,075,270,261 | (471,881,653) |
|
|
|
Net Assets | ||
Beginning of period | 1,968,063,760 | 2,439,945,413 |
End of period (including accumulated net investment loss of $919 and accumulated net investment loss of $714, respectively) | $ 3,043,334,021 | $ 1,968,063,760 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.71) | (.17) | (5.01) | - |
Total distributions | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.63) | (.17) | (4.97) | - |
Total distributions | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.51) | (.17) | (4.84) | - |
Total distributions | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | (.17) | - |
Distributions from net realized gain | (.53) | (.17) | (4.89) | - |
Total distributions | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Gold
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.04) | (.02) | .22 F | .04 |
Net realized and unrealized gain (loss) | 11.10 | (15.51) | 15.05 | 5.49 | 12.21 |
Total from investment operations | 10.94 | (15.55) | 15.03 | 5.71 | 12.25 |
Distributions from net investment income | - | - | (.18) | (.02) | (.02) |
Distributions from net realized gain | (.77) | (.17) | (5.03) | (5.10) | (3.84) |
Total distributions | (.77) | (.17) | (5.21) | (5.12) | (3.86) |
Redemption fees added to paid in capital C | .01 | .02 | .01 | .04 | .06 |
Net asset value, end of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Total Return A, B | 35.52% | (33.59)% | 45.10% | 16.19% | 48.84% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .98% | .89% | .85% | .90% | .97% |
Expenses net of fee waivers, if any | .96% | .87% | .85% | .90% | .97% |
Expenses net of all reductions | .94% | .86% | .81% | .87% | .82% |
Net investment income (loss) | (.40)% | (.13)% | (.05)% | .62% F | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 |
Portfolio turnover rate E | 46% | 42% | 55% | 85% | 108% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.82) | (.17) | (5.04) | - |
Total distributions | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2010
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2010, the Fund held $207,130,454 in the Subsidiary, representing 6.8% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are 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 Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying consolidated financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 587,307,975 |
Gross unrealized depreciation | (162,095,828) |
Net unrealized appreciation (depreciation) | $ 425,212,147 |
|
|
Tax Cost | $ 2,614,215,395 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 29,267,911 |
Capital loss carryforward | $ (12,954,352) |
Net unrealized appreciation (depreciation) | $ 425,205,855 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 56,010,412 | $ - |
Long-term Capital Gains | - | 9,542,341 |
Total | $ 56,010,412 | $ 9,542,341 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,666,765,327 and $1,222,401,265, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its average net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period, FMR reimbursed the Fund $617,017.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 165,404 | $ 12,406 |
Class T | .25% | .25% | 109,284 | 706 |
Class B | .75% | .25% | 148,843 | 111,714 |
Class C | .75% | .25% | 294,223 | 150,118 |
|
|
| $ 717,754 | $ 274,944 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 128,737 |
Class T | 17,837 |
Class B* | 40,323 |
Class C* | 21,509 |
| $ 208,406 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 201,509 | .31 |
Class T | 77,008 | .35 |
Class B | 50,520 | .34 |
Class C | 88,998 | .30 |
Gold | 8,484,126 | .33 |
Institutional Class | 49,028 | .29 |
| $ 8,951,189 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,032 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $9,533 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $499,028.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $492,362 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $375.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ 1,356,457 | $ 120,234 |
Class T | 386,094 | 52,921 |
Class B | 226,465 | 30,037 |
Class C | 480,176 | 48,372 |
Gold | 53,033,502 | 9,277,078 |
Institutional Class | 527,718 | 13,699 |
Total | $ 56,010,412 | $ 9,542,341 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,548,727 | 1,309,698 | $ 60,979,204 | $ 44,660,266 |
Reinvestment of distributions | 28,941 | 2,750 | 1,258,667 | 115,078 |
Shares redeemed | (828,099) | (603,399) | (32,946,669) | (19,759,071) |
Net increase (decrease) | 749,569 | 709,049 | $ 29,291,202 | $ 25,016,273 |
Class T |
|
|
|
|
Shares sold | 410,718 | 490,596 | $ 16,022,649 | $ 16,725,703 |
Reinvestment of distributions | 8,602 | 1,250 | 372,822 | 52,336 |
Shares redeemed | (271,824) | (233,926) | (10,198,558) | (7,642,955) |
Net increase (decrease) | 147,496 | 257,920 | $ 6,196,913 | $ 9,135,084 |
Class B |
|
|
|
|
Shares sold | 271,111 | 268,687 | $ 10,287,423 | $ 9,041,240 |
Reinvestment of distributions | 4,654 | 619 | 199,620 | 25,767 |
Shares redeemed | (95,719) | (138,798) | (3,721,090) | (4,716,395) |
Net increase (decrease) | 180,046 | 130,508 | $ 6,765,953 | $ 4,350,612 |
Class C |
|
|
|
|
Shares sold | 698,249 | 585,858 | $ 27,513,842 | $ 18,965,561 |
Reinvestment of distributions | 9,039 | 1,077 | 386,528 | 44,699 |
Shares redeemed | (320,512) | (238,490) | (12,323,085) | (7,504,831) |
Net increase (decrease) | 386,776 | 348,445 | $ 15,577,285 | $ 11,505,429 |
Annual Report
Notes to Consolidated Financial Statements - continued
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Gold |
|
|
|
|
Shares sold | 40,468,485 | 46,487,078 | $ 1,581,099,363 | $ 1,611,564,135 |
Reinvestment of distributions | 1,174,296 | 212,477 | 51,481,173 | 8,930,407 |
Shares redeemed | (33,470,388) | (36,708,151) | (1,303,757,681) | (1,244,304,895) |
Net increase (decrease) | 8,172,393 | 9,991,404 | $ 328,822,855 | $ 376,189,647 |
Institutional Class |
|
|
|
|
Shares sold | 933,259 | 256,180 | $ 39,237,749 | $ 8,523,938 |
Reinvestment of distributions | 10,089 | 259 | 441,486 | 10,894 |
Shares redeemed | (208,491) | (126,881) | (8,098,596) | (4,173,180) |
Net increase (decrease) | 734,857 | 129,558 | $ 31,580,639 | $ 4,361,652 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 80.25% | 8.01% | 12.50% |
Class T (incl. 3.50% sales charge) B | 84.03% | 8.28% | 12.64% |
Class B (incl. contingent deferred sales charge) C | 84.79% | 8.42% | 12.86% |
Class C (incl. contingent deferred sales charge) D | 88.82% | 8.71% | 12.86% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Class A on February 29, 2000, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM - the broadest gauge of U.S. stocks - climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor Materials Fund: For the 12 months ending February 28, 2010, the fund's Class A, Class T, Class B and Class C shares returned 91.25%, 90.70%, 89.79% and 89.82%, respectively (excluding sales charges), significantly outperforming the S&P 500 and the 73.30% return of the MSCI® U.S. IM Materials 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Security selection boosted results relative to the MSCI index, particularly within specialty chemicals, paper packaging, commodity and diversified chemicals, and coal/consumable fuels. An underweighting in fertilizers/agricultural chemicals and an overweighting in commodity chemicals also helped. Conversely, an underweighting in paper products and lack of exposure to the aluminum group detracted, as did a modest cash position in a rising market. Specialty chemicals firm W.R. Grace was the top contributor, helped by better-than-expected earnings. Commodity chemicals firm Celanese rose sharply on improved earnings and an uptick in demand, while paper packaging company Temple-Inland jumped due to the firm's stable earnings. Detractors included underweightings in International Paper, whose stock rose on improved profit margins thanks to aggressive cost-cutting, and steel concern Cliffs Natural Resources, which rose on brightening prospects for the iron ore and coal industries. Some holdings mentioned in this update were sold by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.60 | $ 6.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.51% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,123.90 | $ 7.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 2.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.20 | $ 10.57 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.83 | $ 10.04 |
Class C | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Materials | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.30 | $ 4.85 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.40 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 9.3 | 7.5 |
Monsanto Co. | 9.3 | 5.1 |
E.I. du Pont de Nemours & Co. | 8.1 | 7.9 |
Praxair, Inc. | 5.9 | 5.8 |
Freeport-McMoRan Copper & Gold, Inc. | 5.0 | 7.6 |
Air Products & Chemicals, Inc. | 4.1 | 4.4 |
Newmont Mining Corp. | 3.7 | 1.2 |
Weyerhaeuser Co. | 3.5 | 2.7 |
Nucor Corp. | 3.3 | 4.2 |
Owens-Illinois, Inc. | 3.1 | 2.6 |
| 55.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Chemicals | 56.9% |
|
![]() | Metals & Mining | 24.7% |
|
![]() | Containers & Packaging | 4.6% |
|
![]() | Paper & Forest Products | 4.0% |
|
![]() | Construction Materials | 3.4% |
|
![]() | All Others* | 6.4% |
|
As of August 31, 2009 | |||
![]() | Chemicals | 52.9% |
|
![]() | Metals & Mining | 22.3% |
|
![]() | Containers & Packaging | 8.6% |
|
![]() | Construction Materials | 4.0% |
|
![]() | Paper & Forest Products | 3.6% |
|
![]() | All Others* | 8.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 1.8% | |||
Building Products - 1.8% | |||
Masco Corp. | 954,300 | $ 12,758,991 | |
CHEMICALS - 56.9% | |||
Commodity Chemicals - 3.1% | |||
Celanese Corp. Class A | 709,406 | 22,126,373 | |
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 275,036 | 12,948,695 | |
Dow Chemical Co. | 2,351,618 | 66,574,305 | |
E.I. du Pont de Nemours & Co. | 1,711,400 | 57,708,408 | |
FMC Corp. | 179,800 | 10,279,166 | |
Huntsman Corp. | 589,100 | 8,088,343 | |
Solutia, Inc. (a) | 447,713 | 6,299,322 | |
| 161,898,239 | ||
Fertilizers & Agricultural Chemicals - 14.1% | |||
CF Industries Holdings, Inc. | 76,300 | 8,106,112 | |
Monsanto Co. | 941,744 | 66,534,214 | |
Potash Corp. of Saskatchewan, Inc. | 16,300 | 1,796,911 | |
The Mosaic Co. | 357,300 | 20,862,747 | |
Yara International ASA | 87,900 | 3,620,173 | |
| 100,920,157 | ||
Industrial Gases - 10.0% | |||
Air Products & Chemicals, Inc. | 424,400 | 29,105,352 | |
Praxair, Inc. | 560,541 | 42,119,051 | |
| 71,224,403 | ||
Specialty Chemicals - 7.1% | |||
Albemarle Corp. | 401,535 | 15,053,547 | |
Ferro Corp. | 1,055,300 | 8,642,907 | |
Innophos Holdings, Inc. | 231,500 | 5,375,430 | |
Johnson Matthey PLC | 74,505 | 1,804,406 | |
Kraton Performance Polymers, Inc. | 111,300 | 1,501,437 | |
W.R. Grace & Co. (a) | 637,900 | 18,473,584 | |
| 50,851,311 | ||
TOTAL CHEMICALS | 407,020,483 | ||
CONSTRUCTION MATERIALS - 3.4% | |||
Construction Materials - 3.4% | |||
Cemex SA de CV sponsored ADR | 564,700 | 5,398,532 | |
HeidelbergCement AG | 89,810 | 4,576,191 | |
Martin Marietta Materials, Inc. (c) | 69,322 | 5,491,689 | |
Vulcan Materials Co. (c) | 197,000 | 8,551,770 | |
| 24,018,182 | ||
CONTAINERS & PACKAGING - 4.6% | |||
Metal & Glass Containers - 4.6% | |||
Crown Holdings, Inc. (a) | 388,599 | 10,616,525 | |
Owens-Illinois, Inc. (a) | 764,600 | 22,662,744 | |
| 33,279,269 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Bunge Ltd. | 120,400 | $ 7,174,637 | |
MARINE - 0.2% | |||
Marine - 0.2% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 1,441,652 | |
METALS & MINING - 24.7% | |||
Diversified Metals & Mining - 7.9% | |||
Anglo American PLC (United Kingdom) (a) | 125,151 | 4,561,740 | |
Freeport-McMoRan Copper & Gold, Inc. | 474,865 | 35,690,853 | |
RTI International Metals, Inc. (a) | 219,600 | 5,276,988 | |
Teck Resources Ltd. Class B (sub. vtg.) (a) | 98,400 | 3,618,988 | |
Vale SA sponsored ADR | 258,450 | 7,200,417 | |
| 56,348,986 | ||
Gold - 7.0% | |||
Agnico-Eagle Mines Ltd. (Canada) | 117,300 | 6,773,246 | |
AngloGold Ashanti Ltd. sponsored ADR | 301,020 | 10,951,108 | |
Newcrest Mining Ltd. | 95,764 | 2,688,514 | |
Newmont Mining Corp. | 531,000 | 26,167,680 | |
Randgold Resources Ltd. sponsored ADR | 50,300 | 3,622,103 | |
| 50,202,651 | ||
Precious Metals & Minerals - 0.6% | |||
Aquarius Platinum Ltd. (United Kingdom) | 264,400 | 1,464,152 | |
Impala Platinum Holdings Ltd. | 63,155 | 1,536,247 | |
Pan American Silver Corp. | 75,200 | 1,616,800 | |
| 4,617,199 | ||
Steel - 9.2% | |||
Allegheny Technologies, Inc. | 248,500 | 10,849,510 | |
Carpenter Technology Corp. | 202,800 | 6,057,636 | |
Commercial Metals Co. | 441,355 | 7,238,222 | |
Nucor Corp. | 568,400 | 23,531,760 | |
Reliance Steel & Aluminum Co. | 194,900 | 8,641,866 | |
Steel Dynamics, Inc. | 412,700 | 6,739,391 | |
Ternium SA sponsored ADR (a)(c) | 71,600 | 2,450,868 | |
| 65,509,253 | ||
TOTAL METALS & MINING | 176,678,089 | ||
OIL, GAS & CONSUMABLE FUELS - 0.4% | |||
Coal & Consumable Fuels - 0.4% | |||
Centennial Coal Co. Ltd. | 894,316 | 2,924,118 | |
Common Stocks - continued | |||
Shares | Value | ||
PAPER & FOREST PRODUCTS - 4.0% | |||
Forest Products - 4.0% | |||
Louisiana-Pacific Corp. (a) | 502,700 | $ 3,825,547 | |
Weyerhaeuser Co. | 619,400 | 25,023,760 | |
| 28,849,307 | ||
TOTAL COMMON STOCKS (Cost $645,126,262) | 694,144,728 | ||
Money Market Funds - 7.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 37,931,793 | 37,931,793 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 11,995,375 | 11,995,375 | |
TOTAL MONEY MARKET FUNDS (Cost $49,927,168) | 49,927,168 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $695,053,430) | 744,071,896 |
NET OTHER ASSETS - (4.0)% | (28,856,109) | ||
NET ASSETS - 100% | $ 715,215,787 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 47,364 |
Fidelity Securities Lending Cash Central Fund | 15,907 |
Total | $ 63,271 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 694,144,728 | $ 694,144,727 | $ - | $ - |
Money Market Funds | 49,927,168 | 49,927,168 | - | - |
Total Investments in Securities: | $ 744,071,896 | $ 744,071,895 | $ - | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.5% |
Canada | 1.9% |
South Africa | 1.7% |
Bermuda | 1.2% |
Brazil | 1.0% |
Others (individually less than 1%) | 4.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $22,356,874 of which $21,745,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. |
A capital loss carryforward of approximately $5,315,874 was acquired from Paper and Forest Products Portfolio, of which $4,704,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,487,690) - See accompanying schedule: Unaffiliated issuers (cost $645,126,262) | $ 694,144,728 |
|
Fidelity Central Funds (cost $49,927,168) | 49,927,168 |
|
Total Investments (cost $695,053,430) |
| $ 744,071,896 |
Receivable for investments sold | 4,649,528 | |
Receivable for fund shares sold | 3,258,849 | |
Dividends receivable | 866,889 | |
Distributions receivable from Fidelity Central Funds | 4,218 | |
Prepaid expenses | 1,392 | |
Other receivables | 12,590 | |
Total assets | 752,865,362 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 22,498,973 | |
Payable for fund shares redeemed | 2,560,693 | |
Accrued management fee | 326,982 | |
Distribution fees payable | 40,913 | |
Other affiliated payables | 178,872 | |
Other payables and accrued expenses | 47,767 | |
Collateral on securities loaned, at value | 11,995,375 | |
Total liabilities | 37,649,575 | |
|
|
|
Net Assets | $ 715,215,787 | |
Net Assets consist of: |
| |
Paid in capital | $ 694,034,904 | |
Undistributed net investment income | 21,306 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (27,857,336) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 49,016,913 | |
Net Assets | $ 715,215,787 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 52.54 | |
|
|
|
Maximum offering price per share (100/94.25 of $52.54) | $ 55.75 | |
Class T: | $ 52.35 | |
|
|
|
Maximum offering price per share (100/96.50 of $52.35) | $ 54.25 | |
Class B: | $ 51.86 | |
|
|
|
Class C: | $ 51.79 | |
|
|
|
Materials: | $ 52.61 | |
|
|
|
Institutional Class: | $ 52.58 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,172,926 |
Special dividends |
| 960,460 |
Interest |
| 10,741 |
Income from Fidelity Central Funds |
| 63,271 |
Total income |
| 8,207,398 |
|
|
|
Expenses | ||
Management fee | $ 2,489,211 | |
Transfer agent fees | 1,294,368 | |
Distribution fees | 335,450 | |
Accounting and security lending fees | 172,078 | |
Custodian fees and expenses | 46,360 | |
Independent trustees' compensation | 2,554 | |
Registration fees | 147,450 | |
Audit | 52,688 | |
Legal | 7,458 | |
Miscellaneous | 10,834 | |
Total expenses before reductions | 4,558,451 | |
Expense reductions | (46,718) | 4,511,733 |
Net investment income (loss) | 3,695,665 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 54,971,145 | |
Foreign currency transactions | (17,050) | |
Total net realized gain (loss) |
| 54,954,095 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 118,180,912 | |
Assets and liabilities in foreign currencies | (969) | |
Total change in net unrealized appreciation (depreciation) |
| 118,179,943 |
Net gain (loss) | 173,134,038 | |
Net increase (decrease) in net assets resulting from operations | $ 176,829,703 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,695,665 | $ 2,259,809 |
Net realized gain (loss) | 54,954,095 | (75,667,547) |
Change in net unrealized appreciation (depreciation) | 118,179,943 | (119,409,812) |
Net increase (decrease) in net assets resulting from operations | 176,829,703 | (192,817,550) |
Distributions to shareholders from net investment income | (4,024,717) | (976,789) |
Share transactions - net increase (decrease) | 390,197,683 | (41,426,103) |
Redemption fees | 93,068 | 46,748 |
Total increase (decrease) in net assets | 563,095,737 | (235,173,694) |
|
|
|
Net Assets | ||
Beginning of period | 152,120,050 | 387,293,744 |
End of period (including undistributed net investment income of $21,306 and undistributed net investment income of $350,358, respectively) | $ 715,215,787 | $ 152,120,050 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .30 H | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.32) | (.12) | (2.53) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .65% H | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .43%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .16 H | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.19) | (.03) | (2.42) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .35% H | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.07) H | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.25) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.15)% H | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.36)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.253 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.06) H | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.33) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.13)% H | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.334 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 F | .38 | .64 | .42 | .32 |
Net realized and unrealized gain (loss) | 24.91 | (29.54) | 8.01 | 9.36 | 6.40 |
Total from investment operations | 25.34 | (29.16) | 8.65 | 9.78 | 6.72 |
Distributions from net investment income | (.40) | (.20) | (.36) | (.48) | (.25) |
Distributions from net realized gain | - | - | (2.21) | (4.79) | (.93) |
Total distributions | (.40) | (.20) | (2.57) J | (5.27) | (1.18) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .06 | .03 |
Net asset value, end of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Total Return A, B | 91.77% | (51.15)% | 17.10% | 22.29% | 17.01% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .96% | .90% | .91% | 1.01% | 1.05% |
Expenses net of fee waivers, if any | .96% | .90% | .90% | .98% | 1.05% |
Expenses net of all reductions | .94% | .90% | .89% | .96% | 1.01% |
Net investment income (loss) | .92% F | .78% | 1.14% | .87% | .78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 |
Portfolio turnover rate E | 104% H | 117% | 77% | 185% | 124% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 K | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .46 G | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.44) | (.20) | (2.56) L | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, I |
|
|
|
|
Expenses before reductions | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | .94% G | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 104% J | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J The portfolio turnover rate does not include the assets acquired in the merger. K For the year ended February 29. L Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund.
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gains are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 81,661,128 |
Gross unrealized depreciation | (38,497,461) |
Net unrealized appreciation (depreciation) | $ 43,163,667 |
|
|
Tax Cost | $ 700,908,229 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 375,642 |
Capital loss carryforward | $ (22,356,874) |
Net unrealized appreciation (depreciation) | $ 43,162,114 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
|
|
|
Ordinary Income | $ 4,024,717 | $ 976,789 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $801,356,820 and $441,665,671, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .57% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 79,488 | $ 2,143 |
Class T | .25% | .25% | 54,942 | 277 |
Class B | .75% | .25% | 62,120 | 46,655 |
Class C | .75% | .25% | 138,900 | 49,199 |
|
|
| $ 335,450 | $ 98,274 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 92,688 |
Class T | 9,956 |
Class B* | 8,978 |
Class C* | 4,361 |
| $ 115,983 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each applicable class were as follows:
| Amount | % of |
Class A | $ 98,217 | .31 |
Class T | 38,681 | .35 |
Class B | 21,492 | .35 |
Class C | 46,333 | .34 |
Materials | 1,076,261 | .29 |
Institutional Class | 13,384 | .27 |
| $ 1,294,368 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8,934 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,333 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $15,907.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $46,675 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $43.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 238,202 | $ 43,307 |
Class T | 47,220 | 5,182 |
Class B | 5,848 | - |
Class C | 12,908 | - |
Materials | 3,662,178 | 923,202 |
Institutional Class | 58,361 | 5,098 |
Total | $ 4,024,717 | $ 976,789 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 858,136 | 400,579 | $ 40,135,680 | $ 21,052,656 |
Reinvestment of distributions | 4,377 | 1,376 | 220,619 | 40,415 |
Shares redeemed | (256,610) | (231,192) | (11,780,339) | (9,966,206) |
Net increase (decrease) | 605,903 | 170,763 | $ 28,575,960 | $ 11,126,865 |
Class T |
|
|
|
|
Shares sold | 167,992 | 127,856 | $ 7,326,294 | $ 6,586,988 |
Reinvestment of distributions | 941 | 169 | 45,756 | 4,976 |
Shares redeemed | (67,330) | (69,236) | (3,005,643) | (3,081,211) |
Net increase (decrease) | 101,603 | 58,789 | $ 4,366,407 | $ 3,510,753 |
Class B |
|
|
|
|
Shares sold | 131,820 | 70,236 | $ 5,954,562 | $ 3,670,456 |
Reinvestment of distributions | 103 | - | 4,824 | - |
Shares redeemed | (43,087) | (48,886) | (1,785,370) | (2,112,869) |
Net increase (decrease) | 88,836 | 21,350 | $ 4,174,016 | $ 1,557,587 |
Class C |
|
|
|
|
Shares sold | 299,617 | 186,111 | $ 13,304,163 | $ 9,519,248 |
Reinvestment of distributions | 234 | (8) | 10,972 | (480) |
Shares redeemed | (106,334) | (139,135) | (4,538,206) | (5,956,182) |
Net increase (decrease) | 193,517 | 46,968 | $ 8,776,929 | $ 3,562,586 |
Materials |
|
|
|
|
Shares sold | 11,253,841 | 3,524,569 | $ 539,188,177 | $ 186,250,882 |
Issued in exchange for shares of Paper and Forest Products Portfolio | 337,332 | - | 13,304,373 | - |
Reinvestment of distributions | 68,039 | 29,537 | 3,440,550 | 866,336 |
Shares redeemed | (4,780,310) | (5,137,192) | (223,285,260) | (248,168,306) |
Net increase (decrease) | 6,878,902 | (1,583,086) | $ 332,647,840 | $ (61,051,088) |
Institutional Class |
|
|
|
|
Shares sold | 269,782 | 41,845 | $ 13,383,120 | $ 2,204,347 |
Reinvestment of distributions | 839 | 156 | 43,347 | 4,588 |
Shares redeemed | (36,606) | (47,942) | (1,769,936) | (2,341,741) |
Net increase (decrease) | 234,015 | (5,941) | $ 11,656,531 | $ (132,806) |
Annual Report
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
12. Merger Information.
On June 19, 2009, the Fund acquired all of the assets and assumed all of the liabilities of Paper and Forest Products Portfolio ("Target Fund") pursuant to an agreement and plan of reorganization approved by the Board of Trustees ("The Board") on November 18, 2008. The reorganization provides shareholders access to a larger portfolio with better historical performance and lower expenses. The acquisition was accomplished by an exchange of 337,332 shares of Materials (the original retail class shares of the Fund), for 697,705 shares then outstanding (valued at $19.07) of the Target Fund. 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. The Target Fund net assets, including securities of $13,445,190, unrealized depreciation of $3,465,168, cash of $45,230 and net other liabilities of $186,047 were combined with the Fund's net assets of $314,623,676 for total net assets after the acquisition of $327,928,049.
Pro forma results of operations of the combined entity for the entire year ended February 28, 2010, 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) | $ 3,777,997 |
Total net realized gain (loss) | 51,950,136 |
Total change in net unrealized appreciation (depreciation) | 125,269,592 |
Net increase (decrease) in net assets resulting from operations | $ 180,997,725 |
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 Fund's accompanying Statement of Operations since June 19, 2009.
Annual Report
Fidelity Advisor Telecommunications Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 33.90% | 1.48% | -8.38% |
Class T (incl. 3.50% sales charge) B | 36.69% | 1.77% | -8.25% |
Class B (incl. contingent deferred sales charge) C | 35.97% | 1.81% | -8.06% |
Class C (incl. contingent deferred sales charge) D | 40.00% | 2.19% | -8.06% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class B shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns prior to December 12, 2006 would have been lower. Class C shares' contingent deferred sales charge included in the past one year, past five years, and past ten years total return figures are 1%, 0%, and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications Fund - Class A on February 29, 2000, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor Telecommunications Fund: For the 12-month period ending February 28, 2010, the fund's Class A, Class T, Class B and Class C shares gained 42.07%, 41.64%, 40.97% and 41.00%, respectively (excluding sales charges), handily outperforming the 18.67% return of the MSCI® U.S. IM Telecommunications Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but underperforming the S&P 500. Versus the MSCI index, the fund benefited from being well-positioned in smaller-cap companies that performed strongly when the market rallied between March and June 2009. Most notably, the fund was helped by an out-of-benchmark stake and strong stock selection in the cable and satellite group, especially U.K.-based Virgin Media. An early-period overweighting in wireless telecom services company Sprint Nextel also helped. In addition, the fund got a boost from being significantly underweighted in the integrated telecom services group, specifically in AT&T and Verizon Communications, which grew at a much lower rate than other telecom subsectors. AT&T and Verizon made up almost three-quarters of the MSCI index during the period. In addition, the fund benefited from holding an out-of-index position in Gameloft, a French company and dominant player in mobile gaming. Conversely, performance was hampered by unfavorable positioning in a few stocks. Specifically, it was hurt by holding an underweighted position in CenturyTel, a rural integrated telecom services provider that did well during the market rally and benefited from acquiring Embarq, another rural phone company, in the summer. British wireless telecom giant Vodafone Group also disappointed during the rally when large, liquid stocks fell out of favor as people invested in smaller, more growth-oriented names. Underweighting Level 3 Communications also dragged down performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.24% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,078.40 | $ 6.39 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,076.60 | $ 7.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.30 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.20 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Telecommunications | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,079.70 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,080.50 | $ 4.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 13.0 | 23.5 |
Verizon Communications, Inc. | 12.9 | 17.4 |
Sprint Nextel Corp. | 6.3 | 4.7 |
American Tower Corp. Class A | 6.3 | 4.8 |
Crown Castle International Corp. | 5.9 | 2.5 |
Qwest Communications International, Inc. | 5.2 | 3.0 |
SBA Communications Corp. Class A | 3.9 | 1.4 |
NII Holdings, Inc. | 3.7 | 1.6 |
tw telecom, inc. | 2.9 | 2.7 |
CenturyTel, Inc. | 2.5 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Diversified Telecommunication Services | 48.5% |
|
![]() | Wireless Telecommunication Services | 36.5% |
|
![]() | Media | 9.4% |
|
![]() | Software | 1.0% |
|
![]() | Communications Equipment | 0.3% |
|
![]() | All Others* | 4.3% |
|
As of August 31, 2009 | |||
![]() | Diversified Telecommunication Services | 61.9% |
|
![]() | Wireless Telecommunication Services | 23.7% |
|
![]() | Media | 9.3% |
|
![]() | Communications Equipment | 2.1% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 95.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.3% | |||
Communications Equipment - 0.3% | |||
Aruba Networks, Inc. (a) | 392 | $ 4,598 | |
F5 Networks, Inc. (a) | 1,600 | 89,280 | |
Infinera Corp. (a)(c) | 75,300 | 570,774 | |
Juniper Networks, Inc. (a) | 2,100 | 58,758 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 1,700 | 44,387 | |
Sandvine Corp. (a) | 3,200 | 4,927 | |
Sonus Networks, Inc. (a) | 56,800 | 120,984 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 6,006 | |
| 899,714 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 3,695 | |
NetApp, Inc. (a) | 700 | 21,007 | |
Synaptics, Inc. (a) | 450 | 12,015 | |
| 36,717 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 48.5% | |||
Alternative Carriers - 5.7% | |||
Cable & Wireless PLC | 19,405 | 40,367 | |
Cogent Communications Group, Inc. (a) | 64,802 | 637,652 | |
Global Crossing Ltd. (a) | 280,586 | 3,998,351 | |
Iliad Group SA (c) | 26,973 | 2,856,740 | |
Level 3 Communications, Inc. (a)(c) | 7,976 | 12,682 | |
PAETEC Holding Corp. (a) | 73,600 | 291,456 | |
tw telecom, inc. (a) | 532,857 | 8,467,098 | |
| 16,304,346 | ||
Integrated Telecommunication Services - 42.8% | |||
AT&T, Inc. | 1,514,019 | 37,562,805 | |
BT Group PLC | 5,351 | 9,386 | |
Cbeyond, Inc. (a)(c) | 165,098 | 2,047,215 | |
CenturyTel, Inc. | 210,190 | 7,203,211 | |
China Telecom Corp. Ltd. sponsored ADR | 50,600 | 2,226,906 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 317,800 | 3,867,626 | |
Cincinnati Bell, Inc. (a) | 225,000 | 666,000 | |
Deutsche Telekom AG (Reg.) | 92,923 | 1,196,848 | |
FairPoint Communications, Inc. (a) | 34,149 | 905 | |
Frontier Communications Corp. (c) | 366,900 | 2,858,151 | |
Hellenic Telecommunications Organization SA | 163 | 1,900 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,375,400 | 3,001,167 | |
Qwest Communications International, Inc. | 3,263,989 | 14,883,790 | |
Telecom Italia SpA sponsored ADR | 226 | 3,214 | |
Telefonica SA | 400 | 9,379 | |
Telefonica SA sponsored ADR | 85,300 | 5,986,354 | |
Telenor ASA (a) | 4,400 | 55,615 | |
Telenor ASA sponsored ADR (a) | 53,300 | 2,025,400 | |
Telkom SA Ltd. | 4,400 | 19,116 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 1,292,624 | $ 37,395,612 | |
Vimpel Communications sponsored ADR | 109,000 | 2,021,950 | |
Windstream Corp. | 73,415 | 743,694 | |
| 123,786,244 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 140,090,590 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 14,510 | |
INTERNET SOFTWARE & SERVICES - 0.2% | |||
Internet Software & Services - 0.2% | |||
Google, Inc. Class A (a) | 90 | 47,412 | |
SAVVIS, Inc. | 26,799 | 377,598 | |
| 425,010 | ||
MEDIA - 9.4% | |||
Broadcasting - 0.8% | |||
Ten Network Holdings Ltd. (a) | 1,539,470 | 2,392,664 | |
Cable & Satellite - 8.4% | |||
Cablevision Systems Corp. - NY Group Class A | 170,900 | 4,115,272 | |
Comcast Corp. Class A | 299,600 | 4,925,424 | |
DIRECTV (a) | 128,909 | 4,363,570 | |
Dish TV India Ltd. (a) | 5,888 | 4,744 | |
Liberty Global, Inc. Class A (a)(c) | 153,200 | 4,118,016 | |
Net Servicos de Comunicacao SA sponsored ADR (c) | 191,500 | 2,357,365 | |
Virgin Media, Inc. | 270,000 | 4,374,000 | |
| 24,258,391 | ||
Movies & Entertainment - 0.2% | |||
Madison Square Garden, Inc. Class A (a) | 22,925 | 447,038 | |
TOTAL MEDIA | 27,098,093 | ||
SOFTWARE - 1.0% | |||
Application Software - 1.0% | |||
Gameloft (a) | 648,786 | 2,791,298 | |
Nuance Communications, Inc. (a) | 800 | 11,512 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 102,075 | |
| 2,904,885 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 113,614 | 104,525 | |
TOTAL SOFTWARE | 3,009,410 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.5% | |||
Wireless Telecommunication Services - 36.5% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 13,371 | |
American Tower Corp. Class A (a) | 424,700 | 18,117,702 | |
Axiata Group Bhd | 1,126,600 | 1,234,948 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
China Mobile (Hong Kong) Ltd. sponsored ADR | 42,100 | $ 2,081,003 | |
Clearwire Corp.: | |||
rights 6/21/10 (a)(c) | 1,029,741 | 298,625 | |
Class A (a)(c) | 1,029,741 | 6,549,153 | |
Crown Castle International Corp. (a) | 449,983 | 17,009,357 | |
Idea Cellular Ltd. (a) | 3,710 | 4,917 | |
Leap Wireless International, Inc. (a)(c) | 364,158 | 5,196,535 | |
MetroPCS Communications, Inc. (a) | 400 | 2,468 | |
Millicom International Cellular SA | 19,400 | 1,643,956 | |
MTN Group Ltd. | 478,225 | 6,929,541 | |
NII Holdings, Inc. (a) | 289,300 | 10,825,606 | |
NTELOS Holdings Corp. | 632 | 10,795 | |
PT Indosat Tbk | 1,600 | 874 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 72,487 | |
SBA Communications Corp. Class A (a) | 317,382 | 11,222,628 | |
Sprint Nextel Corp. (a) | 5,503,750 | 18,327,488 | |
Syniverse Holdings, Inc. (a) | 30,468 | 512,472 | |
Telephone & Data Systems, Inc. | 15,045 | 469,554 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 53,700 | 1,524,543 | |
Vivo Participacoes SA sponsored ADR | 75,225 | 2,035,589 | |
Vodafone Group PLC sponsored ADR | 66,400 | 1,445,528 | |
| 105,529,140 | ||
TOTAL COMMON STOCKS (Cost $314,829,544) | 277,103,184 | ||
Money Market Funds - 11.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 11,655,757 | $ 11,655,757 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 21,925,413 | 21,925,413 | |
TOTAL MONEY MARKET FUNDS (Cost $33,581,170) | 33,581,170 |
TOTAL INVESTMENT PORTFOLIO - 107.5% (Cost $348,410,714) | 310,684,354 |
NET OTHER ASSETS - (7.5)% | (21,692,974) | ||
NET ASSETS - 100% | $ 288,991,380 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,187 |
Fidelity Securities Lending Cash Central Fund | 147,071 |
Total | $ 169,258 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 277,103,184 | $ 275,887,571 | $ 1,215,613 | $ - |
Money Market Funds | 33,581,170 | 33,581,170 | - | - |
Total Investments in Securities: | $ 310,684,354 | $ 309,468,741 | $ 1,215,613 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (666) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 666 |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ (666) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.2% |
South Africa | 2.4% |
Spain | 2.1% |
Hong Kong | 2.0% |
Brazil | 2.0% |
France | 2.0% |
Bermuda | 1.4% |
Indonesia | 1.0% |
Others (individually less than 1%) | 4.9% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $238,175,641 of which $161,866,685, $11,764,473, $52,002,796 and $12,541,687 will expire on February 28, 2011, 2012, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,670,597) - See accompanying schedule: Unaffiliated issuers (cost $314,829,544) | $ 277,103,184 |
|
Fidelity Central Funds (cost $33,581,170) | 33,581,170 |
|
Total Investments (cost $348,410,714) |
| $ 310,684,354 |
Receivable for fund shares sold | 209,095 | |
Dividends receivable | 273,897 | |
Distributions receivable from Fidelity Central Funds | 11,455 | |
Prepaid expenses | 911 | |
Other receivables | 83,241 | |
Total assets | 311,262,953 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 92,136 | |
Accrued management fee | 130,795 | |
Distribution fees payable | 3,919 | |
Other affiliated payables | 84,912 | |
Other payables and accrued expenses | 34,398 | |
Collateral on securities loaned, at value | 21,925,413 | |
Total liabilities | 22,271,573 | |
|
|
|
Net Assets | $ 288,991,380 | |
Net Assets consist of: |
| |
Paid in capital | $ 570,869,864 | |
Undistributed net investment income | 1,935,664 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (246,075,965) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (37,738,183) | |
Net Assets | $ 288,991,380 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
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|
Calculation of Maximum Offering Price | $ 37.64 | |
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Maximum offering price per share (100/94.25 of $37.64) | $ 39.94 | |
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Class T: | $ 37.55 | |
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Maximum offering price per share (100/96.50 of $37.55) | $ 38.91 | |
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Class B: | $ 37.60 | |
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Class C: | $ 37.61 | |
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Telecommunications: | $ 37.73 | |
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Institutional Class: | $ 37.69 |
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.
Annual Report
Select Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,611,898 |
Income from Fidelity Central Funds (including $147,071 from security lending) |
| 169,258 |
Total income |
| 8,781,156 |
|
|
|
Expenses | ||
Management fee | $ 1,575,725 | |
Transfer agent fees | 937,080 | |
Distribution fees | 40,496 | |
Accounting and security lending fees | 113,619 | |
Custodian fees and expenses | 17,680 | |
Independent trustees' compensation | 1,966 | |
Registration fees | 76,311 | |
Audit | 50,145 | |
Legal | 5,426 | |
Interest | 157 | |
Miscellaneous | 4,318 | |
Total expenses before reductions | 2,822,923 | |
Expense reductions | (38,062) | 2,784,861 |
Net investment income (loss) | 5,996,295 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,404,701 | |
Foreign currency transactions | 7,671 | |
Capital gain distributions from Fidelity Central Funds | 1,225 | |
Total net realized gain (loss) |
| 5,413,597 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 79,570,497 | |
Assets and liabilities in foreign currencies | 1,940 | |
Total change in net unrealized appreciation (depreciation) |
| 79,572,437 |
Net gain (loss) | 84,986,034 | |
Net increase (decrease) in net assets resulting from operations | $ 90,982,329 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,996,295 | $ 2,191,887 |
Net realized gain (loss) | 5,413,597 | (72,731,263) |
Change in net unrealized appreciation (depreciation) | 79,572,437 | (37,714,452) |
Net increase (decrease) in net assets resulting from operations | 90,982,329 | (108,253,828) |
Distributions to shareholders from net investment income | (2,355,415) | (2,892,731) |
Distributions to shareholders from net realized gain | (402,567) | (1,435,678) |
Total distributions | (2,757,982) | (4,328,409) |
Share transactions - net increase (decrease) | 989,027 | (28,183,681) |
Redemption fees | 12,272 | 6,604 |
Total increase (decrease) in net assets | 89,225,646 | (140,759,314) |
|
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|
Net Assets | ||
Beginning of period | 199,765,734 | 340,525,048 |
End of period (including undistributed net investment income of $1,935,664 and distributions in excess of net investment income of $1,700,123, respectively) | $ 288,991,380 | $ 199,765,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.19) | (.35) M | (.51) | - |
Distributions from net realized gain | (.05) | (.18) M | - | - |
Total distributions | (.24) N | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Class T
|
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|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
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|
|
|
Net asset value, beginning of period | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
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|
|
Net investment income (loss) E | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.22) | (.24) M | (.42) | - |
Distributions from net realized gain | (.03) | (.13) M | - | - |
Total distributions | (.24) N | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
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|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
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|
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Net asset value, beginning of period | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
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|
|
Net investment income (loss) E | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.04) | (.11) M | (.20) | - |
Distributions from net realized gain | (.01) | (.06) M | - | - |
Total distributions | (.05) N | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
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|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications due to book to tax differences. N Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. |
Financial Highlights - Class C
|
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|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
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|
|
|
Net asset value, beginning of period | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.10) | (.07) M | (.22) | - |
Distributions from net realized gain | (.02) | (.05) M | - | - |
Total distributions | (.12) N | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
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|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
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|
|
Net asset value, beginning of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Income from Investment Operations |
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|
Net investment income (loss) C | .76 | .30 | .43 | .61 F | .36 |
Net realized and unrealized gain (loss) | 10.59 | (15.65) | (8.12) | 8.85 | 7.11 |
Total from investment operations | 11.35 | (15.35) | (7.69) | 9.46 | 7.47 |
Distributions from net investment income | (.31) | (.41) K | (.52) | (.53) | (.33) |
Distributions from net realized gain | (.05) | (.20) K | - | - | - |
Total distributions | (.36) L | (.61) J | (.52) | (.53) | (.33) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Total Return A, B | 42.43% | (36.00)% | (15.30)% | 22.69% | 21.54% |
Ratios to Average Net Assets D, G |
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|
|
Expenses before reductions | .99% | .97% | .91% | .99% | 1.05% |
Expenses net of fee waivers, if any | .99% | .97% | .90% | .97% | 1.05% |
Expenses net of all reductions | .98% | .96% | .90% | .97% | .96% |
Net investment income (loss) | 2.15% | .85% | .79% | 1.34% F | .96% |
Supplemental Data |
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|
|
Net assets, end of period (000 omitted) | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 |
Portfolio turnover rate E | 90% | 168% | 134% | 162% | 148% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.11 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.09%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. K The amount shown reflects certain reclassifications related to book to tax differences. L Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Institutional Class
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|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
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|
|
|
Net asset value, beginning of period | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.38) | (.40) L | (.62) | - |
Distributions from net realized gain | (.05) | (.20) L | - | - |
Total distributions | (.43) M | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - |
Net asset value, end of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. M Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 per share and distributions from net realized gain of $.051 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory and political uncertainties, and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 22,492,418 |
Gross unrealized depreciation | (66,549,245) |
Net unrealized appreciation (depreciation) | $ (44,056,827) |
|
|
Tax Cost | $ 354,741,181 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,935,859 |
Capital loss carryforward | $ (238,175,641) |
Net unrealized appreciation (depreciation) | $ (44,068,650) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 2,757,982 | $ 4,328,409 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $245,737,983 and $242,388,135, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 8,842 | $ 348 |
Class T | .25% | .25% | 7,956 | 10 |
Class B | .75% | .25% | 6,292 | 4,720 |
Class C | .75% | .25% | 17,406 | 6,228 |
|
|
| $ 40,496 | $ 11,306 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 7,518 |
Class T | 1,778 |
Class B* | 3,551 |
Class C* | 587 |
| $ 13,434 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 12,356 | .35 |
Class T | 6,117 | .39 |
Class B | 2,209 | .35 |
Class C | 6,068 | .35 |
Telecommunications | 908,946 | .33 |
Institutional Class | 1,384 | .20 |
| $ 937,080 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $546 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 6,365,000 | .44% | $ 157 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $38,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $61.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 15,094 | $ 25,664 |
Class T | 11,817 | 8,592 |
Class B | 821 | 2,117 |
Class C | 5,697 | 1,365 |
Telecommunications | 2,311,098 | 4,183,665 |
Institutional Class | 10,888 | 1,823 |
Total | $ 2,355,415 | $ 4,223,226 |
From net realized gain |
|
|
Class A | $ 4,245 | $ 735 |
Class T | 827 | 357 |
Class B | 139 | 203 |
Class C | 504 | 204 |
Telecommunications | 396,621 | 103,644 |
Institutional Class | 231 | 40 |
Total | $ 402,567 | $ 105,183 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 88,778 | 74,621 | $ 3,085,616 | $ 2,094,308 |
Reinvestment of distributions | 476 | 895 | 17,722 | 24,776 |
Shares redeemed | (79,650) | (61,881) | (2,900,645) | (2,346,705) |
Net increase (decrease) | 9,604 | 13,635 | $ 202,693 | $ (227,621) |
Class T |
|
|
|
|
Shares sold | 45,905 | 9,634 | $ 1,589,430 | $ 334,058 |
Reinvestment of distributions | 314 | 320 | 12,167 | 8,637 |
Shares redeemed | (14,845) | (16,594) | (532,433) | (641,649) |
Net increase (decrease) | 31,374 | (6,640) | $ 1,069,164 | $ (298,954) |
Class B |
|
|
|
|
Shares sold | 15,431 | 4,801 | $ 522,557 | $ 166,647 |
Reinvestment of distributions | 22 | 82 | 836 | 2,207 |
Shares redeemed | (11,987) | (8,780) | (408,765) | (330,007) |
Net increase (decrease) | 3,466 | (3,897) | $ 114,628 | $ (161,153) |
Class C |
|
|
|
|
Shares sold | 62,598 | 5,551 | $ 2,159,620 | $ 174,242 |
Reinvestment of distributions | 129 | 51 | 5,000 | 1,354 |
Shares redeemed | (19,418) | (12,987) | (702,765) | (456,301) |
Net increase (decrease) | 43,309 | (7,385) | $ 1,461,855 | $ (280,705) |
Telecommunications |
|
|
|
|
Shares sold | 3,331,732 | 1,724,964 | $ 111,276,252 | $ 54,824,085 |
Reinvestment of distributions | 68,653 | 146,701 | 2,606,513 | 4,105,779 |
Shares redeemed | (3,325,834) | (2,367,928) | (116,676,048) | (86,013,313) |
Net increase (decrease) | 74,551 | (496,263) | $ (2,793,283) | $ (27,083,449) |
Institutional Class |
|
|
|
|
Shares sold | 35,372 | 477 | $ 1,243,451 | $ 15,601 |
Reinvestment of distributions | 37 | 51 | 1,435 | 1,477 |
Shares redeemed | (8,744) | (3,964) | (310,916) | (148,877) |
Net increase (decrease) | 26,665 | (3,436) | $ 933,970 | $ (131,799) |
Annual Report
Notes to Financial Statements - continued
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio(funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 Assistant Treasurer of the Fidelity Fixed Income and Asset Allocation Funds. Mr. Robins also serves as President and Treasurer of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each 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:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/12/10 | 04/09/10 | $0.055 | $0.00 |
Class T | 04/12/10 | 04/09/10 | $0.027 | $0.00 |
Class B | 04/12/10 | 04/09/10 | $0.00 | $0.00 |
Class C | 04/12/10 | 04/09/10 | $0.00 | $0.00 |
Gold Portfolio |
|
|
|
|
Class A | 04/12/10 | 04/09/10 | $0.00 | $0.383 |
Class T | 04/12/10 | 04/09/10 | $0.00 | $0.361 |
Class B | 04/12/10 | 04/09/10 | $0.00 | $0.333 |
Class C | 04/12/10 | 04/09/10 | $0.00 | $0.337 |
Materials Portfolio |
|
|
|
|
Class A | 04/12/10 | 04/09/10 | $0.00 | $0.01 |
Class T | 04/12/10 | 04/09/10 | $0.00 | $0.00 |
Class B | 04/12/10 | 04/09/10 | $0.00 | $0.00 |
Class C | 04/12/10 | 04/09/10 | $0.00 | $0.00 |
Telecommunications Portfolio |
|
|
|
|
Class A | 04/12/10 | 04/09/10 | $0.224 | $0.00 |
Class T | 04/12/10 | 04/09/10 | $0.199 | $0.00 |
Class B | 04/12/10 | 04/09/10 | $0.163 | $0.00 |
Class C | 04/12/10 | 04/09/10 | $0.166 | $0.00 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2009 | December |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | - | 100% |
Class B | - | 100% |
Class C | - | 100% |
Gold Portfolio |
|
|
Class A | - | - |
Class T | - | - |
Class B | - | - |
Class C | - | - |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Annual Report
Distributions - continued
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 2009 | December |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | - | 100% |
Class B | - | 100% |
Class C | - | 100% |
Gold Portfolio |
|
|
Class A | - | 16% |
Class T | - | 18% |
Class B | - | 21% |
Class C | - | 21% |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 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:
Gold Portfolio | Pay Date | Income | Taxes |
Class A | 12/14/2009 | .082 | .0062 |
Class T | 12/14/2009 | .072 | .0062 |
Class B | 12/14/2009 | .059 | .0062 |
Class C | 12/14/2009 | .061 | .0062 |
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASGMT-UANN-0410
1.845779.103
Fidelity Advisor
Focus Funds®
Institutional Class
Fidelity Advisor Consumer Staples Fund
Fidelity Advisor Gold Fund
Fidelity Advisor Materials Fund
Fidelity Advisor Telecommunications Fund
Each Advisor fund listed above is a class
of the Fidelity® Select Portfolios®.
Annual Report
February 28, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Note to Shareholders |
| |
Consumer Staples | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
The turnaround in global capital markets that marked most of 2009 slowed in early 2010, as investors considered the risks to a sustained recovery, including increased political uncertainty, high unemployment, weak consumer spending and potential inflation on the horizon. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Annual Report
Note to shareholders
In December 2009 and January 2010, Fidelity adopted capped benchmarks for most of its sector and industry funds, including the Advisor Focus Funds. The capped benchmarks, which limit the weightings of individual issuers, better represent the investment opportunities available to the funds and will provide shareholders with more-meaningful performance comparisons. These changes do not affect the investment policies of any of the funds, and the primary benchmark for all of the funds remains the S&P 500® Index.
Annual Report
Fidelity Advisor Consumer Staples Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 41.03% | 7.65% | 10.49% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Consumer Staples Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Institutional Class on February 29, 2000. 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. The initial offering of Institutional Class took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Portfolio: During the past year, the fund's Institutional Class shares returned 41.03%, trailing the S&P 500 but outperforming the 37.17% gain of the MSCI® U.S. IM Consumer Staples 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe. Leading the way in terms of performance relative to the MSCI index was strong stock picking and a modest underweighting in the soft drink industry, including stakes in bottlers Coca-Cola Enterprises and Mexico's Coca-Cola FEMSA, as well as Canada's private-label manufacturer Cott. Stock choices within packaged food/meats were significant contributors, particularly out-of-index holdings in Anglo-Dutch firm Unilever and Switzerland's Nestlé. Good stock selection in brewers also helped, including an out-of-index stake in Belgian brewer Anheuser-Busch InBev, which posted solid gains in response to the successful merger between two major brewers. Underweighting major index component Wal-Mart Stores also was a positive, when the stock lagged for much of the period. On the negative side, underweighting the strong-performing tobacco group - and index constituents within, including Philip Morris International - detracted, as did an overweighting and weak stock selection within food retailing, including an outsized stake in major grocery chain Kroger. Weak stock selection in the distillers and vintners industry also hurt, including a position in Constellation Brands. In other areas, not owning global cosmetic manufacturer and index component Estee Lauder was a negative when the stock performed very well near the end of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to February 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.11% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,086.90 | $ 5.74 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.41% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,085.40 | $ 7.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.80 | $ 7.05 |
Class B | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.50 | $ 10.07 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Class C | 1.87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,082.70 | $ 9.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.52 | $ 9.35 |
Consumer Staples | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.20 | $ 4.56 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,088.30 | $ 4.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 14.6 | 11.5 |
CVS Caremark Corp. | 6.4 | 8.0 |
The Coca-Cola Co. | 5.8 | 6.6 |
British American Tobacco PLC sponsored ADR | 5.0 | 4.9 |
Wal-Mart Stores, Inc. | 4.6 | 5.0 |
Walgreen Co. | 4.3 | 2.7 |
PepsiCo, Inc. | 4.3 | 6.9 |
Altria Group, Inc. | 3.9 | 3.5 |
Avon Products, Inc. | 3.6 | 2.7 |
Safeway, Inc. | 3.3 | 2.5 |
| 55.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Beverages | 24.8% |
|
![]() | Food & Staples Retailing | 22.0% |
|
![]() | Household Products | 17.9% |
|
![]() | Food Products | 13.1% |
|
![]() | Tobacco | 11.5% |
|
![]() | All Others* | 10.7% |
|
As of August 31, 2009 | |||
![]() | Beverages | 29.5% |
|
![]() | Food & Staples Retailing | 21.4% |
|
![]() | Food Products | 14.7% |
|
![]() | Household Products | 14.6% |
|
![]() | Tobacco | 11.9% |
|
![]() | All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
BEVERAGES - 24.8% | |||
Brewers - 6.0% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 277,611 | $ 2,799,982 | |
Anheuser-Busch InBev SA NV | 566,622 | 28,358,717 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 65,200 | 6,321,140 | |
Molson Coors Brewing Co. Class B | 953,715 | 38,511,012 | |
| 75,990,851 | ||
Distillers & Vintners - 4.1% | |||
Brown-Forman Corp. Class B (non-vtg.) | 128,521 | 6,729,360 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 2,066,373 | 31,078,250 | |
Diageo PLC sponsored ADR | 217,663 | 14,209,041 | |
| 52,016,651 | ||
Soft Drinks - 14.7% | |||
Coca-Cola Bottling Co. Consolidated | 37,504 | 2,087,098 | |
Coca-Cola Enterprises, Inc. | 781,200 | 19,959,660 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 101,029 | 6,487,072 | |
Coca-Cola Icecek AS | 373,332 | 3,475,775 | |
Cott Corp. (a) | 21,000 | 151,076 | |
Dr Pepper Snapple Group, Inc. | 546,131 | 17,339,659 | |
Embotelladora Andina SA sponsored ADR (c) | 323,541 | 6,347,874 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 72,490 | 3,102,572 | |
PepsiCo, Inc. | 873,327 | 54,556,738 | |
The Coca-Cola Co. | 1,395,715 | 73,582,095 | |
| 187,089,619 | ||
TOTAL BEVERAGES | 315,097,121 | ||
FOOD & STAPLES RETAILING - 22.0% | |||
Drug Retail - 10.7% | |||
CVS Caremark Corp. | 2,404,926 | 81,166,253 | |
Walgreen Co. | 1,557,718 | 54,893,982 | |
| 136,060,235 | ||
Food Retail - 5.0% | |||
Kroger Co. | 878,068 | 19,405,303 | |
Safeway, Inc. | 1,681,396 | 41,900,388 | |
Susser Holdings Corp. (a) | 70,300 | 589,114 | |
The Pantry, Inc. (a) | 162,909 | 2,134,108 | |
| 64,028,913 | ||
Hypermarkets & Super Centers - 6.3% | |||
BJ's Wholesale Club, Inc. (a) | 586,299 | 21,206,435 | |
Wal-Mart Stores, Inc. | 1,076,480 | 58,205,274 | |
| 79,411,709 | ||
TOTAL FOOD & STAPLES RETAILING | 279,500,857 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 13.1% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. | 609,253 | $ 17,887,668 | |
Bunge Ltd. | 198,072 | 11,803,110 | |
Corn Products International, Inc. | 187,577 | 6,111,259 | |
SLC Agricola SA | 364,400 | 3,123,457 | |
Viterra, Inc. (a) | 331,300 | 3,060,334 | |
| 41,985,828 | ||
Packaged Foods & Meats - 9.8% | |||
Ausnutria Dairy Hunan Co. Ltd. Class H | 4,155,000 | 2,960,134 | |
Brasil Foods SA | 1,000 | 24,447 | |
Cermaq ASA (a) | 304,000 | 3,394,981 | |
Cosan Ltd. Class A (a) | 91,200 | 827,184 | |
Danone | 101,220 | 5,918,984 | |
Dean Foods Co. (a) | 1,918,268 | 27,987,530 | |
General Mills, Inc. | 116,923 | 8,419,625 | |
Kraft Foods, Inc. Class A | 310,062 | 8,815,063 | |
Lindt & Spruengli AG (c) | 109 | 2,535,792 | |
Nestle SA (Reg.) | 655,642 | 32,617,335 | |
Tyson Foods, Inc. Class A | 321,761 | 5,482,807 | |
Unilever NV (NY Shares) | 837,612 | 25,203,745 | |
| 124,187,627 | ||
TOTAL FOOD PRODUCTS | 166,173,455 | ||
HOUSEHOLD PRODUCTS - 17.9% | |||
Household Products - 17.9% | |||
Colgate-Palmolive Co. | 230,514 | 19,118,831 | |
Energizer Holdings, Inc. (a) | 390,266 | 22,615,915 | |
Procter & Gamble Co. | 2,928,338 | 185,305,226 | |
| 227,039,972 | ||
PERSONAL PRODUCTS - 4.1% | |||
Personal Products - 4.1% | |||
Avon Products, Inc. | 1,496,306 | 45,547,555 | |
Mead Johnson Nutrition Co. Class A | 86,926 | 4,111,600 | |
Natura Cosmeticos SA | 164,500 | 3,033,030 | |
| 52,692,185 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 595,924 | 37,543,212 | |
Perrigo Co. | 1,000 | 49,570 | |
| 37,592,782 | ||
TOBACCO - 11.5% | |||
Tobacco - 11.5% | |||
Altria Group, Inc. | 2,442,510 | 49,143,301 | |
British American Tobacco PLC sponsored ADR | 934,941 | 63,482,494 | |
KT&G Corp. | 56,270 | 3,114,254 | |
Common Stocks - continued | |||
Shares | Value | ||
TOBACCO - CONTINUED | |||
Tobacco - continued | |||
Philip Morris International, Inc. | 540,657 | $ 26,481,380 | |
Souza Cruz Industria Comerico | 92,300 | 3,156,429 | |
| 145,377,858 | ||
TOTAL COMMON STOCKS (Cost $1,133,829,769) | 1,223,474,230 | ||
Money Market Funds - 3.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 42,479,890 | 42,479,890 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 830,658 | 830,658 | |
TOTAL MONEY MARKET FUNDS (Cost $43,310,548) | 43,310,548 | ||
TOTAL INVESTMENT PORTFOLIO - 99.8% (Cost $1,177,140,317) | 1,266,784,778 | ||
NET OTHER ASSETS - 0.2% | 2,782,497 | ||
NET ASSETS - 100% | $ 1,269,567,275 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 73,704 |
Fidelity Securities Lending Cash Central Fund | 140,195 |
Total | $ 213,899 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.4% |
United Kingdom | 6.1% |
Switzerland | 2.8% |
Belgium | 2.3% |
Netherlands | 2.0% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $2,242,566 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
Assets | ||
Investment in securities, at value (including securities loaned of $803,687) - See accompanying schedule: Unaffiliated issuers (cost $1,133,829,769) | $ 1,223,474,230 |
|
Fidelity Central Funds (cost $43,310,548) | 43,310,548 |
|
Total Investments (cost $1,177,140,317) |
| $ 1,266,784,778 |
Foreign currency held at value (cost $108) | 108 | |
Receivable for investments sold | 12,862,525 | |
Receivable for fund shares sold | 1,923,204 | |
Dividends receivable | 1,615,280 | |
Distributions receivable from Fidelity Central Funds | 10,510 | |
Prepaid expenses | 3,545 | |
Other receivables | 3,944 | |
Total assets | 1,283,203,894 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,325,644 | |
Payable for fund shares redeemed | 1,419,802 | |
Accrued management fee | 577,290 | |
Distribution fees payable | 124,205 | |
Other affiliated payables | 294,964 | |
Other payables and accrued expenses | 64,056 | |
Collateral on securities loaned, at value | 830,658 | |
Total liabilities | 13,636,619 | |
|
|
|
Net Assets | $ 1,269,567,275 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,194,469,877 | |
Undistributed net investment income | 1,438,918 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (15,985,104) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 89,643,584 | |
Net Assets | $ 1,269,567,275 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
Calculation of Maximum Offering Price Class A: | $ 61.06 | |
|
|
|
Maximum offering price per share (100/94.25 of $61.06) | $ 64.79 | |
|
|
|
Class T: | $ 60.77 | |
|
|
|
Maximum offering price per share (100/96.50 of $60.77) | $ 62.97 | |
|
|
|
Class B: | $ 60.37 | |
|
|
|
Class C: | $ 60.29 | |
|
|
|
Consumer Staples: | $ 61.34 | |
|
|
|
Institutional Class: | $ 61.26 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 28,762,013 |
Interest |
| 5 |
Income from Fidelity Central Funds |
| 213,899 |
Total income |
| 28,975,917 |
|
|
|
Expenses | ||
Management fee | $ 6,157,861 | |
Transfer agent fees | 3,057,955 | |
Distribution fees | 1,411,256 | |
Accounting and security lending fees | 411,499 | |
Custodian fees and expenses | 127,130 | |
Independent trustees' compensation | 7,233 | |
Registration fees | 135,457 | |
Audit | 42,554 | |
Legal | 5,574 | |
Miscellaneous | 16,951 | |
Total expenses before reductions | 11,373,470 | |
Expense reductions | (27,975) | 11,345,495 |
Net investment income (loss) | 17,630,422 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 34,385,671 | |
Foreign currency transactions | (33,750) | |
Total net realized gain (loss) |
| 34,351,921 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 298,588,712 | |
Assets and liabilities in foreign currencies | 1,251 | |
Total change in net unrealized appreciation (depreciation) |
| 298,589,963 |
Net gain (loss) | 332,941,884 | |
Net increase (decrease) in net assets resulting from operations | $ 350,572,306 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 17,630,422 | $ 12,665,686 |
Net realized gain (loss) | 34,351,921 | (44,836,625) |
Change in net unrealized appreciation (depreciation) | 298,589,963 | (269,141,455) |
Net increase (decrease) in net assets resulting from operations | 350,572,306 | (301,312,394) |
Distributions to shareholders from net investment income | (15,962,478) | (11,887,776) |
Distributions to shareholders from net realized gain | - | (334,486) |
Total distributions | (15,962,478) | (12,222,262) |
Share transactions - net increase (decrease) | 33,089,434 | 494,877,505 |
Redemption fees | 34,831 | 113,075 |
Total increase (decrease) in net assets | 367,734,093 | 181,455,924 |
|
|
|
Net Assets | ||
Beginning of period | 901,833,182 | 720,377,258 |
End of period (including undistributed net investment income of $1,438,918 and undistributed net investment income of $512,356, respectively) | $ 1,269,567,275 | $ 901,833,182 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | - | (.02) | (2.44) | - |
Total distributions | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024 per share. |
Financial Highlights - Class T
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.42 per share is comprised of distributions from net investment income of $.418 and distributions from net realized gain of $.000 per share. |
Financial Highlights - Class C
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | - | - | (2.44) | - |
Total distributions | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | - K |
Net asset value, end of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.44 per share is comprised of distributions from net investment income of $.443 and distributions from net realized gain of $.000 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2010 | 2009 | 2008 G | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .96 | .88 | .71 | .56 | .50 |
Net realized and unrealized gain (loss) | 17.11 | (19.31) | 7.30 | 8.88 | 3.25 |
Total from investment operations | 18.07 | (18.43) | 8.01 | 9.44 | 3.75 |
Distributions from net investment income | (.87) | (.67) | (.46) | (.32) | (.44) |
Distributions from net realized gain | - | (.03) | (2.44) | (3.18) | (2.56) |
Total distributions | (.87) | (.69) I | (2.90) | (3.50) | (3.00) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Total Return A, B | 40.96% | (29.23)% | 13.72% | 18.43% | 7.50% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .92% | .91% | .91% | 1.01% | 1.04% |
Expenses net of fee waivers, if any | .92% | .91% | .90% | .99% | 1.04% |
Expenses net of all reductions | .91% | .90% | .90% | .98% | 1.03% |
Net investment income (loss) | 1.73% | 1.55% | 1.12% | .99% | .97% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 |
Portfolio turnover rate E | 69% | 70% | 71% | 99% | 75% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. H Amount represents less than $.01 per share. I Total distributions of $.69 per share is comprised of distributions from net investment income of $.668 and distributions from net realized gain of $.025 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | - | (.03) | (2.44) | - |
Total distributions | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | .01 | .01 | - J |
Net asset value, end of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 69% | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 117,013,594 |
Gross unrealized depreciation | (40,330,590) |
Net unrealized appreciation (depreciation) | $ 76,683,004 |
|
|
Tax Cost | $ 1,190,101,774 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,439,085 |
Capital loss carryforward | $ (2,242,566) |
Net unrealized appreciation (depreciation) | $ 76,682,972 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 15,962,478 | $ 12,222,262 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $749,813,665 and $739,748,758, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 396,506 | $ 13,397 |
Class T | .25% | .25% | 133,350 | 561 |
Class B | .75% | .25% | 193,963 | 145,659 |
Class C | .75% | .25% | 687,437 | 308,759 |
|
|
| $ 1,411,256 | $ 468,376 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 109,547 |
Class T | 12,607 |
Class B* | 51,810 |
Class C* | 24,728 |
| $ 198,692 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 402,842 | .25 |
Class T | 82,383 | .31 |
Class B | 65,652 | .34 |
Class C | 180,801 | .26 |
Consumer Staples | 2,245,942 | .28 |
Institutional Class | 80,335 | .23 |
| $ 3,057,955 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,379 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,814 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $140,195.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $27,863 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $112.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 2,068,687 | $ 1,409,006 |
Class T | 279,551 | 273,000 |
Class B | 121,683 | 118,536 |
Class C | 461,837 | 437,729 |
Consumer Staples | 12,515,444 | 9,279,861 |
Institutional Class | 515,276 | 369,644 |
Total | $ 15,962,478 | $ 11,887,776 |
From net realized gain |
|
|
Class A | $ - | $ 11,953 |
Consumer Staples | - | 317,666 |
Institutional Class | - | 4,867 |
Total | $ - | $ 334,486 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,132,943 | 2,896,213 | $ 59,482,737 | $ 154,503,507 |
Reinvestment of distributions | 31,495 | 27,496 | 1,903,559 | 1,327,859 |
Shares redeemed | (1,263,286) | (542,745) | (70,043,896) | (28,294,587) |
Net increase (decrease) | (98,848) | 2,380,964 | $ (8,657,600) | $ 127,536,779 |
Class T |
|
|
|
|
Shares sold | 173,895 | 520,546 | $ 9,112,154 | $ 27,382,626 |
Reinvestment of distributions | 4,329 | 5,430 | 262,823 | 260,678 |
Shares redeemed | (207,203) | (108,963) | (10,599,980) | (5,646,618) |
Net increase (decrease) | (28,979) | 417,013 | $ (1,225,003) | $ 21,996,686 |
Class B |
|
|
|
|
Shares sold | 104,786 | 323,554 | $ 5,439,880 | $ 17,593,411 |
Reinvestment of distributions | 1,610 | 1,967 | 97,230 | 94,022 |
Shares redeemed | (99,879) | (60,442) | (5,370,134) | (3,153,125) |
Net increase (decrease) | 6,517 | 265,079 | $ 166,976 | $ 14,534,308 |
Class C |
|
|
|
|
Shares sold | 378,183 | 1,133,018 | $ 19,816,576 | $ 59,347,217 |
Reinvestment of distributions | 5,180 | 6,095 | 312,378 | 290,992 |
Shares redeemed | (422,141) | (191,974) | (22,614,834) | (10,093,420) |
Net increase (decrease) | (38,778) | 947,139 | $ (2,485,880) | $ 49,544,789 |
Consumer Staples |
|
|
|
|
Shares sold | 6,969,074 | 13,482,265 | $ 390,940,582 | $ 765,828,751 |
Reinvestment of distributions | 198,030 | 185,893 | 11,983,104 | 9,096,289 |
Shares redeemed | (6,628,713) | (9,136,327) | (351,735,799) | (521,761,725) |
Net increase (decrease) | 538,391 | 4,531,831 | $ 51,187,887 | $ 253,163,315 |
Institutional Class |
|
|
|
|
Shares sold | 333,805 | 760,504 | $ 17,656,120 | $ 40,084,673 |
Reinvestment of distributions | 4,184 | 4,038 | 251,491 | 196,481 |
Shares redeemed | (449,527) | (227,140) | (23,804,557) | (12,179,526) |
Net increase (decrease) | (111,538) | 537,402 | $ (5,896,946) | $ 28,101,628 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Gold Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 35.50% | 17.69% | 17.64% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Gold Fund - Institutional Class on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Select Gold Portfolio: During the past year, the fund's Institutional Class shares returned 35.50%, trailing the S&P 500 but beating the 32.34% mark of the S&P® Global BMI Gold Capped Index, which was adopted in December 2009 as a better representation of the fund's investment universe. Versus its industry index, the fund was aided most by its diversification outside the gold market, especially its out-of-index investments in non-gold precious metals, coal and steel producers. These securities and their underlying commodities outperformed gold bullion and gold equities for a majority of the period. In absolute terms, our foreign holdings were bolstered by weakness in the U.S. dollar versus most major currencies, especially the Canadian dollar. At the stock level, out-of-index positions in Impala Platinum and Aquarius Platinum - both with operations in South Africa - provided strong performance, as that metal's two primary end-markets, jewelry and automobile catalytic converters, rebounded on improving demand and tightening supply. Other contributors were coal producer Massey Energy and diversified metals/mining holding Buenaventura, the latter based in Peru. Randgold Resources - a U.K.-based company with most of its assets in West Africa - and Aquiline Resources, a miner with projects in South America that was acquired on very favorable terms, also aided performance. Impala, Aquarius and Massey were reduced or sold by period end. Underweighting three large index constituents also benefited performance, as Newmont Mining and Canadian holdings Goldcorp and Barrick Gold all underperformed our industry benchmark. In the case of Goldcorp, I felt the company's potential improved significantly, leading me to make that stock the fund's largest position by period end. Conversely, underweighted exposure to outperforming emerging market and exploration gold names, such as SEMAFO and Centerra Gold, with operations in West Africa and Asia, respectively, and Russia-based Polyus Gold, detracted from our results. Another area of relative underperformance came from the fund's out-of-index exposure to gold bullion. While our bullion holdings delivered a return of approximately 18%, that result lagged the return of gold equities.
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.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.16% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,113.50 | $ 6.08 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,111.70 | $ 7.70 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.00 | $ 10.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,109.30 | $ 9.99 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Gold | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,114.60 | $ 4.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,115.00 | $ 4.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 9.8 | 9.9 |
Newmont Mining Corp. | 7.8 | 4.7 |
AngloGold Ashanti Ltd. sponsored ADR | 7.2 | 7.1 |
Newcrest Mining Ltd. | 6.8 | 7.1 |
Agnico-Eagle Mines Ltd. (Canada) | 6.1 | 6.7 |
Randgold Resources Ltd. sponsored ADR | 5.2 | 4.5 |
Barrick Gold Corp. | 4.9 | 10.0 |
Kinross Gold Corp. | 4.9 | 4.8 |
Eldorado Gold Corp. | 3.5 | 2.4 |
Yamana Gold, Inc. | 3.5 | 4.2 |
| 59.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Gold | 92.6% |
|
![]() | Precious | 4.5% |
|
![]() | Coal & | 0.4% |
|
![]() | Diversified | 0.1% |
|
![]() | Oil & Gas Exploration & Production | 0.0% |
|
![]() | All Others* | 2.4% |
|
As of August 31, 2009 | |||
![]() | Gold | 92.2% |
|
![]() | Precious | 3.3% |
|
![]() | Diversified | 2.4% |
|
![]() | Coal & | 0.5% |
|
![]() | Steel | 0.3% |
|
![]() | All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 90.8% | |||
Shares | Value | ||
Australia - 8.3% | |||
METALS & MINING - 8.3% | |||
Gold - 8.3% | |||
Andean Resources Ltd. (a) | 4,807,514 | $ 11,067,888 | |
Avoca Resources Ltd. (a) | 2,035,474 | 3,263,846 | |
Centamin Egypt Ltd. (a) | 4,197,000 | 7,440,982 | |
Dominion Mining Ltd. | 595,594 | 1,392,521 | |
Kingsgate Consolidated NL | 1,260,123 | 9,944,888 | |
Mineral Deposits Ltd. (a) | 3,151,255 | 2,681,750 | |
Newcrest Mining Ltd. | 7,350,648 | 206,364,826 | |
Perseus Mining Ltd. (c) | 1,939,308 | 3,040,156 | |
Resolute Mining Ltd. (a) | 2,052,147 | 1,709,631 | |
St Barbara Ltd. (a) | 14,110,000 | 2,780,742 | |
Troy Resources NL (a)(d) | 2,300,000 | 4,043,716 | |
| 253,730,946 | ||
Bailiwick of Jersey - 5.2% | |||
METALS & MINING - 5.2% | |||
Gold - 5.2% | |||
Randgold Resources Ltd. sponsored ADR (c) | 2,203,667 | 158,686,061 | |
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,981,752 | 10,974,225 | |
Canada - 49.1% | |||
METALS & MINING - 49.0% | |||
Diversified Metals & Mining - 0.1% | |||
Anatolia Minerals Development Ltd. (a) | 70,000 | 239,487 | |
Clifton Star Resources, Inc. (a) | 5,000 | 37,254 | |
Kimber Resources, Inc. (a) | 16,100 | 16,219 | |
Kimber Resources, Inc. (a)(d) | 3,888,000 | 3,916,636 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(d) | 1,944,000 | 29,962 | |
| 4,239,558 | ||
Gold - 45.6% | |||
Agnico-Eagle Mines Ltd. (Canada) | 3,232,900 | 186,677,124 | |
Alamos Gold, Inc. (a) | 2,143,800 | 26,016,941 | |
Aurizon Mines Ltd. (a) | 2,234,600 | 8,982,996 | |
B2Gold Corp. (a)(c) | 880,000 | 1,145,735 | |
Barrick Gold Corp. | 3,924,519 | 147,880,426 | |
Centerra Gold, Inc. (a) | 280,000 | 3,408,696 | |
Colossus Minerals, Inc. (a) | 370,000 | 1,860,109 | |
Crocodile Gold Corp. (a) | 10,000 | 19,482 | |
Detour Gold Corp. (a)(d) | 615,000 | 9,953,386 | |
Eldorado Gold Corp. (a) | 8,475,213 | 107,042,605 | |
European Goldfields Ltd. (a) | 1,229,600 | 6,800,924 | |
Exeter Resource Corp. (a) | 233,000 | 1,882,157 | |
Franco-Nevada Corp. | 1,529,300 | 39,793,047 | |
Gammon Gold, Inc. (a) | 1,207,500 | 11,831,148 | |
Gleichen Resources Ltd. (a) | 230,000 | 209,836 | |
| |||
Shares | Value | ||
Goldcorp, Inc. | 7,880,300 | $ 298,211,970 | |
Golden Star Resources Ltd. (a) | 3,375,769 | 10,522,711 | |
Great Basin Gold Ltd. (a)(c) | 5,107,900 | 8,349,335 | |
Great Basin Gold Ltd. warrants 10/15/10 (a) | 850,000 | 246,377 | |
Greystar Resources Ltd. (a) | 75,000 | 360,656 | |
Guyana Goldfields, Inc. (a) | 878,000 | 5,440,304 | |
Guyana Goldfields, Inc. (a)(d) | 155,000 | 960,418 | |
IAMGOLD Corp. | 5,009,000 | 73,689,066 | |
International Tower Hill Mines Ltd. (a) | 236,700 | 1,561,129 | |
Jaguar Mining, Inc. (a) | 1,105,500 | 10,443,022 | |
Kinross Gold Corp. | 8,150,100 | 147,704,830 | |
Lake Shore Gold Corp. (a) | 500,000 | 1,458,779 | |
Minefinders Corp. Ltd. (a) | 1,060,000 | 10,476,598 | |
New Gold, Inc. (a) | 4,826,900 | 21,330,563 | |
New Gold, Inc. warrants 4/3/12 (a)(d) | 2,928,500 | 97,408 | |
Northgate Minerals Corp. (a) | 2,874,900 | 7,868,579 | |
Novagold Resources, Inc. (a) | 50,000 | 288,430 | |
Osisko Mining Corp. (a) | 682,000 | 5,800,808 | |
Osisko Mining Corp. (a)(d) | 3,000,000 | 25,516,750 | |
Premier Gold Mines Ltd. (a) | 460,200 | 1,640,057 | |
Rainy River Resources Ltd. (a) | 40,000 | 188,168 | |
Red Back Mining, Inc. (a) | 2,753,100 | 53,060,459 | |
Red Back Mining, Inc. (a)(d) | 270,000 | 5,203,706 | |
Romarco Minerals, Inc. (a) | 125,000 | 198,384 | |
Rubicon Minerals Corp. (a) | 914,500 | 3,936,978 | |
San Gold Corp. (a) | 1,581,400 | 5,470,464 | |
Seabridge Gold, Inc. (a) | 631,105 | 15,367,408 | |
SEMAFO, Inc. (a) | 786,100 | 3,608,328 | |
Ventana Gold Corp. (a) | 943,300 | 7,413,724 | |
Yamana Gold, Inc. | 10,050,900 | 106,120,693 | |
| 1,386,040,714 | ||
Precious Metals & Minerals - 3.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 474,115 | |
Etruscan Resources, Inc. (a)(d) | 1,549,400 | 603,710 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(d) | 774,700 | 7,362 | |
Pan American Silver Corp. | 1,029,987 | 22,144,725 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 1,312,639 | |
Silver Standard Resources, Inc. (a) | 976,800 | 16,615,375 | |
Silver Wheaton Corp. (a) | 3,970,000 | 60,592,255 | |
| 101,750,181 | ||
TOTAL METALS & MINING | 1,492,030,453 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Coal & Consumable Fuels - 0.1% | |||
Fronteer Development Group, Inc. (a) | 500,000 | 2,228,558 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - 0.0% | |||
Comaplex Minerals Corp. (a) | 7,000 | $ 52,488 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,281,046 | ||
TOTAL CANADA | 1,494,311,499 | ||
China - 1.3% | |||
METALS & MINING - 1.3% | |||
Gold - 1.3% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) (c) | 7,800,500 | 15,616,677 | |
Zijin Mining Group Co. Ltd. (H Shares) | 28,818,000 | 24,651,712 | |
| 40,268,389 | ||
Papua New Guinea - 3.4% | |||
METALS & MINING - 3.4% | |||
Gold - 3.4% | |||
Lihir Gold Ltd. | 43,495,881 | 103,253,567 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 750,000 | 25,207,500 | |
Russia - 0.9% | |||
METALS & MINING - 0.9% | |||
Gold - 0.9% | |||
Polyus Gold OJSC sponsored ADR | 941,566 | 25,281,047 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 63,300 | 605,781 | |
TOTAL METALS & MINING | 25,886,828 | ||
South Africa - 11.7% | |||
METALS & MINING - 11.7% | |||
Gold - 11.7% | |||
AngloGold Ashanti Ltd. sponsored ADR (c) | 6,012,452 | 218,733,004 | |
Gold Fields Ltd. sponsored ADR | 7,553,659 | 86,791,542 | |
Harmony Gold Mining Co. Ltd. | 1,549,000 | 13,978,909 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (c) | 4,126,800 | 37,677,684 | |
| 357,181,139 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Petropavlovsk PLC | 640,000 | 9,214,044 | |
| |||
Shares | Value | ||
United States of America - 9.4% | |||
METALS & MINING - 9.1% | |||
Gold - 9.1% | |||
Allied Nevada Gold Corp. (a)(c) | 592,800 | $ 8,156,928 | |
Newmont Mining Corp. | 4,801,450 | 236,615,456 | |
Royal Gold, Inc. (c) | 649,413 | 29,184,620 | |
US Gold Corp. (a) | 1,165,900 | 3,136,271 | |
| 277,093,275 | ||
Precious Metals & Minerals - 0.0% | |||
Hecla Mining Co. (a)(c) | 150,000 | 780,000 | |
TOTAL METALS & MINING | 277,873,275 | ||
OIL, GAS & CONSUMABLE FUELS - 0.3% | |||
Coal & Consumable Fuels - 0.3% | |||
Arch Coal, Inc. | 325,000 | 7,309,250 | |
TOTAL UNITED STATES OF AMERICA | 285,182,525 | ||
TOTAL COMMON STOCKS (Cost $2,241,570,065) | 2,763,896,723 | ||
Commodities - 6.8% | |||
Troy |
| ||
Gold Bullion (a) | 185,500 | 207,184,950 | |
Money Market Funds - 2.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.16% (e) | 884,915 | 884,915 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(e) | 67,460,954 | 67,460,954 | |
TOTAL MONEY MARKET FUNDS (Cost $68,345,869) | 68,345,869 |
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $2,472,238,834) | 3,039,427,542 |
NET OTHER ASSETS - 0.1% | 3,906,479 | ||
NET ASSETS - 100% | $ 3,043,334,021 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(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 $50,333,054 or 1.7% of net assets. |
(e) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 180,857 |
Fidelity Securities Lending Cash Central Fund | 499,028 |
Total | $ 679,885 |
Other Affiliated Issuers |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 154,880,326 | $ 42,460,530 | $ 27,469,000 | $ - | $ 207,130,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 2,763,896,723 | $ 2,746,715,104 | $ 17,181,619 | $ - |
Commodities | 207,184,950 | 207,184,950 | - | - |
Money Market Funds | 68,345,869 | 68,345,869 | - | - |
Total Investments: | $ 3,039,427,542 | $ 3,022,245,923 | $ 17,181,619 | $ - |
The following is a reconciliation of Investments for which Level 3 inputs were used in determining value: |
Investments: | |
Beginning Balance | $ 30,448 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (23,086) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | (7,362) |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Investment or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $12,954,352 all of which will expire on February 28, 2017. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $66,348,802) - See accompanying schedule: Unaffiliated issuers (cost $2,241,570,065) | $ 2,763,896,723 |
|
Fidelity Central Funds (cost $68,345,869) | 68,345,869 |
|
Commodities (cost $162,322,900) | 207,184,950 |
|
Total Investments (cost $2,472,238,834) |
| $ 3,039,427,542 |
Cash | 6,462 | |
Receivable for investments sold | 156,345,630 | |
Receivable for fund shares sold | 4,261,845 | |
Dividends receivable | 1,520,832 | |
Distributions receivable from Fidelity Central Funds | 16,298 | |
Prepaid expenses | 8,347 | |
Receivable from investment adviser for expense reductions | 53,706 | |
Other receivables | 65,565 | |
Total assets | 3,201,706,227 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 85,096,066 | |
Payable for fund shares redeemed | 3,239,466 | |
Accrued management fee | 1,447,456 | |
Distribution fees payable | 74,328 | |
Other affiliated payables | 918,135 | |
Other payables and accrued expenses | 135,801 | |
Collateral on securities loaned, at value | 67,460,954 | |
Total liabilities | 158,372,206 | |
|
|
|
Net Assets | $ 3,043,334,021 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,601,815,526 | |
Accumulated net investment loss | (919) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (125,663,002) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 567,182,416 | |
Net Assets | $ 3,043,334,021 |
Consolidated Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 40.50 | |
|
|
|
Maximum offering price per share (100/94.25 of $40.50) | $ 42.97 | |
Class T: | $ 40.34 | |
|
|
|
Maximum offering price per share (100/96.50 of $40.34) | $ 41.80 | |
Class B: | $ 39.87 | |
|
|
|
Class C: | $ 39.75 | |
|
|
|
Gold: | $ 40.85 | |
|
|
|
Institutional Class: | $ 40.77 |
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.
Annual Report
Gold Portfolio
Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,179,836 |
Interest |
| 74 |
Income from Fidelity Central Funds |
| 679,885 |
Total income |
| 14,859,795 |
|
|
|
Expenses | ||
Management fee | $ 16,105,508 | |
Transfer agent fees | 8,951,189 | |
Distribution fees | 717,754 | |
Accounting and security lending fees | 1,212,567 | |
Custodian fees and expenses | 323,942 | |
Independent trustees' compensation | 17,951 | |
Registration fees | 289,277 | |
Audit | 71,070 | |
Legal | 13,823 | |
Miscellaneous | 34,226 | |
Total expenses before reductions | 27,737,307 | |
Expense reductions | (1,109,754) | 26,627,553 |
Net investment income (loss) | (11,767,758) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 137,360,027 | |
Commodities | 4,098,700 |
|
Foreign currency transactions | 276,376 | |
Capital gain distribution from Fidelity Central Funds | 4,434 | |
Total net realized gain (loss) |
| 141,739,537 |
Change in net unrealized appreciation (depreciation) on: Investments | 548,783,486 | |
Assets and liabilities in foreign currencies | (41,908) | |
Commodities | 33,817,640 | |
Total change in net unrealized appreciation (depreciation) |
| 582,559,218 |
Net gain (loss) | 724,298,755 | |
Net increase (decrease) in net assets resulting from operations | $ 712,530,997 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (11,767,758) | $ (2,690,363) |
Net realized gain (loss) | 141,739,537 | (179,917,786) |
Change in net unrealized appreciation (depreciation) | 582,559,218 | (711,142,287) |
Net increase (decrease) in net assets resulting from operations | 712,530,997 | (893,750,436) |
Distributions to shareholders from net realized gain | (56,010,412) | (9,542,341) |
Share transactions - net increase (decrease) | 418,234,847 | 430,558,697 |
Redemption fees | 514,829 | 852,427 |
Total increase (decrease) in net assets | 1,075,270,261 | (471,881,653) |
|
|
|
Net Assets | ||
Beginning of period | 1,968,063,760 | 2,439,945,413 |
End of period (including accumulated net investment loss of $919 and accumulated net investment loss of $714, respectively) | $ 3,043,334,021 | $ 1,968,063,760 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.71) | (.17) | (5.01) | - |
Total distributions | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.63) | (.17) | (4.97) | - |
Total distributions | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | (.16) | - |
Distributions from net realized gain | (.51) | (.17) | (4.84) | - |
Total distributions | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | (.17) | - |
Distributions from net realized gain | (.53) | (.17) | (4.89) | - |
Total distributions | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Gold
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.16) | (.04) | (.02) | .22 F | .04 |
Net realized and unrealized gain (loss) | 11.10 | (15.51) | 15.05 | 5.49 | 12.21 |
Total from investment operations | 10.94 | (15.55) | 15.03 | 5.71 | 12.25 |
Distributions from net investment income | - | - | (.18) | (.02) | (.02) |
Distributions from net realized gain | (.77) | (.17) | (5.03) | (5.10) | (3.84) |
Total distributions | (.77) | (.17) | (5.21) | (5.12) | (3.86) |
Redemption fees added to paid in capital C | .01 | .02 | .01 | .04 | .06 |
Net asset value, end of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Total Return A, B | 35.52% | (33.59)% | 45.10% | 16.19% | 48.84% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .98% | .89% | .85% | .90% | .97% |
Expenses net of fee waivers, if any | .96% | .87% | .85% | .90% | .97% |
Expenses net of all reductions | .94% | .86% | .81% | .87% | .82% |
Net investment income (loss) | (.40)% | (.13)% | (.05)% | .62% F | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 |
Portfolio turnover rate E | 46% | 42% | 55% | 85% | 108% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | (.19) | - |
Distributions from net realized gain | (.82) | (.17) | (5.04) | - |
Total distributions | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 46% | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2010
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2010, the Fund held $207,130,454 in the Subsidiary, representing 6.8% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Security Valuation - continued
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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are 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 Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying consolidated financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 587,307,975 |
Gross unrealized depreciation | (162,095,828) |
Net unrealized appreciation (depreciation) | $ 425,212,147 |
|
|
Tax Cost | $ 2,614,215,395 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 29,267,911 |
Capital loss carryforward | $ (12,954,352) |
Net unrealized appreciation (depreciation) | $ 425,205,855 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 56,010,412 | $ - |
Long-term Capital Gains | - | 9,542,341 |
Total | $ 56,010,412 | $ 9,542,341 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,666,765,327 and $1,222,401,265, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its average net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period, FMR reimbursed the Fund $617,017.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 165,404 | $ 12,406 |
Class T | .25% | .25% | 109,284 | 706 |
Class B | .75% | .25% | 148,843 | 111,714 |
Class C | .75% | .25% | 294,223 | 150,118 |
|
|
| $ 717,754 | $ 274,944 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 128,737 |
Class T | 17,837 |
Class B* | 40,323 |
Class C* | 21,509 |
| $ 208,406 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 201,509 | .31 |
Class T | 77,008 | .35 |
Class B | 50,520 | .34 |
Class C | 88,998 | .30 |
Gold | 8,484,126 | .33 |
Institutional Class | 49,028 | .29 |
| $ 8,951,189 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,032 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $9,533 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $499,028.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $492,362 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $375.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net realized gain |
|
|
Class A | $ 1,356,457 | $ 120,234 |
Class T | 386,094 | 52,921 |
Class B | 226,465 | 30,037 |
Class C | 480,176 | 48,372 |
Gold | 53,033,502 | 9,277,078 |
Institutional Class | 527,718 | 13,699 |
Total | $ 56,010,412 | $ 9,542,341 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 1,548,727 | 1,309,698 | $ 60,979,204 | $ 44,660,266 |
Reinvestment of distributions | 28,941 | 2,750 | 1,258,667 | 115,078 |
Shares redeemed | (828,099) | (603,399) | (32,946,669) | (19,759,071) |
Net increase (decrease) | 749,569 | 709,049 | $ 29,291,202 | $ 25,016,273 |
Class T |
|
|
|
|
Shares sold | 410,718 | 490,596 | $ 16,022,649 | $ 16,725,703 |
Reinvestment of distributions | 8,602 | 1,250 | 372,822 | 52,336 |
Shares redeemed | (271,824) | (233,926) | (10,198,558) | (7,642,955) |
Net increase (decrease) | 147,496 | 257,920 | $ 6,196,913 | $ 9,135,084 |
Class B |
|
|
|
|
Shares sold | 271,111 | 268,687 | $ 10,287,423 | $ 9,041,240 |
Reinvestment of distributions | 4,654 | 619 | 199,620 | 25,767 |
Shares redeemed | (95,719) | (138,798) | (3,721,090) | (4,716,395) |
Net increase (decrease) | 180,046 | 130,508 | $ 6,765,953 | $ 4,350,612 |
Class C |
|
|
|
|
Shares sold | 698,249 | 585,858 | $ 27,513,842 | $ 18,965,561 |
Reinvestment of distributions | 9,039 | 1,077 | 386,528 | 44,699 |
Shares redeemed | (320,512) | (238,490) | (12,323,085) | (7,504,831) |
Net increase (decrease) | 386,776 | 348,445 | $ 15,577,285 | $ 11,505,429 |
Annual Report
Notes to Consolidated Financial Statements - continued
12. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Gold |
|
|
|
|
Shares sold | 40,468,485 | 46,487,078 | $ 1,581,099,363 | $ 1,611,564,135 |
Reinvestment of distributions | 1,174,296 | 212,477 | 51,481,173 | 8,930,407 |
Shares redeemed | (33,470,388) | (36,708,151) | (1,303,757,681) | (1,244,304,895) |
Net increase (decrease) | 8,172,393 | 9,991,404 | $ 328,822,855 | $ 376,189,647 |
Institutional Class |
|
|
|
|
Shares sold | 933,259 | 256,180 | $ 39,237,749 | $ 8,523,938 |
Reinvestment of distributions | 10,089 | 259 | 441,486 | 10,894 |
Shares redeemed | (208,491) | (126,881) | (8,098,596) | (4,173,180) |
Net increase (decrease) | 734,857 | 129,558 | $ 31,580,639 | $ 4,361,652 |
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 91.79% | 9.43% | 13.24% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Institutional Class on February 29, 2000. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM - the broadest gauge of U.S. stocks - climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor Materials Fund: For the 12 months ending February 28, 2010, the fund's Institutional Class shares returned 91.79%, significantly outperforming the S&P 500 and the 73.30% return of the MSCI® U.S. IM Materials 25/50 Index - - which was adopted in January 2010 as a better representation of the fund's investment universe. Security selection boosted results relative to the MSCI index, particularly within specialty chemicals, paper packaging, commodity and diversified chemicals, and coal/consumable fuels. An underweighting in fertilizers/agricultural chemicals and an overweighting in commodity chemicals also helped. Conversely, an underweighting in paper products and lack of exposure to the aluminum group detracted, as did a modest cash position in a rising market. Specialty chemicals firm W.R. Grace was the top contributor, helped by better-than-expected earnings. Commodity chemicals firm Celanese rose sharply on improved earnings and an uptick in demand, while paper packaging company Temple-Inland jumped due to the firm's stable earnings. Detractors included underweightings in International Paper, whose stock rose on improved profit margins thanks to aggressive cost-cutting, and steel concern Cliffs Natural Resources, which rose on brightening prospects for the iron ore and coal industries. Some holdings mentioned in this update were sold by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.60 | $ 6.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.51% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,123.90 | $ 7.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.31 | $ 7.55 |
Class B | 2.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.20 | $ 10.57 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.83 | $ 10.04 |
Class C | 1.99% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.93 | $ 9.94 |
Materials | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.30 | $ 4.85 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.40 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 9.3 | 7.5 |
Monsanto Co. | 9.3 | 5.1 |
E.I. du Pont de Nemours & Co. | 8.1 | 7.9 |
Praxair, Inc. | 5.9 | 5.8 |
Freeport-McMoRan Copper & Gold, Inc. | 5.0 | 7.6 |
Air Products & Chemicals, Inc. | 4.1 | 4.4 |
Newmont Mining Corp. | 3.7 | 1.2 |
Weyerhaeuser Co. | 3.5 | 2.7 |
Nucor Corp. | 3.3 | 4.2 |
Owens-Illinois, Inc. | 3.1 | 2.6 |
| 55.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Chemicals | 56.9% |
|
![]() | Metals & Mining | 24.7% |
|
![]() | Containers & Packaging | 4.6% |
|
![]() | Paper & Forest Products | 4.0% |
|
![]() | Construction Materials | 3.4% |
|
![]() | All Others* | 6.4% |
|
As of August 31, 2009 | |||
![]() | Chemicals | 52.9% |
|
![]() | Metals & Mining | 22.3% |
|
![]() | Containers & Packaging | 8.6% |
|
![]() | Construction Materials | 4.0% |
|
![]() | Paper & Forest Products | 3.6% |
|
![]() | All Others* | 8.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 1.8% | |||
Building Products - 1.8% | |||
Masco Corp. | 954,300 | $ 12,758,991 | |
CHEMICALS - 56.9% | |||
Commodity Chemicals - 3.1% | |||
Celanese Corp. Class A | 709,406 | 22,126,373 | |
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 275,036 | 12,948,695 | |
Dow Chemical Co. | 2,351,618 | 66,574,305 | |
E.I. du Pont de Nemours & Co. | 1,711,400 | 57,708,408 | |
FMC Corp. | 179,800 | 10,279,166 | |
Huntsman Corp. | 589,100 | 8,088,343 | |
Solutia, Inc. (a) | 447,713 | 6,299,322 | |
| 161,898,239 | ||
Fertilizers & Agricultural Chemicals - 14.1% | |||
CF Industries Holdings, Inc. | 76,300 | 8,106,112 | |
Monsanto Co. | 941,744 | 66,534,214 | |
Potash Corp. of Saskatchewan, Inc. | 16,300 | 1,796,911 | |
The Mosaic Co. | 357,300 | 20,862,747 | |
Yara International ASA | 87,900 | 3,620,173 | |
| 100,920,157 | ||
Industrial Gases - 10.0% | |||
Air Products & Chemicals, Inc. | 424,400 | 29,105,352 | |
Praxair, Inc. | 560,541 | 42,119,051 | |
| 71,224,403 | ||
Specialty Chemicals - 7.1% | |||
Albemarle Corp. | 401,535 | 15,053,547 | |
Ferro Corp. | 1,055,300 | 8,642,907 | |
Innophos Holdings, Inc. | 231,500 | 5,375,430 | |
Johnson Matthey PLC | 74,505 | 1,804,406 | |
Kraton Performance Polymers, Inc. | 111,300 | 1,501,437 | |
W.R. Grace & Co. (a) | 637,900 | 18,473,584 | |
| 50,851,311 | ||
TOTAL CHEMICALS | 407,020,483 | ||
CONSTRUCTION MATERIALS - 3.4% | |||
Construction Materials - 3.4% | |||
Cemex SA de CV sponsored ADR | 564,700 | 5,398,532 | |
HeidelbergCement AG | 89,810 | 4,576,191 | |
Martin Marietta Materials, Inc. (c) | 69,322 | 5,491,689 | |
Vulcan Materials Co. (c) | 197,000 | 8,551,770 | |
| 24,018,182 | ||
CONTAINERS & PACKAGING - 4.6% | |||
Metal & Glass Containers - 4.6% | |||
Crown Holdings, Inc. (a) | 388,599 | 10,616,525 | |
Owens-Illinois, Inc. (a) | 764,600 | 22,662,744 | |
| 33,279,269 | ||
| |||
Shares | Value | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Bunge Ltd. | 120,400 | $ 7,174,637 | |
MARINE - 0.2% | |||
Marine - 0.2% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 1,441,652 | |
METALS & MINING - 24.7% | |||
Diversified Metals & Mining - 7.9% | |||
Anglo American PLC (United Kingdom) (a) | 125,151 | 4,561,740 | |
Freeport-McMoRan Copper & Gold, Inc. | 474,865 | 35,690,853 | |
RTI International Metals, Inc. (a) | 219,600 | 5,276,988 | |
Teck Resources Ltd. Class B (sub. vtg.) (a) | 98,400 | 3,618,988 | |
Vale SA sponsored ADR | 258,450 | 7,200,417 | |
| 56,348,986 | ||
Gold - 7.0% | |||
Agnico-Eagle Mines Ltd. (Canada) | 117,300 | 6,773,246 | |
AngloGold Ashanti Ltd. sponsored ADR | 301,020 | 10,951,108 | |
Newcrest Mining Ltd. | 95,764 | 2,688,514 | |
Newmont Mining Corp. | 531,000 | 26,167,680 | |
Randgold Resources Ltd. sponsored ADR | 50,300 | 3,622,103 | |
| 50,202,651 | ||
Precious Metals & Minerals - 0.6% | |||
Aquarius Platinum Ltd. (United Kingdom) | 264,400 | 1,464,152 | |
Impala Platinum Holdings Ltd. | 63,155 | 1,536,247 | |
Pan American Silver Corp. | 75,200 | 1,616,800 | |
| 4,617,199 | ||
Steel - 9.2% | |||
Allegheny Technologies, Inc. | 248,500 | 10,849,510 | |
Carpenter Technology Corp. | 202,800 | 6,057,636 | |
Commercial Metals Co. | 441,355 | 7,238,222 | |
Nucor Corp. | 568,400 | 23,531,760 | |
Reliance Steel & Aluminum Co. | 194,900 | 8,641,866 | |
Steel Dynamics, Inc. | 412,700 | 6,739,391 | |
Ternium SA sponsored ADR (a)(c) | 71,600 | 2,450,868 | |
| 65,509,253 | ||
TOTAL METALS & MINING | 176,678,089 | ||
OIL, GAS & CONSUMABLE FUELS - 0.4% | |||
Coal & Consumable Fuels - 0.4% | |||
Centennial Coal Co. Ltd. | 894,316 | 2,924,118 | |
Common Stocks - continued | |||
Shares | Value | ||
PAPER & FOREST PRODUCTS - 4.0% | |||
Forest Products - 4.0% | |||
Louisiana-Pacific Corp. (a) | 502,700 | $ 3,825,547 | |
Weyerhaeuser Co. | 619,400 | 25,023,760 | |
| 28,849,307 | ||
TOTAL COMMON STOCKS (Cost $645,126,262) | 694,144,728 | ||
Money Market Funds - 7.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.16% (d) | 37,931,793 | 37,931,793 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 11,995,375 | 11,995,375 | |
TOTAL MONEY MARKET FUNDS (Cost $49,927,168) | 49,927,168 |
TOTAL INVESTMENT PORTFOLIO - 104.0% (Cost $695,053,430) | 744,071,896 |
NET OTHER ASSETS - (4.0)% | (28,856,109) | ||
NET ASSETS - 100% | $ 715,215,787 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 47,364 |
Fidelity Securities Lending Cash Central Fund | 15,907 |
Total | $ 63,271 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the table below, please refer to the Security 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 | $ 694,144,728 | $ 694,144,727 | $ - | $ - |
Money Market Funds | 49,927,168 | 49,927,168 | - | - |
Total Investments in Securities: | $ 744,071,896 | $ 744,071,895 | $ - | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.5% |
Canada | 1.9% |
South Africa | 1.7% |
Bermuda | 1.2% |
Brazil | 1.0% |
Others (individually less than 1%) | 4.7% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $22,356,874 of which $21,745,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. |
A capital loss carryforward of approximately $5,315,874 was acquired from Paper and Forest Products Portfolio, of which $4,704,565 and $611,309 will expire on February 28, 2017 and 2018, respectively. Capital loss carryforwards are only available to offset future capital gains of the fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,487,690) - See accompanying schedule: Unaffiliated issuers (cost $645,126,262) | $ 694,144,728 |
|
Fidelity Central Funds (cost $49,927,168) | 49,927,168 |
|
Total Investments (cost $695,053,430) |
| $ 744,071,896 |
Receivable for investments sold | 4,649,528 | |
Receivable for fund shares sold | 3,258,849 | |
Dividends receivable | 866,889 | |
Distributions receivable from Fidelity Central Funds | 4,218 | |
Prepaid expenses | 1,392 | |
Other receivables | 12,590 | |
Total assets | 752,865,362 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 22,498,973 | |
Payable for fund shares redeemed | 2,560,693 | |
Accrued management fee | 326,982 | |
Distribution fees payable | 40,913 | |
Other affiliated payables | 178,872 | |
Other payables and accrued expenses | 47,767 | |
Collateral on securities loaned, at value | 11,995,375 | |
Total liabilities | 37,649,575 | |
|
|
|
Net Assets | $ 715,215,787 | |
Net Assets consist of: |
| |
Paid in capital | $ 694,034,904 | |
Undistributed net investment income | 21,306 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (27,857,336) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 49,016,913 | |
Net Assets | $ 715,215,787 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 52.54 | |
|
|
|
Maximum offering price per share (100/94.25 of $52.54) | $ 55.75 | |
Class T: | $ 52.35 | |
|
|
|
Maximum offering price per share (100/96.50 of $52.35) | $ 54.25 | |
Class B: | $ 51.86 | |
|
|
|
Class C: | $ 51.79 | |
|
|
|
Materials: | $ 52.61 | |
|
|
|
Institutional Class: | $ 52.58 |
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.
Annual Report
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,172,926 |
Special dividends |
| 960,460 |
Interest |
| 10,741 |
Income from Fidelity Central Funds |
| 63,271 |
Total income |
| 8,207,398 |
|
|
|
Expenses | ||
Management fee | $ 2,489,211 | |
Transfer agent fees | 1,294,368 | |
Distribution fees | 335,450 | |
Accounting and security lending fees | 172,078 | |
Custodian fees and expenses | 46,360 | |
Independent trustees' compensation | 2,554 | |
Registration fees | 147,450 | |
Audit | 52,688 | |
Legal | 7,458 | |
Miscellaneous | 10,834 | |
Total expenses before reductions | 4,558,451 | |
Expense reductions | (46,718) | 4,511,733 |
Net investment income (loss) | 3,695,665 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 54,971,145 | |
Foreign currency transactions | (17,050) | |
Total net realized gain (loss) |
| 54,954,095 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 118,180,912 | |
Assets and liabilities in foreign currencies | (969) | |
Total change in net unrealized appreciation (depreciation) |
| 118,179,943 |
Net gain (loss) | 173,134,038 | |
Net increase (decrease) in net assets resulting from operations | $ 176,829,703 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,695,665 | $ 2,259,809 |
Net realized gain (loss) | 54,954,095 | (75,667,547) |
Change in net unrealized appreciation (depreciation) | 118,179,943 | (119,409,812) |
Net increase (decrease) in net assets resulting from operations | 176,829,703 | (192,817,550) |
Distributions to shareholders from net investment income | (4,024,717) | (976,789) |
Share transactions - net increase (decrease) | 390,197,683 | (41,426,103) |
Redemption fees | 93,068 | 46,748 |
Total increase (decrease) in net assets | 563,095,737 | (235,173,694) |
|
|
|
Net Assets | ||
Beginning of period | 152,120,050 | 387,293,744 |
End of period (including undistributed net investment income of $21,306 and undistributed net investment income of $350,358, respectively) | $ 715,215,787 | $ 152,120,050 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
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|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .30 H | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.32) | (.12) | (2.53) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .65% H | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .43%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
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|
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|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
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|
|
|
Net asset value, beginning of period | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .16 H | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.19) | (.03) | (2.42) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .35% H | .22% | .57% | 1.18% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.07) H | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.25) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.15)% H | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.36)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.253 per share is comprised of distributions from net investment income of $.043 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | (.06) H | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.04) | - | (2.33) M | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, J |
|
|
|
|
Expenses before reductions | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.13)% H | (.27)% | .07% | .89% A |
Supplemental Data |
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|
|
|
Net assets, end of period (000 omitted) | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 104% K | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. I For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K The portfolio turnover rate does not include the assets acquired in the merger. L For the year ended February 29. M Total distributions of $2.334 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
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|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 | 2006 |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Income from Investment Operations |
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|
|
|
|
Net investment income (loss) C | .43 F | .38 | .64 | .42 | .32 |
Net realized and unrealized gain (loss) | 24.91 | (29.54) | 8.01 | 9.36 | 6.40 |
Total from investment operations | 25.34 | (29.16) | 8.65 | 9.78 | 6.72 |
Distributions from net investment income | (.40) | (.20) | (.36) | (.48) | (.25) |
Distributions from net realized gain | - | - | (2.21) | (4.79) | (.93) |
Total distributions | (.40) | (.20) | (2.57) J | (5.27) | (1.18) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .06 | .03 |
Net asset value, end of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Total Return A, B | 91.77% | (51.15)% | 17.10% | 22.29% | 17.01% |
Ratios to Average Net Assets D, G |
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|
|
Expenses before reductions | .96% | .90% | .91% | 1.01% | 1.05% |
Expenses net of fee waivers, if any | .96% | .90% | .90% | .98% | 1.05% |
Expenses net of all reductions | .94% | .90% | .89% | .96% | 1.01% |
Net investment income (loss) | .92% F | .78% | 1.14% | .87% | .78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 |
Portfolio turnover rate E | 104% H | 117% | 77% | 185% | 124% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H The portfolio turnover rate does not include the assets acquired in the merger. I For the year ended February 29. J Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
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|
|
|
Years ended February 28, | 2010 | 2009 | 2008 K | 2007 H |
Selected Per-Share Data |
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|
|
|
Net asset value, beginning of period | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
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|
|
|
Net investment income (loss) D | .46 G | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | - | - | (2.21) | - |
Total distributions | (.44) | (.20) | (2.56) L | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, I |
|
|
|
|
Expenses before reductions | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | .94% G | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 104% J | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J The portfolio turnover rate does not include the assets acquired in the merger. K For the year ended February 29. L Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund.
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant 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 are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gains are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 81,661,128 |
Gross unrealized depreciation | (38,497,461) |
Net unrealized appreciation (depreciation) | $ 43,163,667 |
|
|
Tax Cost | $ 700,908,229 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 375,642 |
Capital loss carryforward | $ (22,356,874) |
Net unrealized appreciation (depreciation) | $ 43,162,114 |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
|
|
|
Ordinary Income | $ 4,024,717 | $ 976,789 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $801,356,820 and $441,665,671, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .57% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 79,488 | $ 2,143 |
Class T | .25% | .25% | 54,942 | 277 |
Class B | .75% | .25% | 62,120 | 46,655 |
Class C | .75% | .25% | 138,900 | 49,199 |
|
|
| $ 335,450 | $ 98,274 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 92,688 |
Class T | 9,956 |
Class B* | 8,978 |
Class C* | 4,361 |
| $ 115,983 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each applicable class were as follows:
| Amount | % of |
Class A | $ 98,217 | .31 |
Class T | 38,681 | .35 |
Class B | 21,492 | .35 |
Class C | 46,333 | .34 |
Materials | 1,076,261 | .29 |
Institutional Class | 13,384 | .27 |
| $ 1,294,368 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8,934 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,333 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $15,907.
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $46,675 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $43.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 238,202 | $ 43,307 |
Class T | 47,220 | 5,182 |
Class B | 5,848 | - |
Class C | 12,908 | - |
Materials | 3,662,178 | 923,202 |
Institutional Class | 58,361 | 5,098 |
Total | $ 4,024,717 | $ 976,789 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 858,136 | 400,579 | $ 40,135,680 | $ 21,052,656 |
Reinvestment of distributions | 4,377 | 1,376 | 220,619 | 40,415 |
Shares redeemed | (256,610) | (231,192) | (11,780,339) | (9,966,206) |
Net increase (decrease) | 605,903 | 170,763 | $ 28,575,960 | $ 11,126,865 |
Class T |
|
|
|
|
Shares sold | 167,992 | 127,856 | $ 7,326,294 | $ 6,586,988 |
Reinvestment of distributions | 941 | 169 | 45,756 | 4,976 |
Shares redeemed | (67,330) | (69,236) | (3,005,643) | (3,081,211) |
Net increase (decrease) | 101,603 | 58,789 | $ 4,366,407 | $ 3,510,753 |
Class B |
|
|
|
|
Shares sold | 131,820 | 70,236 | $ 5,954,562 | $ 3,670,456 |
Reinvestment of distributions | 103 | - | 4,824 | - |
Shares redeemed | (43,087) | (48,886) | (1,785,370) | (2,112,869) |
Net increase (decrease) | 88,836 | 21,350 | $ 4,174,016 | $ 1,557,587 |
Class C |
|
|
|
|
Shares sold | 299,617 | 186,111 | $ 13,304,163 | $ 9,519,248 |
Reinvestment of distributions | 234 | (8) | 10,972 | (480) |
Shares redeemed | (106,334) | (139,135) | (4,538,206) | (5,956,182) |
Net increase (decrease) | 193,517 | 46,968 | $ 8,776,929 | $ 3,562,586 |
Materials |
|
|
|
|
Shares sold | 11,253,841 | 3,524,569 | $ 539,188,177 | $ 186,250,882 |
Issued in exchange for shares of Paper and Forest Products Portfolio | 337,332 | - | 13,304,373 | - |
Reinvestment of distributions | 68,039 | 29,537 | 3,440,550 | 866,336 |
Shares redeemed | (4,780,310) | (5,137,192) | (223,285,260) | (248,168,306) |
Net increase (decrease) | 6,878,902 | (1,583,086) | $ 332,647,840 | $ (61,051,088) |
Institutional Class |
|
|
|
|
Shares sold | 269,782 | 41,845 | $ 13,383,120 | $ 2,204,347 |
Reinvestment of distributions | 839 | 156 | 43,347 | 4,588 |
Shares redeemed | (36,606) | (47,942) | (1,769,936) | (2,341,741) |
Net increase (decrease) | 234,015 | (5,941) | $ 11,656,531 | $ (132,806) |
Annual Report
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
12. Merger Information.
On June 19, 2009, the Fund acquired all of the assets and assumed all of the liabilities of Paper and Forest Products Portfolio ("Target Fund") pursuant to an agreement and plan of reorganization approved by the Board of Trustees ("The Board") on November 18, 2008. The reorganization provides shareholders access to a larger portfolio with better historical performance and lower expenses. The acquisition was accomplished by an exchange of 337,332 shares of Materials (the original retail class shares of the Fund), for 697,705 shares then outstanding (valued at $19.07) of the Target Fund. 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. The Target Fund net assets, including securities of $13,445,190, unrealized depreciation of $3,465,168, cash of $45,230 and net other liabilities of $186,047 were combined with the Fund's net assets of $314,623,676 for total net assets after the acquisition of $327,928,049.
Pro forma results of operations of the combined entity for the entire year ended February 28, 2010, 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) | $ 3,777,997 |
Total net realized gain (loss) | 51,950,136 |
Total change in net unrealized appreciation (depreciation) | 125,269,592 |
Net increase (decrease) in net assets resulting from operations | $ 180,997,725 |
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 Fund's accompanying Statement of Operations since June 19, 2009.
Annual Report
Fidelity Advisor Telecommunications Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' 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 $10,000 table and the fund's 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
Periods ended February 28, 2010 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 42.59% | 2.90% | -7.74% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications Fund - Institutional Class on February 29, 2000. 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. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market began one of its most dramatic turnarounds ever in March 2009, finishing the 12-month period ending February 28, 2010, with impressive gains as the economy inched its way toward recovery and the credit crisis eased. By the close of the period, the Great Recession that began in 2007 appeared nearer to an end, as many companies posted positive earnings in the wake of cost-cutting measures and unprecedented government intervention. Most major indexes declined in only two months - October, when unemployment hit 10.1%, and January, when European debt worries crimped returns. For the full year, the S&P 500® Index rose 53.62%, its largest 12-month gain in 27 years. The technology-laden Nasdaq Composite® Index rose 63.98% and the Dow Jones U.S. Total Stock Market IndexSM, which is the broadest gauge of U.S. stocks, climbed 56.16%. All 10 sectors of the market - as represented by the S&P 500® - reported double-digit gains in the period, led by financials, which rose 98%. The consumer discretionary and industrials sectors also finished strong, followed by materials and information technology. Groups that posted weaker results still gained, with the worst performer - telecommunication services - returning almost 13%.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor Telecommunications Fund: For the 12-month period ending February 28, 2010, the fund's Institutional Class shares returned 42.59%, handily outperforming the 18.67% return of the MSCI® U.S. IM Telecommunications Services 25/50 Index - which was adopted in January 2010 as a better representation of the fund's investment universe - but underperforming the S&P 500. Versus the MSCI index, the fund benefited from being well-positioned in smaller-cap companies that performed strongly when the market rallied between March and June 2009. Most notably, the fund was helped by an out-of-benchmark stake and strong stock selection in the cable and satellite group, especially U.K.-based Virgin Media. An early-period overweighting in wireless telecom services company Sprint Nextel also helped. In addition, the fund got a boost from being significantly underweighted in the integrated telecom services group, specifically in AT&T and Verizon Communications, which grew at a much lower rate than other telecom subsectors. AT&T and Verizon made up almost three-quarters of the MSCI index during the period. In addition, the fund benefited from holding an out-of-index position in Gameloft, a French company and dominant player in mobile gaming. Conversely, performance was hampered by unfavorable positioning in a few stocks. Specifically, it was hurt by holding an underweighted position in CenturyTel, a rural integrated telecom services provider that did well during the market rally and benefited from acquiring Embarq, another rural phone company, in the summer. British wireless telecom giant Vodafone Group also disappointed during the rally when large, liquid stocks fell out of favor as people invested in smaller, more growth-oriented names. Underweighting Level 3 Communications also dragged down performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009 to Febru-ary 28, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.24% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,078.40 | $ 6.39 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.65 | $ 6.21 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,076.60 | $ 7.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.30 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Class C | 2.00% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,074.20 | $ 10.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,014.88 | $ 9.99 |
Telecommunications | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,079.70 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,080.50 | $ 4.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2010 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 13.0 | 23.5 |
Verizon Communications, Inc. | 12.9 | 17.4 |
Sprint Nextel Corp. | 6.3 | 4.7 |
American Tower Corp. Class A | 6.3 | 4.8 |
Crown Castle International Corp. | 5.9 | 2.5 |
Qwest Communications International, Inc. | 5.2 | 3.0 |
SBA Communications Corp. Class A | 3.9 | 1.4 |
NII Holdings, Inc. | 3.7 | 1.6 |
tw telecom, inc. | 2.9 | 2.7 |
CenturyTel, Inc. | 2.5 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2010 | |||
![]() | Diversified Telecommunication Services | 48.5% |
|
![]() | Wireless Telecommunication Services | 36.5% |
|
![]() | Media | 9.4% |
|
![]() | Software | 1.0% |
|
![]() | Communications Equipment | 0.3% |
|
![]() | All Others* | 4.3% |
|
As of August 31, 2009 | |||
![]() | Diversified Telecommunication Services | 61.9% |
|
![]() | Wireless Telecommunication Services | 23.7% |
|
![]() | Media | 9.3% |
|
![]() | Communications Equipment | 2.1% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2010
Showing Percentage of Net Assets
Common Stocks - 95.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.3% | |||
Communications Equipment - 0.3% | |||
Aruba Networks, Inc. (a) | 392 | $ 4,598 | |
F5 Networks, Inc. (a) | 1,600 | 89,280 | |
Infinera Corp. (a)(c) | 75,300 | 570,774 | |
Juniper Networks, Inc. (a) | 2,100 | 58,758 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 1,700 | 44,387 | |
Sandvine Corp. (a) | 3,200 | 4,927 | |
Sonus Networks, Inc. (a) | 56,800 | 120,984 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 6,006 | |
| 899,714 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 3,695 | |
NetApp, Inc. (a) | 700 | 21,007 | |
Synaptics, Inc. (a) | 450 | 12,015 | |
| 36,717 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 48.5% | |||
Alternative Carriers - 5.7% | |||
Cable & Wireless PLC | 19,405 | 40,367 | |
Cogent Communications Group, Inc. (a) | 64,802 | 637,652 | |
Global Crossing Ltd. (a) | 280,586 | 3,998,351 | |
Iliad Group SA (c) | 26,973 | 2,856,740 | |
Level 3 Communications, Inc. (a)(c) | 7,976 | 12,682 | |
PAETEC Holding Corp. (a) | 73,600 | 291,456 | |
tw telecom, inc. (a) | 532,857 | 8,467,098 | |
| 16,304,346 | ||
Integrated Telecommunication Services - 42.8% | |||
AT&T, Inc. | 1,514,019 | 37,562,805 | |
BT Group PLC | 5,351 | 9,386 | |
Cbeyond, Inc. (a)(c) | 165,098 | 2,047,215 | |
CenturyTel, Inc. | 210,190 | 7,203,211 | |
China Telecom Corp. Ltd. sponsored ADR | 50,600 | 2,226,906 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 317,800 | 3,867,626 | |
Cincinnati Bell, Inc. (a) | 225,000 | 666,000 | |
Deutsche Telekom AG (Reg.) | 92,923 | 1,196,848 | |
FairPoint Communications, Inc. (a) | 34,149 | 905 | |
Frontier Communications Corp. (c) | 366,900 | 2,858,151 | |
Hellenic Telecommunications Organization SA | 163 | 1,900 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,375,400 | 3,001,167 | |
Qwest Communications International, Inc. | 3,263,989 | 14,883,790 | |
Telecom Italia SpA sponsored ADR | 226 | 3,214 | |
Telefonica SA | 400 | 9,379 | |
Telefonica SA sponsored ADR | 85,300 | 5,986,354 | |
Telenor ASA (a) | 4,400 | 55,615 | |
Telenor ASA sponsored ADR (a) | 53,300 | 2,025,400 | |
Telkom SA Ltd. | 4,400 | 19,116 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 1,292,624 | $ 37,395,612 | |
Vimpel Communications sponsored ADR | 109,000 | 2,021,950 | |
Windstream Corp. | 73,415 | 743,694 | |
| 123,786,244 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 140,090,590 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 14,510 | |
INTERNET SOFTWARE & SERVICES - 0.2% | |||
Internet Software & Services - 0.2% | |||
Google, Inc. Class A (a) | 90 | 47,412 | |
SAVVIS, Inc. | 26,799 | 377,598 | |
| 425,010 | ||
MEDIA - 9.4% | |||
Broadcasting - 0.8% | |||
Ten Network Holdings Ltd. (a) | 1,539,470 | 2,392,664 | |
Cable & Satellite - 8.4% | |||
Cablevision Systems Corp. - NY Group Class A | 170,900 | 4,115,272 | |
Comcast Corp. Class A | 299,600 | 4,925,424 | |
DIRECTV (a) | 128,909 | 4,363,570 | |
Dish TV India Ltd. (a) | 5,888 | 4,744 | |
Liberty Global, Inc. Class A (a)(c) | 153,200 | 4,118,016 | |
Net Servicos de Comunicacao SA sponsored ADR (c) | 191,500 | 2,357,365 | |
Virgin Media, Inc. | 270,000 | 4,374,000 | |
| 24,258,391 | ||
Movies & Entertainment - 0.2% | |||
Madison Square Garden, Inc. Class A (a) | 22,925 | 447,038 | |
TOTAL MEDIA | 27,098,093 | ||
SOFTWARE - 1.0% | |||
Application Software - 1.0% | |||
Gameloft (a) | 648,786 | 2,791,298 | |
Nuance Communications, Inc. (a) | 800 | 11,512 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 102,075 | |
| 2,904,885 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 113,614 | 104,525 | |
TOTAL SOFTWARE | 3,009,410 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.5% | |||
Wireless Telecommunication Services - 36.5% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 13,371 | |
American Tower Corp. Class A (a) | 424,700 | 18,117,702 | |
Axiata Group Bhd | 1,126,600 | 1,234,948 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
China Mobile (Hong Kong) Ltd. sponsored ADR | 42,100 | $ 2,081,003 | |
Clearwire Corp.: | |||
rights 6/21/10 (a)(c) | 1,029,741 | 298,625 | |
Class A (a)(c) | 1,029,741 | 6,549,153 | |
Crown Castle International Corp. (a) | 449,983 | 17,009,357 | |
Idea Cellular Ltd. (a) | 3,710 | 4,917 | |
Leap Wireless International, Inc. (a)(c) | 364,158 | 5,196,535 | |
MetroPCS Communications, Inc. (a) | 400 | 2,468 | |
Millicom International Cellular SA | 19,400 | 1,643,956 | |
MTN Group Ltd. | 478,225 | 6,929,541 | |
NII Holdings, Inc. (a) | 289,300 | 10,825,606 | |
NTELOS Holdings Corp. | 632 | 10,795 | |
PT Indosat Tbk | 1,600 | 874 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 72,487 | |
SBA Communications Corp. Class A (a) | 317,382 | 11,222,628 | |
Sprint Nextel Corp. (a) | 5,503,750 | 18,327,488 | |
Syniverse Holdings, Inc. (a) | 30,468 | 512,472 | |
Telephone & Data Systems, Inc. | 15,045 | 469,554 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 53,700 | 1,524,543 | |
Vivo Participacoes SA sponsored ADR | 75,225 | 2,035,589 | |
Vodafone Group PLC sponsored ADR | 66,400 | 1,445,528 | |
| 105,529,140 | ||
TOTAL COMMON STOCKS (Cost $314,829,544) | 277,103,184 | ||
Money Market Funds - 11.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.16% (d) | 11,655,757 | $ 11,655,757 | |
Fidelity Securities Lending Cash Central Fund, 0.17% (b)(d) | 21,925,413 | 21,925,413 | |
TOTAL MONEY MARKET FUNDS (Cost $33,581,170) | 33,581,170 |
TOTAL INVESTMENT PORTFOLIO - 107.5% (Cost $348,410,714) | 310,684,354 |
NET OTHER ASSETS - (7.5)% | (21,692,974) | ||
NET ASSETS - 100% | $ 288,991,380 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Affiliated fund that is 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. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 22,187 |
Fidelity Securities Lending Cash Central Fund | 147,071 |
Total | $ 169,258 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2010, involving the Fund's assets and liabilities carried at 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 in the tables below, please refer to the Security 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 | $ 277,103,184 | $ 275,887,571 | $ 1,215,613 | $ - |
Money Market Funds | 33,581,170 | 33,581,170 | - | - |
Total Investments in Securities: | $ 310,684,354 | $ 309,468,741 | $ 1,215,613 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (666) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in/out of Level 3 | 666 |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2010 | $ (666) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.2% |
South Africa | 2.4% |
Spain | 2.1% |
Hong Kong | 2.0% |
Brazil | 2.0% |
France | 2.0% |
Bermuda | 1.4% |
Indonesia | 1.0% |
Others (individually less than 1%) | 4.9% |
| 100.0% |
Income Tax Information |
At February 28, 2010, the fund had a capital loss carryforward of approximately $238,175,641 of which $161,866,685, $11,764,473, $52,002,796 and $12,541,687 will expire on February 28, 2011, 2012, 2017 and 2018, respectively. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2010 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,670,597) - See accompanying schedule: Unaffiliated issuers (cost $314,829,544) | $ 277,103,184 |
|
Fidelity Central Funds (cost $33,581,170) | 33,581,170 |
|
Total Investments (cost $348,410,714) |
| $ 310,684,354 |
Receivable for fund shares sold | 209,095 | |
Dividends receivable | 273,897 | |
Distributions receivable from Fidelity Central Funds | 11,455 | |
Prepaid expenses | 911 | |
Other receivables | 83,241 | |
Total assets | 311,262,953 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 92,136 | |
Accrued management fee | 130,795 | |
Distribution fees payable | 3,919 | |
Other affiliated payables | 84,912 | |
Other payables and accrued expenses | 34,398 | |
Collateral on securities loaned, at value | 21,925,413 | |
Total liabilities | 22,271,573 | |
|
|
|
Net Assets | $ 288,991,380 | |
Net Assets consist of: |
| |
Paid in capital | $ 570,869,864 | |
Undistributed net investment income | 1,935,664 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (246,075,965) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (37,738,183) | |
Net Assets | $ 288,991,380 |
Statement of Assets and Liabilities - continued
| February 28, 2010 | |
|
|
|
Calculation of Maximum Offering Price | $ 37.64 | |
|
|
|
Maximum offering price per share (100/94.25 of $37.64) | $ 39.94 | |
|
|
|
Class T: | $ 37.55 | |
|
|
|
Maximum offering price per share (100/96.50 of $37.55) | $ 38.91 | |
|
|
|
Class B: | $ 37.60 | |
|
|
|
Class C: | $ 37.61 | |
|
|
|
Telecommunications: | $ 37.73 | |
|
|
|
Institutional Class: | $ 37.69 |
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.
Annual Report
Select Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2010 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,611,898 |
Income from Fidelity Central Funds (including $147,071 from security lending) |
| 169,258 |
Total income |
| 8,781,156 |
|
|
|
Expenses | ||
Management fee | $ 1,575,725 | |
Transfer agent fees | 937,080 | |
Distribution fees | 40,496 | |
Accounting and security lending fees | 113,619 | |
Custodian fees and expenses | 17,680 | |
Independent trustees' compensation | 1,966 | |
Registration fees | 76,311 | |
Audit | 50,145 | |
Legal | 5,426 | |
Interest | 157 | |
Miscellaneous | 4,318 | |
Total expenses before reductions | 2,822,923 | |
Expense reductions | (38,062) | 2,784,861 |
Net investment income (loss) | 5,996,295 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,404,701 | |
Foreign currency transactions | 7,671 | |
Capital gain distributions from Fidelity Central Funds | 1,225 | |
Total net realized gain (loss) |
| 5,413,597 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 79,570,497 | |
Assets and liabilities in foreign currencies | 1,940 | |
Total change in net unrealized appreciation (depreciation) |
| 79,572,437 |
Net gain (loss) | 84,986,034 | |
Net increase (decrease) in net assets resulting from operations | $ 90,982,329 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,996,295 | $ 2,191,887 |
Net realized gain (loss) | 5,413,597 | (72,731,263) |
Change in net unrealized appreciation (depreciation) | 79,572,437 | (37,714,452) |
Net increase (decrease) in net assets resulting from operations | 90,982,329 | (108,253,828) |
Distributions to shareholders from net investment income | (2,355,415) | (2,892,731) |
Distributions to shareholders from net realized gain | (402,567) | (1,435,678) |
Total distributions | (2,757,982) | (4,328,409) |
Share transactions - net increase (decrease) | 989,027 | (28,183,681) |
Redemption fees | 12,272 | 6,604 |
Total increase (decrease) in net assets | 89,225,646 | (140,759,314) |
|
|
|
Net Assets | ||
Beginning of period | 199,765,734 | 340,525,048 |
End of period (including undistributed net investment income of $1,935,664 and distributions in excess of net investment income of $1,700,123, respectively) | $ 288,991,380 | $ 199,765,734 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.19) | (.35) M | (.51) | - |
Distributions from net realized gain | (.05) | (.18) M | - | - |
Total distributions | (.24) N | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Class T
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.22) | (.24) M | (.42) | - |
Distributions from net realized gain | (.03) | (.13) M | - | - |
Total distributions | (.24) N | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.24 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $.028 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.04) | (.11) M | (.20) | - |
Distributions from net realized gain | (.01) | (.06) M | - | - |
Total distributions | (.05) N | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications due to book to tax differences. N Total distributions of $.05 per share is comprised of distributions from net investment income of $.044 and distributions from net realized gain of $.009 per share. |
Financial Highlights - Class C
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) E | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.10) | (.07) M | (.22) | - |
Distributions from net realized gain | (.02) | (.05) M | - | - |
Total distributions | (.12) N | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
Expenses before reductions | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. N Total distributions of $.12 per share is comprised of distributions from net investment income of $.098 and distributions from net realized gain of $.023 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
|
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 H | 2007 | 2006 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .76 | .30 | .43 | .61 F | .36 |
Net realized and unrealized gain (loss) | 10.59 | (15.65) | (8.12) | 8.85 | 7.11 |
Total from investment operations | 11.35 | (15.35) | (7.69) | 9.46 | 7.47 |
Distributions from net investment income | (.31) | (.41) K | (.52) | (.53) | (.33) |
Distributions from net realized gain | (.05) | (.20) K | - | - | - |
Total distributions | (.36) L | (.61) J | (.52) | (.53) | (.33) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Total Return A, B | 42.43% | (36.00)% | (15.30)% | 22.69% | 21.54% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .99% | .97% | .91% | .99% | 1.05% |
Expenses net of fee waivers, if any | .99% | .97% | .90% | .97% | 1.05% |
Expenses net of all reductions | .98% | .96% | .90% | .97% | .96% |
Net investment income (loss) | 2.15% | .85% | .79% | 1.34% F | .96% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 |
Portfolio turnover rate E | 90% | 168% | 134% | 162% | 148% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.11 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.09%. G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. H For the year ended February 29. I Amount represents less than $.01 per share. J Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. K The amount shown reflects certain reclassifications related to book to tax differences. L Total distributions of $.36 per share is comprised of distributions from net investment income of $.310 and distributions from net realized gain of $.048 per share. |
Financial Highlights - Institutional Class
|
|
|
|
|
Years ended February 28, | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
Net asset value, beginning of period | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
Net investment income (loss) D | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.38) | (.40) L | (.62) | - |
Distributions from net realized gain | (.05) | (.20) L | - | - |
Total distributions | (.43) M | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - |
Net asset value, end of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
Expenses before reductions | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 90% | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. M Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 per share and distributions from net realized gain of $.051 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2010
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class 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. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory and political uncertainties, and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
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, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. 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 an independent 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 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 categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Money Market Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. 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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. 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 by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. As of February 28, 2010, the Fund did not have any unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. 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 recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
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. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 22,492,418 |
Gross unrealized depreciation | (66,549,245) |
Net unrealized appreciation (depreciation) | $ (44,056,827) |
|
|
Tax Cost | $ 354,741,181 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,935,859 |
Capital loss carryforward | $ (238,175,641) |
Net unrealized appreciation (depreciation) | $ (44,068,650) |
The tax character of distributions paid was as follows:
| February 28, 2010 | February 28, 2009 |
Ordinary Income | $ 2,757,982 | $ 4,328,409 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $245,737,983 and $242,388,135, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. FMR 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 a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, 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 and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 8,842 | $ 348 |
Class T | .25% | .25% | 7,956 | 10 |
Class B | .75% | .25% | 6,292 | 4,720 |
Class C | .75% | .25% | 17,406 | 6,228 |
|
|
| $ 40,496 | $ 11,306 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 7,518 |
Class T | 1,778 |
Class B* | 3,551 |
Class C* | 587 |
| $ 13,434 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 12,356 | .35 |
Class T | 6,117 | .39 |
Class B | 2,209 | .35 |
Class C | 6,068 | .35 |
Telecommunications | 908,946 | .33 |
Institutional Class | 1,384 | .20 |
| $ 937,080 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $546 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 6,365,000 | .44% | $ 157 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $996 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
7. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
8. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $38,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $61.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2010 | 2009 |
From net investment income |
|
|
Class A | $ 15,094 | $ 25,664 |
Class T | 11,817 | 8,592 |
Class B | 821 | 2,117 |
Class C | 5,697 | 1,365 |
Telecommunications | 2,311,098 | 4,183,665 |
Institutional Class | 10,888 | 1,823 |
Total | $ 2,355,415 | $ 4,223,226 |
From net realized gain |
|
|
Class A | $ 4,245 | $ 735 |
Class T | 827 | 357 |
Class B | 139 | 203 |
Class C | 504 | 204 |
Telecommunications | 396,621 | 103,644 |
Institutional Class | 231 | 40 |
Total | $ 402,567 | $ 105,183 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2010 | 2009 | 2010 | 2009 |
Class A |
|
|
|
|
Shares sold | 88,778 | 74,621 | $ 3,085,616 | $ 2,094,308 |
Reinvestment of distributions | 476 | 895 | 17,722 | 24,776 |
Shares redeemed | (79,650) | (61,881) | (2,900,645) | (2,346,705) |
Net increase (decrease) | 9,604 | 13,635 | $ 202,693 | $ (227,621) |
Class T |
|
|
|
|
Shares sold | 45,905 | 9,634 | $ 1,589,430 | $ 334,058 |
Reinvestment of distributions | 314 | 320 | 12,167 | 8,637 |
Shares redeemed | (14,845) | (16,594) | (532,433) | (641,649) |
Net increase (decrease) | 31,374 | (6,640) | $ 1,069,164 | $ (298,954) |
Class B |
|
|
|
|
Shares sold | 15,431 | 4,801 | $ 522,557 | $ 166,647 |
Reinvestment of distributions | 22 | 82 | 836 | 2,207 |
Shares redeemed | (11,987) | (8,780) | (408,765) | (330,007) |
Net increase (decrease) | 3,466 | (3,897) | $ 114,628 | $ (161,153) |
Class C |
|
|
|
|
Shares sold | 62,598 | 5,551 | $ 2,159,620 | $ 174,242 |
Reinvestment of distributions | 129 | 51 | 5,000 | 1,354 |
Shares redeemed | (19,418) | (12,987) | (702,765) | (456,301) |
Net increase (decrease) | 43,309 | (7,385) | $ 1,461,855 | $ (280,705) |
Telecommunications |
|
|
|
|
Shares sold | 3,331,732 | 1,724,964 | $ 111,276,252 | $ 54,824,085 |
Reinvestment of distributions | 68,653 | 146,701 | 2,606,513 | 4,105,779 |
Shares redeemed | (3,325,834) | (2,367,928) | (116,676,048) | (86,013,313) |
Net increase (decrease) | 74,551 | (496,263) | $ (2,793,283) | $ (27,083,449) |
Institutional Class |
|
|
|
|
Shares sold | 35,372 | 477 | $ 1,243,451 | $ 15,601 |
Reinvestment of distributions | 37 | 51 | 1,435 | 1,477 |
Shares redeemed | (8,744) | (3,964) | (310,916) | (148,877) |
Net increase (decrease) | 26,665 | (3,436) | $ 933,970 | $ (131,799) |
Annual Report
Notes to Financial Statements - continued
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio(funds of Fidelity Select Portfolios) at February 28, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2010
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive 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. Except for James C. Curvey, each of the Trustees oversees 222 funds advised by FMR or an affiliate. Mr. Curvey oversees 410 funds advised by FMR or an affiliate.
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) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and 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.
Experience, Skills, Attributes, and Qualifications of the Funds' 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. Edward C. Johnson 3d is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's equity and high income funds and another Board oversees Fidelity's investment-grade bond, money market, and asset allocation 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. The responsibilities of each committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Edward C. Johnson 3d (79) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Trustee and Chairman of the Board of Trustees of certain Trusts. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (74) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupations and Other Relevant Experience+ | |
Dennis J. Dirks (61) | |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (56) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (private equity). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb Company (global pharmaceuticals, 2007-present). Mr. Lacy is Chairman (2008-present) and a member (2006-present) of the Board of Trustees of The National Parks Conservation Association. |
Ned C. Lautenbach (66) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment, 2008-present) and was previously a Partner of Clayton, Dubilier & Rice, Inc. (1998-2008). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. Mr. Lautenbach is also a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (65) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (65) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Board of Directors of the Teagle Foundation (2009-present). Ms. Small is also a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. In addition, Ms. Small serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (70) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Vice Chairman of the Independent Trustees of the Equity and High Income Funds (2006-present). Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment, 2005-present). Mr. Stavropoulos is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (60) | |
| Year of Election or Appointment: 2008 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). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (59) | |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-present), and as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers:
Correspondence intended for each executive officer and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Peter S. Lynch (66) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR and FMR Co., Inc. 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 on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (40) | |
| Year of Election or Appointment: 2008 Assistant Treasurer of the Fidelity Fixed Income and Asset Allocation Funds. Mr. Robins also serves as President and Treasurer of other Fidelity funds and is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (45) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR (2006-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as a portfolio manager. |
Christopher S. Bartel (38) | |
| Year of Election or Appointment: 2009 Vice President of Fidelity's Sector and Real Estate Equity Funds. Mr. Bartel also serves as Senior Vice President of Equity Research (2009-present). Previously, Mr. Bartel served as Managing Director of Research (2006-2009) and an analyst and portfolio manager (2000-2006). |
Scott C. Goebel (42) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present) and FMR Co., Inc. (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present), Fidelity Investments Money Management, Inc. (2008-present), Fidelity Management & Research (U.K.) Inc. (2008-present), and Fidelity Research and Analysis Company (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
William C. Coffey (41) | |
| Year of Election or Appointment: 2009 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. Coffey also serves as Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Holly C. Laurent (55) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), and Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (51) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. Ms. Reynolds served as Chief Operating Officer of FPCMS (2007-2008). Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). |
Kenneth A. Rathgeber (62) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), Pyramis Global Advisors, LLC (2005-present), and Strategic Advisers, Inc. (2005-present). |
Jeffrey S. Christian (48) | |
| Year of Election or Appointment: 2009 Deputy Treasurer of the Fidelity funds. Mr. Christian is an employee of Fidelity Investments. Previously, Mr. Christian served as Chief Financial Officer (2008-2009) of certain Fidelity funds and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2004-2009). |
Bryan A. Mehrmann (48) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (42) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
John R. Hebble (51) | |
| Year of Election or Appointment: 2009 Assistant Treasurer of Fidelity's Equity and High Income Funds. Mr. Hebble also serves as Treasurer and Chief Financial Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Paul M. Murphy (62) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments. Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (51) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each 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:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/12/10 | 04/09/10 | $0.085 | $0.00 |
Gold Portfolio |
|
|
|
|
Institutional Class | 04/12/10 | 04/09/10 | $0.00 | $0.402 |
Materials Portfolio |
|
|
|
|
Institutional Class | 04/12/10 | 04/09/10 | $0.008 | $0.03 |
Telecommunications Portfolio |
|
|
|
|
Institutional Class | 04/12/10 | 04/09/10 | $0.243 | $0.00 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2009 | December |
Consumer Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | - | - |
Materials Portfolio |
|
|
Institutional Class | 100% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2009 | December |
Consumers Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | - | 14% |
Materials Portfolio |
|
|
Institutional Class | 100% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 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:
Gold Portfolio | Pay Date | Income | Taxes |
Institutional Class | 12/14/2009 | .094 | .0062 |
The fund will notify shareholders in January 2011 of amounts for use in preparing 2010 income tax returns.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASGMTI-UANN-0410
1.845768.103
Item 2. Code of Ethics
As of the end of the period, February 28, 2010, 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 Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environmental Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Home Finance Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Software and Computer Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Portfolio and Wireless Portfolio (the "Funds"):
Services Billed by PwC
February 28, 2010 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $31,000 | $- | $2,600 | $1,600 |
Automotive Portfolio | $31,000 | $- | $2,600 | $1,600 |
Banking Portfolio | $32,000 | $- | $2,600 | $1,700 |
Biotechnology Portfolio | $35,000 | $- | $2,600 | $2,400 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $2,600 | $1,900 |
Chemicals Portfolio | $33,000 | $- | $2,600 | $1,800 |
Communications Equipment Portfolio | $38,000 | $- | $2,600 | $1,700 |
Computers Portfolio | $33,000 | $- | $2,600 | $1,800 |
Construction and Housing Portfolio | $31,000 | $- | $2,600 | $1,600 |
Consumer Discretionary Portfolio | $31,000 | $- | $2,600 | $1,600 |
Consumer Staples Portfolio | $38,000 | $- | $2,600 | $2,300 |
Defense and Aerospace Portfolio | $32,000 | $- | $2,600 | $1,900 |
Electronics Portfolio | $34,000 | $- | $2,600 | $2,200 |
Energy Portfolio | $35,000 | $- | $2,800 | $2,900 |
Energy Service Portfolio | $35,000 | $- | $2,600 | $2,400 |
Environmental Portfolio | $32,000 | $- | $2,600 | $1,600 |
Financial Services Portfolio | $32,000 | $- | $4,100 | $1,800 |
Gold Portfolio | $58,000 | $- | $9,300 | $3,500 |
Health Care Portfolio | $34,000 | $- | $2,600 | $2,600 |
Home Finance Portfolio | $32,000 | $- | $2,600 | $1,600 |
Industrial Equipment Portfolio | $35,000 | $- | $2,600 | $1,600 |
Industrials Portfolio | $32,000 | $- | $2,600 | $1,600 |
Insurance Portfolio | $31,000 | $- | $2,600 | $1,600 |
IT Services Portfolio | $31,000 | $- | $2,600 | $1,600 |
Leisure Portfolio | $32,000 | $- | $2,600 | $1,700 |
Materials Portfolio | $43,000 | $- | $2,600 | $1,900 |
Medical Delivery Portfolio | $32,000 | $- | $2,600 | $1,800 |
Medical Equipment and Systems Portfolio | $34,000 | $- | $2,600 | $2,400 |
Multimedia Portfolio | $31,000 | $- | $2,600 | $1,600 |
Natural Gas Portfolio | $35,000 | $- | $2,600 | $2,300 |
Natural Resources Portfolio | $34,000 | $- | $2,600 | $2,500 |
Pharmaceuticals Portfolio | $32,000 | $- | $2,600 | $1,600 |
Retailing Portfolio | $33,000 | $- | $2,600 | $1,600 |
Software and Computer Services Portfolio | $33,000 | $- | $2,600 | $2,000 |
Technology Portfolio | $34,000 | $- | $2,600 | $2,500 |
Telecommunications Portfolio | $36,000 | $- | $2,600 | $1,700 |
Transportation Portfolio | $33,000 | $- | $2,600 | $1,600 |
Utilities Portfolio | $32,000 | $- | $2,600 | $1,800 |
Wireless Portfolio | $32,000 | $- | $2,600 | $1,800 |
February 28, 2009 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $31,000 | $- | $2,600 | $1,500 |
Automotive Portfolio | $31,000 | $- | $2,600 | $1,500 |
Banking Portfolio | $32,000 | $- | $2,600 | $1,600 |
Biotechnology Portfolio | $34,000 | $- | $2,600 | $2,400 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $3,000 | $1,900 |
Chemicals Portfolio | $32,000 | $- | $2,600 | $1,800 |
Communications Equipment Portfolio | $32,000 | $- | $2,600 | $1,600 |
Computers Portfolio | $32,000 | $- | $2,600 | $1,700 |
Construction and Housing Portfolio | $33,000 | $- | $2,600 | $1,500 |
Consumer Discretionary Portfolio | $31,000 | $- | $2,600 | $1,500 |
Consumer Staples Portfolio | $37,000 | $- | $2,600 | $2,100 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,600 | $2,200 |
Electronics Portfolio | $33,000 | $- | $2,600 | $2,300 |
Energy Portfolio | $37,000 | $- | $2,800 | $3,600 |
Energy Service Portfolio | $36,000 | $- | $2,600 | $3,100 |
Environmental Portfolio | $31,000 | $- | $2,600 | $1,500 |
Financial Services Portfolio | $32,000 | $- | $3,000 | $1,700 |
Gold Portfolio | $52,000 | $- | $6,200 | $3,000 |
Health Care Portfolio | $35,000 | $- | $2,600 | $2,800 |
Home Finance Portfolio | $32,000 | $- | $2,600 | $1,500 |
Industrial Equipment Portfolio | $35,000 | $- | $2,600 | $1,500 |
Industrials Portfolio | $32,000 | $- | $2,600 | $1,500 |
Insurance Portfolio | $32,000 | $- | $2,600 | $1,500 |
IT Services Portfolio | $31,000 | $- | $2,600 | $1,500 |
Leisure Portfolio | $32,000 | $- | $2,600 | $1,600 |
Materials Portfolio | $36,000 | $- | $2,600 | $1,700 |
Medical Delivery Portfolio | $32,000 | $- | $2,600 | $1,800 |
Medical Equipment and Systems Portfolio | $34,000 | $- | $2,600 | $2,400 |
Multimedia Portfolio | $31,000 | $- | $2,600 | $1,500 |
Natural Gas Portfolio | $35,000 | $- | $2,600 | $2,700 |
Natural Resources Portfolio | $36,000 | $- | $2,600 | $3,100 |
Pharmaceuticals Portfolio | $32,000 | $- | $2,600 | $1,600 |
Retailing Portfolio | $33,000 | $- | $2,600 | $1,500 |
Software and Computer Services Portfolio | $34,000 | $- | $2,600 | $2,000 |
Technology Portfolio | $34,000 | $- | $2,600 | $2,500 |
Telecommunications Portfolio | $36,000 | $- | $2,600 | $1,700 |
Transportation Portfolio | $32,000 | $- | $2,600 | $1,500 |
Utilities Portfolio | $32,000 | $- | $2,600 | $1,800 |
Wireless Portfolio | $32,000 | $- | $2,600 | $1,700 |
|
|
|
|
|
A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company ("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 Funds ("Fund Service Providers"):
Services Billed by PwC
| February 28, 2010A | February 28, 2009A |
Audit-Related Fees | $2,250,000 | $2,985,000 |
Tax Fees | $- | $2,000 |
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 assurance services provided to the fund or Fund Service Provider that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, 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 Funds are as follows:
Billed By | February 28, 2010 A | February 28, 2009 A,B |
PwC | $4,465,000 | $3,795,000 |
A Amounts may reflect rounding.
B Reflects current period presentation.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
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Date: | April 27, 2010 |
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/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | April 27, 2010 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
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Date: | April 27, 2010 |