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 |
|
|
Date of reporting period: | February 28, 2011 |
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, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Automotive Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Construction and Housing Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Consumer Discretionary Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Leisure Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Multimedia Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Retailing Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
Annual Report
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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, 2010 to February 28, 2011).
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 |
Automotive Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,481.40 | $ 5.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Construction and Housing Portfolio | .96% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,342.30 | $ 5.58 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.03 | $ 4.81 |
Consumer Discretionary Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,305.70 | $ 5.32 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Leisure Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,253.30 | $ 4.97 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Multimedia Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,366.10 | $ 5.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Retailing Portfolio | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,298.20 | $ 5.24 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
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
Automotive Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Automotive Portfolio | 50.90% | 8.05% | 9.32% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Michael Weaver, Portfolio Manager of Automotive Portfolio: For the year, the fund returned 50.90%, significantly outperforming both the 44.72% gain of its industry benchmark, the S&P® Custom Automobiles & Components Index, and the S&P 500®. Relative to its industry index, strong stock selection - particularly in the auto parts and equipment group - and favorable overall market positioning fueled the fund's outperformance. Underweighting the lagging automobile manufacturers group and slightly overweighting the construction/farm machinery/heavy trucks category, along with solid stock picking in both areas, bolstered relative performance. Security selection in the out-of-benchmark automotive retail group also helped. The biggest individual contributors were substantially overweighted positions in TRW Automotive Holdings, a leading supplier of airbags and other safety equipment, and Tenneco, a maker of vehicle emission-system components. Underweighting underperforming Japanese manufacturer and index heavyweight Toyota Motor also contributed, as did an out-of-benchmark investment in automotive retailer Lithia Motors. On the downside, a small stake in bonds issued by General Motors and security selection in consumer electronics were the primary detractors. In addition to GM, individual detractors included an underweighting in Canada-based Magna International, which makes automotive chassis, interiors and metal stampings, and a non-index position in Harman International, which produces audio products and electronic systems. Some holdings mentioned in this update 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
Automotive Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Toyota Motor Corp. sponsored ADR | 11.7 | 9.6 |
Ford Motor Co. | 10.0 | 9.3 |
Honda Motor Co. Ltd. sponsored ADR | 8.9 | 8.3 |
Lear Corp. | 7.0 | 0.0 |
TRW Automotive Holdings Corp. | 6.8 | 7.1 |
Tenneco, Inc. | 4.9 | 4.9 |
Johnson Controls, Inc. | 4.7 | 5.7 |
BorgWarner, Inc. | 4.5 | 5.7 |
Harley-Davidson, Inc. | 4.1 | 2.2 |
Magna International, Inc. Class A (sub. vtg.) | 3.9 | 4.6 |
| 66.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Auto Components | 52.6% |
|
![]() | Automobiles | 42.4% |
|
![]() | Specialty Retail | 3.2% |
|
![]() | Machinery | 1.2% |
|
![]() | All Others* | 0.6% |
|
As of August 31, 2010 | |||
![]() | Auto Components | 49.2% |
|
![]() | Automobiles | 30.9% |
|
![]() | Specialty Retail | 11.7% |
|
![]() | Household Durables | 2.8% |
|
![]() | Machinery | 2.5% |
|
![]() | All Others* | 2.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Automotive Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 95.4% | |||
Shares | Value | ||
AUTO COMPONENTS - 52.6% | |||
Auto Parts & Equipment - 50.6% | |||
American Axle & Manufacturing Holdings, Inc. (a) | 564,900 | $ 7,552,713 | |
Amerigon, Inc. (a)(e) | 200,400 | 2,733,456 | |
Autoliv, Inc. | 178,155 | 13,342,028 | |
BorgWarner, Inc. (a) | 217,600 | 16,887,936 | |
Dana Holding Corp. (a) | 577,200 | 10,897,536 | |
Delphi Corp. Class B (a) | 300 | 6,270,000 | |
Drew Industries, Inc. | 32,100 | 742,473 | |
Exide Technologies (a) | 555,500 | 6,610,450 | |
Federal-Mogul Corp. Class A (a) | 346,824 | 7,286,772 | |
Fuel Systems Solutions, Inc. (a) | 14,200 | 413,504 | |
Gentex Corp. | 187,300 | 5,671,444 | |
Johnson Controls, Inc. | 431,670 | 17,612,136 | |
Lear Corp. | 247,400 | 26,174,920 | |
Magna International, Inc. Class A | 299,384 | 14,749,575 | |
Martinrea International, Inc. (a) | 221,500 | 2,041,107 | |
Modine Manufacturing Co. (a) | 200,200 | 2,962,960 | |
Stoneridge, Inc. (a) | 132,589 | 1,999,442 | |
Tenneco, Inc. (a) | 455,280 | 18,156,566 | |
Tower International, Inc. | 101,300 | 1,752,490 | |
TRW Automotive Holdings Corp. (a) | 445,100 | 25,281,680 | |
| 189,139,188 | ||
Tires & Rubber - 2.0% | |||
Cooper Tire & Rubber Co. | 134,500 | 3,155,370 | |
The Goodyear Tire & Rubber Co. (a) | 300,026 | 4,254,369 | |
| 7,409,739 | ||
TOTAL AUTO COMPONENTS | 196,548,927 | ||
AUTOMOBILES - 38.4% | |||
Automobile Manufacturers - 34.3% | |||
Ford Motor Co. (a) | 2,476,661 | 37,273,748 | |
General Motors Co. | 338,900 | 11,363,317 | |
Honda Motor Co. Ltd. sponsored ADR (e) | 762,200 | 33,300,518 | |
Thor Industries, Inc. | 53,500 | 1,778,340 | |
Toyota Motor Corp. sponsored ADR (e) | 468,000 | 43,664,399 | |
Winnebago Industries, Inc. (a) | 49,400 | 714,324 | |
| 128,094,646 | ||
Motorcycle Manufacturers - 4.1% | |||
Harley-Davidson, Inc. | 374,900 | 15,303,418 | |
TOTAL AUTOMOBILES | 143,398,064 | ||
MACHINERY - 1.2% | |||
Construction & Farm Machinery & Heavy Trucks - 1.2% | |||
Accuride Corp. (a) | 111,100 | 1,554,289 | |
ArvinMeritor, Inc. (a) | 172,100 | 3,084,032 | |
| 4,638,321 | ||
| |||
Shares | Value | ||
SPECIALTY RETAIL - 3.2% | |||
Automotive Retail - 3.2% | |||
Asbury Automotive Group, Inc. (a) | 185,126 | $ 3,415,575 | |
Group 1 Automotive, Inc. (e) | 58,300 | 2,463,175 | |
Sonic Automotive, Inc. Class A (sub. vtg.) (e) | 415,900 | 5,980,642 | |
| 11,859,392 | ||
TOTAL COMMON STOCKS (Cost $281,985,275) | 356,444,704 |
Nonconvertible Bonds - 4.0% | ||||
| Principal Amount |
| ||
AUTOMOBILES - 4.0% | ||||
Automobile Manufacturers - 4.0% | ||||
General Motors Corp.: | ||||
6.75% 5/1/28 (d) | $ 31,005,000 | 9,766,575 | ||
7.125% 7/15/13 (d) | 12,970,000 | 4,117,975 | ||
7.2% 1/15/49 (d) | 10,000 | 3,200 | ||
8.25% 7/15/23 (d) | 3,030,000 | 969,600 | ||
8.375% 7/15/33 (d) | 25,000 | 8,313 | ||
| 14,865,663 |
Money Market Funds - 21.7% | |||
Shares |
| ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 81,313,075 | 81,313,075 |
TOTAL INVESTMENT PORTFOLIO - 121.1% (Cost $379,737,589) | 452,623,442 | |
NET OTHER ASSETS (LIABILITIES) - (21.1)% | (78,991,845) | |
NET ASSETS - 100% | $ 373,631,597 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Non-income producing - Security is in default. |
(e) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,720 |
Fidelity Securities Lending Cash Central Fund | 99,057 |
Total | $ 112,777 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 356,444,704 | $ 350,174,704 | $ 6,270,000 | $ - |
Nonconvertible Bonds | 14,865,663 | - | 14,865,663 | - |
Money Market Funds | 81,313,075 | 81,313,075 | - | - |
Total Investments in Securities: | $ 452,623,442 | $ 431,487,779 | $ 21,135,663 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 75.0% |
Japan | 20.6% |
Canada | 4.4% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $80,509,909) - See accompanying schedule: Unaffiliated issuers (cost $298,424,514) | $ 371,310,367 |
|
Fidelity Central Funds (cost $81,313,075) | 81,313,075 |
|
Total Investments (cost $379,737,589) |
| $ 452,623,442 |
Cash | 269 | |
Receivable for investments sold | 13,296,518 | |
Receivable for fund shares sold | 1,090,392 | |
Dividends receivable | 249,991 | |
Distributions receivable from Fidelity Central Funds | 13,611 | |
Prepaid expenses | 192 | |
Other receivables | 6,970 | |
Total assets | 467,281,385 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 6,051,273 | |
Accrued management fee | 191,168 | |
Notes payable to affiliates | 5,979,000 | |
Other affiliated payables | 81,469 | |
Other payables and accrued expenses | 33,803 | |
Collateral on securities loaned, at value | 81,313,075 | |
Total liabilities | 93,649,788 | |
|
|
|
Net Assets | $ 373,631,597 | |
Net Assets consist of: |
| |
Paid in capital | $ 297,505,507 | |
Accumulated net investment loss | (6,345) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,246,754 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 72,885,681 | |
Net Assets, for 7,972,418 shares outstanding | $ 373,631,597 | |
Net Asset Value, offering price and redemption price per share ($373,631,597 ÷ 7,972,418 shares) | $ 46.87 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,271,062 |
Interest |
| 507 |
Income from Fidelity Central Funds (including $99,057 from security lending) |
| 112,777 |
Total income |
| 1,384,346 |
|
|
|
Expenses | ||
Management fee | $ 1,101,180 | |
Transfer agent fees | 451,459 | |
Accounting and security lending fees | 83,247 | |
Custodian fees and expenses | 16,040 | |
Independent trustees' compensation | 977 | |
Registration fees | 71,171 | |
Audit | 40,010 | |
Legal | 547 | |
Interest | 1,451 | |
Miscellaneous | 1,625 | |
Total expenses before reductions | 1,767,707 | |
Expense reductions | (7,579) | 1,760,128 |
Net investment income (loss) | (375,782) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 8,977,599 | |
Foreign currency transactions | 34,798 | |
Total net realized gain (loss) |
| 9,012,397 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 57,048,582 | |
Assets and liabilities in foreign currencies | 73 | |
Total change in net unrealized appreciation (depreciation) |
| 57,048,655 |
Net gain (loss) | 66,061,052 | |
Net increase (decrease) in net assets resulting from operations | $ 65,685,270 |
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 |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (375,782) | $ (223,089) |
Net realized gain (loss) | 9,012,397 | 12,547,740 |
Change in net unrealized appreciation (depreciation) | 57,048,655 | 32,049,790 |
Net increase (decrease) in net assets resulting from operations | 65,685,270 | 44,374,441 |
Distributions to shareholders from net investment income | - | (69,440) |
Distributions to shareholders from net realized gain | (3,086,154) | - |
Total distributions | (3,086,154) | (69,440) |
Share transactions | 420,037,518 | 237,075,048 |
Reinvestment of distributions | 2,936,075 | 67,208 |
Cost of shares redeemed | (258,021,780) | (143,070,227) |
Net increase (decrease) in net assets resulting from share transactions | 164,951,813 | 94,072,029 |
Redemption fees | 58,011 | 64,595 |
Total increase (decrease) in net assets | 227,608,940 | 138,441,625 |
|
|
|
Net Assets | ||
Beginning of period | 146,022,657 | 7,581,032 |
End of period (including accumulated net investment loss of $6,345 and accumulated net investment loss of $60, respectively) | $ 373,631,597 | $ 146,022,657 |
Other Information Shares | ||
Sold | 10,011,164 | 8,989,665 |
Issued in reinvestment of distributions | 85,450 | 3,926 |
Redeemed | (6,740,636) | (5,130,314) |
Net increase (decrease) | 3,355,978 | 3,863,277 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 31.63 | $ 10.07 | $ 34.23 | $ 40.24 | $ 34.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.08) | (.06) | .42 | .18 | .06 |
Net realized and unrealized gain (loss) | 15.94 | 21.67 | (24.30) | (4.98) | 5.85 |
Total from investment operations | 15.86 | 21.61 | (23.88) | (4.80) | 5.91 |
Distributions from net investment income | - | (.07) | (.28) | (.13) | (.06) |
Distributions from net realized gain | (.63) | - | (.01) | (1.11) | - |
Total distributions | (.63) | (.07) | (.29) | (1.24) | (.06) |
Redemption fees added to paid in capital B | .01 | .02 | .01 | .03 | .04 |
Net asset value, end of period | $ 46.87 | $ 31.63 | $ 10.07 | $ 34.23 | $ 40.24 |
Total Return A | 50.90% | 215.39% | (69.99)% | (12.11)% | 17.33% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .91% | .99% | 1.47% | 1.19% | 1.58% |
Expenses net of fee waivers, if any | .91% | .99% | 1.15% | 1.15% | 1.22% |
Expenses net of all reductions | .91% | .97% | 1.15% | 1.15% | 1.21% |
Net investment income (loss) | (.19)% | (.23)% | 1.73% | .44% | .16% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 373,632 | $ 146,023 | $ 7,581 | $ 25,823 | $ 47,708 |
Portfolio turnover rate D | 91% | 156% | 156% | 258% | 256% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Construction and Housing Portfolio | 26.24% | 0.55% | 9.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Daniel Kelley, Portfolio Manager of Construction and Housing Portfolio: For the year, the fund returned 26.24%, beating the 24.78% return of its sector benchmark, the MSCI® U.S. IM Custom Construction & Housing 25/50 Index, and the broadly based S&P 500®. The fund's outperformance of the MSCI index was driven primarily by robust stock picking and an overweighting in the construction and engineering group, an industry where I increased the portfolio's exposure during the period. This area gained momentum when project demand, or backlog, began to rebound. This uptick in orders boosted the industry's stocks, including our stakes in KBR and Fluor, both large global engineering firms. Another lift came from stakes in two out-of-index groups - retail real estate investment trusts (REITs) and real estate services. In the former, shopping center landlord CBL & Associates Properties gained ground, while in the latter, commercial real estate broker CB Richard Ellis Group moved up nicely. CB Richard Ellis' stock was sold prior to period end. Shares of both companies benefited from improving trends in commercial real estate that bolstered their business activities. The fund also had a good result from underweighting the construction materials area, including a lighter-than-index stake in crushed stone producer Vulcan Materials. Positioning in diversified real estate activities and building products also contributed. On the flip side, the biggest relative detractor was our significant overweighting and poor security selection in the homebuilding area, including the fund's two biggest individual detractors, PulteGroup and KB Home. Both stocks underperformed along with the entire industry, and were also beset with company-specific problems. Pulte had trouble digesting a poorly timed acquisition, while the U.S. Securities and Exchange Commission investigated KB's accounting practices. KB also had problems with a joint venture in Las Vegas and an onerous cost structure that further hampered margins. Elsewhere, the fund had some poor results in residential REITs, where our sizable underweighting was costly, including a lighter-than-index stake in rental property manager AvalonBay Communities and untimely ownership of Equity Residential.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Home Depot, Inc. | 19.0 | 23.3 |
Lowe's Companies, Inc. | 16.9 | 12.4 |
Equity Residential (SBI) | 7.7 | 7.2 |
Fluor Corp. | 4.7 | 5.5 |
Foster Wheeler Ag | 4.5 | 3.5 |
Jacobs Engineering Group, Inc. | 4.3 | 1.7 |
Toll Brothers, Inc. | 3.9 | 3.9 |
Lennar Corp. Class A | 3.7 | 3.3 |
Vulcan Materials Co. | 3.6 | 1.3 |
KBR, Inc. | 2.5 | 3.8 |
| 70.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Specialty Retail | 35.9% |
|
![]() | Construction & Engineering | 23.1% |
|
![]() | Real Estate Investment Trusts | 17.6% |
|
![]() | Household Durables | 12.2% |
|
![]() | Construction Materials | 4.6% |
|
![]() | All Others* | 6.6% |
|
As of August 31, 2010 | |||
![]() | Specialty Retail | 35.9% |
|
![]() | Real Estate Investment Trusts | 20.0% |
|
![]() | Construction & Engineering | 18.4% |
|
![]() | Household Durables | 15.3% |
|
![]() | Building Products | 4.8% |
|
![]() | All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Construction and Housing Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
BUILDING PRODUCTS - 3.5% | |||
Building Products - 3.5% | |||
Masco Corp. | 91,800 | $ 1,247,562 | |
Owens Corning (a) | 50,169 | 1,792,538 | |
Quanex Building Products Corp. | 45,143 | 852,751 | |
| 3,892,851 | ||
CONSTRUCTION & ENGINEERING - 23.1% | |||
Construction & Engineering - 23.1% | |||
AECOM Technology Corp. (a) | 33,900 | 970,896 | |
Dycom Industries, Inc. (a) | 116,700 | 2,014,242 | |
Fluor Corp. | 74,500 | 5,271,620 | |
Foster Wheeler AG (a) | 139,300 | 5,037,088 | |
Granite Construction, Inc. | 18,700 | 532,950 | |
Jacobs Engineering Group, Inc. (a) | 95,600 | 4,785,736 | |
KBR, Inc. | 85,400 | 2,801,120 | |
Shaw Group, Inc. (a) | 60,950 | 2,420,934 | |
URS Corp. (a) | 45,371 | 2,111,113 | |
| 25,945,699 | ||
CONSTRUCTION MATERIALS - 4.6% | |||
Construction Materials - 4.6% | |||
Eagle Materials, Inc. | 33,400 | 1,079,488 | |
Vulcan Materials Co. (d) | 88,500 | 4,057,725 | |
| 5,137,213 | ||
HOUSEHOLD DURABLES - 12.2% | |||
Homebuilding - 12.2% | |||
Beazer Homes USA, Inc. (a)(d) | 91,978 | 427,698 | |
D.R. Horton, Inc. | 201,437 | 2,385,014 | |
KB Home (d) | 54,763 | 725,610 | |
Lennar Corp. Class A | 207,478 | 4,182,756 | |
M.D.C. Holdings, Inc. | 25,900 | 679,875 | |
M/I Homes, Inc. (a) | 15,293 | 204,162 | |
PulteGroup, Inc. (a) | 66,683 | 460,113 | |
Ryland Group, Inc. | 18,200 | 315,952 | |
Toll Brothers, Inc. (a) | 203,250 | 4,321,095 | |
| 13,702,275 | ||
REAL ESTATE INVESTMENT TRUSTS - 17.6% | |||
Residential REITs - 17.4% | |||
American Campus Communities, Inc. | 16,200 | 541,404 | |
Apartment Investment & Management Co. Class A | 28,371 | 727,716 | |
AvalonBay Communities, Inc. | 17,969 | 2,174,788 | |
BRE Properties, Inc. | 6,900 | 327,819 | |
Camden Property Trust (SBI) | 34,800 | 2,059,116 | |
Education Realty Trust, Inc. | 57,600 | 475,200 | |
Equity Residential (SBI) | 157,600 | 8,685,336 | |
Essex Property Trust, Inc. | 9,500 | 1,175,910 | |
Mid-America Apartment Communities, Inc. | 11,470 | 745,206 | |
| |||
Shares | Value | ||
Post Properties, Inc. | 47,500 | $ 1,852,500 | |
UDR, Inc. | 32,238 | 784,028 | |
| 19,549,023 | ||
Retail REITs - 0.2% | |||
CBL & Associates Properties, Inc. | 13,600 | 242,760 | |
TOTAL REAL ESTATE INVESTMENT TRUSTS | 19,791,783 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.6% | |||
Diversified Real Estate Activities - 1.3% | |||
The St. Joe Co. (a)(d) | 52,600 | 1,408,628 | |
Real Estate Operating Companies - 1.3% | |||
Forest City Enterprises, Inc. Class A (a)(d) | 78,800 | 1,489,320 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 2,897,948 | ||
SPECIALTY RETAIL - 35.9% | |||
Home Improvement Retail - 35.9% | |||
Home Depot, Inc. | 568,490 | 21,301,320 | |
Lowe's Companies, Inc. | 724,934 | 18,971,523 | |
| 40,272,843 | ||
TOTAL COMMON STOCKS (Cost $101,522,653) | 111,640,612 | ||
Money Market Funds - 6.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 591,914 | 591,914 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 6,292,250 | 6,292,250 | |
TOTAL MONEY MARKET FUNDS (Cost $6,884,164) | 6,884,164 |
TOTAL INVESTMENT PORTFOLIO - 105.6% (Cost $108,406,817) | 118,524,776 | |
NET OTHER ASSETS (LIABILITIES) - (5.6)% | (6,324,384) | |
NET ASSETS - 100% | $ 112,200,392 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 1,813 |
Fidelity Securities Lending Cash Central Fund | 29,226 |
Total | $ 31,039 |
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, 2011, the Fund had a capital loss carryforward of approximately $7,977,983 of which $2,451,853 and $5,526,130 will expire in fiscal 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
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,136,438) - See accompanying schedule: Unaffiliated issuers (cost $101,522,653) | $ 111,640,612 |
|
Fidelity Central Funds (cost $6,884,164) | 6,884,164 |
|
Total Investments (cost $108,406,817) |
| $ 118,524,776 |
Receivable for investments sold | 2,199,209 | |
Receivable for fund shares sold | 792,842 | |
Dividends receivable | 21,500 | |
Distributions receivable from Fidelity Central Funds | 13,532 | |
Prepaid expenses | 167 | |
Other receivables | 145 | |
Total assets | 121,552,171 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 355,203 | |
Payable for fund shares redeemed | 2,592,631 | |
Accrued management fee | 52,884 | |
Other affiliated payables | 28,748 | |
Other payables and accrued expenses | 30,063 | |
Collateral on securities loaned, at value | 6,292,250 | |
Total liabilities | 9,351,779 | |
|
|
|
Net Assets | $ 112,200,392 | |
Net Assets consist of: |
| |
Paid in capital | $ 114,892,022 | |
Accumulated undistributed net realized gain (loss) on investments | (12,809,589) | |
Net unrealized appreciation (depreciation) on investments | 10,117,959 | |
Net Assets, for 2,997,329 shares outstanding | $ 112,200,392 | |
Net Asset Value, offering price and redemption price per share ($112,200,392 ÷ 2,997,329 shares) | $ 37.43 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,547,430 |
Income from Fidelity Central Funds (including $29,226 from security lending) |
| 31,039 |
Total income |
| 1,578,469 |
|
|
|
Expenses | ||
Management fee | $ 577,960 | |
Transfer agent fees | 299,639 | |
Accounting and security lending fees | 41,453 | |
Custodian fees and expenses | 22,794 | |
Independent trustees' compensation | 581 | |
Registration fees | 26,383 | |
Audit | 40,315 | |
Legal | 405 | |
Miscellaneous | 1,341 | |
Total expenses before reductions | 1,010,871 | |
Expense reductions | (1,672) | 1,009,199 |
Net investment income (loss) | 569,270 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,292,320 | |
Change in net unrealized appreciation (depreciation) on investment securities | 10,423,658 | |
Net gain (loss) | 15,715,978 | |
Net increase (decrease) in net assets resulting from operations | $ 16,285,248 |
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) | $ 569,270 | $ 855,068 |
Net realized gain (loss) | 5,292,320 | (2,154,284) |
Change in net unrealized appreciation (depreciation) | 10,423,658 | 43,777,995 |
Net increase (decrease) in net assets resulting from operations | 16,285,248 | 42,478,779 |
Distributions to shareholders from net investment income | (783,306) | (826,043) |
Share transactions | 85,158,733 | 78,915,369 |
Reinvestment of distributions | 743,388 | 800,902 |
Cost of shares redeemed | (88,789,200) | (104,036,666) |
Net increase (decrease) in net assets resulting from share transactions | (2,887,079) | (24,320,395) |
Redemption fees | 23,680 | 10,659 |
Total increase (decrease) in net assets | 12,638,543 | 17,343,000 |
|
|
|
Net Assets | ||
Beginning of period | 99,561,849 | 82,218,849 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $102,753, respectively) | $ 112,200,392 | $ 99,561,849 |
Other Information Shares | ||
Sold | 2,478,458 | 3,118,032 |
Issued in reinvestment of distributions | 21,868 | 28,811 |
Redeemed | (2,833,936) | (4,380,076) |
Net increase (decrease) | (333,610) | (1,233,233) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 29.89 | $ 18.01 | $ 33.19 | $ 45.98 | $ 49.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .18 | .22 | .31 | .26 | .19 |
Net realized and unrealized gain (loss) | 7.63 | 11.91 | (14.35) | (8.49) | 2.28 |
Total from investment operations | 7.81 | 12.13 | (14.04) | (8.23) | 2.47 |
Distributions from net investment income | (.28) | (.25) | (.30) | (.16) | (.05) |
Distributions from net realized gain | - | - | (.85) | (4.41) | (5.87) |
Total distributions | (.28) | (.25) | (1.15) | (4.57) | (5.92) |
Redemption fees added to paid in capital B | .01 | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 37.43 | $ 29.89 | $ 18.01 | $ 33.19 | $ 45.98 |
Total Return A | 26.24% | 67.46% | (43.68)% | (18.11)% | 5.41% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .98% | 1.01% | 1.03% | .98% | 1.02% |
Expenses net of fee waivers, if any | .98% | 1.01% | 1.03% | .98% | 1.02% |
Expenses net of all reductions | .98% | 1.01% | 1.02% | .97% | 1.02% |
Net investment income (loss) | .55% | .84% | 1.14% | .63% | .41% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 112,200 | $ 99,562 | $ 82,219 | $ 84,685 | $ 163,981 |
Portfolio turnover rate D | 101% | 82% | 85% | 102% | 54% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Consumer Discretionary Portfolio A | 29.75% | 4.07% | 3.51% |
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 28, 2001. 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 Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from John Harris, Portfolio Manager of Consumer Discretionary Portfolio: For the 12 months ending February 28, 2011, the fund returned 29.75%, lagging the 32.58% return of its sector benchmark, the MSCI® U.S. IM Consumer Discretionary 25/50 Index but handily topping the broadly based S&P 500®. The portfolio lagged its sector benchmark primarily as a result of weak stock picking in Internet retail and home improvement retail. Within Internet retail, the fund's lack of exposure to movie-subscription service and index component Netflix hurt when subscriber growth boosted the stock. Overweighting the home improvement retail industry was a big disappointment, including an outsized stake in Lowe's, the fund's second-largest holding, which continued to struggle in the face of weak housing reports and sluggish sales of big-ticket items such as appliances. The retail apparel industry had some poor performers, including shares of urban-oriented off-price retailer Citi Trends, which fell in August when the chain missed its earnings target. Underweighting cable TV provider Comcast proved costly when the firm's shares responded well to the company's "triple play" offering of cable TV, phone and Internet. On the flip side, security selection in the automobile manufacturing industry was a bright spot, with an out-of-index position in BMW pumping up returns, as the firm benefited from an attractive vehicle lineup and growing demand for its luxury cars in China. Solid picks in specialized consumer services helped, including a stake in upscale auction house Sotheby's. Overweighting casinos and gaming was a positive, including a significantly larger-than-index position in casino operator Las Vegas Sands, the fund's top individual contributor. The firm's shares benefited from increased consumer spending in the U.S. and from the successful opening of the firm's Singapore property. Media stocks contributed, with an overweighting in U.K. cable TV provider Virgin Media paying off. Some of the stocks I've discussed were sold from the fund 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, 2011 | ||
| % of fund's | % of fund's net assets |
The Walt Disney Co. | 5.7 | 5.6 |
Lowe's Companies, Inc. | 5.6 | 5.9 |
Amazon.com, Inc. | 4.4 | 4.0 |
McDonald's Corp. | 3.8 | 6.6 |
Target Corp. | 3.6 | 4.3 |
News Corp. Class A | 3.5 | 0.0 |
DIRECTV | 2.8 | 3.8 |
Bed Bath & Beyond, Inc. | 2.7 | 2.4 |
TJX Companies, Inc. | 2.4 | 1.9 |
Starbucks Corp. | 2.2 | 1.9 |
| 36.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Media | 27.6% |
|
![]() | Specialty Retail | 21.1% |
|
![]() | Hotels, Restaurants & Leisure | 18.7% |
|
![]() | Internet & Catalog Retail | 6.6% |
|
![]() | Textiles, Apparel & Luxury Goods | 5.0% |
|
![]() | All Others* | 21.0% |
|
As of August 31, 2010 | |||
![]() | Media | 24.1% |
|
![]() | Specialty Retail | 21.6% |
|
![]() | Hotels, Restaurants & Leisure | 21.2% |
|
![]() | Internet & Catalog Retail | 6.1% |
|
![]() | Multiline Retail | 6.0% |
|
![]() | All Others* | 21.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Discretionary Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
AUTO COMPONENTS - 3.0% | |||
Auto Parts & Equipment - 3.0% | |||
Autoliv, Inc. | 36,744 | $ 2,751,758 | |
Gentex Corp. | 16,900 | 511,732 | |
Tenneco, Inc. (a) | 31,597 | 1,260,088 | |
TRW Automotive Holdings Corp. (a) | 28,736 | 1,632,205 | |
| 6,155,783 | ||
AUTOMOBILES - 2.7% | |||
Automobile Manufacturers - 2.7% | |||
Bayerische Motoren Werke AG (BMW) | 16,500 | 1,338,421 | |
General Motors Co. | 125,298 | 4,201,242 | |
| 5,539,663 | ||
DISTRIBUTORS - 0.5% | |||
Distributors - 0.5% | |||
Li & Fung Ltd. | 174,000 | 1,059,014 | |
DIVERSIFIED CONSUMER SERVICES - 2.8% | |||
Education Services - 1.4% | |||
DeVry, Inc. | 27,000 | 1,464,750 | |
Grand Canyon Education, Inc. (a) | 79,395 | 1,276,672 | |
| 2,741,422 | ||
Specialized Consumer Services - 1.4% | |||
Sotheby's Class A (ltd. vtg.) | 29,740 | 1,463,803 | |
Steiner Leisure Ltd. (a) | 30,795 | 1,452,292 | |
| 2,916,095 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 5,657,517 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Technology Distributors - 0.2% | |||
Funtalk China Holdings Ltd. (a) | 81,400 | 415,954 | |
FOOD & STAPLES RETAILING - 1.9% | |||
Drug Retail - 0.1% | |||
Droga Raia SA | 10,000 | 142,445 | |
Hypermarkets & Super Centers - 1.8% | |||
BJ's Wholesale Club, Inc. (a) | 10,889 | 527,245 | |
Costco Wholesale Corp. | 41,712 | 3,119,640 | |
| 3,646,885 | ||
TOTAL FOOD & STAPLES RETAILING | 3,789,330 | ||
HOTELS, RESTAURANTS & LEISURE - 18.7% | |||
Casinos & Gaming - 4.2% | |||
Betfair Group PLC | 33,600 | 474,176 | |
Las Vegas Sands Corp. unit | 4,160 | 3,287,856 | |
Pinnacle Entertainment, Inc. (a) | 82,725 | 1,086,179 | |
WMS Industries, Inc. (a) | 55,596 | 2,212,165 | |
Wynn Resorts Ltd. | 11,900 | 1,462,867 | |
| 8,523,243 | ||
| |||
Shares | Value | ||
Hotels, Resorts & Cruise Lines - 3.7% | |||
Accor SA | 22,072 | $ 1,037,903 | |
China Lodging Group Ltd. ADR (d) | 33,507 | 553,536 | |
Club Mediterranee SA (a) | 4,500 | 108,209 | |
Marriott International, Inc. Class A | 42,900 | 1,682,109 | |
Starwood Hotels & Resorts Worldwide, Inc. | 54,370 | 3,322,007 | |
Wyndham Worldwide Corp. | 23,103 | 722,662 | |
| 7,426,426 | ||
Restaurants - 10.8% | |||
BJ's Restaurants, Inc. (a) | 45,584 | 1,638,745 | |
Bravo Brio Restaurant Group, Inc. | 20,781 | 358,057 | |
Darden Restaurants, Inc. | 56,892 | 2,681,320 | |
McDonald's Corp. | 101,550 | 7,685,304 | |
P.F. Chang's China Bistro, Inc. (d) | 33,107 | 1,537,489 | |
Panera Bread Co. Class A (a) | 4,400 | 513,700 | |
Ruth's Hospitality Group, Inc. (a) | 197,090 | 987,421 | |
Starbucks Corp. | 135,180 | 4,458,236 | |
Texas Roadhouse, Inc. Class A | 124,000 | 2,105,520 | |
| 21,965,792 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 37,915,461 | ||
HOUSEHOLD DURABLES - 2.5% | |||
Home Furnishings - 1.3% | |||
Tempur-Pedic International, Inc. (a) | 56,000 | 2,628,640 | |
Homebuilding - 1.2% | |||
Lennar Corp. Class A | 85,589 | 1,725,474 | |
Toll Brothers, Inc. (a) | 30,700 | 652,682 | |
| 2,378,156 | ||
TOTAL HOUSEHOLD DURABLES | 5,006,796 | ||
INTERNET & CATALOG RETAIL - 6.6% | |||
Internet Retail - 6.6% | |||
Amazon.com, Inc. (a) | 51,908 | 8,995,137 | |
Expedia, Inc. | 60,397 | 1,199,484 | |
Ocado Group PLC (a)(d) | 134,400 | 439,214 | |
Priceline.com, Inc. (a) | 5,996 | 2,721,464 | |
| 13,355,299 | ||
INTERNET SOFTWARE & SERVICES - 1.0% | |||
Internet Software & Services - 1.0% | |||
eBay, Inc. (a) | 61,437 | 2,058,447 | |
LEISURE EQUIPMENT & PRODUCTS - 0.4% | |||
Leisure Products - 0.4% | |||
Hasbro, Inc. | 20,500 | 920,450 | |
MEDIA - 27.6% | |||
Advertising - 2.1% | |||
Lamar Advertising Co. Class A (a) | 47,500 | 1,841,575 | |
National CineMedia, Inc. | 121,449 | 2,294,172 | |
| 4,135,747 | ||
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Broadcasting - 1.0% | |||
Discovery Communications, Inc. (a) | 32,800 | $ 1,414,008 | |
Scripps Networks Interactive, Inc. Class A | 12,243 | 635,901 | |
| 2,049,909 | ||
Cable & Satellite - 11.0% | |||
Comcast Corp.: | |||
Class A | 86,316 | 2,223,500 | |
Class A (special) (non-vtg.) | 112,452 | 2,734,833 | |
DIRECTV (a) | 123,897 | 5,695,545 | |
Kabel Deutschland Holding AG | 38,166 | 2,079,375 | |
Sirius XM Radio, Inc. (a) | 775,624 | 1,403,879 | |
Time Warner Cable, Inc. | 57,208 | 4,129,273 | |
Virgin Media, Inc. | 148,253 | 4,038,412 | |
| 22,304,817 | ||
Movies & Entertainment - 12.8% | |||
News Corp. Class A | 408,200 | 7,090,434 | |
The Walt Disney Co. | 263,067 | 11,506,550 | |
Time Warner, Inc. | 91,700 | 3,502,940 | |
Viacom, Inc. Class B (non-vtg.) | 88,801 | 3,965,853 | |
| 26,065,777 | ||
Publishing - 0.7% | |||
United Business Media Ltd. | 123,900 | 1,435,280 | |
TOTAL MEDIA | 55,991,530 | ||
MULTILINE RETAIL - 4.9% | |||
Department Stores - 1.3% | |||
Macy's, Inc. | 70,465 | 1,684,114 | |
Nordstrom, Inc. | 23,400 | 1,059,084 | |
| 2,743,198 | ||
General Merchandise Stores - 3.6% | |||
Target Corp. | 138,073 | 7,255,736 | |
TOTAL MULTILINE RETAIL | 9,998,934 | ||
PROFESSIONAL SERVICES - 0.3% | |||
Research & Consulting Services - 0.3% | |||
Nielsen Holdings B.V. (a) | 25,400 | 675,386 | |
SPECIALTY RETAIL - 21.1% | |||
Apparel Retail - 6.3% | |||
Body Central Corp. | 4,200 | 71,652 | |
Chico's FAS, Inc. | 142,900 | 1,963,446 | |
Citi Trends, Inc. (a) | 101,612 | 2,234,448 | |
Fast Retailing Co. Ltd. | 3,400 | 533,849 | |
H&M Hennes & Mauritz AB (B Shares) | 16,801 | 549,169 | |
TJX Companies, Inc. | 98,718 | 4,923,067 | |
Urban Outfitters, Inc. (a) | 64,014 | 2,456,857 | |
| 12,732,488 | ||
| |||
Shares | Value | ||
Automotive Retail - 1.4% | |||
Advance Auto Parts, Inc. | 42,300 | $ 2,651,364 | |
Lentuo International, Inc. ADR | 34,300 | 175,616 | |
| 2,826,980 | ||
Computer & Electronics Retail - 0.5% | |||
Best Buy Co., Inc. | 27,800 | 896,272 | |
Carphone Warehouse Group PLC (a) | 12,600 | 83,377 | |
| 979,649 | ||
Home Improvement Retail - 7.0% | |||
Home Depot, Inc. | 41,954 | 1,572,016 | |
Lowe's Companies, Inc. | 433,903 | 11,355,242 | |
Lumber Liquidators Holdings, Inc. (a)(d) | 59,800 | 1,392,144 | |
| 14,319,402 | ||
Homefurnishing Retail - 2.7% | |||
Bed Bath & Beyond, Inc. (a) | 114,061 | 5,492,037 | |
Specialty Stores - 3.2% | |||
Hengdeli Holdings Ltd. | 984,000 | 535,717 | |
OfficeMax, Inc. (a) | 162,604 | 2,234,179 | |
Tractor Supply Co. | 51,340 | 2,673,274 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 23,404 | 976,649 | |
| 6,419,819 | ||
TOTAL SPECIALTY RETAIL | 42,770,375 | ||
TEXTILES, APPAREL & LUXURY GOODS - 5.0% | |||
Apparel, Accessories & Luxury Goods - 3.0% | |||
China Xiniya Fashion Ltd. ADR (d) | 65,900 | 301,163 | |
Phillips-Van Heusen Corp. | 25,400 | 1,524,254 | |
Polo Ralph Lauren Corp. Class A | 21,158 | 2,680,930 | |
Titan Industries Ltd. | 13,944 | 1,025,153 | |
Vera Bradley, Inc. | 19,538 | 671,130 | |
| 6,202,630 | ||
Footwear - 2.0% | |||
Iconix Brand Group, Inc. (a) | 41,900 | 925,990 | |
NIKE, Inc. Class B | 34,557 | 3,076,610 | |
| 4,002,600 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 10,205,230 | ||
TOTAL COMMON STOCKS (Cost $168,998,271) | 201,515,169 | ||
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 3,311,000 | $ 3,311,000 |
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $172,309,271) | 204,826,169 | |
NET OTHER ASSETS (LIABILITIES) - (0.9)% | (1,743,014) | |
NET ASSETS - 100% | $ 203,083,155 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 4,979 |
Fidelity Securities Lending Cash Central Fund | 29,650 |
Total | $ 34,629 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 201,515,169 | $ 197,693,464 | $ 3,821,705 | $ - |
Money Market Funds | 3,311,000 | 3,311,000 | - | - |
Total Investments in Securities: | $ 204,826,169 | $ 201,004,464 | $ 3,821,705 | $ - |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $3,186,237) - See accompanying schedule: Unaffiliated issuers (cost $168,998,271) | $ 201,515,169 |
|
Fidelity Central Funds (cost $3,311,000) | 3,311,000 |
|
Total Investments (cost $172,309,271) |
| $ 204,826,169 |
Cash | 201 | |
Receivable for investments sold | 9,725,938 | |
Receivable for fund shares sold | 257,772 | |
Dividends receivable | 223,838 | |
Distributions receivable from Fidelity Central Funds | 1,864 | |
Prepaid expenses | 232 | |
Other receivables | 3,900 | |
Total assets | 215,039,914 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,363,111 | |
Payable for fund shares redeemed | 1,997,593 | |
Accrued management fee | 98,998 | |
Notes payable to affiliates | 2,090,000 | |
Other affiliated payables | 50,941 | |
Other payables and accrued expenses | 45,116 | |
Collateral on securities loaned, at value | 3,311,000 | |
Total liabilities | 11,956,759 | |
|
|
|
Net Assets | $ 203,083,155 | |
Net Assets consist of: |
| |
Paid in capital | $ 164,137,885 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,428,492 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 32,516,778 | |
Net Assets, for 8,129,086 shares outstanding | $ 203,083,155 | |
Net Asset Value, offering price and redemption price per share ($203,083,155 ÷ 8,129,086 shares) | $ 24.98 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,669,495 |
Income from Fidelity Central Funds (including $29,650 from security lending) |
| 34,629 |
Total income |
| 1,704,124 |
|
|
|
Expenses | ||
Management fee | $ 811,605 | |
Transfer agent fees | 369,856 | |
Accounting and security lending fees | 57,483 | |
Custodian fees and expenses | 70,481 | |
Independent trustees' compensation | 730 | |
Registration fees | 36,304 | |
Audit | 37,118 | |
Legal | 410 | |
Interest | 313 | |
Miscellaneous | 1,165 | |
Total expenses before reductions | 1,385,465 | |
Expense reductions | (17,398) | 1,368,067 |
Net investment income (loss) | 336,057 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $7,482) | 11,410,164 | |
Foreign currency transactions | 1,195 | |
Total net realized gain (loss) |
| 11,411,359 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 22,349,698 | |
Assets and liabilities in foreign currencies | 22 | |
Total change in net unrealized appreciation (depreciation) |
| 22,349,720 |
Net gain (loss) | 33,761,079 | |
Net increase (decrease) in net assets resulting from operations | $ 34,097,136 |
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) | $ 336,057 | $ 196,969 |
Net realized gain (loss) | 11,411,359 | 2,571,128 |
Change in net unrealized appreciation (depreciation) | 22,349,720 | 19,170,461 |
Net increase (decrease) in net assets resulting from operations | 34,097,136 | 21,938,558 |
Distributions to shareholders from net investment income | (368,849) | (191,875) |
Distributions to shareholders from net realized gain | (911,441) | - |
Total distributions | (1,280,290) | (191,875) |
Share transactions | 196,721,754 | 58,076,902 |
Reinvestment of distributions | 1,230,039 | 189,124 |
Cost of shares redeemed | (104,711,980) | (24,328,431) |
Net increase (decrease) in net assets resulting from share transactions | 93,239,813 | 33,937,595 |
Redemption fees | 15,686 | 1,754 |
Total increase (decrease) in net assets | 126,072,345 | 55,686,032 |
|
|
|
Net Assets | ||
Beginning of period | 77,010,810 | 21,324,778 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $23,820, respectively) | $ 203,083,155 | $ 77,010,810 |
Other Information Shares | ||
Sold | 8,739,845 | 3,568,123 |
Issued in reinvestment of distributions | 50,160 | 10,486 |
Redeemed | (4,637,683) | (1,429,225) |
Net increase (decrease) | 4,152,322 | 2,149,384 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 19.37 | $ 11.67 | $ 19.70 | $ 26.85 | $ 25.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .05 | .06 | .10 | .01 | .11 E |
Net realized and unrealized gain (loss) | 5.71 | 7.70 | (8.05) | (3.95) | 3.15 |
Total from investment operations | 5.76 | 7.76 | (7.95) | (3.94) | 3.26 |
Distributions from net investment income | (.05) | (.06) | (.08) | (.06) | - |
Distributions from net realized gain | (.10) | - | (.01) | (3.15) | (2.16) |
Total distributions | (.15) | (.06) | (.09) | (3.21) | (2.16) |
Redemption fees added to paid in capital B | - H | - H | .01 | - H | .01 |
Net asset value, end of period | $ 24.98 | $ 19.37 | $ 11.67 | $ 19.70 | $ 26.85 |
Total Return A | 29.75% | 66.54% | (40.37)% | (16.15)% | 12.99% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .96% | 1.10% | 1.19% | 1.12% | 1.14% |
Expenses net of fee waivers, if any | .96% | 1.10% | 1.15% | 1.12% | 1.14% |
Expenses net of all reductions | .95% | 1.08% | 1.15% | 1.12% | 1.13% |
Net investment income (loss) | .23% | .37% | .62% | .03% | .43% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 203,083 | $ 77,011 | $ 21,325 | $ 24,297 | $ 40,249 |
Portfolio turnover rate D | 196% | 134% | 71% | 108% | 244% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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)%. 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
Leisure Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Leisure Portfolio | 31.16% | 7.46% | 6.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Jean Park, who became Portfolio Manager of Leisure Portfolio on July 1, 2010: For the 12 months ending February 28, 2011, the fund gained 31.16%, compared with 31.18% for the MSCI® U.S. IM Consumer Services 25/50 Index and 22.57% for the broad-based S&P 500®. Relative to the MSCI index, security selection in the specialized consumer services, restaurants and diversified support services industries was especially helpful. Overweighting the hotels, resorts and cruise lines group also provided a boost. The fund's top individual contributor was casino operator Las Vegas Sands, which benefited from its growing operations in Macau, China, a successful opening of its new casino in Singapore and a surge in performance across most casino/gaming stocks amid improving consumer spending. Underweighting H&R Block was beneficial. With the unemployment rate remaining high and more consumers choosing to file taxes online, the tax-preparation provider suffered. Overweighting Coinstar, owner of Redbox DVD kiosks, helped, as the stock exceeded expectations. Concern about the long-term viability of the company's business model - DVD usage has been perceived to be threatened as new online media evolves - proved to be unfounded in the short term, and Coinstar's stock surged during the period. Underweighting for-profit education provider Corinthian Colleges also was a plus. McDonald's - the largest holding in both the fund and the index on average during the period - continued to be a strong contributor, as the fast-food company outperformed its competitors by expertly executing its business plan and benefiting from consumers "trading down" to save money. However, the stock underperformed the index, so the fund's underweighting was beneficial. By period end, H&R Block, Coinstar and Corinthian Colleges were no longer held. On the downside, stock selection in casinos and gaming was the biggest detractor. As consumer confidence rebounded amid an improving economy, stocks in this segment rose almost across the board. However, I selectively chose to overweight certain stocks such as Las Vegas Sands, at the expense of underweighting others such as Wynn Resorts, which was the fund's top detractor. Slot machine manufacturer WMS Industries was a disappointment. I expected demand for new machines to increase as consumers returned to casinos, however, we didn't see a rise in orders despite the company's improving market share. Underweighting Chipotle Mexican Grill also hurt. I thought the stock was fully valued in light of its growth prospects, and I underestimated the ability for the stock to grow in a low-interest-rate environment. Not owning Weight Watchers International detracted as well. The weight-management-service provider's stock saw a roughly 45% increase in a single day in February after it announced a much-better-than-expected forecast, and the fund missed out. Out-of-index positions in the Internet retail segment also hurt, as did our holdings in education services, even though the fund's underweighting here helped.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Starbucks Corp. | 14.0 | 7.3 |
McDonald's Corp. | 12.9 | 25.1 |
Las Vegas Sands Corp. | 5.8 | 3.4 |
Starwood Hotels & Resorts Worldwide, Inc. | 5.7 | 4.1 |
Wyndham Worldwide Corp. | 5.3 | 2.8 |
Marriott International, Inc. Class A | 4.9 | 4.3 |
Carnival Corp. unit | 4.7 | 4.5 |
Yum! Brands, Inc. | 4.1 | 7.0 |
WMS Industries, Inc. | 3.8 | 3.6 |
Panera Bread Co. Class A | 2.8 | 0.6 |
| 64.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Hotels, Restaurants & Leisure | 84.6% |
|
![]() | Diversified Consumer Services | 7.8% |
|
![]() | Textiles, Apparel & Luxury Goods | 1.6% |
|
![]() | Personal Products | 1.3% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 3.5% |
|
As of August 31, 2010 | |||
![]() | Hotels, Restaurants & Leisure | 85.5% |
|
![]() | Diversified Consumer Services | 11.6% |
|
![]() | Food Products | 0.8% |
|
![]() | Specialty Retail | 0.7% |
|
![]() | Food & Staples Retailing | 0.2% |
|
![]() | All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Leisure Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 7.8% | |||
Education Services - 4.4% | |||
Ambow Education Holding Ltd. ADR (d) | 48,200 | $ 388,974 | |
DeVry, Inc. | 126,600 | 6,868,050 | |
Global Education & Technology Group Ltd. ADR (a) | 326,330 | 2,803,175 | |
Grand Canyon Education, Inc. (a) | 89,100 | 1,432,728 | |
K12, Inc. (a) | 130,500 | 4,390,020 | |
Navitas Ltd. | 21,873 | 97,434 | |
Xueda Education Group sponsored ADR | 216,300 | 2,033,220 | |
| 18,013,601 | ||
Specialized Consumer Services - 3.4% | |||
Carriage Services, Inc. (a) | 271,102 | 1,545,281 | |
Sotheby's Class A (ltd. vtg.) | 105,100 | 5,173,022 | |
Steiner Leisure Ltd. (a) | 128,485 | 6,059,353 | |
Stewart Enterprises, Inc. Class A | 153,052 | 1,166,256 | |
| 13,943,912 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 31,957,513 | ||
HOTELS, RESTAURANTS & LEISURE - 84.5% | |||
Casinos & Gaming - 18.3% | |||
Aristocrat Leisure Ltd. | 3 | 10 | |
Betfair Group PLC | 233,400 | 3,293,829 | |
Galaxy Entertainment Group Ltd. (a) | 47,000 | 60,591 | |
Las Vegas Sands Corp. (a) | 509,100 | 23,744,424 | |
Las Vegas Sands Corp. unit | 11,700 | 9,247,095 | |
Melco PBL Entertainment (Macau) Ltd. sponsored ADR (a)(d) | 807,400 | 5,611,430 | |
Penn National Gaming, Inc. (a) | 216,600 | 7,747,782 | |
Pinnacle Entertainment, Inc. (a) | 494,200 | 6,488,846 | |
WMS Industries, Inc. (a) | 389,472 | 15,497,091 | |
Wynn Resorts Ltd. | 27,900 | 3,429,747 | |
| 75,120,845 | ||
Hotels, Resorts & Cruise Lines - 23.4% | |||
Accor SA | 46,218 | 2,173,332 | |
Carnival Corp. unit | 452,900 | 19,325,243 | |
China Lodging Group Ltd. ADR (d) | 48,200 | 796,264 | |
Club Mediterranee SA (a) | 31,500 | 757,465 | |
Ctrip.com International Ltd. sponsored ADR (a) | 55,780 | 2,162,591 | |
Marcus Corp. | 86,728 | 1,129,199 | |
Marriott International, Inc. Class A | 520,401 | 20,404,923 | |
Royal Caribbean Cruises Ltd. (a) | 102,320 | 4,480,593 | |
Starwood Hotels & Resorts Worldwide, Inc. | 382,200 | 23,352,420 | |
Wyndham Worldwide Corp. | 694,300 | 21,717,704 | |
| 96,299,734 | ||
Leisure Facilities - 0.2% | |||
Cedar Fair LP (depository unit) | 42,400 | 834,856 | |
Restaurants - 42.6% | |||
Ajisen (China) Holdings Ltd. | 2,225,000 | 3,394,068 | |
| |||
Shares | Value | ||
BJ's Restaurants, Inc. (a) | 128,400 | $ 4,615,980 | |
Bravo Brio Restaurant Group, Inc. | 115,000 | 1,981,450 | |
CEC Entertainment, Inc. | 33,800 | 1,307,722 | |
Chipotle Mexican Grill, Inc. (a) | 24,109 | 5,906,705 | |
Darden Restaurants, Inc. | 15,600 | 735,228 | |
Denny's Corp. (a) | 714,584 | 2,779,732 | |
Dominos Pizza Enterprises Ltd. | 40,600 | 259,719 | |
Little Sheep Group Ltd. | 1,776,000 | 1,064,961 | |
McDonald's Corp. | 698,800 | 52,885,184 | |
Panera Bread Co. Class A (a) | 98,500 | 11,499,875 | |
Ruth's Hospitality Group, Inc. (a) | 280,700 | 1,406,307 | |
Spur Corp. Ltd. | 1,421,800 | 2,767,022 | |
Starbucks Corp. | 1,741,600 | 57,437,965 | |
Texas Roadhouse, Inc. Class A | 279,200 | 4,740,816 | |
The Cheesecake Factory, Inc. (a) | 53,000 | 1,539,120 | |
Tim Hortons, Inc. (Canada) | 91,300 | 4,022,370 | |
Yum! Brands, Inc. | 335,300 | 16,875,649 | |
| 175,219,873 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 347,475,308 | ||
HOUSEHOLD DURABLES - 1.0% | |||
Home Furnishings - 0.1% | |||
Man Wah Holdings Ltd. | 332,800 | 488,859 | |
Housewares & Specialties - 0.9% | |||
Tupperware Brands Corp. | 63,200 | 3,390,680 | |
TOTAL HOUSEHOLD DURABLES | 3,879,539 | ||
INTERNET & CATALOG RETAIL - 0.1% | |||
Internet Retail - 0.1% | |||
Ocado Group PLC (a)(d) | 178,000 | 581,697 | |
LEISURE EQUIPMENT & PRODUCTS - 0.4% | |||
Leisure Products - 0.4% | |||
Summer Infant, Inc. (a) | 241,153 | 1,772,475 | |
PERSONAL PRODUCTS - 1.3% | |||
Personal Products - 1.3% | |||
Elizabeth Arden, Inc. (a) | 75,100 | 2,184,659 | |
Nu Skin Enterprises, Inc. Class A | 99,100 | 3,163,272 | |
| 5,347,931 | ||
SOFTWARE - 1.2% | |||
Application Software - 1.2% | |||
Intuit, Inc. (a) | 95,300 | 5,010,874 | |
SPECIALTY RETAIL - 0.9% | |||
Apparel Retail - 0.5% | |||
Shoe Carnival, Inc. (a) | 73,600 | 1,909,184 | |
Specialty Stores - 0.4% | |||
MarineMax, Inc. (a) | 208,772 | 1,885,211 | |
TOTAL SPECIALTY RETAIL | 3,794,395 | ||
Common Stocks - continued | |||
Shares | Value | ||
TEXTILES, APPAREL & LUXURY GOODS - 1.6% | |||
Apparel, Accessories & Luxury Goods - 1.6% | |||
Christian Dior SA | 18,800 | $ 2,709,851 | |
G-III Apparel Group Ltd. (a) | 70,000 | 2,752,400 | |
Phillips-Van Heusen Corp. | 17,500 | 1,050,175 | |
| 6,512,426 | ||
TOTAL COMMON STOCKS (Cost $305,972,254) | 406,332,158 |
Convertible Bonds - 0.1% | ||||
| Principal Amount |
| ||
HOTELS, RESTAURANTS & LEISURE - 0.1% | ||||
Casinos & Gaming - 0.1% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (e) | $ 300,000 | 325,688 |
Money Market Funds - 1.4% | |||
Shares |
| ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 5,917,325 | 5,917,325 |
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $312,189,579) | 412,575,171 | |
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (1,336,513) | |
NET ASSETS - 100% | $ 411,238,658 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $325,688 or 0.1% of net assets. |
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 | $ 14,532 |
Fidelity Securities Lending Cash Central Fund | 203,516 |
Total | $ 218,048 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 406,332,158 | $ 396,727,900 | $ 9,604,258 | $ - |
Convertible Bonds | 325,688 | - | 325,688 | - |
Money Market Funds | 5,917,325 | 5,917,325 | - | - |
Total Investments in Securities: | $ 412,575,171 | $ 402,645,225 | $ 9,929,946 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.1% |
Panama | 4.7% |
Cayman Islands | 4.4% |
Bahamas (Nassau) | 1.5% |
France | 1.4% |
Liberia | 1.1% |
Canada | 1.0% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $4,269,370 all of which will expire in fiscal 2017. 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
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $5,856,343) - See accompanying schedule: Unaffiliated issuers (cost $306,272,254) | $ 406,657,846 |
|
Fidelity Central Funds (cost $5,917,325) | 5,917,325 |
|
Total Investments (cost $312,189,579) |
| $ 412,575,171 |
Receivable for investments sold | 10,695,457 | |
Receivable for fund shares sold | 338,436 | |
Dividends receivable | 613,562 | |
Interest receivable | 4,781 | |
Distributions receivable from Fidelity Central Funds | 4,515 | |
Prepaid expenses | 590 | |
Other receivables | 7,696 | |
Total assets | 424,240,208 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,930,575 | |
Payable for investments purchased | 1,677,576 | |
Payable for fund shares redeemed | 2,132,841 | |
Accrued management fee | 199,900 | |
Other affiliated payables | 103,482 | |
Other payables and accrued expenses | 39,851 | |
Collateral on securities loaned, at value | 5,917,325 | |
Total liabilities | 13,001,550 | |
|
|
|
Net Assets | $ 411,238,658 | |
Net Assets consist of: |
| |
Paid in capital | $ 316,802,487 | |
Undistributed net investment income | 354,950 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,304,294) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 100,385,515 | |
Net Assets, for 4,506,207 shares outstanding | $ 411,238,658 | |
Net Asset Value, offering price and redemption price per share ($411,238,658 ÷ 4,506,207 shares) | $ 91.26 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,132,643 |
Interest |
| 10,980 |
Income from Fidelity Central Funds (including $203,516 from security lending) |
| 218,048 |
Total income |
| 5,361,671 |
|
|
|
Expenses | ||
Management fee | $ 1,940,783 | |
Transfer agent fees | 848,553 | |
Accounting and security lending fees | 140,097 | |
Custodian fees and expenses | 45,730 | |
Independent trustees' compensation | 1,876 | |
Registration fees | 75,116 | |
Audit | 37,522 | |
Legal | 1,065 | |
Interest | 258 | |
Miscellaneous | 3,254 | |
Total expenses before reductions | 3,094,254 | |
Expense reductions | (26,542) | 3,067,712 |
Net investment income (loss) | 2,293,959 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 18,427,981 | |
Foreign currency transactions | 14,176 | |
Total net realized gain (loss) |
| 18,442,157 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 59,702,390 | |
Assets and liabilities in foreign currencies | (77) | |
Total change in net unrealized appreciation (depreciation) |
| 59,702,313 |
Net gain (loss) | 78,144,470 | |
Net increase (decrease) in net assets resulting from operations | $ 80,438,429 |
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) | $ 2,293,959 | $ 1,450,968 |
Net realized gain (loss) | 18,442,157 | 18,634,973 |
Change in net unrealized appreciation (depreciation) | 59,702,313 | 61,789,610 |
Net increase (decrease) in net assets resulting from operations | 80,438,429 | 81,875,551 |
Distributions to shareholders from net investment income | (2,395,694) | (1,367,599) |
Share transactions | 420,614,456 | 42,414,521 |
Reinvestment of distributions | 2,282,644 | 1,299,149 |
Cost of shares redeemed | (314,230,216) | (58,875,013) |
Net increase (decrease) in net assets resulting from share transactions | 108,666,884 | (15,161,343) |
Redemption fees | 64,309 | 3,448 |
Total increase (decrease) in net assets | 186,773,928 | 65,350,057 |
|
|
|
Net Assets | ||
Beginning of period | 224,464,730 | 159,114,673 |
End of period (including undistributed net investment income of $354,950 and undistributed net investment income of $456,684, respectively) | $ 411,238,658 | $ 224,464,730 |
Other Information Shares | ||
Sold | 5,018,455 | 719,534 |
Issued in reinvestment of distributions | 25,808 | 20,652 |
Redeemed | (3,745,003) | (974,531) |
Net increase (decrease) | 1,299,260 | (234,345) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.99 | $ 46.24 | $ 69.03 | $ 79.61 | $ 80.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .55 | .43 | .60 | .69 | .25 E |
Net realized and unrealized gain (loss) | 21.22 | 23.73 | (22.57) | (5.73) | 10.52 |
Total from investment operations | 21.77 | 24.16 | (21.97) | (5.04) | 10.77 |
Distributions from net investment income | (.52) | (.41) | (.54) | (.55) | (.12) |
Distributions from net realized gain | - | - | (.28) | (4.99) | (11.69) |
Total distributions | (.52) | (.41) | (.82) | (5.54) | (11.81) |
Redemption fees added to paid in capital B | .02 | - H | - H | - H | .01 |
Net asset value, end of period | $ 91.26 | $ 69.99 | $ 46.24 | $ 69.03 | $ 79.61 |
Total Return A | 31.16% | 52.35% | (32.07)% | (7.09)% | 13.61% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .90% | .94% | .93% | .91% | .96% |
Expenses net of fee waivers, if any | .90% | .94% | .93% | .91% | .96% |
Expenses net of all reductions | .89% | .93% | .93% | .91% | .94% |
Net investment income (loss) | .66% | .70% | 1.00% | .86% | .31% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 411,239 | $ 224,465 | $ 159,115 | $ 210,424 | $ 258,340 |
Portfolio turnover rate D | 112% | 99% | 120% | 74% | 179% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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%. 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
Multimedia Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Multimedia Portfolio | 39.37% | 6.55% | 5.79% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kristina Salen, Portfolio Manager of Multimedia Portfolio: For the year, the fund returned 39.37%, modestly behind the 41.77% result of its industry benchmark, the MSCI® U.S. IM Media 25/50 Index, but well ahead of the S&P 500®. Relative to the MSCI index, hurting performance the most was security selection in the broadcasting group. Here, I underweighted CBS to focus on smaller-cap companies in this area that I thought hadn't fully experienced the cyclical upturn - such Belo, based in Dallas, and Lin TV, which operates out of Providence, R.I. Unfortunately, all of these positions hampered results. I sold Lin by period end. Exposure to the out-of-benchmark Internet retail group was detrimental, including the fund's position in online travel reservation company Expedia. Although the stock did fairly well beginning in July, the company missed its fourth-quarter earnings estimate, and its stock fell sharply in February. Elsewhere, a small out-of-index stake in Akamai Technologies, which I added during the period, hurt. This provider of infrastructure for online video content disappointed investors when it missed earnings later in the period and the stock dropped in November amid rumors it would lose Netflix as a customer. However, I still believed in both positions as longer-term plays in the online travel and video arenas, respectively. In the movies/entertainment group, DreamWorks Animation SKG, which releases a limited number of projects each year, fell short when two of its films failed to meet the company's sales expectations and investors began to doubt the firm's earnings power. Conversely, the fund was lifted by an underweighting in the poor-performing publishing group. Individual contributors included an out-of-index stake in OpenTable - a provider of reservation, table and guest-management software for restaurants. Restaurants pay OpenTable for on-site installation and training, monthly use of its software and hardware, and for each restaurant guest seated through its system. I believed the company had a unique business model and little competition, and the fund's shares rose sharply during the period. I sold OpenTable by period end. Chinese search engine Baidu, another out-of-index pick, also performed well. The stock was lifted on speculation that its U.S.-based competitor Google threatened to leave the Chinese market, which would increase Baidu's share of the fast-growing search industry. In the cable and satellite group, the fund benefited from being underweighted in DirectTV and overweighted in German-based Kabel Deutschland Holding, a non-benchmark position.
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, 2011 | ||
| % of fund's | % of fund's net assets |
The Walt Disney Co. | 15.2 | 15.5 |
Comcast Corp. Class A | 9.5 | 8.6 |
DIRECTV | 7.3 | 7.3 |
Time Warner, Inc. | 7.2 | 6.5 |
News Corp. Class A | 5.2 | 3.6 |
Viacom, Inc. Class B (non-vtg.) | 4.7 | 4.6 |
Omnicom Group, Inc. | 3.3 | 1.7 |
CBS Corp. Class B | 3.2 | 2.3 |
Comcast Corp. Class A (special) (non-vtg.) | 3.1 | 1.9 |
Time Warner Cable, Inc. | 2.3 | 4.4 |
| 61.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Media | 90.4% |
|
![]() | Internet Software & Services | 4.6% |
|
![]() | Internet & Catalog Retail | 0.9% |
|
![]() | Software | 0.8% |
|
![]() | Wireless Telecommunication Services | 0.3% |
|
![]() | All Others* | 3.0% |
|
As of August 31, 2010 | |||
![]() | Media | 92.0% |
|
![]() | Internet Software & Services | 5.2% |
|
![]() | Internet & Catalog Retail | 1.5% |
|
![]() | IT Services | 0.4% |
|
![]() | All Others* | 0.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Multimedia Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
INTERNET & CATALOG RETAIL - 0.9% | |||
Internet Retail - 0.9% | |||
E-Commerce China Dangdang, Inc. ADR (d) | 34,100 | $ 867,845 | |
Expedia, Inc. | 50,600 | 1,004,915 | |
| 1,872,760 | ||
INTERNET SOFTWARE & SERVICES - 4.6% | |||
Internet Software & Services - 4.6% | |||
Akamai Technologies, Inc. (a) | 38,700 | 1,452,411 | |
AOL, Inc. (a) | 142 | 2,964 | |
Baidu.com, Inc. sponsored ADR (a) | 6,400 | 775,424 | |
Demand Media, Inc. | 23,600 | 531,000 | |
eBay, Inc. (a) | 37,200 | 1,246,386 | |
Google, Inc. Class A (a) | 1,550 | 950,770 | |
Mail.ru Group Ltd. GDR: | |||
unit Reg. S | 12,100 | 438,625 | |
unit (a)(e) | 22,900 | 830,125 | |
Marchex, Inc. Class B | 43,300 | 389,267 | |
NHN Corp. (a) | 15 | 2,526 | |
Support.com, Inc. (a) | 126,800 | 707,544 | |
TechTarget, Inc. (a) | 58,900 | 511,841 | |
The Knot, Inc. (a) | 77,600 | 778,328 | |
YouKu.com, Inc. ADR (a)(d) | 20,800 | 865,072 | |
| 9,482,283 | ||
MEDIA - 90.4% | |||
Advertising - 7.5% | |||
Arbitron, Inc. | 200 | 7,962 | |
CyberAgent, Inc. | 2 | 6,389 | |
Dentsu, Inc. | 14,800 | 472,526 | |
Havas SA | 83,900 | 473,548 | |
Interpublic Group of Companies, Inc. | 231,704 | 3,058,493 | |
Lamar Advertising Co. Class A (a) | 30,100 | 1,166,977 | |
National CineMedia, Inc. | 122,900 | 2,321,581 | |
Omnicom Group, Inc. | 131,400 | 6,688,260 | |
ReachLocal, Inc. | 16,300 | 310,352 | |
WPP PLC | 66,790 | 919,303 | |
| 15,425,391 | ||
Broadcasting - 8.2% | |||
Belo Corp. Series A (a) | 87,600 | 698,172 | |
CBS Corp. Class B | 277,500 | 6,621,150 | |
Discovery Communications, Inc. (a) | 85,850 | 3,700,994 | |
Discovery Communications, Inc. Class C (a) | 66,650 | 2,537,366 | |
Grupo Televisa SA de CV (CPO) sponsored ADR (a) | 100 | 2,362 | |
Scripps Networks Interactive, Inc. Class A | 49,200 | 2,555,448 | |
Sinclair Broadcast Group, Inc. Class A | 53,800 | 696,172 | |
| 16,811,664 | ||
Cable & Satellite - 34.4% | |||
Cablevision Systems Corp. - NY Group Class A | 72,200 | 2,660,570 | |
| |||
Shares | Value | ||
Comcast Corp.: | |||
Class A | 762,650 | $ 19,645,864 | |
Class A (special) (non-vtg.) | 258,800 | 6,294,016 | |
DIRECTV (a) | 329,013 | 15,124,728 | |
DISH Network Corp. Class A (a) | 90,000 | 2,092,500 | |
Kabel Deutschland Holding AG | 18,300 | 997,028 | |
Liberty Global, Inc.: | |||
Class A (a)(d) | 53,075 | 2,234,458 | |
Class C (a) | 81,400 | 3,247,046 | |
Liberty Media Corp.: | |||
Capital Series A (a) | 31,800 | 2,307,408 | |
Starz Series A (a) | 19,150 | 1,344,330 | |
Mediacom Communications Corp. | 52,000 | 458,640 | |
Naspers Ltd. Class N | 39,800 | 2,286,249 | |
Sirius XM Radio, Inc. (a)(d) | 1,694,560 | 3,067,154 | |
Time Warner Cable, Inc. | 64,569 | 4,660,590 | |
Virgin Media, Inc. | 160,400 | 4,369,296 | |
| 70,789,877 | ||
Movies & Entertainment - 36.4% | |||
Cinemark Holdings, Inc. | 88,400 | 1,775,072 | |
Cinemax India Ltd. | 1,760 | 1,674 | |
DreamWorks Animation SKG, Inc. | 65,900 | 1,820,158 | |
Lions Gate Entertainment Corp. (a) | 25,300 | 154,836 | |
Live Nation Entertainment, Inc. (a) | 112,400 | 1,194,812 | |
Madison Square Garden, Inc. Class A (a) | 30,675 | 876,078 | |
News Corp.: | |||
Class A | 617,182 | 10,720,451 | |
Class B | 27,200 | 500,480 | |
Regal Entertainment Group Class A (d) | 126,000 | 1,882,440 | |
The Walt Disney Co. | 715,304 | 31,287,396 | |
Time Warner, Inc. | 387,466 | 14,801,201 | |
Viacom, Inc. Class B (non-vtg.) | 215,700 | 9,633,162 | |
Warner Music Group Corp. (a)(d) | 57,300 | 344,373 | |
| 74,992,133 | ||
Publishing - 3.9% | |||
Gannett Co., Inc. | 56,400 | 931,164 | |
Martha Stewart Living Omnimedia, Inc. Class A (a)(d) | 45,600 | 186,960 | |
McGraw-Hill Companies, Inc. | 90,400 | 3,496,672 | |
The New York Times Co. Class A (a)(d) | 80,500 | 837,200 | |
Valassis Communications, Inc. (a) | 49,500 | 1,396,890 | |
Washington Post Co. Class B | 3,000 | 1,299,270 | |
| 8,148,156 | ||
TOTAL MEDIA | 186,167,221 | ||
SOFTWARE - 0.8% | |||
Application Software - 0.4% | |||
TiVo, Inc. (a) | 81,700 | 839,876 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - 0.4% | |||
Rovi Corp. (a) | 12,900 | $ 714,918 | |
TOTAL SOFTWARE | 1,554,794 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
NII Holdings, Inc. (a) | 15,700 | 643,072 | |
TOTAL COMMON STOCKS (Cost $151,366,802) | 199,720,130 | ||
Money Market Funds - 9.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 10,826,579 | 10,826,579 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 7,890,806 | 7,890,806 | |
TOTAL MONEY MARKET FUNDS (Cost $18,717,385) | 18,717,385 |
TOTAL INVESTMENT PORTFOLIO - 106.1% (Cost $170,084,187) | 218,437,515 | |
NET OTHER ASSETS (LIABILITIES) - (6.1)% | (12,517,062) | |
NET ASSETS - 100% | $ 205,920,453 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $830,125 or 0.4% of net assets. |
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 | $ 7,543 |
Fidelity Securities Lending Cash Central Fund | 29,757 |
Total | $ 37,300 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 199,720,130 | $ 198,328,301 | $ 1,391,829 | $ - |
Money Market Funds | 18,717,385 | 18,717,385 | - | - |
Total Investments in Securities: | $ 218,437,515 | $ 217,045,686 | $ 1,391,829 | $ - |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,661,553) - See accompanying schedule: Unaffiliated issuers (cost $151,366,802) | $ 199,720,130 |
|
Fidelity Central Funds (cost $18,717,385) | 18,717,385 |
|
Total Investments (cost $170,084,187) |
| $ 218,437,515 |
Receivable for investments sold | 1,290,147 | |
Receivable for fund shares sold | 4,807,269 | |
Dividends receivable | 192,723 | |
Distributions receivable from Fidelity Central Funds | 10,804 | |
Prepaid expenses | 240 | |
Other receivables | 2,594 | |
Total assets | 224,741,292 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,218,270 | |
Payable for fund shares redeemed | 557,582 | |
Accrued management fee | 82,017 | |
Other affiliated payables | 40,231 | |
Other payables and accrued expenses | 31,933 | |
Collateral on securities loaned, at value | 7,890,806 | |
Total liabilities | 18,820,839 | |
|
|
|
Net Assets | $ 205,920,453 | |
Net Assets consist of: |
| |
Paid in capital | $ 156,761,166 | |
Undistributed net investment income | 26,807 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 779,152 | |
Net unrealized appreciation (depreciation) on investments | 48,353,328 | |
Net Assets, for 4,307,683 shares outstanding | $ 205,920,453 | |
Net Asset Value, offering price and redemption price per share ($205,920,453 ÷ 4,307,683 shares) | $ 47.80 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,851,057 |
Income from Fidelity Central Funds (including $29,757 from security lending) |
| 37,300 |
Total income |
| 1,888,357 |
|
|
|
Expenses | ||
Management fee | $ 812,836 | |
Transfer agent fees | 386,533 | |
Accounting and security lending fees | 57,515 | |
Custodian fees and expenses | 19,389 | |
Independent trustees' compensation | 775 | |
Registration fees | 44,656 | |
Audit | 42,282 | |
Legal | 476 | |
Interest | 272 | |
Miscellaneous | 1,172 | |
Total expenses before reductions | 1,365,906 | |
Expense reductions | (9,197) | 1,356,709 |
Net investment income (loss) | 531,648 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,648,626 | |
Foreign currency transactions | 6,595 | |
Total net realized gain (loss) |
| 6,655,221 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 40,182,271 | |
Assets and liabilities in foreign currencies | (46) | |
Total change in net unrealized appreciation (depreciation) |
| 40,182,225 |
Net gain (loss) | 46,837,446 | |
Net increase (decrease) in net assets resulting from operations | $ 47,369,094 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Multimedia Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 531,648 | $ 205,166 |
Net realized gain (loss) | 6,655,221 | (447,318) |
Change in net unrealized appreciation (depreciation) | 40,182,225 | 24,644,565 |
Net increase (decrease) in net assets resulting from operations | 47,369,094 | 24,402,413 |
Distributions to shareholders from net investment income | (507,699) | (216,486) |
Share transactions | 216,653,527 | 46,703,954 |
Reinvestment of distributions | 493,404 | 207,579 |
Cost of shares redeemed | (134,405,987) | (20,974,314) |
Net increase (decrease) in net assets resulting from share transactions | 82,740,944 | 25,937,219 |
Redemption fees | 9,440 | 2,081 |
Total increase (decrease) in net assets | 129,611,779 | 50,125,227 |
|
|
|
Net Assets | ||
Beginning of period | 76,308,674 | 26,183,447 |
End of period (including undistributed net investment income of $26,807 and undistributed net investment income of $2,738, respectively) | $ 205,920,453 | $ 76,308,674 |
Other Information Shares | ||
Sold | 5,457,270 | 1,463,045 |
Issued in reinvestment of distributions | 11,609 | 6,399 |
Redeemed | (3,379,951) | (684,012) |
Net increase (decrease) | 2,088,928 | 785,432 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 34.39 | $ 18.27 | $ 35.30 | $ 47.31 | $ 47.33 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .14 | .13 E | .06 | .01 | (.07) |
Net realized and unrealized gain (loss) | 13.39 | 16.12 | (16.17) | (5.79) | 6.27 |
Total from investment operations | 13.53 | 16.25 | (16.11) | (5.78) | 6.20 |
Distributions from net investment income | (.12) | (.13) | (.06) | - | - |
Distributions from net realized gain | - | - | (.86) | (6.23) | (6.23) |
Total distributions | (.12) | (.13) | (.92) | (6.23) | (6.23) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 47.80 | $ 34.39 | $ 18.27 | $ 35.30 | $ 47.31 |
Total Return A | 39.37% | 88.96% | (46.75)% | (13.88)% | 13.73% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .94% | 1.08% | 1.07% | .99% | 1.04% |
Expenses net of fee waivers, if any | .94% | 1.08% | 1.07% | .99% | 1.04% |
Expenses net of all reductions | .94% | 1.07% | 1.07% | .98% | 1.04% |
Net investment income (loss) | .37% | .44% E | .22% | .01% | (.16)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 205,920 | $ 76,309 | $ 26,183 | $ 62,141 | $ 90,806 |
Portfolio turnover rate D | 76% | 40% | 39% | 68% | 179% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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%. 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
Retailing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Retailing Portfolio | 22.24% | 7.77% | 6.54% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Peter Dixon, who became Portfolio Manager of Retailing Portfolio on April 14, 2010: For the year, the fund gained 22.24%, lagging the 26.21% return of its industry benchmark, the MSCI® U.S. IM Retailing 25/50 Index, and roughly in line with the S&P 500®. Versus the MSCI index, the primary source of the fund's underperformance was unfavorable stock selection and an overweighting in specialty stores, where the fund's investments gained only about 6%. Specifically, office supply retailers hampered results, including OfficeMax and Staples. Despite its poor performance during the period, I still believed OfficeMax's expansion story was underappreciated by the market and I remained significantly overweighted in the stock at period end. Staples was one of the fund's largest overweightings at the beginning of the period, which was when this stock hurt the most. When I became manager in April, I pared the fund's holding in Staples, and held only a scant stake in the stock by period end. Disappointing stock selection in apparel retail also hindered results, led by an overweighting in Citi Trends, the fund's biggest relative laggard. Customers of the urban fashion and accessories retailer faced high unemployment - which hurt the stock - but the firm was adding successful new stores faster than many other retailers in the benchmark, so I remained optimistic about Citi Trends' future growth. In apparel retail, underweighting Limited Brands, owner of the Victoria's Secret and Bath & Body Works chains, and overweighting Urban Outfitters dampened results. Lastly, an underweighted stake in strong-performing Netflix, a provider of DVD-by-mail rentals and streaming online videos, hurt. I liked the company, but Fidelity's aggregate ownership limitation prevented me from taking a larger position in the stock. Positioning in department stores also dampened results. Conversely, positioning in computer/electronics retail boosted results, including timely ownership of Best Buy, the fund's top contributor. The fund was overweighted in Best Buy early in the period when it performed well, then underweighted in the stock before it plummeted after the company missed its third-quarter earnings. Also in this space, underweighting and then not owning RadioShack in the second half of the period helped, as the company suffered from weak demand. Additionally, the stock fell after speculation that the company was the target of a takeover by private-equity firms never came to fruition. A late-period overweighting in Penske Automotive Group, which owns and operates car dealerships, was the right call. Women's apparel retailer Chico's FAS beat earnings estimates for two consecutive quarters during the period, helping boost its stock. Elsewhere, underweighting discount retailer Target, which lagged during the period, and overweighting online retailer Amazon.com lifted 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
Retailing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Home Depot, Inc. | 12.6 | 10.4 |
Amazon.com, Inc. | 12.5 | 12.2 |
Lowe's Companies, Inc. | 8.9 | 7.8 |
TJX Companies, Inc. | 6.2 | 5.7 |
Priceline.com, Inc. | 5.1 | 3.7 |
Kohl's Corp. | 4.2 | 4.2 |
Target Corp. | 4.0 | 7.8 |
Citi Trends, Inc. | 3.3 | 2.3 |
Macy's, Inc. | 2.9 | 2.9 |
Tiffany & Co., Inc. | 2.9 | 0.0 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Specialty Retail | 61.5% |
|
![]() | Internet & Catalog Retail | 21.6% |
|
![]() | Multiline Retail | 11.5% |
|
![]() | Textiles, Apparel & Luxury Goods | 2.6% |
|
![]() | Internet Software & Services | 2.0% |
|
![]() | All Others* | 0.8% |
|
As of August 31, 2010 | |||
![]() | Specialty Retail | 51.9% |
|
![]() | Internet & Catalog Retail | 21.7% |
|
![]() | Multiline Retail | 18.6% |
|
![]() | Internet Software & Services | 1.8% |
|
![]() | Distributors | 1.4% |
|
![]() | All Others* | 4.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Retailing Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 100.7% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||
Specialized Consumer Services - 0.5% | |||
Coinstar, Inc. (a)(d) | 18,820 | $ 803,238 | |
FOOD & STAPLES RETAILING - 0.5% | |||
Hypermarkets & Super Centers - 0.5% | |||
Costco Wholesale Corp. | 11,500 | 860,085 | |
HOTELS, RESTAURANTS & LEISURE - 0.5% | |||
Casinos & Gaming - 0.5% | |||
Ameristar Casinos, Inc. | 50,600 | 847,550 | |
INTERNET & CATALOG RETAIL - 21.6% | |||
Internet Retail - 21.6% | |||
Amazon.com, Inc. (a) | 120,600 | 20,898,774 | |
Blue Nile, Inc. (a) | 20,600 | 1,177,908 | |
Expedia, Inc. | 144,200 | 2,863,812 | |
Netflix, Inc. (a) | 8,400 | 1,736,028 | |
Priceline.com, Inc. (a) | 18,700 | 8,487,556 | |
Wotif.com Holdings Ltd. | 165,497 | 883,048 | |
| 36,047,126 | ||
INTERNET SOFTWARE & SERVICES - 2.0% | |||
Internet Software & Services - 2.0% | |||
eBay, Inc. (a) | 102,500 | 3,434,263 | |
MULTILINE RETAIL - 11.5% | |||
Department Stores - 7.5% | |||
Kohl's Corp. | 129,800 | 6,994,922 | |
Macy's, Inc. | 201,400 | 4,813,460 | |
Nordstrom, Inc. | 16,100 | 728,686 | |
| 12,537,068 | ||
General Merchandise Stores - 4.0% | |||
Target Corp. | 126,800 | 6,663,340 | |
TOTAL MULTILINE RETAIL | 19,200,408 | ||
SPECIALTY RETAIL - 61.5% | |||
Apparel Retail - 23.9% | |||
American Eagle Outfitters, Inc. | 93,800 | 1,439,830 | |
Chico's FAS, Inc. | 293,281 | 4,029,681 | |
Citi Trends, Inc. (a) | 248,935 | 5,474,081 | |
DSW, Inc. Class A (a)(d) | 31,900 | 1,295,459 | |
Express, Inc. | 106,000 | 1,905,880 | |
Foot Locker, Inc. | 80,000 | 1,589,600 | |
H&M Hennes & Mauritz AB (B Shares) | 40,280 | 1,316,620 | |
Inditex SA | 11,473 | 830,586 | |
Limited Brands, Inc. | 136,400 | 4,367,528 | |
| |||
Shares | Value | ||
Ross Stores, Inc. | 32,000 | $ 2,305,280 | |
rue21, Inc. (a)(d) | 25,500 | 893,010 | |
TJX Companies, Inc. | 206,900 | 10,318,103 | |
Urban Outfitters, Inc. (a) | 108,751 | 4,173,863 | |
| 39,939,521 | ||
Automotive Retail - 6.3% | |||
Advance Auto Parts, Inc. | 54,500 | 3,416,060 | |
AutoZone, Inc. (a) | 20 | 5,159 | |
O'Reilly Automotive, Inc. (a) | 76,400 | 4,246,312 | |
Penske Automotive Group, Inc. (a) | 141,000 | 2,872,170 | |
| 10,539,701 | ||
Computer & Electronics Retail - 0.9% | |||
Best Buy Co., Inc. | 32,500 | 1,047,800 | |
Carphone Warehouse Group PLC (a) | 65,800 | 435,412 | |
GameStop Corp. Class A (a) | 500 | 9,975 | |
| 1,493,187 | ||
Home Improvement Retail - 21.5% | |||
Home Depot, Inc. | 564,000 | 21,133,079 | |
Lowe's Companies, Inc. | 566,200 | 14,817,454 | |
Lumber Liquidators Holdings, Inc. (a) | 700 | 16,296 | |
| 35,966,829 | ||
Homefurnishing Retail - 0.0% | |||
Bed Bath & Beyond, Inc. (a) | 400 | 19,260 | |
Specialty Stores - 8.9% | |||
Office Depot, Inc. (a) | 19,800 | 105,138 | |
OfficeMax, Inc. (a) | 251,400 | 3,454,236 | |
Signet Jewelers Ltd. (a) | 62,900 | 2,759,423 | |
Staples, Inc. | 1,594 | 33,952 | |
Tiffany & Co., Inc. | 78,200 | 4,813,210 | |
Tractor Supply Co. | 44,200 | 2,301,494 | |
Ulta Salon, Cosmetics & Fragrance, Inc. (a) | 32,300 | 1,347,879 | |
| 14,815,332 | ||
TOTAL SPECIALTY RETAIL | 102,773,830 | ||
TEXTILES, APPAREL & LUXURY GOODS - 2.6% | |||
Apparel, Accessories & Luxury Goods - 2.5% | |||
China Xiniya Fashion Ltd. ADR (d) | 98,500 | 450,145 | |
Fossil, Inc. (a) | 6,400 | 491,136 | |
G-III Apparel Group Ltd. (a) | 43,600 | 1,714,352 | |
Phillips-Van Heusen Corp. | 25,880 | 1,553,059 | |
| 4,208,692 | ||
Footwear - 0.1% | |||
Arezzo Industria E Comercio SA | 9,700 | 124,763 | |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 4,333,455 | ||
TOTAL COMMON STOCKS (Cost $131,566,251) | 168,299,955 | ||
Money Market Funds - 1.0% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 1,589,370 | $ 1,589,370 |
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $133,155,621) | 169,889,325 | |
NET OTHER ASSETS (LIABILITIES) - (1.7)% | (2,794,857) | |
NET ASSETS - 100% | $ 167,094,468 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 6,072 |
Fidelity Securities Lending Cash Central Fund | 19,148 |
Total | $ 25,220 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 168,299,955 | $ 167,416,907 | $ 883,048 | $ - |
Money Market Funds | 1,589,370 | 1,589,370 | - | - |
Total Investments in Securities: | $ 169,889,325 | $ 169,006,277 | $ 883,048 | $ - |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,540,395) - See accompanying schedule: Unaffiliated issuers (cost $131,566,251) | $ 168,299,955 |
|
Fidelity Central Funds (cost $1,589,370) | 1,589,370 |
|
Total Investments (cost $133,155,621) |
| $ 169,889,325 |
Receivable for investments sold | 6,308,447 | |
Receivable for fund shares sold | 243,171 | |
Dividends receivable | 75,281 | |
Distributions receivable from Fidelity Central Funds | 759 | |
Prepaid expenses | 285 | |
Other receivables | 1,710 | |
Total assets | 176,518,978 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,009,730 | |
Payable for investments purchased | 4,408,824 | |
Payable for fund shares redeemed | 2,253,624 | |
Accrued management fee | 82,449 | |
Other affiliated payables | 48,979 | |
Other payables and accrued expenses | 31,534 | |
Collateral on securities loaned, at value | 1,589,370 | |
Total liabilities | 9,424,510 | |
|
|
|
Net Assets | $ 167,094,468 | |
Net Assets consist of: |
| |
Paid in capital | $ 122,536,798 | |
Undistributed net investment income | 206,595 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 7,617,371 | |
Net unrealized appreciation (depreciation) on investments | 36,733,704 | |
Net Assets, for 3,112,642 shares outstanding | $ 167,094,468 | |
Net Asset Value, offering price and redemption price per share ($167,094,468 ÷ 3,112,642 shares) | $ 53.68 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,984,865 |
Income from Fidelity Central Funds (including $19,148 from security lending) |
| 25,220 |
Total income |
| 2,010,085 |
|
|
|
Expenses | ||
Management fee | $ 1,016,952 | |
Transfer agent fees | 483,559 | |
Accounting and security lending fees | 71,591 | |
Custodian fees and expenses | 24,510 | |
Independent trustees' compensation | 1,023 | |
Registration fees | 52,923 | |
Audit | 37,207 | |
Legal | 709 | |
Interest | 426 | |
Miscellaneous | 1,956 | |
Total expenses before reductions | 1,690,856 | |
Expense reductions | (5,094) | 1,685,762 |
Net investment income (loss) | 324,323 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 12,495,975 | |
Foreign currency transactions | (11,945) | |
Total net realized gain (loss) |
| 12,484,030 |
Change in net unrealized appreciation (depreciation) on investment securities | 14,023,572 | |
Net gain (loss) | 26,507,602 | |
Net increase (decrease) in net assets resulting from operations | $ 26,831,925 |
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) | $ 324,323 | $ 382,044 |
Net realized gain (loss) | 12,484,030 | 31,825,670 |
Change in net unrealized appreciation (depreciation) | 14,023,572 | 29,858,749 |
Net increase (decrease) in net assets resulting from operations | 26,831,925 | 62,066,463 |
Distributions to shareholders from net investment income | (39,463) | (344,976) |
Distributions to shareholders from net realized gain | (5,248,627) | (6,618,336) |
Total distributions | (5,288,090) | (6,963,312) |
Share transactions | 207,559,950 | 190,409,593 |
Reinvestment of distributions | 5,100,239 | 6,697,463 |
Cost of shares redeemed | (204,551,707) | (155,150,576) |
Net increase (decrease) in net assets resulting from share transactions | 8,108,482 | 41,956,480 |
Redemption fees | 33,591 | 14,152 |
Total increase (decrease) in net assets | 29,685,908 | 97,073,783 |
|
|
|
Net Assets | ||
Beginning of period | 137,408,560 | 40,334,777 |
End of period (including undistributed net investment income of $206,595 and undistributed net investment income of $26,731, respectively) | $ 167,094,468 | $ 137,408,560 |
Other Information Shares | ||
Sold | 4,185,398 | 5,287,234 |
Issued in reinvestment of distributions | 103,790 | 157,699 |
Redeemed | (4,222,320) | (3,922,393) |
Net increase (decrease) | 66,868 | 1,522,540 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 45.11 | $ 26.48 | $ 36.57 | $ 54.98 | $ 50.78 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .09 | .11 | .21 | (.01) | .30 E |
Net realized and unrealized gain (loss) | 9.81 | 20.74 | (10.11) | (10.59) | 7.46 |
Total from investment operations | 9.90 | 20.85 | (9.90) | (10.60) | 7.76 |
Distributions from net investment income | (.01) | (.11) | (.20) | (.22) | - |
Distributions from net realized gain | (1.33) | (2.11) | - | (7.60) | (3.58) |
Total distributions | (1.34) | (2.22) | (.20) | (7.82) | (3.58) |
Redemption fees added to paid in capital B | .01 | - H | .01 | .01 | .02 |
Net asset value, end of period | $ 53.68 | $ 45.11 | $ 26.48 | $ 36.57 | $ 54.98 |
Total Return A | 22.24% | 79.26% | (27.09)% | (21.43)% | 15.79% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .93% | .96% | 1.07% | 1.02% | 1.06% |
Expenses net of fee waivers, if any | .93% | .96% | 1.07% | 1.02% | 1.06% |
Expenses net of all reductions | .93% | .94% | 1.06% | 1.02% | 1.06% |
Net investment income (loss) | .18% | .27% | .63% | (.02)% | .58% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 167,094 | $ 137,409 | $ 40,335 | $ 48,038 | $ 83,843 |
Portfolio turnover rate D | 191% | 281% | 504% | 260% | 202% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a special dividend which amounted to $.37 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.13)%. 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, 2011
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. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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
Debt securities, including restricted securities, are valued based on evaluated prices 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year each Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, Certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, deferred trustees compensation, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Automotive Portfolio | $ 380,591,582 | $ 81,291,620 | $ (9,259,760) | $ 72,031,860 |
Construction and Housing Portfolio | 113,238,423 | 11,283,464 | (5,997,111) | 5,286,353 |
Consumer Discretionary Portfolio | 173,322,271 | 34,858,444 | (3,354,546) | 31,503,898 |
Leisure Portfolio | 314,238,681 | 103,561,137 | (5,224,647) | 98,336,490 |
Multimedia Portfolio | 170,484,581 | 49,992,604 | (2,039,670) | 47,952,934 |
Retailing Portfolio | 133,848,350 | 38,115,503 | (2,074,528) | 36,040,975 |
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 | $ 29,508 | $ 4,071,238 | $ - | $ 72,031,688 |
Construction and Housing Portfolio | - | - | (7,977,983) | 5,286,353 |
Consumer Discretionary Portfolio. | 4,454,673 | 2,986,819 | - | 31,503,778 |
Leisure Portfolio. | 369,292 | - | (4,269,370) | 98,336,413 |
Multimedia Portfolio | 33,403 | 1,172,950 | - | 47,952,934 |
Retailing Portfolio. | 206,719 | 8,310,101 | - | 36,040,975 |
The tax character of distributions paid was as follows:
February 28, 2011 | Ordinary | Long-term | Total |
Automotive Portfolio | $ 3,086,154 | $ - | $ 3,086,154 |
Construction and Housing Portfolio | 783,306 | - | 783,306 |
Consumer Discretionary Portfolio | 660,864 | 619,426 | 1,280,290 |
Leisure Portfolio | 2,395,694 | - | 2,395,694 |
Multimedia Portfolio | 507,699 | - | 507,699 |
Retailing Portfolio | 4,143,652 | 1,144,438 | 5,288,090 |
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 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 ($) | Sales ($) |
Automotive Portfolio | 334,370,081 | 174,614,115 |
Construction and Housing Portfolio | 102,733,677 | 104,957,354 |
Consumer Discretionary Portfolio | 369,672,965 | 277,920,860 |
Leisure Portfolio | 478,541,535 | 373,205,014 |
Multimedia Portfolio | 187,626,370 | 107,620,233 |
Retailing Portfolio | 341,762,844 | 335,524,765 |
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 |
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% | .56% |
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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Automotive Portfolio | .23% |
Construction and Housing Portfolio | .29% |
Consumer Discretionary Portfolio | .26% |
Leisure Portfolio | .25% |
Multimedia Portfolio | .27% |
Retailing Portfolio | .27% |
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 | $ 4,666 |
Construction and Housing Portfolio | 10,112 |
Consumer Discretionary Portfolio | 14,807 |
Leisure Portfolio | 26,968 |
Multimedia Portfolio | 10,215 |
Retailing Portfolio | 16,288 |
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, Construction and Housing Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio had no interfund loans outstanding. Automotive Portfolio's and Consumer Discretionary Portfolio's open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the their Statements of Assets and Liabilities. 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 | $ 5,661,286 | .44% | $ 1,451 |
Consumer Discretionary Portfolio | Borrower | $ 5,598,400 | .40% | $ 313 |
Leisure Portfolio | Borrower | $ 5,449,500 | .43% | $ 258 |
Multimedia Portfolio | Borrower | $ 10,597,000 | .46% | $ 272 |
Retailing Portfolio | Borrower | $ 4,397,125 | .44% | $ 426 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Automotive Portfolio | $ 582 |
Construction and Housing Portfolio | 385 |
Consumer Discretionary Portfolio | 449 |
Leisure Portfolio | 1,161 |
Multimedia Portfolio | 478 |
Retailing Portfolio | 649 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending |
Multimedia Portfolio | $ 163 |
Annual Report
Notes to Financial Statements - continued
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 |
Automotive Portfolio | $ 6,676 | $ 903 |
Construction and Housing Portfolio | 1,672 | - |
Consumer Discretionary Portfolio | 17,398 | - |
Leisure Portfolio | 26,542 | - |
Multimedia Portfolio | 9,197 | - |
Retailing Portfolio | 5,094 | - |
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, Fidelity VIP Funds Manager 60% Portfolio was the owner of record of approximately 26% of the total outstanding shares of Consumer Discretionary Portfolio. The Fidelity VIP Funds Manager Portfolios were the owners of record, in the aggregate, of approximately 38% of the total outstanding shares of Consumer Discretionary Portfolio. In addition, at the end of the period, Strategic Advisers U.S. Opportunity Fund was the owner of record of approximately 19% and 18% of the total outstanding shares of Multimedia Portfolio and Consumer Discretionary Portfolio, respectively. The Strategic Advisers U.S. Opportunity II Fund was the owner of record of approximately 10% of the total outstanding shares of Multimedia Portfolio. Mutual funds managed by Strategic Advisers, Inc., a FMR affiliate, were the owners of record, in the aggregate, of approximately 30% and 20% of the total outstanding shares of Multimedia Portfolio and Consumer Discretionary Portfolio, respectively.
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, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 | 04/07/11 | 04/06/11 | $0.00 | $0.720 |
Construction and Housing Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.000 |
Consumer Discretionary Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.970 |
Leisure Portfolio | 04/07/11 | 04/06/11 | $0.09 | $0.005 |
Multimedia Portfolio | 04/07/11 | 04/06/11 | $0.01 | $0.250 |
Retailing Portfolio | 04/07/11 | 04/06/11 | $0.07 | $2.830 |
The funds hereby designate as capital gain dividends the amounts noted below for the taxable year indicated or for dividends for the taxable year ending 2011, if subsequently determined to be different, the net capital gain of such year; and for dividends for the taxable year ended 2010, if subsequently determined to be different, the excess of: (a) the net capital gain of such year, over (b) amounts previously designated as capital gain dividends with respect to such year.
| February 28, 2011 | February 28, 2010 |
Automotive Portfolio | $ 4,071,238 | $ 0 |
Consumer Discretionary Portfolio | $ 3,606,245 | $ 0 |
Multimedia Portfolio | $ 1,172,950 | $ 0 |
Retailing Portfolio | $ 8,365,791 | $ 1,944,553 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Automotive Portfolio | 19% | 0% |
Construction and Housing Portfolio | 100% | 100% |
Consumer Discretionary Portfolio | 100% | 100% |
Leisure Portfolio | 100% | 100% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | 4% | 0% |
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 2010 | December 2010 |
Automotive Portfolio | 19% | 0% |
Construction and Housing Portfolio | 100% | 100% |
Consumer Discretionary Portfolio | 100% | 100% |
Leisure Portfolio | 100% | 100% |
Multimedia Portfolio | 100% | 100% |
Retailing Portfolio | 5% | 0% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 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-0411
1.910417.101
Fidelity®
Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
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Performance |
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Management's Discussion of Fund Performance |
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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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Consumer Staples Portfolio A | 13.55% | 8.82% | 7.78% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Robert Lee, Portfolio Manager of Consumer Staples Portfolio: For the 12 months ending February 28, 2011, the fund's Retail Class shares gained 13.55%, performing roughly in line with the 13.96% advance of the MSCI® U.S. IM Consumer Staples 25/50 Index, but falling short of the S&P 500®. Relative to its sector benchmark, the portfolio benefited from strong security selection in the soft drinks industry, where an overweighting in Coca-Cola boosted performance, as the company built momentum in higher-growth emerging markets and achieved better-than-expected results in more-developed markets, such as the U.S., Japan and Western Europe. Underweighting PepsiCo, which had a lesser emerging-markets presence, also contributed. Rising agricultural input costs in its snack business also hurt Pepsi's shares. The fund's out-of-index stake in British American Tobacco was another beneficiary of higher growth overseas. Distillers and vintners was a strong area, with holdings in global wine distributor Constellation Brands and British-based premium spirits producer Diageo - not found in the index - boosting the fund's return, as rebounding alcohol sales in restaurants and bars supported earnings gains. An underweighting and robust stock picking in the lagging hypermarkets/super centers area helped, including a smaller-than-index stake in Wal-Mart Stores and an overweighting in BJ's Wholesale Club. Favorable market selection in household products and brewers also buoyed performance, as did dollar weakness in relation to our foreign holdings. On the flip side, positioning in packaged foods/meats hurt the most, including an overweighting in Dean Foods - a company that sells milk across North America - which got caught in a competitive pricing trap. An out-of-index position in Netherlands-based Unilever also detracted here. Unfavorable security selection in the personal products industry was costly, including not owning two benchmark components, cosmetics manufacturer Estee Lauder and nutritional supplement marketer Herbalife. Elsewhere, a non-index stake in pharmaceutical and medical products giant Johnson & Johnson hurt, as did underweighting cigarette manufacturer Philip Morris International. Lastly, not having any exposure to premium grocer and index constituent Whole Foods Market 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
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, 2010 to February 28, 2011).
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 | $ 1,145.40 | $ 5.90 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.39% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.70 | $ 7.39 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.90 | $ 6.95 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,140.70 | $ 10.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.20 | $ 9.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Consumer Staples | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.80 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.90 | $ 4.63 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
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, 2011 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.8 | 12.1 |
The Coca-Cola Co. | 12.0 | 11.4 |
CVS Caremark Corp. | 6.6 | 4.0 |
British American Tobacco PLC sponsored ADR | 6.1 | 4.9 |
Altria Group, Inc. | 5.6 | 5.0 |
PepsiCo, Inc. | 4.4 | 5.5 |
Colgate-Palmolive Co. | 4.2 | 1.4 |
Unilever NV unit | 3.1 | 2.3 |
Diageo PLC sponsored ADR | 3.1 | 2.5 |
Johnson & Johnson | 3.0 | 3.0 |
| 63.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Beverages | 30.1% |
|
![]() | Household Products | 20.0% |
|
![]() | Food & Staples Retailing | 15.7% |
|
![]() | Tobacco | 14.8% |
|
![]() | Food Products | 12.7% |
|
![]() | All Others* | 6.7% |
|
As of August 31, 2010 | |||
![]() | Beverages | 31.1% |
|
![]() | Food & Staples Retailing | 19.8% |
|
![]() | Household Products | 14.5% |
|
![]() | Tobacco | 12.8% |
|
![]() | Food Products | 12.0% |
|
![]() | All Others* | 9.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BEVERAGES - 30.1% | |||
Brewers - 5.7% | |||
Anadolu Efes Biracilik ve Malt Sanayii AS | 253,611 | $ 3,426,533 | |
Anheuser-Busch InBev SA NV | 558,113 | 31,170,509 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 260,285 | 7,030,298 | |
Molson Coors Brewing Co. Class B | 859,203 | 39,291,353 | |
| 80,918,693 | ||
Distillers & Vintners - 6.0% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,752,181 | 35,604,318 | |
Diageo PLC sponsored ADR | 547,406 | 42,839,994 | |
Pernod-Ricard SA | 58,700 | 5,412,011 | |
| 83,856,323 | ||
Soft Drinks - 18.4% | |||
Coca-Cola Bottling Co. Consolidated | 147,913 | 8,534,580 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 92,029 | 6,723,639 | |
Coca-Cola Icecek AS | 300,073 | 3,322,257 | |
Cott Corp. (a) | 21,000 | 175,135 | |
Embotelladora Andina SA sponsored ADR | 263,641 | 7,018,123 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 61,087 | 3,434,922 | |
PepsiCo, Inc. | 968,207 | 61,403,688 | |
The Coca-Cola Co. | 2,639,308 | 168,704,567 | |
| 259,316,911 | ||
TOTAL BEVERAGES | 424,091,927 | ||
FOOD & STAPLES RETAILING - 15.7% | |||
Drug Retail - 9.6% | |||
CVS Caremark Corp. | 2,814,108 | 93,034,410 | |
Drogasil SA | 217,800 | 1,662,495 | |
Walgreen Co. | 928,945 | 40,260,476 | |
| 134,957,381 | ||
Food Distributors - 0.3% | |||
United Natural Foods, Inc. (a) | 102,934 | 4,369,548 | |
Food Retail - 3.1% | |||
Fresh Market, Inc. | 1,300 | 53,040 | |
Koninklijke Ahold NV | 501,177 | 6,728,121 | |
Safeway, Inc. | 1,357,313 | 29,616,570 | |
Susser Holdings Corp. (a) | 251,104 | 3,477,790 | |
The Pantry, Inc. (a) | 267,987 | 4,223,475 | |
| 44,098,996 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 2.7% | |||
BJ's Wholesale Club, Inc. (a) | 101,322 | $ 4,906,011 | |
Wal-Mart Stores, Inc. | 627,188 | 32,601,232 | |
| 37,507,243 | ||
TOTAL FOOD & STAPLES RETAILING | 220,933,168 | ||
FOOD PRODUCTS - 12.7% | |||
Agricultural Products - 4.4% | |||
Archer Daniels Midland Co. | 489,290 | 18,191,802 | |
Bunge Ltd. | 461,378 | 33,297,650 | |
Cresud S.A.C.I.F. y A. sponsored ADR | 91,600 | 1,594,756 | |
Origin Agritech Ltd. (a) | 95,200 | 842,520 | |
SLC Agricola SA | 276,300 | 3,593,660 | |
Viterra, Inc. | 312,700 | 3,831,279 | |
| 61,351,667 | ||
Packaged Foods & Meats - 8.3% | |||
Ausnutria Dairy Hunan Co. Ltd. | 314,000 | 89,507 | |
Brasil Foods SA | 2,000 | 34,740 | |
Calavo Growers, Inc. | 158,742 | 3,685,989 | |
Cermaq ASA | 227,670 | 3,883,072 | |
Cosan Ltd. Class A | 111,100 | 1,528,736 | |
Danone | 58,620 | 3,675,087 | |
Dean Foods Co. (a) | 673,558 | 7,112,772 | |
Kraft Foods, Inc. Class A | 273,127 | 8,696,364 | |
Lindt & Spruengli AG (d) | 111 | 3,475,957 | |
Mead Johnson Nutrition Co. Class A | 148,440 | 8,884,134 | |
Nestle SA | 510,464 | 28,904,038 | |
Smart Balance, Inc. (a) | 67,600 | 293,384 | |
Unilever NV unit | 1,459,991 | 44,150,128 | |
Want Want China Holdings Ltd. | 4,014,000 | 2,999,676 | |
| 117,413,584 | ||
TOTAL FOOD PRODUCTS | 178,765,251 | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Restaurants - 0.3% | |||
Domino's Pizza, Inc. (a) | 101,404 | 1,710,685 | |
Sonic Corp. (a) | 266,504 | 2,366,556 | |
| 4,077,241 | ||
HOUSEHOLD DURABLES - 0.1% | |||
Household Appliances - 0.0% | |||
SodaStream International Ltd. (d) | 24,200 | 1,070,366 | |
Housewares & Specialties - 0.1% | |||
Tupperware Brands Corp. | 21,400 | 1,148,110 | |
TOTAL HOUSEHOLD DURABLES | 2,218,476 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOUSEHOLD PRODUCTS - 20.0% | |||
Household Products - 20.0% | |||
Colgate-Palmolive Co. | 756,907 | $ 59,432,338 | |
Procter & Gamble Co. | 3,524,352 | 222,210,399 | |
| 281,642,737 | ||
PERSONAL PRODUCTS - 2.4% | |||
Personal Products - 2.4% | |||
Avon Products, Inc. | 898,363 | 24,983,475 | |
Hypermarcas SA (a) | 138,400 | 1,580,478 | |
Natura Cosmeticos SA | 138,800 | 3,521,305 | |
Nu Skin Enterprises, Inc. Class A | 109,000 | 3,479,280 | |
| 33,564,538 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 692,820 | 42,566,861 | |
Perrigo Co. | 1,000 | 76,430 | |
| 42,643,291 | ||
TOBACCO - 14.8% | |||
Tobacco - 14.8% | |||
Altria Group, Inc. | 3,088,731 | 78,361,105 | |
British American Tobacco PLC sponsored ADR (d) | 1,055,541 | 85,636,041 | |
KT&G Corp. | 61,159 | 3,113,925 | |
Lorillard, Inc. | 69,198 | 5,312,330 | |
Philip Morris International, Inc. | 509,803 | 32,005,432 | |
Souza Cruz Industria Comerico | 73,500 | 3,525,243 | |
| 207,954,076 | ||
TOTAL COMMON STOCKS (Cost $1,198,155,448) | 1,395,890,705 | ||
Money Market Funds - 1.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 15,137,132 | $ 15,137,132 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 4,824,339 | 4,824,339 | |
TOTAL MONEY MARKET FUNDS (Cost $19,961,471) | 19,961,471 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $1,218,116,919) | 1,415,852,176 | ||
NET OTHER ASSETS (LIABILITIES) - (0.5)% | (7,126,334) | ||
NET ASSETS - 100% | $ 1,408,725,842 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,915 |
Fidelity Securities Lending Cash Central Fund | 242,084 |
Total | $ 299,999 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,395,890,705 | $ 1,364,720,196 | $ 31,170,509 | $ - |
Money Market Funds | 19,961,471 | 19,961,471 | - | - |
Total Investments in Securities: | $ 1,415,852,176 | $ 1,384,681,667 | $ 31,170,509 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 75.3% |
United Kingdom | 9.2% |
Netherlands | 3.6% |
Bermuda | 2.5% |
Switzerland | 2.3% |
Belgium | 2.2% |
Brazil | 1.4% |
Others (Individually Less Than 1%) | 3.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,773,853) - See accompanying schedule: Unaffiliated issuers (cost $1,198,155,448) | $ 1,395,890,705 |
|
Fidelity Central Funds (cost $19,961,471) | 19,961,471 |
|
Total Investments (cost $1,218,116,919) |
| $ 1,415,852,176 |
Receivable for fund shares sold | 1,507,366 | |
Dividends receivable | 1,756,097 | |
Distributions receivable from Fidelity Central Funds | 20,089 | |
Prepaid expenses | 2,695 | |
Other receivables | 5,404 | |
Total assets | 1,419,143,827 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 80,369 | |
Payable for fund shares redeemed | 4,344,746 | |
Accrued management fee | 655,955 | |
Distribution and service plan fees payable | 132,062 | |
Other affiliated payables | 313,090 | |
Other payables and accrued expenses | 67,424 | |
Collateral on securities loaned, at value | 4,824,339 | |
Total liabilities | 10,417,985 | |
|
|
|
Net Assets | $ 1,408,725,842 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,127,374 | |
Undistributed net investment income | 3,223,201 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,638,829 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 197,736,438 | |
Net Assets | $ 1,408,725,842 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 67.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $67.65) | $ 71.78 | |
Class T: | $ 67.30 | |
|
|
|
Maximum offering price per share (100/96.50 of $67.30) | $ 69.74 | |
Class B: | $ 66.83 | |
|
|
|
Class C: | $ 66.71 | |
|
|
|
Consumer Staples: | $ 67.98 | |
|
|
|
Institutional Class: | $ 67.84 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 34,561,280 |
Interest |
| 265 |
Income from Fidelity Central Funds |
| 299,999 |
Total income |
| 34,861,544 |
|
|
|
Expenses | ||
Management fee | $ 7,388,443 | |
Transfer agent fees | 3,240,147 | |
Distribution and service plan fees | 1,550,109 | |
Accounting and security lending fees | 422,444 | |
Custodian fees and expenses | 116,156 | |
Independent trustees' compensation | 7,316 | |
Registration fees | 134,969 | |
Audit | 44,861 | |
Legal | 4,847 | |
Miscellaneous | 16,243 | |
Total expenses before reductions | 12,925,535 | |
Expense reductions | (35,683) | 12,889,852 |
Net investment income (loss) | 21,971,692 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,316,174 | |
Foreign currency transactions | (125,434) | |
Total net realized gain (loss) |
| 37,190,740 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 108,090,796 | |
Assets and liabilities in foreign currencies | 2,058 | |
Total change in net unrealized appreciation (depreciation) |
| 108,092,854 |
Net gain (loss) | 145,283,594 | |
Net increase (decrease) in net assets resulting from operations | $ 167,255,286 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 21,971,692 | $ 17,630,422 |
Net realized gain (loss) | 37,190,740 | 34,351,921 |
Change in net unrealized appreciation (depreciation) | 108,092,854 | 298,589,963 |
Net increase (decrease) in net assets resulting from operations | 167,255,286 | 350,572,306 |
Distributions to shareholders from net investment income | (18,562,633) | (15,962,478) |
Distributions to shareholders from net realized gain | (13,301,800) | - |
Total distributions | (31,864,433) | (15,962,478) |
Share transactions - net increase (decrease) | 3,732,087 | 33,089,434 |
Redemption fees | 35,627 | 34,831 |
Total increase (decrease) in net assets | 139,158,567 | 367,734,093 |
|
|
|
Net Assets | ||
Beginning of period | 1,269,567,275 | 901,833,182 |
End of period (including undistributed net investment income of $3,223,201 and undistributed net investment income of $1,438,918, respectively) | $ 1,408,725,842 | $ 1,269,567,275 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .98 | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.10 | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 8.08 | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.83) | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | (.66) | - | (.02) | (2.44) | - |
Total distributions | (1.49) | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 13.27% | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.11% | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.53% | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .79 | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.05 | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 7.84 | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.65) | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.31) | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 12.93% | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.24% | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .46 | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 6.98 | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 7.44 | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.32) | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (.98) | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 12.35% | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .73% | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .49 | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.00 | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 7.49 | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.41) | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.07) | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 12.44% | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.85% | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .79% | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.14 | .96 | .88 | .71 | .56 |
Net realized and unrealized gain (loss) | 7.14 | 17.11 | (19.31) | 7.30 | 8.88 |
Total from investment operations | 8.28 | 18.07 | (18.43) | 8.01 | 9.44 |
Distributions from net investment income | (.98) | (.87) | (.67) | (.46) | (.32) |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | (3.18) |
Total distributions | (1.64) | (.87) | (.69) H | (2.90) | (3.50) |
Redemption fees added to paid in capital B | - G | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Total Return A | 13.55% | 40.96% | (29.23)% | 13.72% | 18.43% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .86% | .92% | .91% | .91% | 1.01% |
Expenses net of fee waivers, if any | .86% | .92% | .91% | .90% | .99% |
Expenses net of all reductions | .86% | .91% | .90% | .90% | .98% |
Net investment income (loss) | 1.78% | 1.73% | 1.55% | 1.12% | .99% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 |
Portfolio turnover rate D | 57% | 69% | 70% | 71% | 99% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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. F For the year ended February 29. G Amount represents less than $.01 per share. H 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, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.15 | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 7.13 | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 8.28 | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (1.04) | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | - |
Total distributions | (1.70) | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | - J | .01 | .01 | - J |
Net asset value, end of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 13.57% | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .87% | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.77% | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 57% | 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. EFees 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, 2011
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | |
Gross unrealized depreciation | |
Net unrealized appreciation (depreciation) on securities and other investments | |
Tax Cost |
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 | $ 3,273,198 |
Undistributed long-term capital gain | $ 9,389,077 |
Net unrealized appreciation (depreciation) | $ 191,937,229 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 20,981,143 | $ 15,962,478 |
Long-term Capital Gains | 10,883,290 | - |
Total | $ 31,864,433 | $ 15,962,478 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $758,599,862 and $731,559,150, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 397,107 | $ 750 |
Class T | .25% | .25% | 151,642 | 730 |
Class B | .75% | .25% | 206,719 | 155,566 |
Class C | .75% | .25% | 794,641 | 171,222 |
|
|
| $ 1,550,109 | $ 328,268 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 74,644 |
Class T | 11,773 |
Class B* | 44,031 |
Class C* | 9,882 |
| $ 140,330 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 384,629 | .24 |
Class T | 85,440 | .28 |
Class B | 61,736 | .30 |
Class C | 189,687 | .24 |
Consumer Staples | 2,187,260 | .24 |
Institutional Class | 331,395 | .26 |
| $ 3,240,147 |
|
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 $17,374 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,935 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $242,084, including $4,962 from securities loaned to FCM.
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 $35,625 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 $58.
Annual Report
Notes to Financial Statements - continued
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 2,005,855 | $ 2,068,687 |
Class T | 304,100 | 279,551 |
Class B | 100,155 | 121,683 |
Class C | 513,058 | 461,837 |
Consumer Staples | 13,026,528 | 12,515,444 |
Institutional Class | 2,612,937 | 515,276 |
Total | $ 18,562,633 | $ 15,962,478 |
From net realized gain |
|
|
Class A | $ 1,585,279 | $ - |
Class T | 307,782 | - |
Class B | 204,642 | - |
Class C | 836,095 | - |
Consumer Staples | 8,597,123 | - |
Institutional Class | 1,770,879 | - |
Total | $ 13,301,800 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 610,485 | 1,132,943 | $ 39,028,355 | $ 59,482,737 |
Reinvestment of distributions | 47,297 | 31,495 | 3,150,891 | 1,903,559 |
Shares redeemed | (944,038) | (1,263,286) | (60,078,639) | (70,043,896) |
Net increase (decrease) | (286,256) | (98,848) | $ (17,899,393) | $ (8,657,600) |
Class T |
|
|
|
|
Shares sold | 91,776 | 173,895 | $ 5,882,190 | $ 9,112,154 |
Reinvestment of distributions | 8,541 | 4,329 | 566,923 | 262,823 |
Shares redeemed | (120,454) | (207,203) | (7,689,132) | (10,599,980) |
Net increase (decrease) | (20,137) | (28,979) | $ (1,240,019) | $ (1,225,003) |
Class B |
|
|
|
|
Shares sold | 35,654 | 104,786 | $ 2,191,455 | $ 5,439,880 |
Reinvestment of distributions | 3,610 | 1,610 | 238,429 | 97,230 |
Shares redeemed | (89,029) | (99,879) | (5,598,851) | (5,370,134) |
Net increase (decrease) | (49,765) | 6,517 | $ (3,168,967) | $ 166,976 |
Class C |
|
|
|
|
Shares sold | 340,893 | 378,183 | $ 21,482,594 | $ 19,816,576 |
Reinvestment of distributions | 14,479 | 5,180 | 954,487 | 312,378 |
Shares redeemed | (362,057) | (422,141) | (23,068,564) | (22,614,834) |
Net increase (decrease) | (6,685) | (38,778) | $ (631,483) | $ (2,485,880) |
Consumer Staples |
|
|
|
|
Shares sold | 4,055,609 | 6,969,074 | $ 260,108,965 | $ 390,940,582 |
Reinvestment of distributions | 309,170 | 198,030 | 20,671,323 | 11,983,104 |
Shares redeemed | (6,885,851) | (6,628,713) | (436,510,553) | (351,735,799) |
Net increase (decrease) | (2,521,072) | 538,391 | $ (155,730,265) | $ 51,187,887 |
Institutional Class |
|
|
|
|
Shares sold | 3,382,703 | 333,805 | $ 212,714,327 | $ 17,656,120 |
Reinvestment of distributions | 58,392 | 4,184 | 3,904,787 | 251,491 |
Shares redeemed | (524,454) | (449,527) | (34,216,900) | (23,804,557) |
Net increase (decrease) | 2,916,641 | (111,538) | $ 182,402,214 | $ (5,896,946) |
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
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, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009- |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007- |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999- |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Consumer Staples Portfolio voted to pay on April 18, 2011 to shareholders of record at the opening of business on April 15, 2011, a distribution of $0.465 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.177 per share from net investment income.
Consumer Staples hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2011, $20,272,367, or, if subsequently determined to be different, the net capital gain of such year.
Consumer Staples designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Consumer Staples 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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
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Fidelity Management & Research Company
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Fidelity®
Select Portfolios®
Energy Sector
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Energy Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Energy Service Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Gas Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Resources Portfolio | Performance | |
| Management's Discussion | |
| 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.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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, 2010 to February 28, 2011).
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 | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,580.00 | $ 5.37 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
Energy Service Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,685.20 | $ 5.53 |
HypotheticallA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
Natural Gas Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,379.90 | $ 5.19 |
HypotheticallA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Natural Resources Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,541.40 | $ 5.48 |
HypotheticallA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
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
Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Energy Portfolio | 38.95% | 7.94% | 11.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from John Dowd, Portfolio Manager of Energy Portfolio: For the 12 months ending February 28, 2011, the fund returned 38.95%, underperforming the 42.18% return of the MSCI® U.S. IM Energy 25/50 Index, but outperforming the S&P 500®. Relative to the sector benchmark, stock picking in oil/gas exploration and production (E&P), an overweighting in oil/gas drilling and underweighting integrated oil and gas stocks all hurt performance. In E&P, detractors included several natural gas "pure plays" stung by falling gas prices, and I moved away from that theme by period end. In the wake of the oil spill disaster in the Gulf of Mexico, I underestimated the negative impact the subsequent deepwater drilling moratorium would have on drilling stocks such as Noble and Transocean, the latter of which owned the ill-fated Deepwater Horizon rig. The fund also was hurt by having only a minor position in index constituent ConocoPhillips, an integrated oil company whose stock rose after a successful corporate restructuring. Conoco was sold from the fund by period end. Pure-play natural gas firms Southwestern Energy, Cabot Oil & Gas and Petrohawk Energy detracted, and each was sold from the fund by period end. An underweighting in benchmark heavyweight Chevron proved detrimental, as this integrated oil firm is more leveraged to oil than gas, and its stock tends to do well when natural gas prices are falling. Conversely, the fund did well with positioning in the outperforming oil and gas refining/marketing segment, along with an overweighting in the much-in-demand oil and gas equipment/services area. The fund's top contributor was an overweighting in Holly, a mid-continent refining company with plants in New Mexico, Utah and Oklahoma. A significant underweighting in benchmark heavyweight Exxon Mobil helped, as its stock underperformed. National Oilwell Varco, which provides equipment for drilling rigs, was a big winner for the fund. A spike in orders for new offshore rigs helped the company's revenue outlook, and its stock soared.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 15.9 | 19.7 |
Schlumberger Ltd. | 6.0 | 6.0 |
Occidental Petroleum Corp. | 5.8 | 3.8 |
Marathon Oil Corp. | 4.4 | 4.8 |
Chevron Corp. | 4.2 | 10.8 |
Baker Hughes, Inc. | 4.2 | 1.9 |
National Oilwell Varco, Inc. | 4.0 | 2.6 |
Apache Corp. | 3.9 | 3.4 |
Halliburton Co. | 3.3 | 4.2 |
Transocean Ltd. | 2.7 | 2.2 |
| 54.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Oil, Gas & Consumable Fuels | 64.4% |
|
![]() | Energy Equipment & Services | 30.3% |
|
![]() | Chemicals | 1.3% |
|
![]() | Construction & Engineering | 1.3% |
|
![]() | Metals & Mining | 0.8% |
|
![]() | All Others* | 1.9% |
|
As of August 31, 2010 | |||
![]() | Oil, Gas & Consumable Fuels | 68.2% |
|
![]() | Energy Equipment & Services | 28.2% |
|
![]() | Semiconductors & Semiconductor Equipment | 1.6% |
|
![]() | Construction & Engineering | 1.5% |
|
![]() | Metals & Mining | 0.2% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Energy Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
CHEMICALS - 1.3% | |||
Specialty Chemicals - 1.3% | |||
LyondellBasell Industries NV Class A (a) | 1,052,041 | $ 40,061,721 | |
CONSTRUCTION & ENGINEERING - 1.3% | |||
Construction & Engineering - 1.3% | |||
Foster Wheeler AG (a) | 185,600 | 6,711,296 | |
Jacobs Engineering Group, Inc. (a) | 400,781 | 20,063,097 | |
KBR, Inc. | 343,710 | 11,273,688 | |
| 38,048,081 | ||
ENERGY EQUIPMENT & SERVICES - 30.3% | |||
Oil & Gas Drilling - 7.6% | |||
Aker Drilling ASA (a) | 784,600 | 2,914,593 | |
Discovery Offshore S.A. (a)(e) | 870,600 | 1,943,547 | |
Ensco International Ltd. ADR (d) | 1,053,800 | 59,118,180 | |
Hercules Offshore, Inc. (a) | 389,080 | 1,922,055 | |
Noble Corp. | 700,845 | 31,334,780 | |
Northern Offshore Ltd. (a) | 1,261,675 | 3,008,119 | |
Ocean Rig UDW, Inc. (a) | 695,700 | 14,568,040 | |
Rowan Companies, Inc. (a) | 231,900 | 9,895,173 | |
Seadrill Ltd. | 534,800 | 20,382,248 | |
Transocean Ltd. (a) | 981,347 | 83,051,397 | |
Tuscany International Drilling, Inc. (a) | 1,588,600 | 3,173,111 | |
| 231,311,243 | ||
Oil & Gas Equipment & Services - 22.7% | |||
Baker Hughes, Inc. | 1,791,047 | 127,253,889 | |
Dresser-Rand Group, Inc. (a) | 195,776 | 9,647,841 | |
Halliburton Co. | 2,139,821 | 100,443,198 | |
ION Geophysical Corp. (a) | 149,400 | 1,915,308 | |
National Oilwell Varco, Inc. | 1,529,985 | 121,740,906 | |
Oceaneering International, Inc. (a) | 622,865 | 52,090,200 | |
Oil States International, Inc. (a) | 369,721 | 26,911,992 | |
Saipem SpA | 141,760 | 7,160,014 | |
Schlumberger Ltd. | 1,937,240 | 180,976,961 | |
Schoeller-Bleckmann Oilfield Equipment AG | 76,852 | 6,554,246 | |
Superior Energy Services, Inc. (a) | 229,676 | 8,798,888 | |
TSC Offshore Group Ltd. (a) | 5,462,000 | 1,388,644 | |
Weatherford International Ltd. (a) | 1,511,638 | 36,551,407 | |
Willbros Group, Inc. (a) | 533,307 | 6,058,368 | |
| 687,491,862 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 918,803,105 | ||
GAS UTILITIES - 0.0% | |||
Gas Utilities - 0.0% | |||
China Gas Holdings Ltd. | 2,829,859 | 1,061,015 | |
METALS & MINING - 0.8% | |||
Diversified Metals & Mining - 0.8% | |||
Grande Cache Coal Corp. (a) | 338,200 | 3,252,291 | |
| |||
Shares | Value | ||
MacArthur Coal Ltd. | 510,116 | $ 6,169,679 | |
Walter Energy, Inc. | 112,200 | 13,577,322 | |
| 22,999,292 | ||
OIL, GAS & CONSUMABLE FUELS - 64.4% | |||
Coal & Consumable Fuels - 6.1% | |||
Alpha Natural Resources, Inc. (a)(d) | 1,108,526 | 60,104,280 | |
Massey Energy Co. | 1,193,605 | 75,591,005 | |
Peabody Energy Corp. | 757,020 | 49,577,240 | |
| 185,272,525 | ||
Integrated Oil & Gas - 33.3% | |||
BG Group PLC | 303,156 | 7,376,042 | |
Chevron Corp. | 1,238,009 | 128,443,434 | |
Exxon Mobil Corp. | 5,650,392 | 483,278,026 | |
Hess Corp. | 389,781 | 33,922,640 | |
Marathon Oil Corp. | 2,655,877 | 131,731,499 | |
Occidental Petroleum Corp. | 1,714,346 | 174,811,862 | |
Royal Dutch Shell PLC Class B ADR | 723,213 | 52,158,122 | |
| 1,011,721,625 | ||
Oil & Gas Exploration & Production - 15.5% | |||
Anadarko Petroleum Corp. | 587,332 | 48,061,378 | |
Apache Corp. | 936,830 | 116,747,755 | |
Bankers Petroleum Ltd. (a) | 1,406,800 | 13,658,815 | |
Brigham Exploration Co. (a) | 90,300 | 3,303,174 | |
Chesapeake Energy Corp. | 967,200 | 34,441,992 | |
Cimarex Energy Co. | 492,664 | 57,213,070 | |
Concho Resources, Inc. (a) | 28,336 | 3,018,351 | |
Gran Tierra Energy, Inc. (a) | 1,291,300 | 12,018,895 | |
Newfield Exploration Co. (a) | 411,000 | 29,916,690 | |
Niko Resources Ltd. | 46,200 | 3,947,632 | |
Noble Energy, Inc. | 157,544 | 14,598,027 | |
Northern Oil & Gas, Inc. (a) | 31,900 | 1,013,463 | |
Pacific Rubiales Energy Corp. | 260,200 | 8,722,895 | |
Painted Pony Petroleum Ltd. Class A (a) | 393,900 | 4,388,158 | |
Petrobank Energy & Resources Ltd. (a) | 74,200 | 1,909,146 | |
Petroleum Development Corp. (a) | 101,900 | 4,782,167 | |
Petrominerales Ltd. | 162,873 | 6,781,554 | |
Pioneer Natural Resources Co. | 293,166 | 30,002,608 | |
Talisman Energy, Inc. | 638,900 | 15,859,850 | |
Toreador Resources Corp. (a)(d) | 155,423 | 2,357,767 | |
Vermilion Energy, Inc. | 25,300 | 1,329,797 | |
Whiting Petroleum Corp. (a) | 848,250 | 55,424,655 | |
| 469,497,839 | ||
Oil & Gas Refining & Marketing - 9.2% | |||
CVR Energy, Inc. (a) | 1,286,837 | 24,321,219 | |
Frontier Oil Corp. | 1,479,057 | 41,265,690 | |
Holly Corp. | 1,296,404 | 74,076,525 | |
Keyera Corp. | 84,700 | 3,294,688 | |
Petroplus Holdings AG | 210,920 | 3,417,133 | |
Tesoro Corp. (a) | 1,838,411 | 43,717,414 | |
Valero Energy Corp. | 1,995,608 | 56,236,233 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Refining & Marketing - continued | |||
Western Refining, Inc. (a)(d) | 1,236,316 | $ 20,114,861 | |
World Fuel Services Corp. | 292,442 | 12,118,796 | |
| 278,562,559 | ||
Oil & Gas Storage & Transport - 0.3% | |||
El Paso Corp. | 449,500 | 8,360,700 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,953,415,248 | ||
TOTAL COMMON STOCKS (Cost $2,002,415,701) | 2,974,388,462 |
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | ||||
Semiconductors - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 1,040,000 | 1,080,300 |
Money Market Funds - 5.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 62,525,424 | $ 62,525,424 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 109,890,414 | 109,890,414 | |
TOTAL MONEY MARKET FUNDS (Cost $172,415,838) | 172,415,838 |
TOTAL INVESTMENT PORTFOLIO - 103.8% (Cost $2,175,871,539) | 3,147,884,600 |
NET OTHER ASSETS (LIABILITIES) - (3.8)% | (114,862,041) | ||
NET ASSETS - 100% | $ 3,033,022,559 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $1,943,547 or 0.1% of net assets. |
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 | $ 30,681 |
Fidelity Securities Lending Cash Central Fund | 231,242 |
Total | $ 261,923 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 2,974,388,462 | $ 2,968,218,783 | $ 6,169,679 | $ - |
Convertible Bonds | 1,080,300 | - | 1,080,300 | - |
Money Market Funds | 172,415,838 | 172,415,838 | - | - |
Total Investments in Securities: | $ 3,147,884,600 | $ 3,140,634,621 | $ 7,249,979 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 79.4% |
Netherlands Antilles | 6.0% |
Switzerland | 5.2% |
United Kingdom | 3.8% |
Canada | 2.1% |
Netherlands | 1.3% |
Others (Individually Less Than 1%) | 2.2% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $162,227,335 all of which will expire in fiscal 2018. 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
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $107,942,215) - Unaffiliated issuers (cost $2,003,455,701) | $ 2,975,468,762 |
|
Fidelity Central Funds (cost $172,415,838) | 172,415,838 |
|
Total Investments (cost $2,175,871,539) |
| $ 3,147,884,600 |
Receivable for investments sold | 7,240,693 | |
Receivable for fund shares sold | 19,546,278 | |
Dividends receivable | 5,594,017 | |
Interest receivable | 18,525 | |
Distributions receivable from Fidelity Central Funds | 14,342 | |
Prepaid expenses | 3,875 | |
Other receivables | 19,147 | |
Total assets | 3,180,321,477 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 30,811,550 | |
Payable for fund shares redeemed | 4,653,742 | |
Accrued management fee | 1,323,493 | |
Other affiliated payables | 543,914 | |
Other payables and accrued | 75,805 | |
Collateral on securities loaned, at | 109,890,414 | |
Total liabilities | 147,298,918 | |
|
|
|
Net Assets | $ 3,033,022,559 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,230,761,033 | |
Undistributed net investment income | 2,501,192 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (172,246,656) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 972,006,990 | |
Net Assets, for 50,362,187 shares outstanding | $ 3,033,022,559 | |
Net Asset Value, offering price and redemption price per share ($3,033,022,559 ÷ 50,362,187 shares) | $ 60.22 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 31,127,011 |
Interest |
| 50,056 |
Income from Fidelity Central Funds |
| 261,923 |
Total income |
| 31,438,990 |
|
|
|
Expenses | ||
Management fee | $ 11,846,464 | |
Transfer agent fees | 5,275,271 | |
Accounting and security lending fees | 644,527 | |
Custodian fees and expenses | 62,222 | |
Independent trustees' compensation | 11,538 | |
Registration fees | 134,361 | |
Audit | 43,597 | |
Legal | 7,559 | |
Interest | 2,836 | |
Miscellaneous | 26,056 | |
Total expenses before reductions | 18,054,431 | |
Expense reductions | (74,463) | 17,979,968 |
Net investment income (loss) | 13,459,022 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 115,413,652 | |
Foreign currency transactions | (101,366) | |
Total net realized gain (loss) |
| 115,312,286 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 640,670,142 | |
Assets and liabilities in foreign currencies | 136 | |
Total change in net unrealized appreciation (depreciation) |
| 640,670,278 |
Net gain (loss) | 755,982,564 | |
Net increase (decrease) in net assets resulting from operations | $ 769,441,586 |
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) | $ 13,459,022 | $ 3,558,998 |
Net realized gain (loss) | 115,312,286 | 43,703,718 |
Change in net unrealized appreciation (depreciation) | 640,670,278 | 750,988,749 |
Net increase (decrease) in net assets resulting from operations | 769,441,586 | 798,251,465 |
Distributions to shareholders from net investment income | (10,965,367) | (4,448,317) |
Share transactions | 807,561,965 | 635,828,628 |
Reinvestment of distributions | 10,430,100 | 4,235,438 |
Cost of shares redeemed | (677,541,254) | (637,354,218) |
Net increase (decrease) in net assets resulting from share transactions | 140,450,811 | 2,709,848 |
Redemption fees | 77,677 | 122,933 |
Total increase (decrease) in net assets | 899,004,707 | 796,635,929 |
|
|
|
Net Assets | ||
Beginning of period | 2,134,017,852 | 1,337,381,923 |
End of period (including undistributed net investment income of $2,501,192 and distributions in excess of net investment income of $206,987, respectively) | $ 3,033,022,559 | $ 2,134,017,852 |
Other Information Shares | ||
Sold | 16,320,732 | 16,609,422 |
Issued in reinvestment of distributions | 206,804 | 101,862 |
Redeemed | (15,161,606) | (16,469,484) |
Net increase (decrease) | 1,365,930 | 241,800 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 43.55 | $ 27.43 | $ 64.48 | $ 48.80 | $ 49.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 | .07 | .02 | .01 | .18 |
Net realized and unrealized gain (loss) | 16.63 | 16.14 | (35.81) | 19.61 | 4.13 |
Total from investment operations | 16.92 | 16.21 | (35.79) | 19.62 | 4.31 |
Distributions from net investment income | (.25) | (.09) | (.01) | (.05) | (.10) |
Distributions from net realized gain | - | - | (1.26) | (3.90) | (4.62) |
Total distributions | (.25) | (.09) | (1.27) | (3.95) | (4.72) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 60.22 | $ 43.55 | $ 27.43 | $ 64.48 | $ 48.80 |
Total Return A, B | 38.95% | 59.11% | (56.63)% | 40.72% | 8.57% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .83% | .84% | .89% |
Expenses net of fee waivers, if any | .85% | .90% | .83% | .84% | .89% |
Expenses net of all reductions | .85% | .90% | .83% | .84% | .89% |
Net investment income (loss) | .64% | .18% | .03% | .02% | .36% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,033,023 | $ 2,134,018 | $ 1,337,382 | $ 3,155,852 | $ 2,145,397 |
Portfolio turnover rate E | 107% | 97% | 148% | 55% | 102% |
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
Energy Service Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Energy Service Portfolio | 47.38% | 7.50% | 9.76% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Jonathan Kasen, who became Portfolio Manager of Energy Service Portfolio on July 1, 2010: For the 12 months ending February 28, 2011, the fund returned 47.38%, outpacing the S&P 500® but lagging the 49.13% return of the MSCI® U.S. IM Energy Equipment & Services 25/50 Index. The fund underperformed its industry benchmark primarily due to a modest cash position in a rising market. At the same time, the fund was hurt by security selection among small-cap stocks with a market capitalization of between $1 billion and $2 billion, and by not having enough exposure to the benchmark's smallest stocks, which fared quite well. On an individual security basis, performance suffered when I sold Superior Well Services before its stock jumped on an acquisition agreement with Nabors Industries. Results were held back by an overweighting in Transocean, owner of the Gulf of Mexico's ill-fated Deepwater Horizon rig, and I reduced the stake by period end. Transocean, now based in Switzerland, was eliminated from the benchmark in December. My timing in Helmerich & Payne also stung, as this leading horizontal drill rig company posted higher-than-expected earnings due to soaring oil rig counts and higher pricing power for premium land rigs. On the plus side, the fund was helped by its positioning in larger firms and, on an industry basis, underweighting the lagging oil and gas drilling segment and making good choices within oil/gas equipment and services. Not owning benchmark constituent Diamond Offshore Drilling was the biggest contributor to relative performance. I believed Diamond's stock was expensive, even after the deepwater driller was hurt by the BP oil spill and the subsequent moratorium on deepwater drilling permits in the U.S. The timing of an investment in reservoir analysis company Core Laboratories paid off, as did the fund's larger-than-benchmark stake in small-cap oil-field pumping company Lufkin Industries.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 16.9 | 16.7 |
Halliburton Co. | 13.8 | 12.7 |
Baker Hughes, Inc. | 10.3 | 8.1 |
National Oilwell Varco, Inc. | 7.3 | 5.0 |
Cameron International Corp. | 4.8 | 4.9 |
Oceaneering International, Inc. | 4.8 | 2.9 |
Noble Corp. | 4.3 | 4.9 |
Weatherford International Ltd. | 4.0 | 6.4 |
Rowan Companies, Inc. | 3.9 | 0.9 |
McDermott International, Inc. | 2.3 | 2.0 |
| 72.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Energy Equipment & Services | 95.0% |
|
![]() | Construction & Engineering | 2.4% |
|
![]() | Trading Companies & Distributors | 0.8% |
|
![]() | Machinery | 0.6% |
|
![]() | All Others* | 1.2% |
|
As of August 31, 2010 | |||
![]() | Energy Equipment & Services | 97.1% |
|
![]() | Machinery | 1.8% |
|
![]() | Construction & Engineering | 0.7% |
|
![]() | Semiconductors & Semiconductor Equipment† | 0.0% |
|
![]() | Water Utilities† | 0.0% |
|
![]() | All Others* | 0.4% |
|
* Includes short-term investments and net other assets. |
† Amount represents less than 0.1%. |
Annual Report
Energy Service Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 2.4% | |||
Construction & Engineering - 2.4% | |||
Fluor Corp. | 254,400 | $ 18,001,344 | |
Jacobs Engineering Group, Inc. (a) | 459,200 | 22,987,552 | |
Shaw Group, Inc. (a) | 221,800 | 8,809,896 | |
| 49,798,792 | ||
ENERGY EQUIPMENT & SERVICES - 95.0% | |||
Oil & Gas Drilling - 15.3% | |||
Cathedral Energy Services Ltd. | 1,000,000 | 10,501,930 | |
Discovery Offshore S.A. (a)(e) | 578,100 | 1,290,563 | |
Ensco International Ltd. ADR | 485,800 | 27,253,380 | |
Helmerich & Payne, Inc. | 332,600 | 21,615,674 | |
Nabors Industries Ltd. (a) | 215,755 | 6,142,545 | |
Noble Corp. (d) | 1,976,435 | 88,366,409 | |
Northern Offshore Ltd. (a) | 173,262 | 413,096 | |
Ocean Rig UDW, Inc. (a) | 441,600 | 9,247,156 | |
Pride International, Inc. (a) | 334,400 | 13,880,944 | |
Rowan Companies, Inc. (a) | 1,853,100 | 79,071,777 | |
Transocean Ltd. (a) | 385,687 | 32,640,691 | |
Trinidad Drilling Ltd. | 1,355,900 | 11,433,535 | |
Tuscany International Drilling, Inc. (a) | 1,492,200 | 2,980,559 | |
Vantage Drilling Co. (a) | 3,950,400 | 8,216,832 | |
| 313,055,091 | ||
Oil & Gas Equipment & Services - 79.7% | |||
Aker Solutions ASA | 750,300 | 15,878,869 | |
Baker Hughes, Inc. | 2,955,022 | 209,954,313 | |
Bristow Group, Inc. (a) | 84,200 | 4,034,864 | |
Cameron International Corp. (a) | 1,654,888 | 97,853,527 | |
Core Laboratories NV | 37,300 | 3,854,955 | |
Dresser-Rand Group, Inc. (a) | 612,500 | 30,184,000 | |
Dril-Quip, Inc. (a) | 159,800 | 12,256,660 | |
Exterran Holdings, Inc. (a) | 451,600 | 10,251,320 | |
FMC Technologies, Inc. (a) | 139,931 | 13,160,511 | |
Fugro NV (Certificaten Van Aandelen) unit | 138,100 | 11,617,635 | |
Global Geophysical Services, Inc. (a) | 63,860 | 898,510 | |
Halliburton Co. | 5,983,699 | 280,874,831 | |
Helix Energy Solutions Group, Inc. (a) | 1,083,000 | 16,678,200 | |
Hornbeck Offshore Services, Inc. (a)(d) | 407,200 | 11,568,552 | |
ION Geophysical Corp. (a) | 2,551,955 | 32,716,063 | |
Lufkin Industries, Inc. | 371,300 | 29,017,095 | |
McDermott International, Inc. (a) | 2,024,300 | 46,457,685 | |
National Oilwell Varco, Inc. | 1,874,762 | 149,174,812 | |
Newpark Resources, Inc. (a) | 897,046 | 6,261,381 | |
Oceaneering International, Inc. (a) | 1,160,000 | 97,010,800 | |
Petroleum Geo-Services ASA (a) | 559,100 | 9,221,311 | |
RigNet, Inc. | 258,594 | 3,801,332 | |
Saipem SpA | 448,056 | 22,630,412 | |
Schlumberger Ltd. | 3,693,566 | 345,052,936 | |
Schoeller-Bleckmann Oilfield Equipment AG | 461,900 | 39,392,680 | |
| |||
Shares | Value | ||
Superior Energy Services, Inc. (a) | 950,559 | $ 36,415,915 | |
TETRA Technologies, Inc. (a) | 542,096 | 7,486,346 | |
Weatherford International Ltd. (a) | 3,391,938 | 82,017,061 | |
| 1,625,722,576 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 1,938,777,667 | ||
MACHINERY - 0.6% | |||
Industrial Machinery - 0.6% | |||
Gardner Denver, Inc. | 165,900 | 12,133,926 | |
TRADING COMPANIES & DISTRIBUTORS - 0.8% | |||
Trading Companies & Distributors - 0.8% | |||
Finning International, Inc. | 442,600 | 12,600,144 | |
Mills Estruturas e Servicos de Engenharia SA | 225,000 | 2,546,430 | |
| 15,146,574 | ||
TOTAL COMMON STOCKS (Cost $1,256,935,130) | 2,015,856,959 | ||
Money Market Funds - 3.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 52,491,266 | 52,491,266 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 9,821,100 | 9,821,100 | |
TOTAL MONEY MARKET FUNDS (Cost $62,312,366) | 62,312,366 |
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $1,319,247,496) | 2,078,169,325 |
NET OTHER ASSETS (LIABILITIES) - (1.8)% | (37,478,154) | ||
NET ASSETS - 100% | $ 2,040,691,171 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $1,290,563 or 0.1% of net assets. |
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 | $ 29,726 |
Fidelity Securities Lending Cash Central Fund | 111,772 |
Total | $ 141,498 |
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 | 61.7% |
Netherlands Antilles | 16.9% |
Switzerland | 9.9% |
Panama | 2.3% |
Austria | 1.9% |
Canada | 1.8% |
United Kingdom | 1.3% |
Norway | 1.2% |
Italy | 1.1% |
Others (Individually Less Than 1%) | 1.9% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $195,879,771 all of which will expire in fiscal 2018. 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
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,800,440) - See accompanying schedule: Unaffiliated issuers (cost $1,256,935,130) | $ 2,015,856,959 |
|
Fidelity Central Funds (cost $62,312,366) | 62,312,366 |
|
Total Investments (cost $1,319,247,496) |
| $ 2,078,169,325 |
Receivable for fund shares sold | 17,095,237 | |
Dividends receivable | 1,551,013 | |
Distributions receivable from Fidelity Central Funds | 5,879 | |
Prepaid expenses | 2,351 | |
Other receivables | 13,291 | |
Total assets | 2,096,837,096 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 41,961,640 | |
Payable for fund shares redeemed | 3,079,074 | |
Accrued management fee | 882,563 | |
Other affiliated payables | 352,705 | |
Other payables and accrued expenses | 48,843 | |
Collateral on securities loaned, at value | 9,821,100 | |
Total liabilities | 56,145,925 | |
|
|
|
Net Assets | $ 2,040,691,171 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,481,279,740 | |
Accumulated net investment loss | (61,947) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (199,448,814) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 758,922,192 | |
Net Assets, for 23,762,024 shares outstanding | $ 2,040,691,171 | |
Net Asset Value, offering price and redemption price per share ($2,040,691,171 ÷ 23,762,024 shares) | $ 85.88 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,307,592 |
Interest |
| 14,183 |
Income from Fidelity Central Funds |
| 141,498 |
Total income |
| 10,463,273 |
|
|
|
Expenses | ||
Management fee | $ 7,461,250 | |
Transfer agent fees | 3,236,014 | |
Accounting and security lending fees | 430,471 | |
Custodian fees and expenses | 44,762 | |
Independent trustees' compensation | 7,220 | |
Registration fees | 87,202 | |
Audit | 47,586 | |
Legal | 4,526 | |
Interest | 2,700 | |
Miscellaneous | 15,973 | |
Total expenses before reductions | 11,337,704 | |
Expense reductions | (59,440) | 11,278,264 |
Net investment income (loss) | (814,991) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 55,730,327 | |
Foreign currency transactions | (123,463) | |
Total net realized gain (loss) |
| 55,606,864 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 540,146,841 | |
Assets and liabilities in foreign currencies | 377 | |
Total change in net unrealized appreciation (depreciation) |
| 540,147,218 |
Net gain (loss) | 595,754,082 | |
Net increase (decrease) in net assets resulting from operations | $ 594,939,091 |
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 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (814,991) | $ 443,233 |
Net realized gain (loss) | 55,606,864 | 48,016,172 |
Change in net unrealized appreciation (depreciation) | 540,147,218 | 489,518,512 |
Net increase (decrease) in net assets resulting from operations | 594,939,091 | 537,977,917 |
Distributions to shareholders from net investment income | - | (787,232) |
Share transactions | 737,771,272 | 505,358,815 |
Reinvestment of distributions | - | 745,437 |
Cost of shares redeemed | (574,519,729) | (501,940,099) |
Net increase (decrease) in net assets resulting from share transactions | 163,251,543 | 4,164,153 |
Redemption fees | 72,873 | 127,188 |
Total increase (decrease) in net assets | 758,263,507 | 541,482,026 |
|
|
|
Net Assets | ||
Beginning of period | 1,282,427,664 | 740,945,638 |
End of period (including accumulated net investment loss of $61,947 and accumulated net investment loss of $196, respectively) | $ 2,040,691,171 | $ 1,282,427,664 |
Other Information Shares | ||
Sold | 10,987,135 | 9,992,001 |
Issued in reinvestment of distributions | - | 12,721 |
Redeemed | (9,234,606) | (9,871,755) |
Net increase (decrease) | 1,752,529 | 132,967 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.27 | $ 33.87 | $ 92.62 | $ 66.82 | $ 68.03 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .02 F | (.02) G | (.21) | (.21) H |
Net realized and unrealized gain (loss) | 27.65 | 24.41 | (54.75) | 28.45 | 3.07 |
Total from investment operations | 27.61 | 24.43 | (54.77) | 28.24 | 2.86 |
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 capital C | - K | .01 | .02 | .02 | .08 |
Net asset value, end of period | $ 85.88 | $ 58.27 | $ 33.87 | $ 92.62 | $ 66.82 |
Total Return A, B | 47.38% | 72.15% | (61.89)% | 42.91% | 3.92% |
Ratios to Average Net Assets D,I |
|
|
|
|
|
Expenses before reductions | .85% | .91% | .82% | .83% | .88% |
Expenses net of fee waivers, if any | .85% | .91% | .82% | .83% | .88% |
Expenses net of all reductions | .85% | .91% | .82% | .83% | .88% |
Net investment income (loss) | (.06)% | .04% F | (.03)% G | (.23)% | (.30)% H |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,040,691 | $ 1,282,428 | $ 740,946 | $ 2,256,105 | $ 1,221,404 |
Portfolio turnover rate E | 85% | 84% | 82% | 64% | 92% |
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 Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. J For the year ended February 29. K Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Natural Gas Portfolio | 17.58% | 3.25% | 8.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Ryan Oldham, who became Portfolio Manager of Natural Gas Portfolio on June 8, 2010: During the past year, the fund returned 17.58%, underperforming both the broadly based S&P 500® and the 30.39% gain of the S&P® Custom Natural Gas Index. Relative to the industry benchmark, stock picking in oil/gas exploration and production (E&P) hurt the most, followed by the fund's positioning in multi-utilities, in oil/gas equipment and services, oil/gas drilling and gas utilities. Although the fund was favorably positioned from a market-cap standpoint, disappointing stock picking overall prevented it from fully benefiting. In terms of individual stocks, the biggest detractor by far was a large stake in Plains Exploration & Production, an E&P holding whose stock plummeted after the negative impact of the Macondo oil-well disaster in the Gulf of Mexico. I sold Plains from the fund when I took over in June, but not before the damage had been done. Unfavorable positioning in EOG Resources also hurt, as did a below-index stake in Pioneer Natural Resources, an oil-concentrated E&P whose stock soared due to its strong presence in the Permian Basin oilfield in West Texas. Untimely ownership of Chesapeake Energy detracted, as did a significant underweighting in multi-utility Dominion Resources, which fared quite well during the first half of the period. Conversely, the fund got a lift from solid stock picking in integrated oil/gas, oil/gas refining and marketing, and oil/gas storage and transport. Within E&P, underweighting Apache helped the most, given the stock's decline in the wake of Macondo. Mariner Energy also contributed, as the stock soared on its acquisition by Apache in late April. Integrated oil/gas holding Suncor Energy, based in Canada, helped, while timely ownership of Noble Energy boosted performance. Pioneer was sold from the fund by period end, and Plains, Mariner and Suncor were out-of-index positions.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Apache Corp. | 12.4 | 6.6 |
Anadarko Petroleum Corp. | 8.0 | 7.3 |
Devon Energy Corp. | 6.1 | 5.6 |
Williams Companies, Inc. | 5.4 | 1.4 |
Noble Energy, Inc. | 5.4 | 4.5 |
Sempra Energy | 4.5 | 5.1 |
Dominion Resources, Inc. | 4.1 | 4.7 |
Duke Energy Corp. | 4.0 | 6.9 |
Rowan Companies, Inc. | 3.6 | 0.4 |
Newfield Exploration Co. | 3.2 | 1.6 |
| 56.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Oil, Gas & | 64.9% |
|
![]() | Multi-Utilities | 15.1% |
|
![]() | Energy Equipment & Services | 12.6% |
|
![]() | Electric Utilities | 4.0% |
|
![]() | Gas Utilities | 2.5% |
|
![]() | All Others* | 0.9% |
|
As of August 31, 2010 | |||
![]() | Oil, Gas & | 60.1% |
|
![]() | Energy Equipment & Services | 12.6% |
|
![]() | Multi-Utilities | 11.9% |
|
![]() | Gas Utilities | 7.4% |
|
![]() | Electric Utilities | 7.3% |
|
![]() | All Others* | 0.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Gas Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 4.0% | |||
Electric Utilities - 4.0% | |||
Duke Energy Corp. | 2,217,279 | $ 39,888,849 | |
ENERGY EQUIPMENT & SERVICES - 12.6% | |||
Oil & Gas Drilling - 10.3% | |||
Aker Drilling ASA (a) | 256,200 | 951,719 | |
Helmerich & Payne, Inc. | 387,600 | 25,190,124 | |
Ocean Rig UDW, Inc. (a) | 255,700 | 5,354,388 | |
Rowan Companies, Inc. (a) | 845,000 | 36,056,150 | |
Transocean Ltd. (a) | 230,800 | 19,532,604 | |
Trinidad Drilling Ltd. (d) | 1,763,500 | 14,870,595 | |
| 101,955,580 | ||
Oil & Gas Equipment & Services - 2.3% | |||
Baker Hughes, Inc. | 280,700 | 19,943,735 | |
Bourbon SA (d) | 52,500 | 2,515,826 | |
| 22,459,561 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 124,415,141 | ||
GAS UTILITIES - 2.5% | |||
Gas Utilities - 2.5% | |||
AGL Resources, Inc. | 294,900 | 11,209,149 | |
ONEOK, Inc. | 207,400 | 13,391,818 | |
| 24,600,967 | ||
MULTI-UTILITIES - 15.1% | |||
Multi-Utilities - 15.1% | |||
Dominion Resources, Inc. | 891,800 | 40,692,834 | |
NiSource, Inc. | 1,091,200 | 20,907,392 | |
Sempra Energy | 839,377 | 44,680,038 | |
Wisconsin Energy Corp. | 420,600 | 24,899,520 | |
Xcel Energy, Inc. | 781,500 | 18,709,110 | |
| 149,888,894 | ||
OIL, GAS & CONSUMABLE FUELS - 64.9% | |||
Integrated Oil & Gas - 6.6% | |||
BG Group PLC | 470,094 | 11,437,784 | |
InterOil Corp. (a)(d) | 123,800 | 9,197,102 | |
Occidental Petroleum Corp. | 148,900 | 15,183,333 | |
Suncor Energy, Inc. | 628,700 | 29,556,182 | |
| 65,374,401 | ||
Oil & Gas Exploration & Production - 51.0% | |||
Africa Oil Corp. (a) | 509,400 | 1,027,978 | |
Americas Petrogas, Inc. (a)(e) | 198,500 | 525,246 | |
Anadarko Petroleum Corp. | 969,300 | 79,317,819 | |
Apache Corp. | 986,533 | 122,941,745 | |
Canadian Natural Resources Ltd. | 227,100 | 11,440,930 | |
CGX Energy, Inc. (a) | 735,000 | 658,378 | |
Chariot Oil & Gas Ltd. (a) | 244,560 | 1,001,997 | |
Chesapeake Energy Corp. | 500 | 17,805 | |
Denbury Resources, Inc. (a) | 486,775 | 11,794,558 | |
Devon Energy Corp. | 665,846 | 60,884,958 | |
| |||
Shares | Value | ||
Double Eagle Petroleum Co. (a) | 182,179 | $ 1,987,573 | |
EOG Resources, Inc. | 257,685 | 28,940,602 | |
Falkland Oil & Gas Ltd. (a) | 441,000 | 586,147 | |
Heritage Oil PLC | 385,000 | 1,658,773 | |
Newfield Exploration Co. (a) | 430,953 | 31,369,069 | |
Niko Resources Ltd. | 173,800 | 14,850,617 | |
Noble Energy, Inc. | 575,707 | 53,345,011 | |
Painted Pony Petroleum Ltd. (a)(e) | 31,400 | 349,805 | |
Painted Pony Petroleum Ltd. Class A (a) | 491,200 | 5,472,107 | |
Petrobank Energy & Resources Ltd. (a) | 236,800 | 6,092,800 | |
Petroleum Development Corp. (a) | 340,314 | 15,970,936 | |
Petrominerales Ltd. | 145,442 | 6,055,778 | |
Pinecrest Energy, Inc. (a) | 1,093,600 | 2,578,475 | |
Pinecrest Energy, Inc. (a)(e) | 840,200 | 1,981,012 | |
Resolute Energy Corp. (a)(d) | 596,900 | 10,821,797 | |
Rockhopper Exploration PLC (a) | 412,300 | 1,563,563 | |
Rodinia Oil Corp. | 361,500 | 911,892 | |
Southwestern Energy Co. (a) | 242,800 | 9,585,744 | |
Talisman Energy, Inc. | 788,000 | 19,561,061 | |
Voyager Oil & Gas, Inc. unit (a) | 210,032 | 1,369,090 | |
| 504,663,266 | ||
Oil & Gas Storage & Transport - 7.3% | |||
El Paso Corp. | 1,007,589 | 18,741,155 | |
Williams Companies, Inc. | 1,759,899 | 53,430,534 | |
| 72,171,689 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 642,209,356 | ||
TOTAL COMMON STOCKS (Cost $806,870,065) | 981,003,207 | ||
Money Market Funds - 3.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 7,934,076 | 7,934,076 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 22,229,288 | 22,229,288 | |
TOTAL MONEY MARKET FUNDS (Cost $30,163,364) | 30,163,364 |
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $837,033,429) | 1,011,166,571 |
NET OTHER ASSETS (LIABILITIES) - (2.1)% | (21,083,717) | ||
NET ASSETS - 100% | $ 990,082,854 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $2,856,063 or 0.3% of net assets. |
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 | $ 6,560 |
Fidelity Securities Lending Cash Central Fund | 181,809 |
Total | $ 188,369 |
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 | Dividend Income | Value, |
Quicksilver Gas Services LP | $ 7,280,514 | $ 9,215,750 | $ 15,529,417 | $ 133,146 | $ - |
Total | $ 7,280,514 | $ 9,215,750 | $ 15,529,417 | $ 133,146 | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 981,003,207 | $ 979,634,117 | $ 1,369,090 | $ - |
Money Market Funds | 30,163,364 | 30,163,364 | - | - |
Total Investments in Securities: | $ 1,011,166,571 | $ 1,009,797,481 | $ 1,369,090 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 82.7% |
Canada | 12.6% |
Switzerland | 2.0% |
United Kingdom | 1.4% |
Others (Individually Less Than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $459,567,689 of which $57,129,529, $193,661,853 and $208,776,307 will expire in fiscal 2017, 2018 and 2019, 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
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $21,708,591) - See accompanying schedule: Unaffiliated issuers (cost $806,870,065) | $ 981,003,207 |
|
Fidelity Central Funds (cost $30,163,364) | 30,163,364 |
|
Total Investments (cost $837,033,429) |
| $ 1,011,166,571 |
Foreign currency held at value | 1,711,121 | |
Receivable for fund shares sold | 3,088,478 | |
Dividends receivable | 1,106,288 | |
Distributions receivable from Fidelity Central Funds | 24,549 | |
Prepaid expenses | 1,886 | |
Other receivables | 10,123 | |
Total assets | 1,017,109,016 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,217,973 | |
Payable for fund shares redeemed | 1,852,070 | |
Accrued management fee | 444,363 | |
Other affiliated payables | 231,327 | |
Other payables and accrued expenses | 51,141 | |
Collateral on securities loaned, at value | 22,229,288 | |
Total liabilities | 27,026,162 | |
|
|
|
Net Assets | $ 990,082,854 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,277,989,439 | |
Undistributed net investment income | 1,437,759 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (463,463,289) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 174,118,945 | |
Net Assets, for 27,123,024 shares outstanding | $ 990,082,854 | |
Net Asset Value, offering price and redemption price per share ($990,082,854 ÷ 27,123,024 shares) | $ 36.50 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $133,146 earned from other affiliated issuers) |
| $ 12,227,534 |
Special dividends |
| 4,583,336 |
Interest |
| 365,531 |
Income from Fidelity Central Funds |
| 188,369 |
Total income |
| 17,364,770 |
|
|
|
Expenses | ||
Management fee | $ 5,306,591 | |
Transfer agent fees | 2,651,375 | |
Accounting and security lending fees | 322,621 | |
Custodian fees and expenses | 53,180 | |
Independent trustees' compensation | 5,436 | |
Registration fees | 63,366 | |
Audit | 43,545 | |
Legal | 3,872 | |
Interest | 4,316 | |
Miscellaneous | 13,175 | |
Total expenses before reductions | 8,467,477 | |
Expense reductions | (116,055) | 8,351,422 |
Net investment income (loss) | 9,013,348 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (137,474,651) | |
Other affiliated issuers | (763,403) |
|
Foreign currency transactions | (117,417) | |
Total net realized gain (loss) |
| (138,355,471) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 267,865,911 | |
Assets and liabilities in foreign currencies | (14,745) | |
Total change in net unrealized appreciation (depreciation) |
| 267,851,166 |
Net gain (loss) | 129,495,695 | |
Net increase (decrease) in net assets resulting from operations | $ 138,509,043 |
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) | $ 9,013,348 | $ (1,314,712) |
Net realized gain (loss) | (138,355,471) | 69,344,952 |
Change in net unrealized appreciation (depreciation) | 267,851,166 | 362,291,290 |
Net increase (decrease) in net assets resulting from operations | 138,509,043 | 430,321,530 |
Distributions to shareholders from net investment income | (7,289,485) | - |
Distributions to shareholders from net realized gain | (1,911,402) | - |
Total distributions | (9,200,887) | - |
Share transactions | 227,063,598 | 448,470,801 |
Reinvestment of distributions | 8,477,652 | - |
Cost of shares redeemed | (516,555,771) | (442,159,974) |
Net increase (decrease) in net assets resulting from share transactions | (281,014,521) | 6,310,827 |
Redemption fees | 41,849 | 113,377 |
Total increase (decrease) in net assets | (151,664,516) | 436,745,734 |
|
|
|
Net Assets | ||
Beginning of period | 1,141,747,370 | 705,001,636 |
End of period (including undistributed net investment income of $1,437,759 and accumulated net investment loss of $4,708,222, respectively) | $ 990,082,854 | $ 1,141,747,370 |
Other Information Shares | ||
Sold | 7,374,987 | 15,462,388 |
Issued in reinvestment of distributions | 257,265 | - |
Redeemed | (16,934,801) | (15,836,062) |
Net increase (decrease) | (9,302,549) | (373,674) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 31.34 | $ 19.16 | $ 49.91 | $ 39.61 | $ 38.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 J | (.04) | (.05) | (.05) | (.03) F |
Net realized and unrealized gain (loss) | 5.19 | 12.22 | (28.62) | 14.53 | 4.08 |
Total from investment operations | 5.48 | 12.18 | (28.67) | 14.48 | 4.05 |
Distributions from net investment income | (.26) | - | - | - | - |
Distributions from net realized gain | (.06) | - | (2.09) | (4.19) | (3.31) |
Total distributions | (.32) | - | (2.09) | (4.19) | (3.31) |
Redemption fees added to paid in capital C | - I | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 36.50 | $ 31.34 | $ 19.16 | $ 49.91 | $ 39.61 |
Total Return A, B | 17.58% | 63.57% | (59.99)% | 38.08% | 10.43% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .89% | .93% | .85% | .85% | .90% |
Expenses net of fee waivers, if any | .89% | .93% | .85% | .85% | .90% |
Expenses net of all reductions | .88% | .93% | .85% | .85% | .89% |
Net investment income (loss) | .95% J | (.13)% | (.13)% | (.10)% | (.09)% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 990,083 | $ 1,141,747 | $ 705,002 | $ 1,603,270 | $ 1,025,589 |
Portfolio turnover rate E | 167% | 110% | 81% | 68% | 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 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. J Investment income per share reflects a special dividend which amounted to $.15 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .47%. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Natural Resources Portfolio | 42.09% | 10.82% | 12.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from John Dowd, Portfolio Manager of Natural Resources Portfolio: For the 12 months ending February 28, 2011, the fund returned 42.09%, finishing higher than the 41.71% return of the S&P® North American Natural Resources Sector Index and significantly ahead of the S&P 500®. Relative to the sector benchmark, good stock picks and a significant overweighting in the oil/gas refining and marketing segment handsomely contributed to the fund's result, led by a hefty stake in Holly, a mid-continent refining company. Positioning in gold also helped, as did stock selection in coal and consumable fuels, notably takeover target Massey Energy. An overweighting in integrated oil and gas firm Marathon Oil paid off, as the stock spiked in January on news it was spinning off its refining business. Frontier Oil was another refining stock I liked, and its stock soared in late February on a proposed merger with Holly. A depreciating U.S. dollar boosted the fund's foreign holdings. Conversely, the fund was hurt by stock selection and a lighter-than-index stake in integrated oil and gas, including stakes in ConocoPhillips, which rebounded during the period, and benchmark heavyweight Chevron, which is more leveraged to oil than gas, and its stock tends to do well when gas prices are falling. Conoco was sold from the fund by period end. Stock picks and an overweighting in oil and gas drilling also detracted, as I underestimated the negative impact of the deepwater drilling moratorium after the Gulf of Mexico oil disaster. Within that group, I had a poorly timed investment in Transocean, owner of the Gulf's ill-fated Deepwater Horizon rig. Shares of natural gas firm Southwestern Energy were hurt by falling gas prices, and I sold the fund's position 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
Natural Resources Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 7.1 | 9.0 |
Occidental Petroleum Corp. | 5.7 | 4.2 |
Schlumberger Ltd. | 4.7 | 5.1 |
Marathon Oil Corp. | 4.3 | 4.8 |
Halliburton Co. | 3.3 | 4.3 |
Baker Hughes, Inc. | 3.0 | 0.9 |
Apache Corp. | 3.0 | 2.4 |
National Oilwell Varco, Inc. | 3.0 | 1.8 |
Transocean Ltd. | 2.9 | 0.9 |
Holly Corp. | 2.7 | 1.2 |
| 39.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Oil, Gas & Consumable Fuels | 52.1% |
|
![]() | Energy Equipment & Services | 25.8% |
|
![]() | Metals & Mining | 14.7% |
|
![]() | Chemicals | 2.1% |
|
![]() | Containers & Packaging | 1.8% |
|
![]() | All Others* | 3.5% |
|
As of August 31, 2010 | |||
![]() | Oil, Gas & Consumable Fuels | 56.2% |
|
![]() | Energy Equipment & Services | 20.5% |
|
![]() | Metals & Mining | 13.9% |
|
![]() | Containers & Packaging | 3.4% |
|
![]() | Construction & Engineering | 3.0% |
|
![]() | All Others* | 3.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Natural Resources Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.4% | |||
Shares | Value | ||
CHEMICALS - 2.1% | |||
Fertilizers & Agricultural Chemicals - 0.2% | |||
CF Industries Holdings, Inc. | 25,400 | $ 3,588,512 | |
Specialty Chemicals - 1.9% | |||
LyondellBasell Industries NV Class A (a) | 1,009,700 | 38,449,376 | |
TOTAL CHEMICALS | 42,037,888 | ||
CONSTRUCTION & ENGINEERING - 1.6% | |||
Construction & Engineering - 1.6% | |||
Foster Wheeler AG (a) | 196,200 | 7,094,592 | |
Jacobs Engineering Group, Inc. (a) | 362,600 | 18,151,756 | |
KBR, Inc. | 199,200 | 6,533,760 | |
| 31,780,108 | ||
CONTAINERS & PACKAGING - 1.8% | |||
Metal & Glass Containers - 1.7% | |||
Ball Corp. | 261,400 | 9,436,540 | |
Crown Holdings, Inc. (a) | 409,500 | 15,757,560 | |
Owens-Illinois, Inc. (a) | 249,600 | 7,610,304 | |
| 32,804,404 | ||
Paper Packaging - 0.1% | |||
Temple-Inland, Inc. | 121,100 | 2,832,529 | |
TOTAL CONTAINERS & PACKAGING | 35,636,933 | ||
ENERGY EQUIPMENT & SERVICES - 25.8% | |||
Oil & Gas Drilling - 7.7% | |||
Aker Drilling ASA (a) | 512,500 | 1,903,809 | |
Discovery Offshore S.A. (a)(e) | 582,200 | 1,299,716 | |
Ensco International Ltd. ADR (d) | 564,600 | 31,674,060 | |
Hercules Offshore, Inc. (a) | 254,000 | 1,254,760 | |
Noble Corp. | 442,200 | 19,770,762 | |
Northern Offshore Ltd. (a)(d) | 945,000 | 2,253,094 | |
Ocean Rig UDW, Inc. (a) | 437,800 | 9,167,583 | |
Rowan Companies, Inc. (a) | 149,100 | 6,362,097 | |
Seadrill Ltd. (d) | 478,500 | 18,236,547 | |
Transocean Ltd. (a) | 673,800 | 57,023,694 | |
Tuscany International Drilling, Inc. (a) | 1,106,700 | 2,210,551 | |
| 151,156,673 | ||
Oil & Gas Equipment & Services - 18.1% | |||
Baker Hughes, Inc. | 834,500 | 59,291,225 | |
Dresser-Rand Group, Inc. (a) | 134,200 | 6,613,376 | |
Halliburton Co. | 1,372,800 | 64,439,232 | |
ION Geophysical Corp. (a) | 102,400 | 1,312,768 | |
National Oilwell Varco, Inc. | 741,158 | 58,973,942 | |
Oceaneering International, Inc. (a) | 390,000 | 32,615,700 | |
Oil States International, Inc. (a) | 172,200 | 12,534,438 | |
Saipem SpA | 92,487 | 4,671,333 | |
Schlumberger Ltd. | 995,892 | 93,036,231 | |
Schoeller-Bleckmann Oilfield Equipment AG | 47,800 | 4,076,575 | |
TSC Offshore Group Ltd. (a) | 3,250,000 | 826,271 | |
| |||
Shares | Value | ||
Weatherford International Ltd. (a) | 663,600 | $ 16,045,848 | |
Willbros Group, Inc. (a) | 314,600 | 3,573,856 | |
| 358,010,795 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 509,167,468 | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
China Gas Holdings Ltd. | 1,926,892 | 722,461 | |
METALS & MINING - 14.7% | |||
Diversified Metals & Mining - 4.9% | |||
Anglo American PLC (United Kingdom) | 162,100 | 8,785,449 | |
Freeport-McMoRan Copper & Gold, Inc. | 800,234 | 42,372,390 | |
Grande Cache Coal Corp. (a) | 166,500 | 1,601,143 | |
MacArthur Coal Ltd. | 320,987 | 3,882,228 | |
Teck Resources Ltd. Class B (sub. vtg.) | 416,600 | 23,055,084 | |
Thompson Creek Metals Co., Inc. (a)(d) | 315,600 | 4,159,259 | |
Walter Energy, Inc. | 107,200 | 12,972,272 | |
| 96,827,825 | ||
Gold - 8.2% | |||
AngloGold Ashanti Ltd. sponsored ADR | 145,600 | 7,111,104 | |
Barrick Gold Corp. | 507,900 | 26,816,074 | |
Goldcorp, Inc. | 722,200 | 34,509,449 | |
Harmony Gold Mining Co. Ltd. sponsored ADR | 607,000 | 7,150,460 | |
IAMGOLD Corp. | 711,400 | 15,081,314 | |
Kinross Gold Corp. | 309,467 | 4,906,864 | |
Newcrest Mining Ltd. | 655,457 | 25,336,079 | |
Newmont Mining Corp. | 631,800 | 34,919,586 | |
Yamana Gold, Inc. | 547,200 | 6,957,961 | |
| 162,788,891 | ||
Precious Metals & Minerals - 0.9% | |||
Pan American Silver Corp. | 132,400 | 5,176,841 | |
Silver Wheaton Corp. (a) | 287,000 | 12,203,964 | |
| 17,380,805 | ||
Steel - 0.7% | |||
Reliance Steel & Aluminum Co. | 82,400 | 4,559,192 | |
United States Steel Corp. | 152,600 | 8,772,974 | |
| 13,332,166 | ||
TOTAL METALS & MINING | 290,329,687 | ||
OIL, GAS & CONSUMABLE FUELS - 52.1% | |||
Coal & Consumable Fuels - 4.8% | |||
Alpha Natural Resources, Inc. (a) | 534,414 | 28,975,927 | |
Massey Energy Co. | 718,400 | 45,496,272 | |
Peabody Energy Corp. | 303,000 | 19,843,470 | |
| 94,315,669 | ||
Integrated Oil & Gas - 21.7% | |||
BG Group PLC | 157,735 | 3,837,826 | |
Chevron Corp. | 232,200 | 24,090,750 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Integrated Oil & Gas - continued | |||
Exxon Mobil Corp. | 1,627,800 | $ 139,225,735 | |
Hess Corp. | 250,800 | 21,827,124 | |
Marathon Oil Corp. | 1,694,500 | 84,047,200 | |
Occidental Petroleum Corp. | 1,113,100 | 113,502,807 | |
Royal Dutch Shell PLC Class B ADR | 450,000 | 32,454,000 | |
Suncor Energy, Inc. | 200,400 | 9,421,121 | |
| 428,406,563 | ||
Oil & Gas Exploration & Production - 16.2% | |||
Anadarko Petroleum Corp. | 193,200 | 15,809,556 | |
Apache Corp. | 474,800 | 59,169,576 | |
Bankers Petroleum Ltd. (a) | 933,300 | 9,061,538 | |
Chesapeake Energy Corp. | 606,600 | 21,601,026 | |
Cimarex Energy Co. | 301,100 | 34,966,743 | |
Concho Resources, Inc. (a) | 18,800 | 2,002,576 | |
Gran Tierra Energy, Inc. (a) | 759,100 | 7,065,394 | |
Newfield Exploration Co. (a) | 333,400 | 24,268,186 | |
Niko Resources Ltd. | 35,200 | 3,007,720 | |
Noble Energy, Inc. | 149,400 | 13,843,404 | |
Northern Oil & Gas, Inc. (a) | 21,800 | 692,586 | |
Pacific Rubiales Energy Corp. | 147,300 | 4,938,057 | |
Painted Pony Petroleum Ltd. Class A (a) | 278,300 | 3,100,341 | |
Petrobank Energy & Resources Ltd. (a) | 47,300 | 1,217,016 | |
Petroleum Development Corp. (a) | 26,900 | 1,262,417 | |
Petrominerales Ltd. | 83,051 | 3,458,000 | |
Pioneer Natural Resources Co. | 174,800 | 17,889,032 | |
Talisman Energy, Inc. | 2,088,900 | 51,854,187 | |
Toreador Resources Corp. (a)(d) | 102,400 | 1,553,408 | |
Vermilion Energy, Inc. | 17,600 | 925,076 | |
Whiting Petroleum Corp. (a) | 629,000 | 41,098,860 | |
| 318,784,699 | ||
Oil & Gas Refining & Marketing - 8.8% | |||
CVR Energy, Inc. (a) | 777,200 | 14,689,080 | |
Frontier Oil Corp. | 1,068,827 | 29,820,273 | |
Holly Corp. | 918,100 | 52,460,234 | |
Keyera Corp. | 55,400 | 2,154,967 | |
Petroplus Holdings AG | 122,930 | 1,991,600 | |
Tesoro Corp. (a) | 1,216,100 | 28,918,858 | |
Valero Energy Corp. | 1,138,400 | 32,080,112 | |
Western Refining, Inc. (a)(d) | 751,202 | 12,222,057 | |
| 174,337,181 | ||
Oil & Gas Storage & Transport - 0.6% | |||
El Paso Corp. | 593,500 | 11,039,100 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,026,883,212 | ||
| |||
Shares | Value | ||
PAPER & FOREST PRODUCTS - 0.2% | |||
Paper Products - 0.2% | |||
Domtar Corp. | 41,900 | $ 3,662,060 | |
TOTAL COMMON STOCKS (Cost $1,445,473,723) | 1,940,219,817 |
Convertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% | ||||
Semiconductors - 0.0% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 710,000 | 737,513 |
Money Market Funds - 3.3% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.19% (b) | 36,991,027 | 36,991,027 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 27,791,851 | 27,791,851 | |
TOTAL MONEY MARKET FUNDS (Cost $64,782,878) | 64,782,878 |
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $1,510,966,601) | 2,005,740,208 |
NET OTHER ASSETS (LIABILITIES) - (1.7)% | (33,976,157) | ||
NET ASSETS - 100% | $ 1,971,764,051 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $1,299,716 or 0.1% of net assets. |
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 | $ 19,517 |
Fidelity Securities Lending Cash Central Fund | 154,310 |
Total | $ 173,827 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,940,219,817 | $ 1,911,001,510 | $ 29,218,307 | $ - |
Convertible Bonds | 737,513 | - | 737,513 | - |
Money Market Funds | 64,782,878 | 64,782,878 | - | - |
Total Investments in Securities: | $ 2,005,740,208 | $ 1,975,784,388 | $ 29,955,820 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 68.6% |
Canada | 11.3% |
Switzerland | 5.2% |
Netherlands Antilles | 4.7% |
United Kingdom | 3.8% |
Netherlands | 1.9% |
Australia | 1.5% |
Bermuda | 1.0% |
Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $165,800,195 all of which will expire in fiscal 2018. 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
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,089,963) - See accompanying schedule: Unaffiliated issuers (cost $1,446,183,723) | $ 1,940,957,330 |
|
Fidelity Central Funds (cost $64,782,878) | 64,782,878 |
|
Total Investments (cost $1,510,966,601) |
| $ 2,005,740,208 |
Receivable for investments sold | 4,929,666 | |
Receivable for fund shares sold | 10,188,223 | |
Dividends receivable | 2,305,987 | |
Interest receivable | 12,647 | |
Distributions receivable from Fidelity Central Funds | 5,322 | |
Prepaid expenses | 2,667 | |
Other receivables | 12,688 | |
Total assets | 2,023,197,408 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,779,329 | |
Payable for fund shares redeemed | 2,540,359 | |
Accrued management fee | 865,850 | |
Other affiliated payables | 389,328 | |
Other payables and accrued expenses | 66,640 | |
Collateral on securities loaned, at value | 27,791,851 | |
Total liabilities | 51,433,357 | |
|
|
|
Net Assets | $ 1,971,764,051 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,663,166,976 | |
Undistributed net investment income | 458,791 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (186,636,401) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 494,774,685 | |
Net Assets, for 50,471,830 shares outstanding | $ 1,971,764,051 | |
Net Asset Value, offering price and redemption price per share ($1,971,764,051 ÷ 50,471,830 shares) | $ 39.07 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,185,794 |
Interest |
| 33,955 |
Income from Fidelity Central Funds |
| 173,827 |
Total income |
| 18,393,576 |
|
|
|
Expenses | ||
Management fee | $ 8,148,746 | |
Transfer agent fees | 3,906,472 | |
Accounting and security lending fees | 462,315 | |
Custodian fees and expenses | 65,572 | |
Independent trustees' compensation | 7,923 | |
Registration fees | 84,180 | |
Audit | 68,766 | |
Legal | 5,234 | |
Interest | 3,113 | |
Miscellaneous | 18,195 | |
Total expenses before reductions | 12,770,516 | |
Expense reductions | (82,521) | 12,687,995 |
Net investment income (loss) | 5,705,581 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 213,484,048 | |
Foreign currency transactions | 191,817 | |
Total net realized gain (loss) |
| 213,675,865 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 324,575,808 | |
Assets and liabilities in foreign currencies | 239 | |
Total change in net unrealized appreciation (depreciation) |
| 324,576,047 |
Net gain (loss) | 538,251,912 | |
Net increase (decrease) in net assets resulting from operations | $ 543,957,493 |
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) | $ 5,705,581 | $ (141,840) |
Net realized gain (loss) | 213,675,865 | 98,712,879 |
Change in net unrealized appreciation (depreciation) | 324,576,047 | 461,803,078 |
Net increase (decrease) in net assets resulting from operations | 543,957,493 | 560,374,117 |
Distributions to shareholders from net investment income | (5,328,489) | (813,938) |
Distributions to shareholders from net realized gain | (4,021,778) | (5,426,262) |
Total distributions | (9,350,267) | (6,240,200) |
Share transactions | 511,028,949 | 501,390,989 |
Reinvestment of distributions | 8,986,769 | 6,022,872 |
Cost of shares redeemed | (567,758,885) | (499,894,528) |
Net increase (decrease) in net assets resulting from share transactions | (47,743,167) | 7,519,333 |
Redemption fees | 42,708 | 93,909 |
Total increase (decrease) in net assets | 486,906,767 | 561,747,159 |
|
|
|
Net Assets | ||
Beginning of period | 1,484,857,284 | 923,110,125 |
End of period (including undistributed net investment income of $458,791 and undistributed net investment income | $ 1,971,764,051 | $ 1,484,857,284 |
Other Information Shares | ||
Sold | 16,035,557 | 20,187,018 |
Issued in reinvestment of distributions | 269,618 | 224,232 |
Redeemed | (19,511,353) | (20,277,385) |
Net increase (decrease) | (3,206,178) | 133,865 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 27.66 | $ 17.24 | $ 39.00 | $ 28.75 | $ 25.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .12 | - H | .01 | .03 | .08 |
Net realized and unrealized gain (loss) | 11.49 | 10.54 | (21.29) | 11.74 | 3.81 |
Total from investment operations | 11.61 | 10.54 | (21.28) | 11.77 | 3.89 |
Distributions from net investment income | (.11) | (.02) | (.01) | (.03) | (.07) |
Distributions from net realized gain | (.09) | (.10) | (.48) | (1.50) | (.95) |
Total distributions | (.20) | (.12) | (.49) | (1.53) | (1.02) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 39.07 | $ 27.66 | $ 17.24 | $ 39.00 | $ 28.75 |
Total Return A, B | 42.09% | 61.13% | (55.24)% | 41.62% | 15.18% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .88% | .93% | .85% | .85% | .93% |
Expenses net of fee waivers, if any | .88% | .93% | .85% | .85% | .93% |
Expenses net of all reductions | .87% | .92% | .84% | .85% | .92% |
Net investment income (loss) | .39% | (.01)% | .03% | .09% | .31% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,971,764 | $ 1,484,857 | $ 923,110 | $ 2,428,375 | $ 958,443 |
Portfolio turnover rate E | 113% | 85% | 136% | 44% | 116% |
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, 2011
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 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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
Debt securities, including restricted securities, are valued based on evaluated prices 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing NAV each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships, deferred trustees compensation, net operating losses, capital loss carry forwards, 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 cost | Gross unrealized | Gross unrealized | Net unrealized |
Energy Portfolio | $ 2,187,387,515 | $ 971,786,036 | $ (11,288,951) | $ 960,497,085 |
Energy Service Portfolio | 1,322,816,538 | 756,404,418 | (1,051,631) | 755,352,787 |
Natural Gas Portfolio | 840,929,030 | 184,092,296 | (13,854,755) | 170,237,541 |
Natural Resources Portfolio | 1,534,725,702 | 483,352,611 | (12,338,105) | 471,014,506 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Capital loss | Net unrealized |
Energy Portfolio | $ 3,998,149 | $ (162,227,335) | $ 960,491,014 |
Energy Service Portfolio | - | (195,879,771) | 755,353,150 |
Natural Gas Portfolio | 1,437,759 | (459,567,689) | 170,223,344 |
Natural Resources Portfolio | 3,381,687 | (165,800,195) | 471,015,584 |
The tax character of distributions paid was as follows:
February 28, 2011 | Ordinary |
Energy Portfolio | $ 10,965,367 |
Energy Service Portfolio | - |
Natural Gas Portfolio | 9,200,887 |
Natural Resources Portfolio | 9,350,267 |
February 28, 2010 | Ordinary |
Energy Portfolio | $ 4,448,317 |
Energy Service Portfolio | 787,232 |
Natural Gas Portfolio | - |
Natural Resources Portfolio | 6,240,200 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 | 2,350,577,482 | 2,256,467,981 |
Energy Service Portfolio | 1,275,864,754 | 1,135,930,210 |
Natural Gas Portfolio | 1,580,115,657 | 1,857,098,712 |
Natural Resources Portfolio | 1,641,263,057 | 1,721,438,281 |
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 |
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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .25% |
Energy Service Portfolio | .24% |
Natural Gas Portfolio | .28% |
Natural Resources Portfolio | .27% |
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 | $ 23,143 |
Energy Service Portfolio | 9,717 |
Natural Gas Portfolio | 25,084 |
Natural Resources Portfolio | 14,940 |
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 Average | Interest |
Energy Portfolio | Borrower | $ 8,838,600 | .46% | $ 2,836 |
Energy Service Portfolio | Borrower | 7,386,310 | .45% | 2,700 |
Natural Gas Portfolio | Borrower | 5,546,178 | .45% | 3,090 |
Natural Resources Portfolio | Borrower | 6,318,564 | .45% | 3,113 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Energy Portfolio | $ 7,810 |
Energy Service Portfolio | 4,787 |
Natural Gas Portfolio | 3,815 |
Natural Resources Portfolio | 5,427 |
During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. During the period, there were no securities loaned to FCM. Security lending activity as of and during the period was as follows:
| Total Security |
Energy Portfolio | $ 231,242 |
Energy Service Portfolio | 111,772 |
Natural Gas Portfolio | 181,809 |
Natural Resources Portfolio | 154,310 |
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 Rate | Interest Expense |
Natural Gas Portfolio | $ 10,478,667 | .70% | $ 1,226 |
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 Service |
Energy Portfolio | $ 74,463 |
Energy Service Portfolio | 59,440 |
Natural Gas Portfolio | 116,055 |
Natural Resources Portfolio | 82,521 |
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.
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, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 11, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 |
Energy Portfolio | 04/07/11 | 04/06/11 | $0.05 | $0.03 |
Energy Service Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.00 |
Natural Gas Portfolio | 04/07/11 | 04/06/11 | $0.05 | $0.00 |
Natural Resources Portfolio | 04/07/11 | 04/06/11 | $0.01 | $0.06 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Energy Portfolio | 0% | 100% |
Natural Gas Portfolio | 100% | 100% |
Natural Resources 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 2010 | December 2010 |
Energy Portfolio | 0% | 100% |
Natural Gas Portfolio | 100% | 100% |
Natural Resources Portfolio | 100% | 100% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 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.
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
SELNR-UANNPRO-0411
1.910419.101
Fidelity®
Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
(formerly Home Finance Portfolio)
Financial Services Portfolio
Insurance Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Banking Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Brokerage and Investment Management Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Consumer Finance Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Financial Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Insurance Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
| |
Prospectus | P-1 |
|
Annual Report
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Note to shareholders
At a shareholder meeting on November 16, 2010, shareholders of Home Finance Portfolio approved changes to certain of the fund's fundamental investment policies. As a result, effective December 1, 2010, the fund's investment strategy was broadened to include an emphasis on companies principally engaged in providing products and services associated with consumer finance. At the same time, the fund was renamed Consumer Finance Portfolio and changed its industry benchmark from the MSCI® U.S. IM Thrifts & Mortgage Finance 25/50 Index to the S&P® Consumer Finance 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, 2010 to February 28, 2011).
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 | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,278.40 | $ 4.97 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Brokerage and Investment Management Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,263.80 | $ 4.88 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Consumer Finance Portfolio | 1.02% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,203.70 | $ 5.57 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.74 | $ 5.11 |
Financial Services Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,222.60 | $ 5.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Insurance Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,237.10 | $ 5.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
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
Banking Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Banking Portfolio | 13.83% | -6.72% | -0.01% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Vincent Montemaggiore, Portfolio Manager of Banking Portfolio: For the year, the fund returned 13.83%, outperforming the 11.94% gain of its industry benchmark, the MSCI® U.S. IM Banks 25/50 Index, but trailing the broadly based S&P 500®. Strong stock selection among regional banks fueled the fund's outperformance versus the MSCI index. Solid positioning in diversified banks and positive security selection in the consumer finance group also helped. Adverse stock picking in thrifts/mortgage finance - primarily the result of one investment - was more than offset by substantially underweighting this lagging category. A modest cash stake provided a further boost. The top individual contributors were two Los Angeles-based regional banks: Cathay General Bancorp and Center Financial, the latter of which is not in the benchmark. I took profits and sold the fund's Cathay General position during the period. An out-of-benchmark investment in credit card issuer Capital One Financial also helped, as did Texas-based regional bank Sterling Bancshares, which agreed to be acquired during the period. On the downside, security selection in other diversified financial services and data processing/outsourced services dampened relative performance. As for individual holdings, untimely ownership of mortgage insurer Radian Group detracted, along with an overweighting in Los Angeles-based regional bank Wilshire Bancorp and a non-index position in Bank of America.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 13.8 | 11.7 |
U.S. Bancorp, Delaware | 7.5 | 9.7 |
BB&T Corp. | 6.4 | 4.9 |
SunTrust Banks, Inc. | 5.6 | 4.7 |
Regions Financial Corp. | 5.3 | 4.7 |
Comerica, Inc. | 3.7 | 4.0 |
Huntington Bancshares, Inc. | 3.6 | 2.5 |
Zions Bancorporation | 3.5 | 2.0 |
City National Corp. | 2.7 | 2.4 |
Associated Banc-Corp. | 2.6 | 2.7 |
| 54.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Commercial Banks | 83.3% |
|
![]() | Diversified Financial Services | 6.4% |
|
![]() | Capital Markets | 3.6% |
|
![]() | Thrifts & Mortgage Finance | 3.2% |
|
![]() | Consumer Finance | 2.4% |
|
![]() | All Others* | 1.1% |
|
As of August 31, 2010 | |||
![]() | Commercial Banks | 82.7% |
|
![]() | Diversified Financial Services | 5.4% |
|
![]() | Thrifts & Mortgage Finance | 4.5% |
|
![]() | Consumer Finance | 2.6% |
|
![]() | Capital Markets | 2.5% |
|
![]() | All Others* | 2.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Banking Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
CAPITAL MARKETS - 3.6% | |||
Asset Management & Custody Banks - 2.5% | |||
Bank of New York Mellon Corp. | 116,703 | $ 3,546,604 | |
State Street Corp. | 217,700 | 9,735,544 | |
| 13,282,148 | ||
Investment Banking & Brokerage - 1.1% | |||
Morgan Stanley | 186,000 | 5,520,480 | |
TOTAL CAPITAL MARKETS | 18,802,628 | ||
COMMERCIAL BANKS - 83.3% | |||
Diversified Banks - 25.0% | |||
Comerica, Inc. | 495,800 | 19,286,620 | |
U.S. Bancorp, Delaware | 1,403,200 | 38,910,736 | |
Wells Fargo & Co. | 2,206,192 | 71,171,754 | |
| 129,369,110 | ||
Regional Banks - 58.3% | |||
Associated Banc-Corp. | 930,320 | 13,461,730 | |
Bank of the Ozarks, Inc. (d) | 259,300 | 11,162,865 | |
BB&T Corp. | 1,208,400 | 33,351,840 | |
Capital City Bank Group, Inc. (d) | 71,311 | 896,379 | |
CapitalSource, Inc. | 98,000 | 742,840 | |
Center Financial Corp. (a) | 1,384,750 | 11,036,458 | |
Chemical Financial Corp. | 136,000 | 2,736,320 | |
CIT Group, Inc. (a) | 262,100 | 11,354,172 | |
City National Corp. | 241,300 | 14,214,983 | |
CVB Financial Corp. (d) | 454,400 | 3,798,784 | |
First Bancorp, North Carolina | 307,600 | 4,534,024 | |
First Midwest Bancorp, Inc., Delaware | 356,000 | 4,296,920 | |
Glacier Bancorp, Inc. | 74,700 | 1,167,561 | |
Huntington Bancshares, Inc. | 2,713,551 | 18,560,689 | |
MB Financial, Inc. | 266,100 | 5,473,677 | |
Nara Bancorp, Inc. (a) | 600,900 | 6,297,432 | |
Oriental Financial Group, Inc. | 213,180 | 2,551,765 | |
Pacific Continental Corp. | 490,290 | 4,937,220 | |
PacWest Bancorp | 347,000 | 7,186,370 | |
PNC Financial Services Group, Inc. | 200,141 | 12,348,700 | |
PrivateBancorp, Inc. | 392,000 | 5,613,440 | |
Regions Financial Corp. | 3,618,300 | 27,643,812 | |
Sandy Spring Bancorp, Inc. | 290,000 | 5,536,100 | |
SunTrust Banks, Inc. | 966,600 | 29,162,322 | |
Susquehanna Bancshares, Inc. | 581,300 | 5,557,228 | |
SVB Financial Group (a) | 223,665 | 12,118,170 | |
Synovus Financial Corp. | 2,229,200 | 5,684,460 | |
West Coast Bancorp (a) | 1,651,800 | 5,566,566 | |
Western Alliance Bancorp. (a)(d) | 1,117,500 | 9,062,925 | |
Wilshire Bancorp, Inc. (d) | 503,763 | 3,329,873 | |
Wintrust Financial Corp. | 136,300 | 4,576,954 | |
Zions Bancorporation (d) | 777,700 | 18,167,072 | |
| 302,129,651 | ||
TOTAL COMMERCIAL BANKS | 431,498,761 | ||
| |||
Shares | Value | ||
CONSUMER FINANCE - 2.4% | |||
Consumer Finance - 2.4% | |||
Capital One Financial Corp. | 252,900 | $ 12,586,833 | |
DIVERSIFIED FINANCIAL SERVICES - 6.4% | |||
Other Diversified Financial Services - 6.4% | |||
Bank of America Corp. | 618,648 | 8,840,480 | |
Citigroup, Inc. (a) | 2,752,100 | 12,879,828 | |
JPMorgan Chase & Co. | 238,600 | 11,140,234 | |
NBH Holdings Corp. Class A (a)(e) | 13,300 | 229,425 | |
| 33,089,967 | ||
IT SERVICES - 1.0% | |||
Data Processing & Outsourced Services - 1.0% | |||
Visa, Inc. Class A | 67,400 | 4,923,570 | |
THRIFTS & MORTGAGE FINANCE - 3.2% | |||
Thrifts & Mortgage Finance - 3.2% | |||
BankUnited, Inc. | 3,700 | 104,895 | |
MGIC Investment Corp. (a)(d) | 212,592 | 1,826,165 | |
New York Community Bancorp, Inc. | 179,300 | 3,345,738 | |
Ocwen Financial Corp. (a) | 367,300 | 3,886,034 | |
Radian Group, Inc. | 537,887 | 3,797,482 | |
WSFS Financial Corp. | 80,900 | 3,787,738 | |
| 16,748,052 | ||
TOTAL COMMON STOCKS (Cost $495,369,917) | 517,649,811 | ||
Money Market Funds - 1.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 352 | 352 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 9,670,163 | 9,670,163 | |
TOTAL MONEY MARKET FUNDS (Cost $9,670,515) | 9,670,515 |
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $505,040,432) | 527,320,326 | |
NET OTHER ASSETS (LIABILITIES) - (1.7)% | (9,003,396) | |
NET ASSETS - 100% | $ 518,316,930 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $229,425 or 0.0% of net assets. |
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 | $ 24,575 |
Fidelity Securities Lending Cash Central Fund | 76,987 |
Total | $ 101,562 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 517,649,811 | $ 517,420,386 | $ 229,425 | $ - |
Money Market Funds | 9,670,515 | 9,670,515 | - | - |
Total Investments in Securities: | $ 527,320,326 | $ 527,090,901 | $ 229,425 | $ - |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $26,069,664 of which $16,134,125 and $9,935,539 will expire in fiscal 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
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,393,994) - See accompanying schedule: Unaffiliated issuers (cost $495,369,917) | $ 517,649,811 |
|
Fidelity Central Funds (cost $9,670,515) | 9,670,515 |
|
Total Investments (cost $505,040,432) |
| $ 527,320,326 |
Receivable for investments sold | 9,800,596 | |
Receivable for fund shares sold | 888,068 | |
Dividends receivable | 201,870 | |
Distributions receivable from Fidelity Central Funds | 2,075 | |
Prepaid expenses | 964 | |
Other receivables | 13,262 | |
Total assets | 538,227,161 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,900,967 | |
Payable for fund shares redeemed | 1,921,754 | |
Accrued management fee | 252,586 | |
Notes payable to affiliates | 4,004,457 | |
Other affiliated payables | 128,490 | |
Other payables and accrued | 31,814 | |
Collateral on securities loaned, at value | 9,670,163 | |
Total liabilities | 19,910,231 | |
|
|
|
Net Assets | $ 518,316,930 | |
Net Assets consist of: |
| |
Paid in capital | $ 573,707,816 | |
Accumulated net investment loss | (131) | |
Accumulated undistributed net realized gain (loss) on investments | (77,670,383) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign | 22,279,628 | |
Net Assets, for 27,399,426 shares outstanding | $ 518,316,930 | |
Net Asset Value, offering price and redemption price per share ($518,316,930 ÷ 27,399,426 shares) | $ 18.92 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,874,895 |
Income from Fidelity Central Funds |
| 101,562 |
Total income |
| 3,976,457 |
|
|
|
Expenses | ||
Management fee | $ 2,675,061 | |
Transfer agent fees | 1,232,170 | |
Accounting and security lending fees | 189,007 | |
Custodian fees and expenses | 26,953 | |
Independent trustees' compensation | 2,636 | |
Registration fees | 70,407 | |
Audit | 38,572 | |
Legal | 1,677 | |
Interest | 1,769 | |
Miscellaneous | 5,307 | |
Total expenses before reductions | 4,243,559 | |
Expense reductions | (67,394) | 4,176,165 |
Net investment income (loss) | (199,708) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,974,333 | |
Investment not meeting investment restrictions | (628) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 628 | |
Total net realized gain (loss) |
| 36,974,333 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 6,458,734 | |
Assets and liabilities in foreign currencies | 163 | |
Total change in net unrealized appreciation (depreciation) |
| 6,458,897 |
Net gain (loss) | 43,433,230 | |
Net increase (decrease) in net assets resulting from operations | $ 43,233,522 |
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) | $ (199,708) | $ 1,329,319 |
Net realized gain (loss) | 36,974,333 | 9,348,518 |
Change in net unrealized appreciation (depreciation) | 6,458,897 | 146,258,873 |
Net increase (decrease) in net assets resulting from operations | 43,233,522 | 156,936,710 |
Distributions to shareholders from net investment income | (262,814) | (4,369,898) |
Share transactions | 506,892,321 | 246,260,700 |
Reinvestment of distributions | 253,072 | 4,210,966 |
Cost of shares redeemed | (391,329,054) | (194,829,173) |
Net increase (decrease) in net assets resulting from share transactions | 115,816,339 | 55,642,493 |
Redemption fees | 92,169 | 70,895 |
Total increase (decrease) in net assets | 158,879,216 | 208,280,200 |
|
|
|
Net Assets | ||
Beginning of period | 359,437,714 | 151,157,514 |
End of period (including accumulated net investment loss of $131 and undistributed net investment income of $163,741, respectively) | $ 518,316,930 | $ 359,437,714 |
Other Information Shares | ||
Sold | 28,430,489 | 18,721,629 |
Issued in reinvestment of distributions | 13,174 | 335,981 |
Redeemed | (22,657,917) | (14,172,266) |
Net increase (decrease) | 5,785,746 | 4,885,344 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 16.63 | $ 9.04 | $ 22.24 | $ 33.52 | $ 36.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | (.01) | .06 | .67 | .81 | .78 |
Net realized and unrealized gain (loss) | 2.31 | 7.74 | (13.32) | (9.57) | 2.12 |
Total from investment operations | 2.30 | 7.80 | (12.65) | (8.76) | 2.90 |
Distributions from net investment income | (.01) | (.21) | (.51) | (.64) | (.71) |
Distributions from net realized gain | - | - | (.05) | (1.88) | (5.39) |
Total distributions | (.01) | (.21) | (.56) | (2.52) | (6.10) |
Redemption fees added to paid in capitalC | -H | -H | .01 | -H | .01 |
Net asset value, end of period | $ 18.92 | $ 16.63 | $ 9.04 | $ 22.24 | $ 33.52 |
Total ReturnA,B | 13.83% | 87.04% | (57.85)% | (27.30)% | 8.23% |
Ratios to Average Net AssetsD,F |
|
|
|
|
|
Expenses before reductions | .89% | .95% | .93% | .91% | .93% |
Expenses net of fee waivers, if any | .89% | .95% | .93% | .91% | .93% |
Expenses net of all reductions | .88% | .94% | .93% | .90% | .91% |
Net investment income (loss) | (.04)% | .46% | 3.86% | 2.75% | 2.15% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 518,317 | $ 359,438 | $ 151,158 | $ 293,767 | $ 349,271 |
Portfolio turnover rateE | 73% | 105% | 199% | 86% | 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
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Brokerage and Investment Management Portfolio | 15.03% | -0.83% | 5.40% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Benjamin Hesse, Portfolio Manager of Brokerage and Investment Management Portfolio: For the 12 months ending February 28, 2011, the fund returned 15.03%, lagging the 19.57% result of the fund's industry benchmark, the MSCI® U.S. IM Capital Markets 25/50 Index, and the 22.57% advance of the broadly based S&P 500® Index. Relative to the industry benchmark, security selection and a sizable underweighting in asset management/custody banks detracted from performance, as did an out-of-benchmark stake in regional banks. Lack of exposure to asset managers Ameriprise Financial and American Capital, both of whose shares rallied sharply, especially hindered performance. Owning Artio Global Investors, a small U.S. investment manager focused on European equities, also hurt, as its shares declined amid worries over the sovereign debt crisis in Europe. Detractors from other segments included Genworth Financial, a multi-line insurer pressured by weakness in its mortgage insurance business, and Credit Suisse Group, a Swiss diversified capital markets company held back by weaker-than-expected earnings. Neither Genworth nor Credit Suisse was in the MSCI index, and Credit Suisse was not in the portfolio at period end. The fund picked up ground from strong stock selection in out-of-benchmark segments, including specialized finance and other diversified financial services. Top individual contributors included BM&F Bovespa, the Brazilian stock exchange, and UBS, a Swiss diversified capital markets company. Shares of BM&F Bovespa rallied nicely in the first half of the year, as trading volume increased. This stock was no longer held at period end. UBS's stock price climbed as the company reported stronger earnings growth than its competitors. Lastly, the fund benefited from a big position in Citigroup, a large and well-known diversified financial services company whose shares posted a sharp gain, driven by better-than-expected profits for most of 2010. None of these top contributors was in the MSCI index.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Goldman Sachs Group, Inc. | 5.0 | 2.5 |
Citigroup, Inc. | 4.9 | 5.4 |
Invesco Ltd. | 4.9 | 3.3 |
Morgan Stanley | 4.9 | 5.5 |
Affiliated Managers Group, Inc. | 4.7 | 2.3 |
E*TRADE Financial Corp. | 4.2 | 0.0 |
Comerica, Inc. | 4.2 | 0.0 |
Bursa Malaysia Bhd | 4.0 | 0.0 |
Visa, Inc. Class A | 3.9 | 0.0 |
MF Global Holdings Ltd. | 3.7 | 3.5 |
| 44.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Capital Markets | 67.9% |
|
![]() | Diversified Financial Services | 12.1% |
|
![]() | Commercial Banks | 10.4% |
|
![]() | IT Services | 4.4% |
|
![]() | Insurance | 2.1% |
|
![]() | All Others* | 3.1% |
|
As of August 31, 2010 | |||
![]() | Capital Markets | 63.5% |
|
![]() | Diversified Financial Services | 13.0% |
|
![]() | Commercial Banks | 12.6% |
|
![]() | Insurance | 2.1% |
|
![]() | Media | 2.0% |
|
![]() | All Others* | 6.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Brokerage and Investment Management Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 67.9% | |||
Asset Management & Custody Banks - 35.8% | |||
Affiliated Managers Group, Inc. (a) | 242,500 | $ 25,886,875 | |
AllianceBernstein Holding LP | 262,300 | 5,969,948 | |
Ameriprise Financial, Inc. | 180,100 | 11,403,932 | |
Artio Global Investors, Inc. Class A | 529,463 | 8,391,989 | |
Bank of New York Mellon Corp. | 178,100 | 5,412,459 | |
BlackRock Kelso Capital Corp. | 514,200 | 6,391,506 | |
BlackRock, Inc. Class A | 13,000 | 2,651,870 | |
Calamos Asset Management, Inc. | 30,000 | 497,400 | |
Franklin Resources, Inc. | 155,200 | 19,496,224 | |
Invesco Ltd. | 1,010,907 | 27,132,744 | |
Janus Capital Group, Inc. | 650,409 | 8,734,993 | |
Legg Mason, Inc. | 230,361 | 8,350,586 | |
MCG Capital Corp. | 538,207 | 3,928,911 | |
Northern Trust Corp. | 366,900 | 18,921,033 | |
Och-Ziff Capital Management Group LLC Class A | 813,649 | 13,107,885 | |
PennantPark Investment Corp. | 223,474 | 2,838,120 | |
State Street Corp. | 430,900 | 19,269,848 | |
U.S. Global Investments, Inc. Class A | 381,329 | 2,985,806 | |
Waddell & Reed Financial, Inc. Class A | 149,300 | 6,028,734 | |
| 197,400,863 | ||
Diversified Capital Markets - 2.1% | |||
UBS AG (NY Shares) (a) | 584,185 | 11,596,072 | |
Investment Banking & Brokerage - 30.0% | |||
E*TRADE Financial Corp. (a) | 1,461,100 | 23,348,378 | |
Evercore Partners, Inc. Class A | 578,415 | 19,943,749 | |
GFI Group, Inc. | 3,167,324 | 15,836,620 | |
Goldman Sachs Group, Inc. | 169,800 | 27,809,845 | |
ICAP PLC | 665,400 | 5,630,980 | |
Jefferies Group, Inc. (d) | 767,201 | 18,458,856 | |
MF Global Holdings Ltd. (a) | 2,371,251 | 20,558,746 | |
Morgan Stanley | 905,575 | 26,877,466 | |
SWS Group, Inc. | 191,783 | 1,033,710 | |
TD Ameritrade Holding Corp. | 277,149 | 6,041,848 | |
| 165,540,198 | ||
TOTAL CAPITAL MARKETS | 374,537,133 | ||
COMMERCIAL BANKS - 10.4% | |||
Diversified Banks - 4.2% | |||
Comerica, Inc. | 599,806 | 23,332,453 | |
Regional Banks - 6.2% | |||
Regions Financial Corp. | 2,481,900 | 18,961,716 | |
Synovus Financial Corp. (d) | 4,978,630 | 12,695,507 | |
Zions Bancorporation | 114,100 | 2,665,376 | |
| 34,322,599 | ||
TOTAL COMMERCIAL BANKS | 57,655,052 | ||
| |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - 12.1% | |||
Other Diversified Financial Services - 7.0% | |||
Citigroup, Inc. (a) | 5,810,600 | $ 27,193,608 | |
JPMorgan Chase & Co. | 243,600 | 11,373,684 | |
| 38,567,292 | ||
Specialized Finance - 5.1% | |||
Bursa Malaysia Bhd | 8,207,900 | 21,848,270 | |
Hellenic Exchanges Holding SA | 647,000 | 6,089,305 | |
| 27,937,575 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 66,504,867 | ||
INSURANCE - 2.1% | |||
Multi-Line Insurance - 2.1% | |||
Genworth Financial, Inc. Class A (a) | 871,798 | 11,533,888 | |
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
China Finance Online Co. Ltd. ADR (a) | 341,300 | 1,863,498 | |
IT SERVICES - 4.4% | |||
Data Processing & Outsourced Services - 4.4% | |||
MasterCard, Inc. Class A | 11,000 | 2,646,160 | |
Visa, Inc. Class A | 295,000 | 21,549,750 | |
| 24,195,910 | ||
TOTAL COMMON STOCKS (Cost $489,923,463) | 536,290,348 | ||
Investment Companies - 2.9% | |||
|
|
|
|
Ares Capital Corp. | 901,207 | 16,068,521 | |
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 14,022,750 | 14,022,750 |
TOTAL INVESTMENT PORTFOLIO - 102.6% (Cost $517,857,597) | 566,381,619 | |
NET OTHER ASSETS (LIABILITIES) - (2.6)% | (14,405,972) | |
NET ASSETS - 100% | $ 551,975,647 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 18,656 |
Fidelity Securities Lending Cash Central Fund | 42,098 |
Total | $ 60,754 |
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 | 86.6% |
Bermuda | 4.9% |
Malaysia | 4.0% |
Switzerland | 2.1% |
Greece | 1.1% |
United Kingdom | 1.0% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At February 28, 2011 the Fund had a capital loss carryforward of approximately $96,741,956 of which $56,849,067 and $39,892,889 will expire in fiscal 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. |
The Fund intends to elect to defer to its fiscal year ending February 29, 2012 approximately $9,166,800 of losses recognized during the period November 1, 2010 to February 28, 2011. |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,413,288) - See accompanying schedule: Unaffiliated issuers (cost $503,834,847) | $ 552,358,869 |
|
Fidelity Central Funds (cost $14,022,750) | 14,022,750 |
|
Total Investments (cost $517,857,597) |
| $ 566,381,619 |
Foreign currency held at value (cost $982,568) | 982,568 | |
Receivable for investments sold | 11,594,667 | |
Receivable for fund shares sold | 147,498 | |
Dividends receivable | 446,725 | |
Distributions receivable from Fidelity Central Funds | 1,768 | |
Prepaid expenses | 1,006 | |
Other receivables | 24,784 | |
Total assets | 579,580,635 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,368,252 | |
Payable for investments purchased | 9,988,725 | |
Payable for fund shares redeemed | 799,181 | |
Accrued management fee | 261,496 | |
Other affiliated payables | 133,054 | |
Other payables and accrued expenses | 31,530 | |
Collateral on securities loaned, at value | 14,022,750 | |
Total liabilities | 27,604,988 | |
|
|
|
Net Assets | $ 551,975,647 | |
Net Assets consist of: |
| |
Paid in capital | $ 615,281,635 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (111,820,734) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 48,514,746 | |
Net Assets, for 10,200,379 shares outstanding | $ 551,975,647 | |
Net Asset Value, offering price and redemption price per share ($551,975,647 ÷ 10,200,379 shares) | $ 54.11 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,816,943 |
Interest |
| 209 |
Income from Fidelity Central Funds |
| 60,754 |
Total income |
| 8,877,906 |
|
|
|
Expenses | ||
Management fee | $ 3,001,226 | |
Transfer agent fees | 1,394,456 | |
Accounting and security lending fees | 210,094 | |
Custodian fees and expenses | 48,821 | |
Independent trustees' compensation | 3,047 | |
Registration fees | 35,998 | |
Audit | 37,924 | |
Legal | 2,304 | |
Interest | 2,945 | |
Miscellaneous | 7,113 | |
Total expenses before reductions | 4,743,928 | |
Expense reductions | (109,212) | 4,634,716 |
Net investment income (loss) | 4,243,190 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 29,174,274 | |
Investment not meeting investment restrictions | (1,221) | |
Foreign currency transactions | (182,693) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,221 | |
Total net realized gain (loss) |
| 28,991,581 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 39,803,411 | |
Assets and liabilities in foreign currencies | (10,851) | |
Total change in net unrealized appreciation (depreciation) |
| 39,792,560 |
Net gain (loss) | 68,784,141 | |
Net increase (decrease) in net assets resulting from operations | $ 73,027,331 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Brokerage and Investment Management Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,243,190 | $ 3,354,150 |
Net realized gain (loss) | 28,991,581 | 63,494,770 |
Change in net unrealized appreciation (depreciation) | 39,792,560 | 170,735,803 |
Net increase (decrease) in net assets resulting from operations | 73,027,331 | 237,584,723 |
Distributions to shareholders from net investment income | (3,333,469) | (3,004,230) |
Share transactions | 125,870,174 | 266,339,159 |
Reinvestment of distributions | 3,164,070 | 2,842,411 |
Cost of shares redeemed | (202,248,374) | (242,936,913) |
Net increase (decrease) in net assets resulting from share transactions | (73,214,130) | 26,244,657 |
Redemption fees | 23,381 | 29,613 |
Total increase (decrease) in net assets | (3,496,887) | 260,854,763 |
|
|
|
Net Assets | ||
Beginning of period | 555,472,534 | 294,617,771 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $491,586, respectively) | $ 551,975,647 | $ 555,472,534 |
Other Information Shares | ||
Sold | 2,494,145 | 6,045,653 |
Issued in reinvestment of distributions | 60,806 | 68,536 |
Redeemed | (4,094,270) | (5,417,062) |
Net increase (decrease) | (1,539,319) | 697,127 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.32 | $ 26.68 | $ 59.56 | $ 73.69 | $ 76.12 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .39 | .27 | .78 | 1.01 F | .61 |
Net realized and unrealized gain (loss) | 6.71 | 20.62 | (30.23) | (8.50) | 6.18 |
Total from investment operations | 7.10 | 20.89 | (29.45) | (7.49) | 6.79 |
Distributions from net investment income | (.31) | (.25) | (.93) | (.87) | (.59) |
Distributions from net realized gain | - | - | (2.51) | (5.78) | (8.65) |
Total distributions | (.31) | (.25) | (3.44) | (6.65) | (9.24) |
Redemption fees added to paid in capital C | - I | - I | .01 | .01 | .02 |
Net asset value, end of period | $ 54.11 | $ 47.32 | $ 26.68 | $ 59.56 | $ 73.69 |
Total Return A, B | 15.03% | 78.44% | (51.86)% | (11.16)% | 9.27% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .88% | .93% | .90% | .88% | .90% |
Expenses net of fee waivers, if any | .88% | .93% | .90% | .88% | .90% |
Expenses net of all reductions | .86% | .89% | .89% | .87% | .89% |
Net investment income (loss) | .79% | .64% | 1.74% | 1.41% F | .82% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 551,976 | $ 555,473 | $ 294,618 | $ 699,205 | $ 1,252,565 |
Portfolio turnover rate E | 153% | 264% | 351% | 84% | 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 $.18 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.15%.
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
Consumer Finance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Consumer Finance PortfolioA | 5.83% | -20.29% | -6.98% |
A Prior to December 1, 2010, Consumer Finance Portfolio was named Home Finance Portfolio and 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 Finance Portfolio on February 28, 2001. 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 Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Christopher Lee, Portfolio Manager of Consumer Finance Portfolio: For the 12 months ending February 28, 2011, the fund returned 5.83%, versus 13.40% for the S&P® Consumer Finance Index, 22.57% for the broadly based S&P 500® Index and 1.98% for the blended index specific to this fund. The blended index is a combination of the MSCI® U.S. IM Thrifts & Mortgage Finance 25/50 Index, with which the fund was compared through November 2010, and the new S&P® Consumer Finance Index mentioned above, with which the fund was compared for the final three months of the period. Effective December 1, 2010, the fund, previously known as the Home Finance Portfolio, was renamed Consumer Finance Portfolio, with a mandate of investing at least 80% of its assets in securities of companies principally engaged in consumer finance, including auto loans, credit cards, mortgages, student loans or services related to these activities. During the first nine months of the period, the fund declined less than the MSCI index, which fell 10.80%. Stock picking, both in out-of-benchmark areas and in the thrifts/mortgage finance segment, aided results. Avoiding mortgage lenders Fannie Mae and Freddie Mac, which slid amid news they were being delisted from the New York Stock Exchange, was particularly helpful. On the downside, a sizable but underweighted stake in New York Community Bancorp, a multifamily home finance lender with a high dividend yield, hampered relative performance as the stock appreciated. During the last three months, the fund performed about in line with the 14.33% return of the S&P Consumer Finance index, as strong security selection largely offset disappointing industry allocations. Stock picking was most helpful among regional banks, consumer finance and mortgage real estate investment trusts (REITs), but disappointing in the thrifts/mortgage finance segment. In terms of individual stocks, a lack of exposure to Annaly Capital Management, a mortgage REIT that was a large but lagging index component, aided results, while an underweighting in New York Community Bancorp again detracted from performance. Annaly was not in the portfolio 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
Consumer Finance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Discover Financial Services | 8.2 | 1.0 |
Visa, Inc. Class A | 7.2 | 0.7 |
SLM Corp. | 5.8 | 0.7 |
Wells Fargo & Co. | 4.9 | 2.2 |
MasterCard, Inc. Class A | 4.7 | 1.3 |
Citigroup, Inc. | 4.7 | 1.1 |
JPMorgan Chase & Co. | 4.1 | 1.0 |
Regions Financial Corp. | 4.1 | 0.4 |
American Express Co. | 3.6 | 1.5 |
Ocwen Financial Corp. | 3.6 | 4.0 |
| 50.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Commercial Banks | 22.6% |
|
![]() | Consumer Finance | 20.5% |
|
![]() | Thrifts & Mortgage Finance | 15.7% |
|
![]() | IT Services | 12.4% |
|
![]() | Diversified Financial Services | 10.6% |
|
![]() | All Others* | 18.2% |
|
As of August 31, 2010 | |||
![]() | Thrifts & Mortgage Finance | 75.9% |
|
![]() | Consumer Finance | 4.8% |
|
![]() | Commercial Banks | 4.8% |
|
![]() | IT Services | 3.9% |
|
![]() | Diversified Financial Services | 2.7% |
|
![]() | All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Finance Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 95.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 3.3% | |||
Asset Management & Custody Banks - 2.0% | |||
Bank of New York Mellon Corp. | 15,000 | $ 455,850 | |
State Street Corp. | 35,000 | 1,565,200 | |
| 2,021,050 | ||
Investment Banking & Brokerage - 1.3% | |||
TD Ameritrade Holding Corp. | 60,000 | 1,308,000 | |
TOTAL CAPITAL MARKETS | 3,329,050 | ||
COMMERCIAL BANKS - 22.6% | |||
Diversified Banks - 10.3% | |||
Comerica, Inc. | 50,000 | 1,945,000 | |
U.S. Bancorp, Delaware | 130,000 | 3,604,900 | |
Wells Fargo & Co. | 155,000 | 5,000,300 | |
| 10,550,200 | ||
Regional Banks - 12.3% | |||
BB&T Corp. | 100,000 | 2,760,000 | |
CIT Group, Inc. (a) | 35,000 | 1,516,200 | |
Regions Financial Corp. | 550,000 | 4,202,000 | |
SunTrust Banks, Inc. | 120,000 | 3,620,400 | |
Zions Bancorporation | 20,000 | 467,200 | |
| 12,565,800 | ||
TOTAL COMMERCIAL BANKS | 23,116,000 | ||
CONSUMER FINANCE - 20.5% | |||
Consumer Finance - 20.5% | |||
American Express Co. | 85,000 | 3,703,450 | |
Capital One Financial Corp. | 60,000 | 2,986,200 | |
Discover Financial Services | 381,915 | 8,306,651 | |
SLM Corp. (a) | 400,000 | 5,928,000 | |
| 20,924,301 | ||
DIVERSIFIED FINANCIAL SERVICES - 10.6% | |||
Other Diversified Financial Services - 10.6% | |||
Bank of America Corp. | 125,000 | 1,786,250 | |
Citigroup, Inc. (a) | 1,025,000 | 4,797,000 | |
JPMorgan Chase & Co. | 90,000 | 4,202,100 | |
| 10,785,350 | ||
INSURANCE - 0.6% | |||
Multi-Line Insurance - 0.6% | |||
Genworth Financial, Inc. Class A (a) | 43,700 | 578,151 | |
IT SERVICES - 12.4% | |||
Data Processing & Outsourced Services - 12.4% | |||
CoreLogic, Inc. (a) | 30,000 | 559,500 | |
MasterCard, Inc. Class A | 20,000 | 4,811,200 | |
Visa, Inc. Class A | 100,000 | 7,305,000 | |
| 12,675,700 | ||
| |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - 9.5% | |||
Mortgage REITs - 9.5% | |||
Capstead Mortgage Corp. | 175,000 | $ 2,299,500 | |
Chimera Investment Corp. | 350,000 | 1,508,500 | |
Invesco Mortgage Capital, Inc. | 100,000 | 2,334,000 | |
MFA Financial, Inc. | 150,000 | 1,270,500 | |
Redwood Trust, Inc. | 100,000 | 1,638,000 | |
Starwood Property Trust, Inc. | 30,000 | 701,700 | |
| 9,752,200 | ||
THRIFTS & MORTGAGE FINANCE - 15.7% | |||
Thrifts & Mortgage Finance - 15.7% | |||
Astoria Financial Corp. | 50,000 | 701,000 | |
BankUnited, Inc. | 600 | 17,010 | |
Capitol Federal Financial, Inc. | 80,000 | 1,011,200 | |
First Niagara Financial Group, Inc. (d) | 185,000 | 2,678,800 | |
Flushing Financial Corp. | 75,000 | 1,074,000 | |
MGIC Investment Corp. (a)(d) | 187,300 | 1,608,907 | |
New York Community Bancorp, Inc. (d) | 125,000 | 2,332,500 | |
NewAlliance Bancshares, Inc. | 50,000 | 782,000 | |
Ocwen Financial Corp. (a) | 350,000 | 3,703,000 | |
Radian Group, Inc. | 179,400 | 1,266,564 | |
Washington Federal, Inc. | 50,000 | 888,500 | |
| 16,063,481 | ||
TOTAL COMMON STOCKS (Cost $93,964,056) | 97,224,233 | ||
Money Market Funds - 9.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 4,193,838 | 4,193,838 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 5,074,750 | 5,074,750 | |
TOTAL MONEY MARKET FUNDS (Cost $9,268,588) | 9,268,588 |
TOTAL INVESTMENT PORTFOLIO - 104.3% (Cost $103,232,644) | 106,492,821 | |
NET OTHER ASSETS (LIABILITIES) - (4.3)% | (4,411,655) | |
NET ASSETS - 100% | $ 102,081,166 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 6,164 |
Fidelity Securities Lending Cash Central Fund | 46,960 |
Total | $ 53,124 |
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, 2011, the Fund had a capital loss carryforward of approximately $147,052,496 of which $97,174,837, $48,865,995 and $1,011,664 will expire in fiscal 2017, 2018 and 2019, 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. |
The Fund intends to elect to defer to its fiscal year ending February 29, 2012 approximately $6,935,771 of losses recognized during the period November 1, 2010 to February 28, 2011. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,931,148) - See accompanying schedule: Unaffiliated issuers (cost $93,964,056) | $ 97,224,233 |
|
Fidelity Central Funds (cost $9,268,588) | 9,268,588 |
|
Total Investments (cost $103,232,644) |
| $ 106,492,821 |
Receivable for fund shares sold | 940,119 | |
Dividends receivable | 30,649 | |
Distributions receivable from Fidelity Central Funds | 1,221 | |
Prepaid expenses | 255 | |
Other receivables | 4,195 | |
Total assets | 107,469,260 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 74,562 | |
Payable for fund shares redeemed | 130,016 | |
Accrued management fee | 46,041 | |
Other affiliated payables | 25,588 | |
Other payables and accrued | 37,137 | |
Collateral on securities loaned, at value | 5,074,750 | |
Total liabilities | 5,388,094 | |
|
|
|
Net Assets | $ 102,081,166 | |
Net Assets consist of: |
| |
Paid in capital | $ 253,986,791 | |
Undistributed net investment income | 22,936 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (155,188,738) | |
Net unrealized appreciation (depreciation) on investments | 3,260,177 | |
Net Assets, for 8,529,950 shares outstanding | $ 102,081,166 | |
Net Asset Value, offering price and redemption price per share ($102,081,166 ÷ 8,529,950 shares) | $ 11.97 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,737,408 |
Interest |
| 33 |
Income from Fidelity Central Funds |
| 53,124 |
Total income |
| 2,790,565 |
|
|
|
Expenses | ||
Management fee | $ 597,500 | |
Transfer agent fees | 316,141 | |
Accounting and security lending fees | 43,428 | |
Custodian fees and expenses | 15,273 | |
Independent trustees' compensation | 653 | |
Registration fees | 30,792 | |
Audit | 37,060 | |
Legal | 1,436 | |
Miscellaneous | 32,283 | |
Total expenses before reductions | 1,074,566 | |
Expense reductions | (30,308) | 1,044,258 |
Net investment income (loss) | 1,746,307 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (6,798,994) | |
Foreign currency transactions | 1,141 | |
Total net realized gain (loss) |
| (6,797,853) |
Change in net unrealized appreciation (depreciation) on investment securities | 2,833,691 | |
Net gain (loss) | (3,964,162) | |
Net increase (decrease) in net assets resulting from operations | $ (2,217,855) |
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) | $ 1,746,307 | $ 1,454,853 |
Net realized gain (loss) | (6,797,853) | 2,027,213 |
Change in net unrealized appreciation (depreciation) | 2,833,691 | 19,933,221 |
Net increase (decrease) in net assets resulting from operations | (2,217,855) | 23,415,287 |
Distributions to shareholders from net investment income | (2,038,026) | (2,931,320) |
Share transactions | 120,380,784 | 37,068,220 |
Reinvestment of distributions | 1,960,762 | 2,830,347 |
Cost of shares redeemed | (101,440,703) | (26,423,145) |
Net increase (decrease) in net assets resulting from share transactions | 20,900,843 | 13,475,422 |
Redemption fees | 27,586 | 9,764 |
Total increase (decrease) in net assets | 16,672,548 | 33,969,153 |
|
|
|
Net Assets | ||
Beginning of period | 85,408,618 | 51,439,465 |
End of period (including undistributed net investment income of $22,936 and undistributed net investment income of $313,820, respectively) | $ 102,081,166 | $ 85,408,618 |
Other Information Shares | ||
Sold | 9,886,922 | 3,532,774 |
Issued in reinvestment of distributions | 168,934 | 288,408 |
Redeemed | (8,902,219) | (2,584,163) |
Net increase (decrease) | 1,153,637 | 1,237,019 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 11.58 | $ 8.38 | $ 25.83 | $ 48.40 | $ 51.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | .19 | .22 | .75 | .86 | .81 |
Net realized and unrealized gain (loss) | .48F | 3.44 | (17.60) | (20.77) | 3.01 |
Total from investment operations | .67 | 3.66 | (16.85) | (19.91) | 3.82 |
Distributions from net investment income | (.28) | (.46) | (.56) | (.80) | (.80) |
Distributions from net realized gain | - | - | (.05) | (1.86) | (6.45) |
Total distributions | (.28) | (.46) | (.61) | (2.66) | (7.25) |
Redemption fees added to paid in capitalC | -I | -I | .01 | -I | -I |
Net asset value, end of period | $ 11.97 | $ 11.58 | $ 8.38 | $ 25.83 | $ 48.40 |
Total ReturnA,B | 5.83% | 44.74% | (65.96)% | (42.37)% | 7.10% |
Ratios to Average Net AssetsD,G |
|
|
|
|
|
Expenses before reductions | 1.01% | 1.05% | .99% | .93% | .93% |
Expenses net of fee waivers, if any | 1.01% | 1.05% | .99% | .93% | .93% |
Expenses net of all reductions | .98% | 1.02% | .99% | .92% | .93% |
Net investment income (loss) | 1.63% | 2.18% | 4.48% | 2.21% | 1.55% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 102,081 | $ 85,409 | $ 51,439 | $ 151,202 | $ 256,873 |
Portfolio turnover rateE | 161% | 153% | 79% | 36% | 52% |
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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
G 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
Financial 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Financial Services Portfolio | 6.21% | -8.00% | -0.76% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Benjamin Hesse, Portfolio Manager of Financial Services Portfolio: For the 12 months ending February 28, 2011, the fund returned 6.21%, lagging by a wide margin the 17.95% gain of its benchmark, the MSCI® U.S. IM Financials 25/50 Index, which in turn trailed the S&P 500®. The sector was hampered by a number of macro issues - including the sovereign debt crisis in Europe, financial regulatory reform, the housing slump in the U.S. and, by the summer, growing concerns about a double-dip recession. Relative to the MSCI index, stock selection and industry weightings were about equally disappointing, with positioning in regional banks and investment banking/brokerage posing some of the biggest hindrances to results. Individual detractors included Synovus Financial, a Southeast regional bank suffering from weak credit quality in its loan portfolio, and Texas-based Comerica - the fund's largest holding at period end - whose shares fell sharply on news the bank was buying a competitor at a sizable premium. Genworth Financial, a multi-line insurer pressured by weakness in its mortgage insurance business, also hurt. Positioning within other diversified financial services helped relative performance. The fund particularly benefited from an underweighting in Bank of America, a large index component, whose shares were pressured by the housing slump, weak loan growth, new debit card fee regulations and concerns related to mortgage-backed securities. Stock selection within the specialized finance segment also was helpful, driven by Moody's, a credit-rating agency whose shares rallied, thanks to strong bond issuance and new financial regulations that weren't as onerous as originally anticipated. Moody's 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
Financial Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Comerica, Inc. | 10.2 | 1.1 |
Visa, Inc. Class A | 6.6 | 4.8 |
Regions Financial Corp. | 6.4 | 5.3 |
Goldman Sachs Group, Inc. | 5.1 | 1.0 |
Citigroup, Inc. | 5.0 | 5.2 |
Morgan Stanley | 4.3 | 5.1 |
JPMorgan Chase & Co. | 4.0 | 5.1 |
Bank of America Corp. | 3.9 | 4.3 |
Franklin Resources, Inc. | 3.7 | 0.0 |
American Express Co. | 3.6 | 0.0 |
| 52.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Commercial Banks | 31.3% |
|
![]() | Capital Markets | 29.1% |
|
![]() | Diversified Financial Services | 16.2% |
|
![]() | IT Services | 11.0% |
|
![]() | Consumer Finance | 7.7% |
|
![]() | All Others* | 4.7% |
|
As of August 31, 2010 | |||
![]() | Commercial Banks | 40.0% |
|
![]() | Diversified Financial Services | 19.7% |
|
![]() | Capital Markets | 16.1% |
|
![]() | IT Services | 15.7% |
|
![]() | Insurance | 3.5% |
|
![]() | All Others* | 5.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Financial Services Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
CAPITAL MARKETS - 29.1% | |||
Asset Management & Custody Banks - 10.8% | |||
Affiliated Managers Group, Inc. (a) | 129,434 | $ 13,817,080 | |
Bank of New York Mellon Corp. | 83,731 | 2,544,585 | |
Franklin Resources, Inc. | 150,055 | 18,849,909 | |
Invesco Ltd. | 459,300 | 12,327,612 | |
Legg Mason, Inc. | 70,718 | 2,563,528 | |
Northern Trust Corp. | 99,800 | 5,146,686 | |
| 55,249,400 | ||
Investment Banking & Brokerage - 18.3% | |||
Charles Schwab Corp. | 108,700 | 2,062,039 | |
E*TRADE Financial Corp. (a) | 913,939 | 14,604,745 | |
Evercore Partners, Inc. Class A | 169,013 | 5,827,568 | |
GFI Group, Inc. | 1,382,336 | 6,911,680 | |
Goldman Sachs Group, Inc. | 159,421 | 26,109,971 | |
Jefferies Group, Inc. (d) | 331,881 | 7,985,057 | |
MF Global Holdings Ltd. (a) | 954,882 | 8,278,827 | |
Morgan Stanley | 743,449 | 22,065,566 | |
| 93,845,453 | ||
TOTAL CAPITAL MARKETS | 149,094,853 | ||
COMMERCIAL BANKS - 31.3% | |||
Diversified Banks - 10.6% | |||
Banco ABC Brasil SA | 228,000 | 1,759,538 | |
Banco Pine SA | 51,400 | 429,106 | |
Comerica, Inc. | 1,345,031 | 52,321,708 | |
| 54,510,352 | ||
Regional Banks - 20.7% | |||
Banco Daycoval SA (PN) | 304,400 | 2,186,308 | |
BancTrust Financial Group, Inc. (a)(d) | 83,350 | 220,044 | |
Bridge Capital Holdings (a) | 13,708 | 124,743 | |
Bridge Capital Holdings (a)(e) | 132,440 | 1,084,684 | |
CIT Group, Inc. (a) | 248,900 | 10,782,348 | |
CoBiz, Inc. (d) | 668,612 | 4,359,350 | |
First Horizon National Corp. | 14,321 | 164,692 | |
First Interstate Bancsystem, Inc. | 120,400 | 1,719,914 | |
Glacier Bancorp, Inc. | 377,066 | 5,893,542 | |
Old National Bancorp, Indiana | 19,881 | 222,667 | |
Regions Financial Corp. | 4,296,359 | 32,824,183 | |
SunTrust Banks, Inc. | 422,925 | 12,759,647 | |
Susquehanna Bancshares, Inc. | 290,375 | 2,775,985 | |
SVB Financial Group (a) | 81,845 | 4,434,362 | |
Synovus Financial Corp. (d) | 6,075,540 | 15,492,627 | |
United Security Bancshares, California | 42 | 133 | |
Webster Financial Corp. | 91,600 | 2,123,288 | |
Zions Bancorporation (d) | 371,515 | 8,678,590 | |
| 105,847,107 | ||
TOTAL COMMERCIAL BANKS | 160,357,459 | ||
| |||
Shares | Value | ||
CONSUMER FINANCE - 7.7% | |||
Consumer Finance - 7.7% | |||
American Express Co. | 425,908 | $ 18,556,812 | |
Netspend Holdings, Inc. | 521,529 | 6,837,245 | |
SLM Corp. (a) | 963,994 | 14,286,391 | |
| 39,680,448 | ||
DIVERSIFIED FINANCIAL SERVICES - 16.2% | |||
Other Diversified Financial Services - 12.9% | |||
Bank of America Corp. | 1,376,958 | 19,676,730 | |
Citigroup, Inc. (a) | 5,503,530 | 25,756,520 | |
JPMorgan Chase & Co. | 440,883 | 20,584,827 | |
| 66,018,077 | ||
Specialized Finance - 3.3% | |||
Infrastructure Development Finance Co. Ltd. | 2,631,063 | 8,439,862 | |
PHH Corp. (a) | 339,508 | 8,379,057 | |
| 16,818,919 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 82,836,996 | ||
HOUSEHOLD DURABLES - 0.9% | |||
Homebuilding - 0.9% | |||
MRV Engenharia e Participacoes SA | 613,400 | 4,870,185 | |
INSURANCE - 2.7% | |||
Life & Health Insurance - 0.3% | |||
Prudential Financial, Inc. | 19,896 | 1,309,754 | |
Multi-Line Insurance - 2.4% | |||
Fairfax Financial Holdings Ltd. (sub. vtg.) | 3,100 | 1,201,635 | |
Genworth Financial, Inc. Class A (a) | 852,461 | 11,278,059 | |
| 12,479,694 | ||
TOTAL INSURANCE | 13,789,448 | ||
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
China Finance Online Co. Ltd. ADR (a)(d) | 300,544 | 1,640,970 | |
IT SERVICES - 11.0% | |||
Data Processing & Outsourced Services - 11.0% | |||
Alliance Data Systems Corp. (a) | 98,532 | 7,758,410 | |
MasterCard, Inc. Class A | 53,415 | 12,849,512 | |
MoneyGram International, Inc. (a) | 676,830 | 1,868,051 | |
Visa, Inc. Class A | 464,184 | 33,908,641 | |
| 56,384,614 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.3% | |||
Specialized REITs - 0.3% | |||
Strategic Hotel & Resorts, Inc. (a) | 204,000 | 1,326,000 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.2% | |||
Real Estate Operating Companies - 0.2% | |||
Castellum AB | 54,900 | 785,419 | |
Common Stocks - continued | |||
Shares | Value | ||
THRIFTS & MORTGAGE FINANCE - 0.1% | |||
Thrifts & Mortgage Finance - 0.1% | |||
BofI Holding, Inc. (a) | 4,727 | $ 71,472 | |
Cheviot Financial Corp. | 43,398 | 368,883 | |
Mayflower Bancorp, Inc. | 5,816 | 49,087 | |
| 489,442 | ||
TOTAL COMMON STOCKS (Cost $496,217,204) | 511,255,834 | ||
Money Market Funds - 5.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 7,723,427 | 7,723,427 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 17,896,100 | 17,896,100 | |
TOTAL MONEY MARKET FUNDS (Cost $25,619,527) | 25,619,527 |
TOTAL INVESTMENT PORTFOLIO - 104.8% (Cost $521,836,731) | 536,875,361 | |
NET OTHER ASSETS (LIABILITIES) - (4.8)% | (24,648,445) | |
NET ASSETS - 100% | $ 512,226,916 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $1,084,684 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Bridge Capital Holdings | 11/19/10 | $ 1,132,362 |
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 | $ 14,312 |
Fidelity Securities Lending Cash Central Fund | 142,345 |
Total | $ 156,657 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 511,255,834 | $ 510,171,150 | $ 1,084,684 | $ - |
Money Market Funds | 25,619,527 | 25,619,527 | - | - |
Total Investments in Securities: | $ 536,875,361 | $ 535,790,677 | $ 1,084,684 | $ - |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $72,824,687 of which $72,151,762 and $672,925 will expire in fiscal 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. |
The Fund intends to elect to defer to its fiscal year ending February 29, 2012 approximately $6,788,259 of losses recognized during the period November 1, 2010 to February 28, 2011. |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $16,755,985) - See accompanying schedule: Unaffiliated issuers (cost $496,217,204) | $ 511,255,834 |
|
Fidelity Central Funds (cost $25,619,527) | 25,619,527 |
|
Total Investments (cost $521,836,731) |
| $ 536,875,361 |
Receivable for investments sold | 23,065,845 | |
Receivable for fund shares sold | 939,840 | |
Dividends receivable | 210,228 | |
Distributions receivable from Fidelity Central Funds | 3,660 | |
Prepaid expenses | 960 | |
Other receivables | 16,983 | |
Total assets | 561,112,877 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 27,622,289 | |
Payable for fund shares redeemed | 2,958,272 | |
Accrued management fee | 243,464 | |
Other affiliated payables | 128,832 | |
Other payables and accrued expenses | 37,004 | |
Collateral on securities loaned, at value | 17,896,100 | |
Total liabilities | 48,885,961 | |
|
|
|
Net Assets | $ 512,226,916 | |
Net Assets consist of: |
| |
Paid in capital | $ 590,205,676 | |
Distributions in excess of net investment income | (153,011) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (92,823,248) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 14,997,499 | |
Net Assets, for 8,155,260 shares outstanding | $ 512,226,916 | |
Net Asset Value, offering price and redemption price per share ($512,226,916 ÷ 8,155,260 shares) | $ 62.81 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,323,314 |
Interest |
| 161 |
Income from Fidelity Central Funds |
| 156,657 |
Total income |
| 5,480,132 |
|
|
|
Expenses | ||
Management fee | $ 2,638,581 | |
Transfer agent fees | 1,315,019 | |
Accounting and security lending fees | 189,004 | |
Custodian fees and expenses | 79,376 | |
Independent trustees' compensation | 2,684 | |
Registration fees | 39,303 | |
Audit | 38,196 | |
Legal | 2,053 | |
Interest | 4,530 | |
Miscellaneous | 6,304 | |
Total expenses before reductions | 4,315,050 | |
Expense reductions | (166,181) | 4,148,869 |
Net investment income (loss) | 1,331,263 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $2,698) | 12,253,537 | |
Foreign currency transactions | (215,664) | |
Total net realized gain (loss) |
| 12,037,873 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $1,027) | 3,917,211 | |
Assets and liabilities in foreign currencies | (44,919) | |
Total change in net unrealized appreciation (depreciation) |
| 3,872,292 |
Net gain (loss) | 15,910,165 | |
Net increase (decrease) in net assets resulting from operations | $ 17,241,428 |
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) | $ 1,331,263 | $ 3,055,900 |
Net realized gain (loss) | 12,037,873 | 118,426,103 |
Change in net unrealized appreciation (depreciation) | 3,872,292 | 89,954,776 |
Net increase (decrease) in net assets resulting from operations | 17,241,428 | 211,436,779 |
Distributions to shareholders from net investment income | (1,297,143) | (5,034,571) |
Distributions to shareholders from net realized gain | - | (247,305) |
Total distributions | (1,297,143) | (5,281,876) |
Share transactions | 261,286,558 | 256,861,350 |
Reinvestment of distributions | 1,251,537 | 5,111,284 |
Cost of shares redeemed | (248,816,600) | (213,004,771) |
Net increase (decrease) in net assets resulting from share transactions | 13,721,495 | 48,967,863 |
Redemption fees | 40,773 | 53,594 |
Total increase (decrease) in net assets | 29,706,553 | 255,176,360 |
|
|
|
Net Assets | ||
Beginning of period | 482,520,363 | 227,344,003 |
End of period (including distributions in excess of net investment income of $153,011 and distributions in excess of net investment income of $186,830, respectively) | $ 512,226,916 | $ 482,520,363 |
Other Information Shares | ||
Sold | 4,241,840 | 5,247,995 |
Issued in reinvestment of distributions | 21,169 | 97,877 |
Redeemed | (4,242,167) | (4,008,087) |
Net increase (decrease) | 20,842 | 1,337,785 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 59.32 | $ 33.45 | $ 84.31 | $ 117.33 | $ 120.01 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .17 | .37 | 1.58 | 1.73 | 1.56 |
Net realized and unrealized gain (loss) | 3.49 | 26.14 | (51.12) | (27.77) | 10.14 |
Total from investment operations | 3.66 | 26.51 | (49.54) | (26.04) | 11.70 |
Distributions from net investment income | (.18) | (.62) | (1.22) | (1.45) | (1.29) |
Distributions from net realized gain | - | (.03) | (.13) | (5.54) | (13.10) |
Total distributions | (.18) | (.65) | (1.35) | (6.99) | (14.39) |
Redemption fees added to paid in capital C | .01 | .01 | .03 | .01 | .01 |
Net asset value, end of period | $ 62.81 | $ 59.32 | $ 33.45 | $ 84.31 | $ 117.33 |
Total Return A, B | 6.21% | 79.56% | (59.22)% | (23.05)% | 10.14% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .92% | .96% | .94% | .90% | .93% |
Expenses net of fee waivers, if any | .92% | .96% | .94% | .90% | .93% |
Expenses net of all reductions | .88% | .92% | .93% | .89% | .92% |
Net investment income (loss) | .28% | .70% | 2.57% | 1.57% | 1.31% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 512,227 | $ 482,520 | $ 227,344 | $ 382,468 | $ 541,576 |
Portfolio turnover rate E | 242% | 301% | 129% | 53% | 55% |
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
Insurance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Insurance Portfolio | 21.31% | -2.70% | 3.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Court Dignan, Portfolio Manager of Insurance Portfolio: For the 12 months ending February 28, 2011, the fund returned 21.31%, in line with the 21.74% gain of its industry benchmark, the MSCI® U.S. IM Insurance 25/50 Index, and slightly behind the broadly based S&P 500®. Stock selection, which focused on what I view as above-average companies with reasonable share prices, was especially helpful versus the MSCI benchmark in the property/casualty insurance, reinsurance and life/health insurance segments. Top contributors included Prudential Financial, a market leader in the life insurance/variable annuity market, and Aon, an insurance broker that rebounded as investors became more comfortable with a recent acquisition. In addition, XL Group, a property/casualty insurer, rallied, as its balance sheet and earnings outlook improved. Detractors were limited, but included weak stock selection within multi-line insurance and a small cash position in a rising market. The biggest stock disappointment was Fairfax Financial Holdings, a multi-line insurer that uses a more differentiated and robust investment process than its peers. The company's demonstrated skill in this area has driven best-in-class, long-term book value growth, with book value being thought of as a company's net asset value. Over the past year, however, the company hedged the majority of its equity exposure, which muted book value growth in a rising market. I regarded the resulting stock decline as transitory and held on to the position. Not owning American International Group (AIG), another multi-line insurer, also hindered performance. My analysis suggested the company's net asset value was substantially below its share price. However, the stock rallied sharply over the period due to a combination of technical buying, successful asset sales and the announcement of a promising restructuring plan.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Berkshire Hathaway, Inc. Class B | 16.8 | 13.0 |
Prudential Financial, Inc. | 8.5 | 5.2 |
ACE Ltd. | 8.0 | 5.6 |
MetLife, Inc. | 4.9 | 9.3 |
Aon Corp. | 4.8 | 0.0 |
AFLAC, Inc. | 4.7 | 7.2 |
The Chubb Corp. | 4.3 | 1.9 |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 4.2 | 1.4 |
Progressive Corp. | 3.5 | 2.8 |
The Travelers Companies, Inc. | 3.5 | 4.4 |
| 63.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Insurance | 96.9% |
|
![]() | Road & Rail | 0.1% |
|
![]() | All Others* | 3.0% |
|
As of August 31, 2010 | |||
![]() | Insurance | 96.8% |
|
![]() | Diversified Financial Services | 1.2% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Insurance Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 97.0% | |||
Shares | Value | ||
INSURANCE - 96.9% | |||
Insurance Brokers - 12.6% | |||
Aon Corp. | 228,947 | $ 12,051,770 | |
Brasil Insurance Participacoes e Administracao SA | 3,300 | 3,768,482 | |
Jardine Lloyd Thompson Group PLC | 582,600 | 6,161,667 | |
National Financial Partners Corp. (a) | 529,744 | 7,490,580 | |
Willis Group Holdings PLC | 48,473 | 1,885,115 | |
| 31,357,614 | ||
Life & Health Insurance - 25.3% | |||
AFLAC, Inc. | 199,200 | 11,724,912 | |
American Equity Investment Life Holding Co. (d) | 524,300 | 6,920,760 | |
Lincoln National Corp. | 70,600 | 2,239,432 | |
MetLife, Inc. | 258,875 | 12,260,320 | |
Phoenix Companies, Inc. (a) | 182,300 | 484,918 | |
Prudential Financial, Inc. | 320,889 | 21,124,123 | |
StanCorp Financial Group, Inc. | 81,200 | 3,735,200 | |
Torchmark Corp. | 28,600 | 1,866,150 | |
Unum Group | 91,160 | 2,418,475 | |
| 62,774,290 | ||
Multi-Line Insurance - 11.9% | |||
Assurant, Inc. | 154,300 | 6,269,209 | |
Fairfax Financial Holdings Ltd. (sub. vtg.) | 26,600 | 10,310,804 | |
Hartford Financial Services Group, Inc. | 222,700 | 6,591,920 | |
Horace Mann Educators Corp. | 233,800 | 3,962,910 | |
Loews Corp. | 40,400 | 1,747,300 | |
Mapfre SA (Reg.) | 7,100 | 26,376 | |
Porto Seguro SA | 32,700 | 520,826 | |
| 29,429,345 | ||
Property & Casualty Insurance - 42.7% | |||
ACE Ltd. | 312,849 | 19,787,699 | |
Allied World Assurance Co. Holdings Ltd. | 58,300 | 3,597,693 | |
Allstate Corp. | 126,300 | 4,013,814 | |
American Safety Insurance Group Ltd. (a) | 28,800 | 614,880 | |
Axis Capital Holdings Ltd. | 66,100 | 2,400,752 | |
Berkshire Hathaway, Inc.: | |||
Class A (a) | 4 | 525,200 | |
Class B (a) | 477,869 | 41,708,407 | |
Dongbu Insurance Co. Ltd. | 20,720 | 843,234 | |
Hilltop Holdings, Inc. (a) | 171,900 | 1,663,992 | |
Progressive Corp. | 420,700 | 8,763,181 | |
Safety Insurance Group, Inc. | 8,400 | 404,208 | |
| |||
Shares | Value | ||
The Chubb Corp. | 174,858 | $ 10,610,383 | |
The Travelers Companies, Inc. | 143,100 | 8,575,983 | |
XL Group PLC Class A | 107,855 | 2,518,414 | |
| 106,027,840 | ||
Reinsurance - 4.4% | |||
Montpelier Re Holdings Ltd. | 15,000 | 302,550 | |
Reinsurance Group of America, Inc. | 122,500 | 7,397,775 | |
Transatlantic Holdings, Inc. | 43,700 | 2,225,641 | |
Validus Holdings Ltd. | 28,500 | 882,075 | |
| 10,808,041 | ||
TOTAL INSURANCE | 240,397,130 | ||
ROAD & RAIL - 0.1% | |||
Trucking - 0.1% | |||
Tegma Gestao Logistica | 19,800 | 279,542 | |
TOTAL COMMON STOCKS (Cost $203,416,584) | 240,676,672 | ||
Money Market Funds - 4.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 5,516,879 | 5,516,879 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 4,461,875 | 4,461,875 | |
TOTAL MONEY MARKET FUNDS (Cost $9,978,754) | 9,978,754 |
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $213,395,338) | 250,655,426 | |
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (2,600,496) | |
NET ASSETS - 100% | $ 248,054,930 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 11,817 |
Fidelity Securities Lending Cash Central Fund | 35,718 |
Total | $ 47,535 |
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 | 78.3% |
Switzerland | 9.4% |
Canada | 4.2% |
United Kingdom | 2.5% |
Brazil | 1.8% |
Ireland | 1.8% |
Bermuda | 1.7% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $21,210,935 all of which will expire in fiscal 2018. 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
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,283,400) - See accompanying schedule: Unaffiliated issuers (cost $203,416,584) | $ 240,676,672 |
|
Fidelity Central Funds (cost $9,978,754) | 9,978,754 |
|
Total Investments (cost $213,395,338) |
| $ 250,655,426 |
Cash | 1,559 | |
Receivable for investments sold | 4,225,764 | |
Receivable for fund shares sold | 1,464,006 | |
Dividends receivable | 122,620 | |
Distributions receivable from Fidelity Central Funds | 1,484 | |
Prepaid expenses | 351 | |
Other receivables | 5,293 | |
Total assets | 256,476,503 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,678,363 | |
Payable for fund shares redeemed | 77,723 | |
Accrued management fee | 111,490 | |
Other affiliated payables | 58,199 | |
Other payables and accrued | 33,923 | |
Collateral on securities loaned, at value | 4,461,875 | |
Total liabilities | 8,421,573 | |
|
|
|
Net Assets | $ 248,054,930 | |
Net Assets consist of: |
| |
Paid in capital | $ 232,961,303 | |
Undistributed net investment income | 141,242 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (22,308,026) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign | 37,260,411 | |
Net Assets, for 4,957,248 shares outstanding | $ 248,054,930 | |
Net Asset Value, offering price and redemption price per share ($248,054,930 ÷ 4,957,248 shares) | $ 50.04 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,709,058 |
Interest |
| 9 |
Income from Fidelity Central Funds |
| 47,535 |
Total income |
| 3,756,602 |
|
|
|
Expenses | ||
Management fee | $ 1,072,402 | |
Transfer agent fees | 529,709 | |
Accounting and security lending fees | 75,320 | |
Custodian fees and expenses | 27,176 | |
Independent trustees' compensation | 1,026 | |
Registration fees | 28,929 | |
Audit | 37,220 | |
Legal | 631 | |
Miscellaneous | 1,792 | |
Total expenses before reductions | 1,774,205 | |
Expense reductions | (26,544) | 1,747,661 |
Net investment income (loss) | 2,008,941 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 19,312,171 | |
Foreign currency transactions | (106,551) | |
Total net realized gain (loss) |
| 19,205,620 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 17,839,218 | |
Assets and liabilities in foreign currencies | 323 | |
Total change in net unrealized appreciation (depreciation) |
| 17,839,541 |
Net gain (loss) | 37,045,161 | |
Net increase (decrease) in net assets resulting from operations | $ 39,054,102 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Insurance Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,008,941 | $ 1,097,886 |
Net realized gain (loss) | 19,205,620 | (2,761,494) |
Change in net unrealized appreciation (depreciation) | 17,839,541 | 56,104,001 |
Net increase (decrease) in net assets resulting from operations | 39,054,102 | 54,440,393 |
Distributions to shareholders from net investment income | (1,716,081) | (1,083,490) |
Share transactions | 127,403,521 | 65,680,133 |
Reinvestment of distributions | 1,680,552 | 1,053,143 |
Cost of shares redeemed | (68,548,769) | (46,500,482) |
Net increase (decrease) in net assets resulting from share transactions | 60,535,304 | 20,232,794 |
Redemption fees | 5,979 | 6,001 |
Total increase (decrease) in net assets | 97,879,304 | 73,595,698 |
|
|
|
Net Assets | ||
Beginning of period | 150,175,626 | 76,579,928 |
End of period (including undistributed net investment income of $141,242 and undistributed net investment income of $7,515, respectively) | $ 248,054,930 | $ 150,175,626 |
Other Information Shares | ||
Sold | 2,844,414 | 1,715,410 |
Issued in reinvestment of distributions | 36,150 | 26,936 |
Redeemed | (1,537,684) | (1,325,955) |
Net increase (decrease) | 1,342,880 | 416,391 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 41.55 | $ 23.95 | $ 54.02 | $ 69.38 | $ 68.72 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss)C | .47 | .34 | .51 | .45 | .44 |
Net realized and unrealized gain (loss) | 8.36 | 17.60 | (30.02) | (10.95) | 5.25 |
Total from investment operations | 8.83 | 17.94 | (29.51) | (10.50) | 5.69 |
Distributions from net investment income | (.34) | (.34) | (.54) | (.30) | (.40) |
Distributions from net realized gain | - | - | (.02) | (4.56) | (4.64) |
Total distributions | (.34) | (.34) | (.56) | (4.86) | (5.04) |
Redemption fees added to paid in capitalC | -H | -H | -H | -H | .01 |
Net asset value, end of period | $ 50.04 | $ 41.55 | $ 23.95 | $ 54.02 | $ 69.38 |
Total ReturnA,B | 21.31% | 74.97% | (54.83)% | (16.04)% | 8.33% |
Ratios to Average Net AssetsD,F |
|
|
|
|
|
Expenses before reductions | .93% | .99% | .97% | .93% | .98% |
Expenses net of fee waivers, if any | .93% | .99% | .97% | .93% | .98% |
Expenses net of all reductions | .91% | .97% | .97% | .93% | .98% |
Net investment income (loss) | 1.05% | .96% | 1.27% | .65% | .64% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 248,055 | $ 150,176 | $ 76,580 | $ 154,063 | $ 244,251 |
Portfolio turnover rateE | 193% | 215% | 426% | 60% | 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 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, 2011
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio (formerly Home Finance Portfolio), Financial Services Portfolio and Insurance Portfolio (the Funds) are funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds are non-diversified with the exception of Banking Portfolio and Financial Services 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.
2. Investments in Fidelity Central Funds.
The Funds 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year each Fund intends to qualify as a regulated investment company, including 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, 2011, 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. Financial Services Portfolio is subject to a tax imposed on realized short term capital gains on securities of certain issuers domiciled in India. An estimated deferred tax liability for net unrealized gains on these securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
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 foreign currency transactions, certain foreign taxes, equity-debt classifications, partnerships, deferred trustees compensation, net operating losses, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Banking Portfolio | $ 556,641,152 | $ 51,165,477 | $ (80,486,303) | $ (29,320,826) |
Brokerage and Investment Management Portfolio | 523,769,574 | 70,832,321 | (28,220,276) | 42,612,045 |
Consumer Finance Portfolio | 104,433,116 | 7,612,079 | (5,552,374) | 2,059,705 |
Financial Services Portfolio | 535,199,943 | 28,099,437 | (26,424,019) | 1,675,418 |
Insurance Portfolio | 214,492,430 | 36,956,025 | (793,029) | 36,162,996 |
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 for each Fund:
| Undistributed | Capital loss | Net unrealized appreciation |
Banking Portfolio | $ - | $ (26,069,664) | $ (29,321,092) |
Brokerage and Investment Management Portfolio | - | (96,741,956) | 42,602,769 |
Consumer Finance Portfolio | 23,001 | (147,052,496) | 2,059,705 |
Financial Services Portfolio | - | (72,824,687) | 1,633,260 |
Insurance Portfolio | 141,243 | (21,210,935) | 36,163,319 |
The tax character of distributions paid was as follows:
February 28, 2011 | Ordinary |
Banking Portfolio | $ 262,814 |
Brokerage and Investment Management Portfolio | 3,333,469 |
Consumer Finance Portfolio | 2,038,026 |
Financial Services Portfolio | 1,297,143 |
Insurance Portfolio | 1,716,081 |
February 28, 2010 | Ordinary |
Banking Portfolio | $ 4,369,898 |
Brokerage and Investment Management Portfolio | 3,004,230 |
Consumer Finance Portfolio | 2,931,320 |
Financial Services Portfolio | 5,281,876 |
Insurance Portfolio | 1,083,490 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 | 456,977,934 | 333,684,219 |
Brokerage and Investment Management Portfolio | 802,068,527 | 897,392,470 |
Consumer Finance Portfolio | 183,508,060 | 164,628,908 |
Financial Services Portfolio | 1,129,407,414 | 1,118,286,196 |
Insurance Portfolio | 413,811,706 | 358,890,980 |
Banking Portfolio and Brokerage and Investment Management 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.
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 |
Banking Portfolio | .30% | .26% | .56% |
Brokerage and Investment Management Portfolio | .30% | .26% | .56% |
Consumer Finance Portfolio | .30% | .26% | .56% |
Financial Services 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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Banking Portfolio | .26% |
|
Brokerage and Investment Management Portfolio | .26% |
|
Consumer Finance Portfolio | .30% |
|
Financial Services Portfolio | .28% |
|
Insurance Portfolio | .28% |
|
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 | $ 40,803 |
Brokerage and Investment Management Portfolio | 96,308 |
Consumer Finance Portfolio | 15,776 |
Financial Services Portfolio | 87,468 |
Insurance Portfolio | 11,463 |
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, Brokerage and Investment Management Portfolio and Financial Services Portfolio had no interfund loans outstanding. Banking Portfolio's open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Statement of Assets and Liabilities. 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 |
Banking Portfolio | Borrower | $ 7,591,947 | .44% | $ 1,769 |
Brokerage and Investment Management Portfolio | Borrower | 8,561,179 | .44% | 2,945 |
Financial Services Portfolio | Borrower | 6,014,717 | .45% | 4,530 |
Annual Report
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Banking Portfolio | $ 1,668 |
Brokerage and Investment Management Portfolio | 2,065 |
Consumer Finance Portfolio | 394 |
Financial Services Portfolio | 1,790 |
Insurance Portfolio | 661 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity as of and during the period was as follows:
| Total Security | Security Lending |
Banking Portfolio | $ 76,987 | $ 756 |
Brokerage and Investment Management Portfolio | 42,098 | - |
Consumer Finance Portfolio | 46,960 | - |
Financial Services Portfolio | 142,345 | - |
Insurance Portfolio | 35,718 | - |
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. All of the applicable expense reductions are noted in the table below.
| Brokerage |
Banking Portfolio | $ 67,394 |
Brokerage and Investment Management Portfolio | 109,212 |
Consumer Finance Portfolio | 30,308 |
Financial Services Portfolio | 166,181 |
Insurance Portfolio | 26,544 |
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
Notes to Financial Statements - continued
10. Other - continued
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 21% of the total outstanding shares of Insurance Portfolio. The Fidelity VIP FundsManager Portfolios were the owners of record, in the aggregate, of approximately 33% of the total outstanding shares of Insurance Portfolio. In addition, at the end of the period, Strategic Advisers U.S. Opportunity Fund was the owner of record of 10% or more of the total outstanding shares of the following funds.
| % of shares held |
Banking Portfolio | 15% |
Financial Services Portfolio | 10% |
Insurance Portfolio | 24% |
Mutual funds managed by Strategic Advisers, Inc., an FMR affiliate, were the owners of record, in the aggregate, of approximately 29% 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, Consumer Finance Portfolio (formerly Home Finance Portfolio), Financial Services Portfolio, and Insurance Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio (formerly Home Finance Portfolio), Financial Services Portfolio, and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 28, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 |
Consumer Finance Portfolio | 04/07/11 | 4/6/2011 | $0.005 | $0.00 |
Insurance Portfolio | 04/07/11 | 4/6/2011 | $0.03 | $0.00 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Banking Portfolio | 100% | 0% |
Brokerage and Investment Management Portfolio | 100% | 100% |
Consumer Finance Portfolio | 99% | 88% |
Financial Services Portfolio | 0% | 100% |
Insurance Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2010 | December 2010 |
Banking Portfolio | 100% | 0% |
Brokerage and Investment Management Portfolio | 100% | 100% |
Consumer Finance Portfolio | 99% | 89% |
Financial Services Portfolio | 0% | 100% |
Insurance Portfolio | 100% | 100% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of Consumer Finance Portfolio (formerly Home Finance Portfolio) shareholders was held on November 16, 2010. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
| # of | % of |
Affirmative | 51,097,438.76 | 87.062 |
Against | 5,276,040.00 | 8.990 |
Abstain | 2,317,235.90 | 3.948 |
TOTAL | 58,690,714.66 | 100.000 |
PROPOSAL 2 | ||
To modify the fund's fundamental concentration policy. | ||
| # of | % of |
Affirmative | 51,090,329.99 | 87.050 |
Against | 5,540,574.21 | 9.440 |
Abstain | 2,059,810.46 | 3.510 |
TOTAL | 58,690,714.66 | 100.000 |
PROPOSAL 3 | ||
To change the fund from a diversified fund to a non-diversified fund. | ||
| # of | % of |
Affirmative | 48,876,654.50 | 83.278 |
Against | 7,002,852.15 | 11.932 |
Abstain | 2,811,208.01 | 4.790 |
TOTAL | 58,690,714.66 | 100.000 |
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.
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
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Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Medical Delivery Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Biotechnology Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Health Care Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Medical Delivery Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Medical Equipment and Systems Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Pharmaceuticals Portfolio | Performance | |
| Management's Discussion | |
| 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.
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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, 2010 to February 28, 2011).
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 | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.10 | $ 4.68 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.53 | $ 4.31 |
Health Care Portfolio | .81% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,334.40 | $ 4.69 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.78 | $ 4.06 |
Medical Delivery Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,414.10 | $ 5.27 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Medical Equipment and Systems Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,346.20 | $ 4.94 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
Pharmaceuticals Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,208.40 | $ 5.09 |
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
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Biotechnology Portfolio | 9.11% | 1.69% | 0.35% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Rajiv Kaul, Portfolio Manager of Biotechnology Portfolio: During the past year, the fund returned 9.11%, topping the 6.78% gain of the MSCI® U.S. IM Biotechnology 25/50 Index but lagging the broadly based S&P 500®. Versus the MSCI index, the fund's performance was aided the most by stock selection in the biotechnology industry, where roughly 92% of the fund's net assets, on average, were invested during the period. A small out-of-index stake in health care equipment also lifted the fund's result. Alexion Pharmaceuticals was the top individual contributor on both a relative and absolute basis. In October, the company raised its financial guidance for 2010. The stock also benefited from an inexpensive valuation to start the period and positive data in a Phase 2 study of its drug Soliris® as a treatment for atypical Hemolytic Uremic Syndrome (aHUS). Underweighting three large, underperforming index components - Gilead Sciences, Celgene and Amgen - also aided performance. That said, Amgen was by far the fund's largest holding at period end, although it still was underweighted relative to the MSCI index. Amgen also was the fund's largest absolute detractor. In December, the share price of another contributor to fund performance, InterMune, soared from around $14 per share to almost $35 after the company announced a positive opinion from European drug regulators regarding the marketing of Esbriet®, a treatment for idiopathic pulmonary fibrosis, a progressive and fatal lung disease. Conversely, out-of-index exposure to the pharmaceuticals group held back the fund's performance. Most of the damage was attributable to a position in Auxilium Pharmaceuticals, the fund's biggest relative detractor. The stock suffered a loss of roughly 25% due to investor concern about the prospects for XIAFLEX®, the company's treatment for an uncommon hand deformity called Dupuytren's contracture, among other ailments. Other detractors included Acorda Therapeutics and underweighted exposures to strong-performing index components Biogen Idec and Genzyme. In the latter's case, the company received a takeover bid during the period from French drug firm Sanofi-Aventis, which lifted Genzyme's stock price. I sold Genzyme during the period to lock in profits. Lastly, the shares of Allos Therapeutics struggled during the period because of a slower-than-expected launch of FOLOTYN®, an injectable treatment for patients with relapsed or refractory peripheral T-cell lymphoma.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 17.6 | 12.0 |
Vertex Pharmaceuticals, Inc. | 7.6 | 3.7 |
Alexion Pharmaceuticals, Inc. | 7.3 | 7.2 |
United Therapeutics Corp. | 4.7 | 5.2 |
Gilead Sciences, Inc. | 4.6 | 12.9 |
Biogen Idec, Inc. | 4.3 | 2.3 |
BioMarin Pharmaceutical, Inc. | 4.1 | 2.3 |
Human Genome Sciences, Inc. | 2.9 | 3.3 |
InterMune, Inc. | 2.8 | 0.7 |
Acorda Therapeutics, Inc. | 2.5 | 3.7 |
| 58.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Biotechnology | 90.2% |
|
![]() | Pharmaceuticals | 8.6% |
|
![]() | Health Care Equipment & Supplies | 0.0% |
|
![]() | All Others* | 1.2% |
|
As of August 31, 2010 | |||
![]() | Biotechnology | 92.8% |
|
![]() | Pharmaceuticals | 6.8% |
|
![]() | Health Care Equipment & Supplies | 0.1% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Biotechnology Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
BIOTECHNOLOGY - 89.9% | |||
Biotechnology - 89.9% | |||
Acadia Pharmaceuticals, Inc. (a) | 169,688 | $ 256,229 | |
Acorda Therapeutics, Inc. (a) | 1,197,484 | 25,111,239 | |
Affymax, Inc. (a) | 78,204 | 498,942 | |
Agenus, Inc. (a)(d) | 372,100 | 338,611 | |
Alexion Pharmaceuticals, Inc. (a) | 764,067 | 73,564,371 | |
Alkermes, Inc. (a) | 779,658 | 11,172,499 | |
Allos Therapeutics, Inc. (a)(d) | 2,101,480 | 7,018,943 | |
Alnylam Pharmaceuticals, Inc. (a) | 258,102 | 2,833,960 | |
AMAG Pharmaceuticals, Inc. (a)(d) | 120,277 | 2,214,300 | |
Amarin Corp. PLC ADR (a) | 289,835 | 2,240,425 | |
Amgen, Inc. (a) | 3,471,675 | 178,201,081 | |
Amylin Pharmaceuticals, Inc. (a) | 885,403 | 13,546,666 | |
Antigenics, Inc. warrants 1/9/18 (a)(f) | 1,548,000 | 368,194 | |
ARIAD Pharmaceuticals, Inc. (a) | 968,539 | 5,820,919 | |
ArQule, Inc. (a) | 230,734 | 1,469,776 | |
AVEO Pharmaceuticals, Inc. | 244,739 | 3,372,503 | |
Biogen Idec, Inc. (a) | 639,287 | 43,727,231 | |
BioMarin Pharmaceutical, Inc. (a) | 1,710,501 | 41,838,854 | |
Bionovo, Inc. (a)(d) | 1,270,000 | 1,017,270 | |
Bionovo, Inc. warrants 1/21/16 (a) | 1,043,150 | 536,029 | |
Catalyst Pharmaceutical Partners, Inc. (a)(e) | 1,188,032 | 1,389,997 | |
Celera Corp. (a) | 556 | 3,536 | |
Celgene Corp. (a) | 78 | 4,142 | |
Cephalon, Inc. (a)(d) | 254,161 | 14,311,806 | |
Cepheid, Inc. (a) | 451,600 | 11,971,916 | |
Chelsea Therapeutics International Ltd. (a) | 218,240 | 901,331 | |
Cubist Pharmaceuticals, Inc. (a) | 176,708 | 3,875,206 | |
Dendreon Corp. (a) | 697,347 | 23,423,886 | |
Dynavax Technologies Corp. (a) | 920,300 | 2,751,697 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 159,800 | 1,706,664 | |
Exelixis, Inc. (a)(d) | 1,168,068 | 14,542,447 | |
Genomic Health, Inc. (a) | 147,181 | 3,714,848 | |
Gilead Sciences, Inc. (a) | 1,186,961 | 46,267,740 | |
Halozyme Therapeutics, Inc. (a) | 756,800 | 5,229,488 | |
Human Genome Sciences, Inc. (a) | 1,170,259 | 29,291,583 | |
ImmunoGen, Inc. (a) | 97,900 | 882,079 | |
Incyte Corp. (a)(d) | 1,157,180 | 15,830,222 | |
Inhibitex, Inc. (a)(d) | 661,321 | 1,554,104 | |
InterMune, Inc. (a)(d) | 779,933 | 28,553,347 | |
Ironwood Pharmaceuticals, Inc. Class A | 87,200 | 1,066,456 | |
Isis Pharmaceuticals, Inc. (a) | 4,610 | 42,043 | |
Keryx Biopharmaceuticals, Inc. (a)(d) | 397,300 | 1,569,335 | |
Lexicon Pharmaceuticals, Inc. (a)(d) | 4,058,474 | 7,873,440 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 900 | 9,756 | |
Medivation, Inc. (a)(d) | 309,287 | 5,344,479 | |
Metabolix, Inc. (a) | 1,400 | 12,712 | |
Micromet, Inc. (a) | 315,602 | 1,966,200 | |
Momenta Pharmaceuticals, Inc. (a)(d) | 281,385 | 3,905,624 | |
Myrexis, Inc. (a) | 4,379 | 16,772 | |
| |||
Shares | Value | ||
Neurocrine Biosciences, Inc. (a) | 662,435 | $ 4,471,436 | |
NPS Pharmaceuticals, Inc. (a) | 1,341,004 | 10,365,961 | |
ONYX Pharmaceuticals, Inc. (a) | 394,572 | 13,904,717 | |
OREXIGEN Therapeutics, Inc. (a)(d) | 593,600 | 1,935,136 | |
PDL BioPharma, Inc. | 3,012,033 | 16,716,783 | |
Pharmasset, Inc. (a) | 346,658 | 17,332,900 | |
Progenics Pharmaceuticals, Inc. (a) | 639,094 | 3,610,881 | |
Protalix BioTherapeutics, Inc. (a)(d) | 276,610 | 1,950,101 | |
Regeneron Pharmaceuticals, Inc. (a) | 386,999 | 14,036,454 | |
Rigel Pharmaceuticals, Inc. (a) | 496,353 | 3,469,507 | |
Sangamo Biosciences, Inc. (a)(d) | 443,972 | 3,671,648 | |
Savient Pharmaceuticals, Inc. (a)(d) | 564,987 | 5,446,475 | |
Seattle Genetics, Inc. (a)(d) | 809,231 | 12,017,080 | |
SIGA Technologies, Inc. (a)(d) | 509,088 | 6,821,779 | |
Targacept, Inc. (a) | 216,659 | 6,211,614 | |
Theravance, Inc. (a)(d) | 725,423 | 16,525,136 | |
United Therapeutics Corp. (a) | 707,994 | 47,740,035 | |
Vertex Pharmaceuticals, Inc. (a) | 1,656,735 | 77,319,822 | |
ZIOPHARM Oncology, Inc. (a) | 387,300 | 2,358,657 | |
Zogenix, Inc. | 221,107 | 902,117 | |
| 909,969,137 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.0% | |||
Health Care Equipment - 0.0% | |||
Alsius Corp. (a) | 314,300 | 3 | |
Aradigm Corp. (a) | 477,800 | 109,846 | |
| 109,849 | ||
Health Care Supplies - 0.0% | |||
Alimera Sciences, Inc. (a) | 400 | 3,192 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 113,041 | ||
PHARMACEUTICALS - 8.6% | |||
Pharmaceuticals - 8.6% | |||
AcelRx Pharmaceuticals, Inc. (e) | 1,041,900 | 3,771,678 | |
Adolor Corp. (a)(e) | 3,563,790 | 4,989,306 | |
Akorn, Inc. (a) | 283,227 | 1,583,239 | |
Ardea Biosciences, Inc. (a) | 64,300 | 1,704,593 | |
Auxilium Pharmaceuticals, Inc. (a)(d) | 752,204 | 16,902,024 | |
AVANIR Pharmaceuticals Class A (a)(d) | 3,397,620 | 12,809,027 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 234,700 | 1,762,597 | |
Cardiome Pharma Corp. (a) | 900 | 5,208 | |
Corcept Therapeutics, Inc. (a)(d) | 1,153,700 | 4,314,838 | |
Elan Corp. PLC sponsored ADR (a) | 1,465,400 | 9,305,290 | |
Jazz Pharmaceuticals, Inc. (a)(d) | 80,342 | 1,978,823 | |
NuPathe, Inc. | 17,100 | 133,893 | |
Optimer Pharmaceuticals, Inc. (a)(d) | 633,737 | 7,566,820 | |
Pacira Pharmaceuticals, Inc. | 410,900 | 2,835,210 | |
Questcor Pharmaceuticals, Inc. (a) | 984,489 | 12,758,977 | |
The Medicines Company (a) | 23,000 | 399,970 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
ViroPharma, Inc. (a) | 64,221 | $ 1,151,483 | |
XenoPort, Inc. (a)(d) | 436,757 | 3,175,223 | |
| 87,148,199 | ||
TOTAL COMMON STOCKS (Cost $969,196,313) | 997,230,377 | ||
Convertible Preferred Stocks - 0.3% | |||
|
|
|
|
BIOTECHNOLOGY - 0.3% | |||
Biotechnology - 0.3% | |||
Xenon Pharmaceuticals, Inc. Series E (a)(f) | 981,626 | 3,416,058 | |
Money Market Funds - 13.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 31,180,234 | 31,180,234 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 106,427,639 | 106,427,639 | |
TOTAL MONEY MARKET FUNDS (Cost $137,607,873) | 137,607,873 | ||
TOTAL INVESTMENT PORTFOLIO - 112.4% (Cost $1,113,528,324) | 1,138,254,308 | ||
NET OTHER ASSETS (LIABILITIES) - (12.4)% | (125,347,776) | ||
NET ASSETS - 100% | $ 1,012,906,532 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(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 $3,784,252 or 0.4% of net assets. |
Additional information on each restricted 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 | $ 9,971 |
Fidelity Securities Lending Cash Central Fund | 1,153,044 |
Total | $ 1,163,015 |
Other Affiliated Issuers |
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
AcelRx Pharmaceuticals, Inc. | $ - | $ 5,209,500 | $ - | $ - | $ 3,771,678 |
Adolor Corp. | 828,180 | 4,091,517 | 540,617 | - | 4,989,306 |
Biodel, Inc. | 7,849,719 | 953,466 | 8,641,352 | - | - |
Catalyst Pharmaceutical Partners, Inc. | - | 1,422,390 | 106,939 | - | 1,389,997 |
Total | $ 8,677,899 | $ 11,676,873 | $ 9,288,908 | $ - | $ 10,150,981 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 997,230,377 | $ 996,326,151 | $ 904,223 | $ 3 |
Convertible Preferred Stocks | 3,416,058 | - | - | 3,416,058 |
Money Market Funds | 137,607,873 | 137,607,873 | - | - |
Total Investments in Securities: | $ 1,138,254,308 | $ 1,133,934,024 | $ 904,223 | $ 3,416,061 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 3,428,944 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | 5,975 |
Cost of Purchases | - |
Proceeds of Sales | (18,858) |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 3,416,061 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ 5,975 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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, 2011, the Fund had a capital loss carryforward of approximately $65,361,069 all of which will expire in fiscal 2017. 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
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $102,400,925) - See accompanying schedule: Unaffiliated issuers (cost $964,798,779) | $ 990,495,454 |
|
Fidelity Central Funds (cost $137,607,873) | 137,607,873 |
|
Other affiliated issuers (cost $11,121,672) | 10,150,981 |
|
Total Investments (cost $1,113,528,324) |
| $ 1,138,254,308 |
Receivable for investments sold | 29,341,162 | |
Receivable for fund shares sold | 382,046 | |
Distributions receivable from Fidelity Central Funds | 235,711 | |
Prepaid expenses | 1,909 | |
Other receivables | 77,710 | |
Total assets | 1,168,292,846 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 47,262,980 | |
Payable for fund shares redeemed | 945,224 | |
Accrued management fee | 473,852 | |
Other affiliated payables | 244,544 | |
Other payables and accrued expenses | 32,075 | |
Collateral on securities loaned, at value | 106,427,639 | |
Total liabilities | 155,386,314 | |
|
|
|
Net Assets | $ 1,012,906,532 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,068,016,266 | |
Accumulated net investment loss | (880) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (79,834,838) | |
Net unrealized appreciation (depreciation) on investments | 24,725,984 | |
Net Assets, for 13,685,533 shares outstanding | $ 1,012,906,532 | |
Net Asset Value, offering price and redemption price per share ($1,012,906,532 ÷ 13,685,533 shares) | $ 74.01 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Special dividends |
| $ 1,653,672 |
Interest |
| 5,955 |
Income from Fidelity Central Funds (including $1,153,044 from security lending) |
| 1,163,015 |
Total income |
| 2,822,642 |
|
|
|
Expenses | ||
Management fee | $ 5,839,349 | |
Transfer agent fees | 2,724,329 | |
Accounting and security lending fees | 368,301 | |
Custodian fees and expenses | 50,366 | |
Independent trustees' compensation | 6,204 | |
Registration fees | 33,649 | |
Audit | 39,376 | |
Legal | 6,710 | |
Interest | 12,739 | |
Miscellaneous | 14,267 | |
Total expenses before reductions | 9,095,290 | |
Expense reductions | (124,789) | 8,970,501 |
Net investment income (loss) | (6,147,859) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 55,905,626 | |
Other affiliated issuers | (24,012,179) |
|
Foreign currency transactions | (10,492) | |
Total net realized gain (loss) |
| 31,882,955 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 62,328,597 | |
Assets and liabilities in foreign currencies | 370 | |
Total change in net unrealized appreciation (depreciation) |
| 62,328,967 |
Net gain (loss) | 94,211,922 | |
Net increase (decrease) in net assets resulting from operations | $ 88,064,063 |
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) | $ (6,147,859) | $ (6,905,926) |
Net realized gain (loss) | 31,882,955 | 41,684,326 |
Change in net unrealized appreciation (depreciation) | 62,328,967 | 197,662,471 |
Net increase (decrease) in net assets resulting from operations | 88,064,063 | 232,440,871 |
Share transactions | 182,973,057 | 133,358,248 |
Cost of shares redeemed | (326,801,243) | (449,320,941) |
Net increase (decrease) in net assets resulting from share transactions | (143,828,186) | (315,962,693) |
Redemption fees | 14,208 | 40,874 |
Total increase (decrease) in net assets | (55,749,915) | (83,480,948) |
|
|
|
Net Assets | ||
Beginning of period | 1,068,656,447 | 1,152,137,395 |
End of period (including accumulated net investment loss of $880 and undistributed net investment income of $15,003, respectively) | $ 1,012,906,532 | $ 1,068,656,447 |
Other Information Shares | ||
Sold | 2,655,819 | 2,188,551 |
Redeemed | (4,724,909) | (7,528,675) |
Net increase (decrease) | (2,069,090) | (5,340,124) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 67.83 | $ 54.62 | $ 62.59 | $ 63.89 | $ 68.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.41) F | (.39) G | (.38) H | (.53) | (.47) |
Net realized and unrealized gain (loss) | 6.59 | 13.60 | (7.60) | (.77) | (3.71) |
Total from investment operations | 6.18 | 13.21 | (7.98) | (1.30) | (4.18) |
Redemption fees added to paid in capital C | - K | - K | .01 | - K | .01 |
Net asset value, end of period | $ 74.01 | $ 67.83 | $ 54.62 | $ 62.59 | $ 63.89 |
Total Return A, B | 9.11% | 24.19% | (12.73)% | (2.03)% | (6.13)% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | .87% | .91% | .89% | .89% | .93% |
Expenses net of fee waivers, if any | .87% | .91% | .89% | .89% | .93% |
Expenses net of all reductions | .86% | .91% | .89% | .89% | .92% |
Net investment income (loss) | (.59)% F | (.64)% G | (.61)% H | (.79)% | (.75)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,012,907 | $ 1,068,656 | $ 1,152,137 | $ 1,088,003 | $ 1,369,309 |
Portfolio turnover rate E | 119% | 109% | 55% | 143% | 70% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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 (.75)%. GInvestment 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)%. HInvestment 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)%. IExpense 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. JFor the year ended February 29. KAmount 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Health Care Portfolio | 22.86% | 5.32% | 4.29% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Edward Yoon, Portfolio Manager of Health Care Portfolio: For the 12 months ending February 28, 2011, the fund returned 22.86%, significantly outperforming the 9.40% gain of its sector benchmark, the MSCI® U.S. IM Health Care 25/50 Index, while also outpacing the broadly based S&P 500®. Good overall positioning in pharmaceuticals and life science tools and services and effective stock picking in biotechnology and health care equipment helped the most versus the MSCI benchmark. The fund's strongest contribution came from Illumina, a genetic-analysis technology company benefiting from a recently introduced product that significantly reduces the cost of sequencing an individual's genome. An out-of-benchmark investment in specialty drug maker Valeant Pharmaceuticals International also helped. The stock got a boost when Valeant completed a very favorable acquisition of Biovail - a transaction that also enabled the firm to move its domicile from the United States to Canada. Also helping was Edwards Lifesciences, a maker of transcatheter heart valves, which are one of the most exciting new products in the medical device field. Underweightings in large-cap pharma stocks Johnson & Johnson, Abbott Laboratories and Merck helped, too, as these defensive holdings lagged when the market rose. An overweighting in Alexion Pharmaceuticals, a biotech firm, also contributed following the unexpectedly strong launch of Soliris®, the company's drug for a rare blood disease. On the other hand, an underweighting in managed health care stocks - including UnitedHealth Group - detracted from relative performance. I underweighted these companies here because I believed the direction of future federal health care policy was too unpredictable, but managed health care stocks recovered when the impact of health care reform turned out to be milder than expected. I overweighted InterMune, a biotechnology firm, but the stock lost ground when the U.S. Food and Drug Administration (FDA) required an additional clinical study for its blood-treatment drug. I underweighted Pfizer, along with the rest of the weak-performing large-cap pharma group, but the stock gained on investors' hopes that the company's new CEO would introduce a more effective business strategy. Another detractor was an overweighting in Orthovita, a small-cap medical device company that makes cement for spinal fusion. The stock lost ground as the volume of these procedures fell. Some of the stocks I've mentioned were sold from the fund 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
Health Care Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Medco Health Solutions, Inc. | 6.3 | 5.3 |
Illumina, Inc. | 5.9 | 4.7 |
Covidien PLC | 5.8 | 3.4 |
Gilead Sciences, Inc. | 4.2 | 1.8 |
McKesson Corp. | 4.0 | 2.1 |
Merck & Co., Inc. | 2.9 | 5.4 |
Valeant Pharmaceuticals International, Inc. (Canada) | 2.8 | 3.4 |
Pfizer, Inc. | 2.5 | 4.1 |
C. R. Bard, Inc. | 2.4 | 3.0 |
Edwards Lifesciences Corp. | 2.3 | 2.1 |
| 39.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Health Care Providers & Services | 23.8% |
|
![]() | Health Care Equipment & Supplies | 20.3% |
|
![]() | Biotechnology | 19.4% |
|
![]() | Life Sciences Tools & Services | 14.6% |
|
![]() | Pharmaceuticals | 14.5% |
|
![]() | All Others* | 7.4% |
|
As of August 31, 2010 | |||
![]() | Pharmaceuticals | 22.8% |
|
![]() | Biotechnology | 20.5% |
|
![]() | Health Care Providers & Services | 20.2% |
|
![]() | Health Care Equipment & Supplies | 17.2% |
|
![]() | Life Sciences Tools & Services | 10.3% |
|
![]() | All Others* | 9.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Health Care Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 97.7% | |||
Shares | Value | ||
BIOTECHNOLOGY - 19.4% | |||
Biotechnology - 19.4% | |||
Acorda Therapeutics, Inc. (a) | 300,000 | $ 6,291,000 | |
Affymax, Inc. (a)(d) | 400,000 | 2,552,000 | |
Alexion Pharmaceuticals, Inc. (a) | 450,000 | 43,326,000 | |
Amgen, Inc. (a) | 900,000 | 46,197,000 | |
Anthera Pharmaceuticals, Inc. (d) | 1,000,000 | 5,440,000 | |
ARIAD Pharmaceuticals, Inc. (a)(d) | 2,000,000 | 12,020,000 | |
ArQule, Inc. (a) | 993,300 | 6,327,321 | |
AVEO Pharmaceuticals, Inc. | 120,000 | 1,653,600 | |
AVEO Pharmaceuticals, Inc. (f) | 117,323 | 1,616,711 | |
Biogen Idec, Inc. (a) | 350,000 | 23,940,000 | |
BioMarin Pharmaceutical, Inc. (a) | 1,250,000 | 30,575,000 | |
Chelsea Therapeutics International Ltd. (a) | 1,280,000 | 5,286,400 | |
Dynavax Technologies Corp. (a) | 2,700,000 | 8,073,000 | |
Gilead Sciences, Inc. (a) | 2,150,000 | 83,807,000 | |
Human Genome Sciences, Inc. (a) | 311,390 | 7,794,092 | |
Incyte Corp. (a)(d) | 800,000 | 10,944,000 | |
Inhibitex, Inc. (a) | 1,000,000 | 2,350,000 | |
Medivir AB (B Shares) (a) | 570,000 | 12,555,958 | |
Micromet, Inc. (a) | 395,347 | 2,463,012 | |
Neurocrine Biosciences, Inc. (a) | 450,000 | 3,037,500 | |
Seattle Genetics, Inc. (a) | 650,000 | 9,652,500 | |
Targacept, Inc. (a) | 466,367 | 13,370,742 | |
Theravance, Inc. (a) | 520,000 | 11,845,600 | |
United Therapeutics Corp. (a) | 400,000 | 26,972,000 | |
YM Biosciences, Inc. (a) | 742,000 | 1,780,036 | |
ZIOPHARM Oncology, Inc. (a)(d) | 1,100,100 | 6,699,609 | |
| 386,570,081 | ||
DIVERSIFIED CONSUMER SERVICES - 0.5% | |||
Specialized Consumer Services - 0.5% | |||
Carriage Services, Inc. (a)(e) | 996,904 | 5,682,353 | |
Stewart Enterprises, Inc. Class A | 690,000 | 5,257,800 | |
| 10,940,153 | ||
FOOD & STAPLES RETAILING - 0.5% | |||
Drug Retail - 0.5% | |||
Droga Raia SA | 82,000 | 1,168,049 | |
Rite Aid Corp. (a) | 6,000,000 | 7,860,000 | |
| 9,028,049 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 20.3% | |||
Health Care Equipment - 19.1% | |||
American Medical Systems Holdings, Inc. (a) | 900,000 | 19,719,000 | |
ArthroCare Corp. (a) | 280,000 | 9,657,200 | |
Baxter International, Inc. | 600,000 | 31,890,000 | |
Boston Scientific Corp. (a) | 3,000,000 | 21,480,000 | |
C. R. Bard, Inc. | 480,000 | 46,924,800 | |
Covidien PLC | 2,250,000 | 115,762,500 | |
| |||
Shares | Value | ||
Edwards Lifesciences Corp. (a) | 550,000 | $ 46,772,000 | |
Genmark Diagnostics, Inc. | 280,001 | 1,206,804 | |
HeartWare International, Inc. (a)(d) | 141,200 | 11,872,096 | |
Hologic, Inc. (a) | 700,000 | 14,126,000 | |
Masimo Corp. | 600,000 | 18,084,000 | |
Orthofix International NV (a) | 200,000 | 6,320,000 | |
Orthovita, Inc. (a) | 2,700,000 | 6,426,000 | |
St. Jude Medical, Inc. | 250,000 | 11,970,000 | |
William Demant Holding AS (a) | 136,700 | 11,601,794 | |
Wright Medical Group, Inc. (a) | 380,000 | 6,015,400 | |
| 379,827,594 | ||
Health Care Supplies - 1.2% | |||
Cooper Companies, Inc. | 220,000 | 13,600,400 | |
RTI Biologics, Inc. (a) | 2,683,274 | 7,218,007 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 1,400,000 | 3,451,464 | |
| 24,269,871 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 404,097,465 | ||
HEALTH CARE PROVIDERS & SERVICES - 23.8% | |||
Health Care Distributors & Services - 4.0% | |||
Amplifon SpA | 144,296 | 784,566 | |
McKesson Corp. | 1,000,000 | 79,280,000 | |
| 80,064,566 | ||
Health Care Facilities - 3.3% | |||
Capital Senior Living Corp. (a) | 40,900 | 343,151 | |
Community Health Systems, Inc. (a) | 280,000 | 11,443,600 | |
Emeritus Corp. (a) | 372,980 | 8,776,219 | |
Hanger Orthopedic Group, Inc. (a) | 400,000 | 10,760,000 | |
Kindred Healthcare, Inc. (a) | 600,000 | 14,952,000 | |
LCA-Vision, Inc. (a) | 700,000 | 4,949,000 | |
Sunrise Senior Living, Inc. (a) | 1,200,000 | 13,668,000 | |
| 64,891,970 | ||
Health Care Services - 14.2% | |||
Accretive Health, Inc. | 300,000 | 6,099,000 | |
Air Methods Corp. (a) | 200,000 | 11,608,000 | |
Express Scripts, Inc. (a) | 700,000 | 39,354,000 | |
Fresenius Medical Care AG & Co. KGaA | 380,000 | 25,158,090 | |
HMS Holdings Corp. (a) | 300,000 | 22,668,000 | |
Laboratory Corp. of America Holdings (a) | 150,000 | 13,519,500 | |
Medco Health Solutions, Inc. (a) | 2,050,000 | 126,362,000 | |
Omnicare, Inc. | 500,000 | 14,315,000 | |
Sun Healthcare Group, Inc. (a) | 670,000 | 9,849,000 | |
Team Health Holdings, Inc. (a) | 700,000 | 12,943,000 | |
| 281,875,590 | ||
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Managed Health Care - 2.3% | |||
CIGNA Corp. | 600,000 | $ 25,242,000 | |
UnitedHealth Group, Inc. | 500,000 | 21,290,000 | |
| 46,532,000 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 473,364,126 | ||
HEALTH CARE TECHNOLOGY - 2.1% | |||
Health Care Technology - 2.1% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 1,500,000 | 32,025,000 | |
Computer Programs & Systems, Inc. | 200,000 | 10,802,000 | |
| 42,827,000 | ||
INTERNET SOFTWARE & SERVICES - 0.6% | |||
Internet Software & Services - 0.6% | |||
WebMD Health Corp. (a) | 202,169 | 11,725,802 | |
LIFE SCIENCES TOOLS & SERVICES - 14.6% | |||
Life Sciences Tools & Services - 14.6% | |||
Agilent Technologies, Inc. (a) | 1,100,000 | 46,288,000 | |
Bruker BioSciences Corp. (a) | 606,900 | 11,646,411 | |
Covance, Inc. (a) | 550,000 | 31,036,500 | |
Illumina, Inc. (a)(d) | 1,700,000 | 117,980,000 | |
PAREXEL International Corp. (a) | 350,000 | 8,214,500 | |
QIAGEN NV (a)(d) | 1,500,000 | 30,945,000 | |
Thermo Fisher Scientific, Inc. (a) | 800,000 | 44,656,000 | |
| 290,766,411 | ||
MACHINERY - 0.8% | |||
Industrial Machinery - 0.8% | |||
Pall Corp. | 280,000 | 15,220,800 | |
PERSONAL PRODUCTS - 0.3% | |||
Personal Products - 0.3% | |||
Prestige Brands Holdings, Inc. (a) | 560,000 | 6,171,200 | |
PHARMACEUTICALS - 14.5% | |||
Pharmaceuticals - 14.5% | |||
Ardea Biosciences, Inc. (a)(d) | 715,000 | 18,954,650 | |
Cardiome Pharma Corp. (a) | 1,200,000 | 6,943,629 | |
Columbia Laboratories, Inc. (a) | 1,000,000 | 3,490,000 | |
Merck & Co., Inc. | 1,800,000 | 58,626,000 | |
Optimer Pharmaceuticals, Inc. (a)(d) | 530,000 | 6,328,200 | |
Perrigo Co. | 400,000 | 30,572,000 | |
Pfizer, Inc. | 2,600,000 | 50,024,000 | |
Piramal Healthcare Ltd. | 700,000 | 7,086,601 | |
Shire PLC sponsored ADR | 425,000 | 36,129,250 | |
| |||
Shares | Value | ||
Valeant Pharmaceuticals International, Inc. (Canada) (d) | 1,400,000 | $ 56,201,802 | |
Watson Pharmaceuticals, Inc. (a) | 250,000 | 13,997,500 | |
| 288,353,632 | ||
SOFTWARE - 0.3% | |||
Application Software - 0.3% | |||
Nuance Communications, Inc. (a) | 350,000 | 6,531,000 | |
TOTAL COMMON STOCKS (Cost $1,469,407,298) | 1,945,595,719 | ||
Money Market Funds - 6.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 74,153,423 | 74,153,423 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 59,021,444 | 59,021,444 | |
TOTAL MONEY MARKET FUNDS (Cost $133,174,867) | 133,174,867 | ||
TOTAL INVESTMENT PORTFOLIO - 104.4% (Cost $1,602,582,165) | 2,078,770,586 | ||
NET OTHER ASSETS (LIABILITIES) - (4.4)% | (87,166,399) | ||
NET ASSETS - 100% | $ 1,991,604,187 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(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 $1,616,711 or 0.1% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
AVEO Pharmaceuticals, Inc. | 10/28/10 | $ 1,583,861 |
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 | $ 71,038 |
Fidelity Securities Lending Cash Central Fund | 770,791 |
Total | $ 841,829 |
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. | $ 3,744,692 | $ 365,820 | $ - | $ - | $ 5,682,353 |
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 | 84.3% |
Ireland | 5.8% |
Canada | 3.3% |
Bailiwick of Jersey | 1.8% |
Netherlands | 1.6% |
Germany | 1.3% |
Others (Individually Less Than 1%) | 1.9% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $1,010,863 all of which will expire in fiscal 2018. 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
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $57,162,153) - See accompanying schedule: Unaffiliated issuers (cost $1,463,707,033) | $ 1,939,913,366 |
|
Fidelity Central Funds (cost $133,174,867) | 133,174,867 |
|
Other affiliated issuers (cost $5,700,265) | 5,682,353 |
|
Total Investments (cost $1,602,582,165) |
| $ 2,078,770,586 |
Receivable for investments sold | 2,048,258 | |
Receivable for fund shares sold | 2,409,410 | |
Dividends receivable | 739,375 | |
Distributions receivable from Fidelity Central Funds | 14,271 | |
Prepaid expenses | 3,186 | |
Other receivables | 235,381 | |
Total assets | 2,084,220,467 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 30,174,073 | |
Payable for fund shares redeemed | 2,042,574 | |
Accrued management fee | 913,045 | |
Other affiliated payables | 381,192 | |
Other payables and accrued expenses | 83,952 | |
Collateral on securities loaned, at value | 59,021,444 | |
Total liabilities | 92,616,280 | |
|
|
|
Net Assets | $ 1,991,604,187 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,526,653,595 | |
Distributions in excess of net investment income | (58,693) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,154,969) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 476,164,254 | |
Net Assets, for 14,870,754 shares outstanding | $ 1,991,604,187 | |
Net Asset Value, offering price and redemption price per share ($1,991,604,187 ÷ 14,870,754 shares) | $ 133.93 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 13,656,239 |
Interest |
| 69 |
Income from Fidelity Central Funds (including $770,791 from security lending) |
| 841,829 |
Total income |
| 14,498,137 |
|
|
|
Expenses | ||
Management fee | $ 9,548,352 | |
Transfer agent fees | 3,770,150 | |
Accounting and security lending fees | 542,296 | |
Custodian fees and expenses | 94,118 | |
Independent trustees' compensation | 9,653 | |
Appreciation in deferred trustee compensation account | 220 | |
Registration fees | 40,436 | |
Audit | 41,101 | |
Legal | 6,675 | |
Miscellaneous | 21,200 | |
Total expenses before reductions | 14,074,201 | |
Expense reductions | (125,212) | 13,948,989 |
Net investment income (loss) | 549,148 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 153,051,183 | |
Foreign currency transactions | 17,786 | |
Total net realized gain (loss) |
| 153,068,969 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 200,848,285 | |
Assets and liabilities in foreign currencies | (6,023) | |
Total change in net unrealized appreciation (depreciation) |
| 200,842,262 |
Net gain (loss) | 353,911,231 | |
Net increase (decrease) in net assets resulting from operations | $ 354,460,379 |
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) | $ 549,148 | $ 1,003,964 |
Net realized gain (loss) | 153,068,969 | 166,497,738 |
Change in net unrealized appreciation (depreciation) | 200,842,262 | 388,977,625 |
Net increase (decrease) in net assets resulting from operations | 354,460,379 | 556,479,327 |
Distributions to shareholders from net investment income | (2,405,048) | (3,816,801) |
Distributions to shareholders from net realized gain | (79,263) | (76,430) |
Total distributions | (2,484,311) | (3,893,231) |
Share transactions | 288,101,353 | 274,942,512 |
Reinvestment of distributions | 2,341,444 | 3,676,939 |
Cost of shares redeemed | (378,577,968) | (294,634,876) |
Net increase (decrease) in net assets resulting from share transactions | (88,135,171) | (16,015,425) |
Redemption fees | 20,826 | 29,014 |
Total increase (decrease) in net assets | 263,861,723 | 536,599,685 |
|
|
|
Net Assets | ||
Beginning of period | 1,727,742,464 | 1,191,142,779 |
End of period (including distributions in excess of net investment income of $58,693 and distributions in excess of net investment income of $31,404, respectively) | $ 1,991,604,187 | $ 1,727,742,464 |
Other Information Shares | ||
Sold | 2,400,177 | 2,790,134 |
Issued in reinvestment of distributions | 19,223 | 42,377 |
Redeemed | (3,375,250) | (3,179,440) |
Net increase (decrease) | (955,850) | (346,929) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 109.17 | $ 73.65 | $ 114.24 | $ 126.78 | $ 139.09 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .04 | .06 | .42 | .39 F | .39 |
Net realized and unrealized gain (loss) | 24.90 | 35.71 | (35.98) | 1.63 | 4.49 |
Total from investment operations | 24.94 | 35.77 | (35.56) | 2.02 | 4.88 |
Distributions from net investment income | (.17) | (.25) | (.37) | (.39) | (.20) |
Distributions from net realized gain | (.01) | (.01) | (4.66) | (14.17) | (16.99) |
Total distributions | (.18) | (.25) J | (5.03) | (14.56) | (17.19) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 133.93 | $ 109.17 | $ 73.65 | $ 114.24 | $ 126.78 |
Total Return A, B | 22.86% | 48.65% | (32.34)% | .72% | 4.13% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .82% | .88% | .86% | .85% | .88% |
Expenses net of fee waivers, if any | .82% | .88% | .86% | .85% | .88% |
Expenses net of all reductions | .82% | .87% | .86% | .84% | .87% |
Net investment income (loss) | .03% | .07% | .44% | .30% F | .31% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,991,604 | $ 1,727,742 | $ 1,191,143 | $ 1,948,147 | $ 2,073,783 |
Portfolio turnover rate E | 99% | 116% | 173% | 120% | 91% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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%. GExpense 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. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Medical Delivery Portfolio | 24.65% | 3.90% | 10.61% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Delivery Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Andrew Hatem, Portfolio Manager of Medical Delivery Portfolio: For the 12 months ending February 28, 2011, the fund returned 24.65%, outperforming both the 22.46% advance of its industry benchmark, the MSCI® U.S. IM Health Care Providers & Services 25/50 Index, and the broadly based S&P 500®. Relative to the MSCI index, the fund benefited from strong stock selection, particularly in the health care services and health care facilities groups. In terms of individual issuers, contributions came from health care services company Accretive Health, senior living community operator Sunrise Senior Living, health care technology firm SXC Health Solutions, life science tools and services company Illumina, an underweighting in diagnostic test provider Quest Diagnostics, an overweighting in hospital operator Tenet Healthcare, and an investment in health care services company HealthGrades. Conversely, the fund was hurt by an underweighted position in managed health care and stock picks in health care equipment and other out-of-benchmark sectors. Individual detractors included an underweighting in managed care firm UnitedHealth Group - the largest index component - and not owning AMERIGROUP, a Medicaid HMO. Additionally, investments in pharmacy benefit manager Medco Health Solutions, home-dialysis device manufacturer NxStage Medical, Brazilian lab firm Fleury and not owning health care facilities operator Psychiatric Solutions hampered performance. Several of the stocks I've 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, 2011 | ||
| % of fund's | % of fund's net assets |
Medco Health Solutions, Inc. | 10.9 | 10.6 |
Express Scripts, Inc. | 10.5 | 11.5 |
UnitedHealth Group, Inc. | 7.7 | 11.0 |
McKesson Corp. | 7.5 | 6.9 |
Accretive Health, Inc. | 4.5 | 0.9 |
Humana, Inc. | 3.7 | 4.9 |
CIGNA Corp. | 3.7 | 5.0 |
AmerisourceBergen Corp. | 3.1 | 4.1 |
SXC Health Solutions Corp. | 2.9 | 2.4 |
Catalyst Health Solutions, Inc. | 2.7 | 3.4 |
| 57.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Health Care Providers & Services | 81.2% |
|
![]() | Food & Staples Retailing | 5.9% |
|
![]() | Health Care Technology | 5.3% |
|
![]() | Life Sciences Tools & Services | 3.4% |
|
![]() | Health Care Equipment & Supplies | 1.8% |
|
![]() | All Others* | 2.4% |
|
As of August 31, 2010 | |||
![]() | Health Care Providers & Services | 82.9% |
|
![]() | Health Care Technology | 6.9% |
|
![]() | Life Sciences Tools & Services | 4.1% |
|
![]() | Food & Staples Retailing | 3.5% |
|
![]() | Health Care Equipment & Supplies | 1.4% |
|
![]() | All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Delivery Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.4% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.6% | |||
Biotechnology - 0.6% | |||
ARIAD Pharmaceuticals, Inc. (a) | 502,100 | $ 3,017,621 | |
Nanosphere, Inc. (a) | 175,350 | 576,902 | |
| 3,594,523 | ||
FOOD & STAPLES RETAILING - 5.9% | |||
Drug Retail - 5.9% | |||
CVS Caremark Corp. | 169,100 | 5,590,446 | |
Droga Raia SA | 27,000 | 384,602 | |
Drogasil SA | 1,518,300 | 11,589,380 | |
Rite Aid Corp. (a) | 4,878,200 | 6,390,442 | |
Walgreen Co. | 218,000 | 9,448,120 | |
| 33,402,990 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.8% | |||
Health Care Equipment - 1.6% | |||
CareFusion Corp. (a) | 133,400 | 3,644,488 | |
NxStage Medical, Inc. (a) | 267,900 | 5,526,777 | |
| 9,171,265 | ||
Health Care Supplies - 0.2% | |||
RTI Biologics, Inc. (a) | 251,324 | 676,062 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 9,847,327 | ||
HEALTH CARE PROVIDERS & SERVICES - 81.2% | |||
Health Care Distributors & Services - 11.1% | |||
AmerisourceBergen Corp. | 467,352 | 17,717,314 | |
Cardinal Health, Inc. | 56,300 | 2,344,332 | |
Henry Schein, Inc. (a) | 7,100 | 489,758 | |
McKesson Corp. | 536,700 | 42,549,576 | |
| 63,100,980 | ||
Health Care Facilities - 8.3% | |||
Brookdale Senior Living, Inc. (a) | 466,600 | 12,546,874 | |
Capital Senior Living Corp. (a) | 345,600 | 2,899,584 | |
Community Health Systems, Inc. (a) | 50,500 | 2,063,935 | |
Hanger Orthopedic Group, Inc. (a) | 145,000 | 3,900,500 | |
Kindred Healthcare, Inc. (a) | 203,900 | 5,081,188 | |
LifePoint Hospitals, Inc. (a) | 45,000 | 1,754,100 | |
Sunrise Senior Living, Inc. (a)(d) | 1,087,540 | 12,387,081 | |
Tenet Healthcare Corp. (a) | 515,500 | 3,701,290 | |
Universal Health Services, Inc. Class B | 62,000 | 2,834,020 | |
| 47,168,572 | ||
Health Care Services - 37.4% | |||
Accretive Health, Inc. (d) | 1,243,804 | 25,286,535 | |
Catalyst Health Solutions, Inc. (a) | 331,000 | 14,964,510 | |
DaVita, Inc. (a) | 59,100 | 4,690,767 | |
Express Scripts, Inc. (a) | 1,061,300 | 59,666,286 | |
Fleury SA | 501,800 | 6,650,252 | |
| |||
Shares | Value | ||
Fresenius Medical Care AG & Co. KGaA sponsored ADR (d) | 53,400 | $ 3,544,692 | |
Laboratory Corp. of America Holdings (a) | 2,000 | 180,260 | |
Lincare Holdings, Inc. | 42,850 | 1,257,219 | |
Medco Health Solutions, Inc. (a) | 1,004,141 | 61,895,251 | |
Omnicare, Inc. | 388,600 | 11,125,618 | |
Quest Diagnostics, Inc. | 65,500 | 3,717,125 | |
Rural/Metro Corp. (a) | 430,963 | 6,460,135 | |
Team Health Holdings, Inc. (a) | 669,100 | 12,371,659 | |
| 211,810,309 | ||
Managed Health Care - 24.4% | |||
Aetna, Inc. | 135,256 | 5,053,164 | |
Amil Participacoes SA | 741,300 | 7,574,288 | |
Centene Corp. (a) | 169,300 | 5,158,571 | |
CIGNA Corp. | 495,700 | 20,854,099 | |
Health Net, Inc. (a) | 58,000 | 1,706,360 | |
Healthspring, Inc. (a) | 130,000 | 4,893,200 | |
Humana, Inc. (a) | 323,072 | 21,002,911 | |
Metropolitan Health Networks, Inc. (a) | 662,000 | 3,290,140 | |
Triple-S Management Corp. (a) | 75,000 | 1,482,000 | |
UnitedHealth Group, Inc. | 1,023,797 | 43,593,276 | |
Wellcare Health Plans, Inc. (a) | 233,800 | 8,779,190 | |
WellPoint, Inc. | 220,500 | 14,656,635 | |
| 138,043,834 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 460,123,695 | ||
HEALTH CARE TECHNOLOGY - 5.3% | |||
Health Care Technology - 5.3% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 373,400 | 7,972,090 | |
Cerner Corp. (a) | 59,800 | 6,006,910 | |
SXC Health Solutions Corp. (a) | 329,400 | 16,241,921 | |
| 30,220,921 | ||
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
WebMD Health Corp. (a) | 8,400 | 487,200 | |
LIFE SCIENCES TOOLS & SERVICES - 3.4% | |||
Life Sciences Tools & Services - 3.4% | |||
Agilent Technologies, Inc. (a) | 169,700 | 7,140,976 | |
Illumina, Inc. (a) | 148,900 | 10,333,660 | |
QIAGEN NV (a) | 86,200 | 1,778,306 | |
Sequenom, Inc. (a) | 15,921 | 97,755 | |
| 19,350,697 | ||
PHARMACEUTICALS - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Endocyte, Inc. | 51,000 | 373,830 | |
TOTAL COMMON STOCKS (Cost $395,165,184) | 557,401,183 | ||
Money Market Funds - 5.9% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 11,855,293 | $ 11,855,293 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 21,301,750 | 21,301,750 | |
TOTAL MONEY MARKET FUNDS (Cost $33,157,043) | 33,157,043 | ||
TOTAL INVESTMENT PORTFOLIO - 104.3% (Cost $428,322,227) | 590,558,226 | ||
NET OTHER ASSETS (LIABILITIES) - (4.3)% | (24,158,427) | ||
NET ASSETS - 100% | $ 566,399,799 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 18,043 |
Fidelity Securities Lending Cash Central Fund | 12,884 |
Total | $ 30,927 |
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, 2011, the Fund had a capital loss carryforward of approximately $47,219,442 all of which will expire in fiscal 2018. 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
Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $20,741,015) - See accompanying schedule: Unaffiliated issuers (cost $395,165,184) | $ 557,401,183 |
|
Fidelity Central Funds (cost $33,157,043) | 33,157,043 |
|
Total Investments (cost $428,322,227) |
| $ 590,558,226 |
Receivable for fund shares sold | 2,440,266 | |
Dividends receivable | 209,445 | |
Distributions receivable from Fidelity Central Funds | 5,327 | |
Prepaid expenses | 815 | |
Other receivables | 14,115 | |
Total assets | 593,228,194 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,522,151 | |
Payable for fund shares redeemed | 601,508 | |
Accrued management fee | 250,841 | |
Other affiliated payables | 118,964 | |
Other payables and accrued expenses | 33,181 | |
Collateral on securities loaned, at value | 21,301,750 | |
Total liabilities | 26,828,395 | |
|
|
|
Net Assets | $ 566,399,799 | |
Net Assets consist of: |
| |
Paid in capital | $ 454,744,094 | |
Accumulated net investment loss | (478,192) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (50,102,758) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 162,236,655 | |
Net Assets, for 10,239,183 shares outstanding | $ 566,399,799 | |
Net Asset Value, offering price and redemption price per share ($566,399,799 ÷ 10,239,183 shares) | $ 55.32 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,422,846 |
Interest |
| 40,539 |
Income from Fidelity Central Funds (including $12,884 from security lending) |
| 30,927 |
Total income |
| 1,494,312 |
|
|
|
Expenses | ||
Management fee | $ 2,466,733 | |
Transfer agent fees | 1,183,908 | |
Accounting and security lending fees | 172,062 | |
Custodian fees and expenses | 26,632 | |
Independent trustees' compensation | 2,480 | |
Registration fees | 31,838 | |
Audit | 40,377 | |
Legal | 1,662 | |
Interest | 1,325 | |
Miscellaneous | 5,229 | |
Total expenses before reductions | 3,932,246 | |
Expense reductions | (46,819) | 3,885,427 |
Net investment income (loss) | (2,391,115) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 36,682,282 | |
Foreign currency transactions | (564,904) | |
Total net realized gain (loss) |
| 36,117,378 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 67,042,804 | |
Assets and liabilities in foreign currencies | 780 | |
Total change in net unrealized appreciation (depreciation) |
| 67,043,584 |
Net gain (loss) | 103,160,962 | |
Net increase (decrease) in net assets resulting from operations | $ 100,769,847 |
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) | $ (2,391,115) | $ (2,292,329) |
Net realized gain (loss) | 36,117,378 | (15,571,450) |
Change in net unrealized appreciation (depreciation) | 67,043,584 | 187,471,791 |
Net increase (decrease) in net assets resulting from operations | 100,769,847 | 169,608,012 |
Share transactions | 180,142,990 | 190,787,013 |
Cost of shares redeemed | (180,637,820) | (157,818,031) |
Net increase (decrease) in net assets resulting from share transactions | (494,830) | 32,968,982 |
Redemption fees | 15,249 | 29,133 |
Total increase (decrease) in net assets | 100,290,266 | 202,606,127 |
|
|
|
Net Assets | ||
Beginning of period | 466,109,533 | 263,503,406 |
End of period (including accumulated net investment loss of $478,192 and accumulated net investment loss of $221, respectively) | $ 566,399,799 | $ 466,109,533 |
Other Information Shares | ||
Sold | 3,704,946 | 4,746,289 |
Redeemed | (3,969,096) | (4,565,603) |
Net increase (decrease) | (264,150) | 180,686 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 44.38 | $ 25.53 | $ 45.27 | $ 51.02 | $ 54.98 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.25) | (.24) | (.18) | .11 F | (.29) |
Net realized and unrealized gain (loss) | 11.19 | 19.09 | (19.18) | (1.69) | 1.20 |
Total from investment operations | 10.94 | 18.85 | (19.36) | (1.58) | .91 |
Distributions from net investment income | - | - | (.03) | - | - |
Distributions from net realized gain | - | - | (.35) | (4.17) | (4.88) |
Total distributions | - | - | (.38) | (4.17) | (4.88) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 55.32 | $ 44.38 | $ 25.53 | $ 45.27 | $ 51.02 |
Total Return A, B | 24.65% | 73.83% | (43.05)% | (4.00)% | 2.23% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .89% | .96% | .94% | .92% | .95% |
Expenses net of fee waivers, if any | .89% | .96% | .94% | .92% | .95% |
Expenses net of all reductions | .88% | .96% | .94% | .91% | .94% |
Net investment income (loss) | (.54)% | (.67)% | (.50)% | .22% F | (.58)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 566,400 | $ 466,110 | $ 263,503 | $ 540,497 | $ 643,641 |
Portfolio turnover rate E | 55% | 50% | 122% | 113% | 92% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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)%. GExpense 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. HFor the year ended February 29. IAmount 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Medical Equipment and Systems Portfolio | 17.12% | 8.26% | 9.55% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Edward Yoon, Portfolio Manager of Medical Equipment and Systems Portfolio: For the 12 months ending February 28, 2011, the portfolio returned 17.12%, substantially outpacing the 10.57% gain of the MSCI® U.S. IM Health Care Equipment & Supplies 25/50 Index but lagging the broadly based S&P 500®. Effective stock picking in both health care equipment and life science tools and services - an out-of-index segment - accounted for most of the fund's outperformance versus the MSCI index. The strongest contribution came from Illumina, which recently introduced a product that significantly reduces the cost of sequencing an individual's genome. The fund's performance also benefited from a large underweighting in major index component Medtronic - a producer of cardiac and other medical devices - which lost value as a result of slowing market growth and increased pricing pressure. Also helping was an investment in Edwards Lifesciences, a maker of transcatheter heart valves - one of the most exciting new products in the medical device field. An investment in HeartWare International, an Australian producer of miniaturized ventricular assistance devices for treating heart failure, helped as well. The stock of Agilent Technologies, a non-benchmark producer of equipment for testing food and water, advanced in response to the company's completion of an attractive acquisition during the period. The stock of contact-lens maker Cooper Companies gained ground, thanks to a successful turnaround. An underweighting in Intuitive Surgical, maker of the da Vinci® Surgical System for minimally invasive procedures, also was helpful. On the other hand, underweighted positions in orthopedics companies Stryker and Zimmer Holdings detracted, as the improving economy spurred investor expectations of a rebound in orthopedic procedures. I did not own the strong-performing stock of index component IDEXX Laboratories, which makes veterinary and food/water safety products, and this stance detracted as well. I had an underweighted position in diagnostic research equipment maker Beckman Coulter when diversified medical equipment manufacturer Danaher agreed to acquire the company at a premium to its current share price. The gain detracted from the fund's relative performance. I overweighted Orthovita, a small-cap medical device company that makes cement for spinal fusion, but its shares lost value as the volume of these procedures declined. Some of the positions mentioned 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
Medical Equipment and Systems Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Covidien PLC | 14.2 | 10.0 |
Baxter International, Inc. | 9.1 | 2.9 |
C. R. Bard, Inc. | 6.6 | 7.2 |
Illumina, Inc. | 5.9 | 4.4 |
St. Jude Medical, Inc. | 5.4 | 3.0 |
Edwards Lifesciences Corp. | 5.0 | 4.7 |
Medco Health Solutions, Inc. | 4.4 | 3.3 |
Boston Scientific Corp. | 4.2 | 0.9 |
Hologic, Inc. | 2.7 | 3.6 |
Hill-Rom Holdings, Inc. | 2.4 | 3.1 |
| 59.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Health Care Equipment & Supplies | 75.7% |
|
![]() | Life Sciences Tools & Services | 11.5% |
|
![]() | Health Care Providers & Services | 7.2% |
|
![]() | Health Care Technology | 1.7% |
|
![]() | Machinery | 0.7% |
|
![]() | All Others* | 3.2% |
|
As of August 31, 2010 | |||
![]() | Health Care Equipment & Supplies | 75.9% |
|
![]() | Life Sciences Tools & Services | 8.6% |
|
![]() | Health Care Providers & Services | 7.5% |
|
![]() | Health Care Technology | 3.1% |
|
![]() | Electronic Equipment & Components | 1.4% |
|
![]() | All Others* | 3.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Medical Equipment and Systems Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 97.1% | |||
Shares | Value | ||
FOOD & STAPLES RETAILING - 0.3% | |||
Drug Retail - 0.3% | |||
Rite Aid Corp. (a) | 3,000,000 | $ 3,930,000 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 75.7% | |||
Health Care Equipment - 69.9% | |||
American Medical Systems Holdings, Inc. (a) | 1,250,000 | 27,387,500 | |
Angiodynamics, Inc. (a) | 330,000 | 5,550,600 | |
ArthroCare Corp. (a) | 300,000 | 10,347,000 | |
Baxter International, Inc. | 2,400,000 | 127,560,000 | |
Boston Scientific Corp. (a) | 8,200,000 | 58,712,000 | |
C. R. Bard, Inc. | 950,000 | 92,872,000 | |
Covidien PLC | 3,900,000 | 200,655,000 | |
Cyberonics, Inc. (a) | 480,700 | 15,877,521 | |
Edwards Lifesciences Corp. (a) | 830,000 | 70,583,200 | |
Exactech, Inc. (a) | 380,000 | 7,201,000 | |
Fisher & Paykel Healthcare Corp. | 5,000,000 | 11,398,860 | |
Genmark Diagnostics, Inc. (d) | 380,001 | 1,637,804 | |
HeartWare International, Inc. (a) | 15,700 | 1,320,056 | |
HeartWare International, Inc. CDI (a) | 5,500,000 | 13,400,707 | |
Hill-Rom Holdings, Inc. | 900,000 | 34,263,000 | |
Hologic, Inc. (a) | 1,900,000 | 38,342,000 | |
Integra LifeSciences Holdings Corp. (a) | 280,000 | 14,042,000 | |
Ion Beam Applications SA (a) | 450,000 | 5,402,700 | |
Kinetic Concepts, Inc. (a) | 400,000 | 19,588,000 | |
Mako Surgical Corp. (a)(d) | 367,600 | 7,572,560 | |
Masimo Corp. | 1,000,000 | 30,140,000 | |
Medtronic, Inc. | 760,000 | 30,339,200 | |
Orthofix International NV (a) | 300,000 | 9,480,000 | |
Orthovita, Inc. (a) | 3,228,100 | 7,682,878 | |
Sonova Holding AG Class B | 70,000 | 9,313,741 | |
St. Jude Medical, Inc. | 1,600,000 | 76,608,000 | |
TomoTherapy, Inc. (a) | 1,200,000 | 4,272,000 | |
Tornier BV | 300,000 | 5,511,000 | |
Varian Medical Systems, Inc. (a) | 220,000 | 15,241,600 | |
Wright Medical Group, Inc. (a) | 670,000 | 10,606,100 | |
Zimmer Holdings, Inc. (a) | 350,000 | 21,819,000 | |
| 984,727,027 | ||
Health Care Supplies - 5.8% | |||
Alere, Inc. (a) | 100,000 | 3,864,000 | |
Cooper Companies, Inc. | 530,000 | 32,764,600 | |
DENTSPLY International, Inc. | 225,000 | 8,408,250 | |
Meridian Bioscience, Inc. (d) | 500,000 | 10,785,000 | |
OraSure Technologies, Inc. (a) | 1,450,000 | 10,048,500 | |
RTI Biologics, Inc. (a)(e) | 3,213,400 | 8,644,046 | |
| |||
Shares | Value | ||
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 2,200,000 | $ 5,423,729 | |
Vascular Solutions, Inc. (a) | 200,000 | 2,198,000 | |
| 82,136,125 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,066,863,152 | ||
HEALTH CARE PROVIDERS & SERVICES - 7.2% | |||
Health Care Distributors & Services - 1.9% | |||
McKesson Corp. | 350,000 | 27,748,000 | |
Health Care Facilities - 0.9% | |||
Hanger Orthopedic Group, Inc. (a) | 300,000 | 8,070,000 | |
LCA-Vision, Inc. (a) | 600,000 | 4,242,000 | |
| 12,312,000 | ||
Health Care Services - 4.4% | |||
Medco Health Solutions, Inc. (a) | 1,000,000 | 61,640,000 | |
TOTAL HEALTH CARE PROVIDERS & SERVICES | 101,700,000 | ||
HEALTH CARE TECHNOLOGY - 1.7% | |||
Health Care Technology - 1.7% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 1,100,000 | 23,485,000 | |
LIFE SCIENCES TOOLS & SERVICES - 11.5% | |||
Life Sciences Tools & Services - 11.5% | |||
Agilent Technologies, Inc. (a) | 500,000 | 21,040,000 | |
Covance, Inc. (a) | 320,000 | 18,057,600 | |
Illumina, Inc. (a) | 1,200,000 | 83,280,000 | |
QIAGEN NV (a)(d) | 1,100,000 | 22,693,000 | |
Thermo Fisher Scientific, Inc. (a) | 300,000 | 16,746,000 | |
| 161,816,600 | ||
MACHINERY - 0.7% | |||
Industrial Machinery - 0.7% | |||
Pall Corp. | 180,000 | 9,784,800 | |
TOTAL COMMON STOCKS (Cost $1,081,488,412) | 1,367,579,552 | ||
Money Market Funds - 4.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 32,883,438 | 32,883,438 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 34,051,963 | 34,051,963 | |
TOTAL MONEY MARKET FUNDS (Cost $66,935,401) | 66,935,401 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $1,148,423,813) | 1,434,514,953 | ||
NET OTHER ASSETS (LIABILITIES) - (1.9)% | (26,172,406) | ||
NET ASSETS - 100% | $ 1,408,342,547 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
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 | $ 51,871 |
Fidelity Securities Lending Cash Central Fund | 150,028 |
Total | $ 201,899 |
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, |
RTI Biologics, Inc. | $ 7,481,250 | $ 4,619,004 | $ - | $ - | $ 8,644,046 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,367,579,552 | $ 1,354,178,845 | $ 13,400,707 | $ - |
Money Market Funds | 66,935,401 | 66,935,401 | - | - |
Total Investments in Securities: | $ 1,434,514,953 | $ 1,421,114,246 | $ 13,400,707 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.5% |
Ireland | 14.2% |
Netherlands | 2.0% |
Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $33,045,550) - See accompanying schedule: Unaffiliated issuers (cost $1,064,516,198) | $ 1,358,935,506 |
|
Fidelity Central Funds (cost $66,935,401) | 66,935,401 |
|
Other affiliated issuers (cost $16,972,214) | 8,644,046 |
|
Total Investments (cost $1,148,423,813) |
| $ 1,434,514,953 |
Receivable for investments sold | 15,617,199 | |
Receivable for fund shares sold | 2,751,059 | |
Dividends receivable | 63,000 | |
Distributions receivable from Fidelity Central Funds | 9,382 | |
Prepaid expenses | 2,696 | |
Other receivables | 16,242 | |
Total assets | 1,452,974,531 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 7,456,586 | |
Payable for fund shares redeemed | 2,122,847 | |
Accrued management fee | 642,334 | |
Other affiliated payables | 305,714 | |
Other payables and accrued expenses | 52,540 | |
Collateral on securities loaned, at value | 34,051,963 | |
Total liabilities | 44,631,984 | |
|
|
|
Net Assets | $ 1,408,342,547 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,121,141,801 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,109,606 | |
Net unrealized appreciation (depreciation) on investments | 286,091,140 | |
Net Assets, for 47,660,713 shares outstanding | $ 1,408,342,547 | |
Net Asset Value, offering price and redemption price per share ($1,408,342,547 ÷ 47,660,713 shares) | $ 29.55 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,768,337 |
Special dividends |
| 1,850,000 |
Interest |
| 142 |
Income from Fidelity Central Funds (including $150,028 from security lending) |
| 201,899 |
Total income |
| 10,820,378 |
|
|
|
Expenses | ||
Management fee | $ 7,450,028 | |
Transfer agent fees | 3,411,934 | |
Accounting and security lending fees | 431,831 | |
Custodian fees and expenses | 63,476 | |
Independent trustees' compensation | 7,417 | |
Registration fees | 84,332 | |
Audit | 39,680 | |
Legal | 5,022 | |
Miscellaneous | 17,106 | |
Total expenses before reductions | 11,510,826 | |
Expense reductions | (96,671) | 11,414,155 |
Net investment income (loss) | (593,777) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 77,913,237 | |
Foreign currency transactions | 35,950 | |
Total net realized gain (loss) |
| 77,949,187 |
Change in net unrealized appreciation (depreciation) on investment securities | 112,602,764 | |
Net gain (loss) | 190,551,951 | |
Net increase (decrease) in net assets resulting from operations | $ 189,958,174 |
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) | $ (593,777) | $ (1,505,082) |
Net realized gain (loss) | 77,949,187 | 65,480,209 |
Change in net unrealized appreciation (depreciation) | 112,602,764 | 352,341,374 |
Net increase (decrease) in net assets resulting from operations | 189,958,174 | 416,316,501 |
Share transactions | 361,006,401 | 423,109,536 |
Cost of shares redeemed | (520,647,143) | (473,964,290) |
Net increase (decrease) in net assets resulting from share transactions | (159,640,742) | (50,854,754) |
Redemption fees | 34,269 | 65,002 |
Total increase (decrease) in net assets | 30,351,701 | 365,526,749 |
|
|
|
Net Assets | ||
Beginning of period | 1,377,990,846 | 1,012,464,097 |
End of period | $ 1,408,342,547 | $ 1,377,990,846 |
Other Information Shares | ||
Sold | 13,732,140 | 19,019,915 |
Redeemed | (20,685,442) | (22,924,188) |
Net increase (decrease) | (6,953,302) | (3,904,273) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.23 | $ 17.30 | $ 24.41 | $ 23.67 | $ 24.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) F | (.03) | .01 | (.05) | (.05) |
Net realized and unrealized gain (loss) | 4.33 | 7.96 | (6.35) | 2.97 | 1.35 |
Total from investment operations | 4.32 | 7.93 | (6.34) | 2.92 | 1.30 |
Distributions from net investment income | - | - | (.01) | - | - |
Distributions from net realized gain | - | - | (.77) | (2.18) | (2.25) |
Total distributions | - | - | (.78) | (2.18) | (2.25) |
Redemption fees added to paid in capital C | - I | - I | .01 | - I | - I |
Net asset value, end of period | $ 29.55 | $ 25.23 | $ 17.30 | $ 24.41 | $ 23.67 |
Total Return A, B | 17.12% | 45.84% | (26.81)% | 12.57% | 5.66% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .86% | .91% | .87% | .88% | .93% |
Expenses net of fee waivers, if any | .86% | .91% | .87% | .88% | .93% |
Expenses net of all reductions | .86% | .90% | .87% | .88% | .92% |
Net investment income (loss) | (.04)% F | (.13)% | .06% | (.20)% | (.22)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,408,343 | $ 1,377,991 | $ 1,012,464 | $ 1,169,861 | $ 796,975 |
Portfolio turnover rate E | 92% | 83% | 116% | 129% | 71% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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 (.18)%. GExpense 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. HFor the year ended February 29. IAmount 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Life of |
Pharmaceuticals Portfolio | 19.68% | 7.21% | 4.10% |
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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Andrew Oh, Portfolio Manager of Pharmaceuticals Portfolio: For the 12 months ending February 28, 2011, the fund gained 19.68%, outperforming the 17.33% return of the S&P® Custom Pharmaceuticals Index, but lagging the broadly based S&P 500®. Relative to its industry benchmark, strong stock picking in the fund's primary industry - pharmaceuticals - produced virtually all the fund's outperformance, while the benefit of a large overweighting in the biotechnology group was almost entirely counterbalanced by poor stock picking here. Stock selection in two out-of-benchmark areas - health care equipment and health care services - detracted from relative performance, as did our modest cash position in a rising market. Additionally, a weaker dollar aided returns from our foreign holdings. Valeant Pharmaceuticals International was the strongest contributor. The company not only delivered better-than-expected earnings, but also executed a number of smart merger-and-acquisition deals, topped off by a merger with Canadian drug maker Biovail, which brought Valeant significant incremental cash flow and also allowed the firm to reduce its corporate tax exposure by shifting its domicile to Canada. An underweighting in large-cap pharma company Abbott Laboratories also helped. The stock underperformed due to investor concern over future competition for Abbott's leading product and the high price the company paid for an acquisition. Also contributing was an overweighting in Perrigo, the largest U.S. maker of private-label generic drugs. Perrigo benefited both from a weak economy, which led to increased sales of its products, and from difficulties at Johnson & Johnson, which recalled a number of competing over-the-counter medications. An out-of-benchmark investment in biotechnology firm Alexion Pharmaceuticals helped relative performance, as the company's key product drove strong earnings growth. The fund also benefited from an underweighting in Teva Pharmaceutical Industries, which underperformed due to competition for its leading drug and the company's forecast of negative earnings in 2011. Detractors from relative performance included Orexigen Therapeutics - a stock that collapsed following the U.S. Food and Drug Administration's (FDA) rejection of its weight-loss drug. I sold our position in Orexigen by period end. Underweightings in Questcor Pharmaceuticals and KV Pharmaceutical also hurt. Questcor had better-than-expected sales of its major product, while KV received unexpected FDA approval of a new drug when it was on the verge of bankruptcy. An investment in Medco Health Solutions, a pharmacy benefit manager that is not in the index, detracted because of investor concern that the firm's earnings growth would slow.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Pfizer, Inc. | 7.6 | 6.3 |
Merck & Co., Inc. | 6.2 | 6.6 |
Johnson & Johnson | 6.0 | 6.0 |
Valeant Pharmaceuticals International, Inc. (Canada) | 5.8 | 3.9 |
Novo Nordisk AS Series B sponsored ADR | 5.0 | 4.0 |
GlaxoSmithKline PLC sponsored ADR | 4.5 | 5.9 |
Novartis AG sponsored ADR | 4.5 | 4.9 |
Shire PLC sponsored ADR | 3.4 | 2.6 |
Abbott Laboratories | 3.2 | 2.0 |
Allergan, Inc. | 3.1 | 3.1 |
| 49.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Pharmaceuticals | 84.6% |
|
![]() | Biotechnology | 7.3% |
|
![]() | Health Care Equipment & Supplies | 3.0% |
|
![]() | Life Sciences Tools & Services | 1.8% |
|
![]() | Health Care Providers & Services | 1.3% |
|
![]() | All Others* | 2.0% |
|
As of August 31, 2010 | |||
![]() | Pharmaceuticals | 84.5% |
|
![]() | Biotechnology | 5.8% |
|
![]() | Health Care Equipment & Supplies | 3.2% |
|
![]() | Health Care Providers & Services | 2.4% |
|
![]() | Life Sciences Tools & Services | 1.1% |
|
![]() | All Others* | 3.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Pharmaceuticals Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 7.3% | |||
Biotechnology - 7.3% | |||
3SBio, Inc. sponsored ADR (a) | 29,700 | $ 457,380 | |
Acorda Therapeutics, Inc. (a) | 20,400 | 427,788 | |
Alexion Pharmaceuticals, Inc. (a) | 30,036 | 2,891,866 | |
Amylin Pharmaceuticals, Inc. (a) | 21,360 | 326,808 | |
ARIAD Pharmaceuticals, Inc. (a) | 248,900 | 1,495,889 | |
Basilea Pharmaceutica AG (a) | 13,000 | 981,700 | |
Biogen Idec, Inc. (a) | 28,300 | 1,935,720 | |
BioMarin Pharmaceutical, Inc. (a) | 121,500 | 2,971,890 | |
Gilead Sciences, Inc. (a) | 125,000 | 4,872,500 | |
Human Genome Sciences, Inc. (a) | 13,000 | 325,390 | |
ImmunoGen, Inc. (a) | 19,100 | 172,091 | |
Incyte Corp. (a)(d) | 43,000 | 588,240 | |
Intercell AG (a) | 40,000 | 478,860 | |
InterMune, Inc. (a) | 30,390 | 1,112,578 | |
Medivation, Inc. (a) | 65,000 | 1,123,200 | |
Neurocrine Biosciences, Inc. (a) | 70,000 | 472,500 | |
NPS Pharmaceuticals, Inc. (a) | 45,000 | 347,850 | |
ONYX Pharmaceuticals, Inc. (a) | 44,000 | 1,550,560 | |
QLT, Inc. (a) | 110,000 | 742,500 | |
Sino Biopharmaceutical Ltd. | 2,098,000 | 730,044 | |
Sinovac Biotech Ltd. (a) | 65,000 | 293,800 | |
Telik, Inc. (a) | 240,000 | 252,000 | |
Theravance, Inc. (a) | 59,900 | 1,364,522 | |
United Therapeutics Corp. (a) | 37,700 | 2,542,111 | |
| 28,457,787 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 3.0% | |||
Health Care Equipment - 2.8% | |||
Baxter International, Inc. | 30,000 | 1,594,500 | |
Boston Scientific Corp. (a) | 292,900 | 2,097,164 | |
C. R. Bard, Inc. | 21,500 | 2,101,840 | |
Covidien PLC | 49,300 | 2,536,485 | |
Hologic, Inc. (a) | 43,000 | 867,740 | |
Masimo Corp. | 40,000 | 1,205,600 | |
Nakanishi, Inc. | 4,900 | 543,912 | |
Orthovita, Inc. (a) | 96,900 | 230,622 | |
| 11,177,863 | ||
Health Care Supplies - 0.2% | |||
RTI Biologics, Inc. (a) | 117,405 | 315,819 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 192,000 | 473,344 | |
| 789,163 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 11,967,026 | ||
HEALTH CARE PROVIDERS & SERVICES - 1.3% | |||
Health Care Services - 1.3% | |||
Catalyst Health Solutions, Inc. (a) | 29,000 | 1,311,090 | |
Medco Health Solutions, Inc. (a) | 62,600 | 3,858,664 | |
| 5,169,754 | ||
| |||
Shares | Value | ||
HEALTH CARE TECHNOLOGY - 0.5% | |||
Health Care Technology - 0.5% | |||
Allscripts-Misys Healthcare Solutions, Inc. (a) | 84,400 | $ 1,801,940 | |
LIFE SCIENCES TOOLS & SERVICES - 1.8% | |||
Life Sciences Tools & Services - 1.8% | |||
Agilent Technologies, Inc. (a) | 42,100 | 1,771,568 | |
Illumina, Inc. (a) | 24,700 | 1,714,180 | |
PerkinElmer, Inc. | 76,100 | 2,016,650 | |
QIAGEN NV (a) | 31,877 | 657,623 | |
Wuxi Pharmatech Cayman, Inc. sponsored ADR (a) | 50,000 | 760,000 | |
| 6,920,021 | ||
PERSONAL PRODUCTS - 0.5% | |||
Personal Products - 0.5% | |||
Prestige Brands Holdings, Inc. (a) | 121,892 | 1,343,250 | |
Schiff Nutrition International, Inc. | 90,000 | 771,300 | |
| 2,114,550 | ||
PHARMACEUTICALS - 84.6% | |||
Pharmaceuticals - 84.6% | |||
Abbott Laboratories | 257,990 | 12,409,319 | |
Akorn, Inc. (a)(d) | 313,100 | 1,750,229 | |
Allergan, Inc. | 163,300 | 12,111,961 | |
Almirall SA (a) | 25,000 | 286,695 | |
Ardea Biosciences, Inc. (a) | 68,949 | 1,827,838 | |
Auxilium Pharmaceuticals, Inc. (a) | 94,700 | 2,127,909 | |
BioMimetic Therapeutics, Inc. (a) | 160,000 | 2,156,800 | |
Bristol-Myers Squibb Co. | 194,910 | 5,030,627 | |
Cadence Pharmaceuticals, Inc. (a)(d) | 143,600 | 1,078,436 | |
Cardiome Pharma Corp. (a) | 297,400 | 1,720,863 | |
China Shineway Pharmaceutical Group Ltd. | 80,000 | 229,584 | |
Cipla Ltd. | 85,000 | 562,692 | |
DepoMed, Inc. (a) | 110,000 | 922,900 | |
Dr. Reddy's Laboratories Ltd. sponsored ADR (d) | 138,400 | 4,712,520 | |
Durect Corp. (a) | 349,500 | 1,132,380 | |
Elan Corp. PLC sponsored ADR (a) | 782,800 | 4,970,780 | |
Eli Lilly & Co. | 113,300 | 3,915,648 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 185,400 | 6,585,408 | |
Endo Pharmaceuticals Holdings, Inc. rights 2/27/12 (a) | 9,000 | 0 | |
Forest Laboratories, Inc. (a) | 93,520 | 3,030,048 | |
GlaxoSmithKline PLC sponsored ADR | 459,400 | 17,737,434 | |
Guangzhou Pharmaceutical Co. Ltd. (H Shares) | 114,000 | 162,481 | |
Hi-Tech Pharmacal Co., Inc. (a)(d) | 52,700 | 1,216,843 | |
Hikma Pharmaceuticals PLC | 89,000 | 1,107,683 | |
Hospira, Inc. (a) | 38,400 | 2,029,440 | |
Impax Laboratories, Inc. (a) | 151,100 | 3,111,149 | |
Inspire Pharmaceuticals, Inc. (a) | 256,073 | 1,029,413 | |
Ista Pharmaceuticals, Inc. (a) | 65,000 | 501,150 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Johnson & Johnson | 379,200 | $ 23,298,048 | |
King Pharmaceuticals, Inc. (a) | 294,800 | 4,197,952 | |
KV Pharmaceutical Co. Class A (a)(d) | 375,000 | 3,041,250 | |
Lijun International Pharmaceutical Holding Ltd. | 1,000,000 | 247,817 | |
MAP Pharmaceuticals, Inc. (a) | 27,112 | 437,317 | |
Medicis Pharmaceutical Corp. Class A | 81,200 | 2,605,708 | |
Merck & Co., Inc. | 740,036 | 24,102,973 | |
Mylan, Inc. (a) | 425,200 | 9,724,324 | |
Nektar Therapeutics (a) | 215,500 | 2,066,645 | |
Novartis AG sponsored ADR (d) | 313,898 | 17,663,040 | |
Novo Nordisk AS Series B sponsored ADR (d) | 154,500 | 19,568,970 | |
Obagi Medical Products, Inc. (a) | 16,000 | 183,360 | |
Optimer Pharmaceuticals, Inc. (a) | 177,000 | 2,113,380 | |
Pain Therapeutics, Inc. | 179,721 | 1,229,292 | |
Paladin Labs, Inc. (a) | 60,600 | 2,125,134 | |
Par Pharmaceutical Companies, Inc. (a) | 30,000 | 926,400 | |
Perrigo Co. | 141,800 | 10,837,774 | |
Pfizer, Inc. | 1,539,288 | 29,615,898 | |
Pozen, Inc. (a) | 119,000 | 611,660 | |
Questcor Pharmaceuticals, Inc. (a) | 179,800 | 2,330,208 | |
Salix Pharmaceuticals Ltd. (a) | 94,900 | 3,163,966 | |
Sanofi-Aventis sponsored ADR | 272,700 | 9,429,966 | |
Santarus, Inc. (a) | 401,500 | 1,280,785 | |
Shire PLC sponsored ADR | 157,000 | 13,346,570 | |
Sihuan Pharmaceutical Holdings Group Ltd. | 708,439 | 430,267 | |
Simcere Pharmaceutical Group sponsored ADR (a) | 20,000 | 250,000 | |
Strides Arcolab Ltd. | 20,000 | 136,596 | |
SuperGen, Inc. (a) | 227,000 | 674,190 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 224,289 | 11,236,879 | |
The Medicines Company (a) | 184,500 | 3,208,455 | |
| |||
Shares | Value | ||
Valeant Pharmaceuticals International, Inc. (Canada) (d) | 565,927 | $ 22,718,655 | |
Virbac SA | 3,767 | 574,690 | |
ViroPharma, Inc. (a) | 142,700 | 2,558,611 | |
Vivus, Inc. (a)(d) | 160,000 | 1,217,600 | |
Watson Pharmaceuticals, Inc. (a) | 165,800 | 9,283,142 | |
XenoPort, Inc. (a)(d) | 105,000 | 763,350 | |
| 330,659,102 | ||
TOTAL COMMON STOCKS (Cost $320,863,627) | 387,090,180 | ||
Money Market Funds - 12.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 4,469,158 | 4,469,158 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 45,716,061 | 45,716,061 | |
TOTAL MONEY MARKET FUNDS (Cost $50,185,219) | 50,185,219 |
TOTAL INVESTMENT PORTFOLIO - 111.8% (Cost $371,048,846) | 437,275,399 |
NET OTHER ASSETS (LIABILITIES) - (11.8)% | (46,255,157) | ||
NET ASSETS - 100% | $ 391,020,242 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 12,983 |
Fidelity Securities Lending Cash Central Fund | 272,089 |
Total | $ 285,072 |
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 | 64.8% |
Canada | 6.9% |
Denmark | 5.0% |
United Kingdom | 4.8% |
Switzerland | 4.8% |
Bailiwick of Jersey | 3.4% |
Israel | 2.9% |
France | 2.5% |
Ireland | 2.0% |
India | 1.3% |
Others (Individually Less Than 1%) | 1.6% |
| 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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $44,732,205) - See accompanying schedule: Unaffiliated issuers (cost $320,863,627) | $ 387,090,180 |
|
Fidelity Central Funds (cost $50,185,219) | 50,185,219 |
|
Total Investments (cost $371,048,846) |
| $ 437,275,399 |
Receivable for investments sold | 72,300 | |
Receivable for fund shares sold | 1,842,996 | |
Dividends receivable | 1,643,985 | |
Distributions receivable from Fidelity Central Funds | 13,855 | |
Prepaid expenses | 555 | |
Other receivables | 3,792 | |
Total assets | 440,852,882 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,103,116 | |
Payable for fund shares redeemed | 680,571 | |
Accrued management fee | 186,271 | |
Other affiliated payables | 104,241 | |
Other payables and accrued expenses | 42,380 | |
Collateral on securities loaned, at value | 45,716,061 | |
Total liabilities | 49,832,640 | |
|
|
|
Net Assets | $ 391,020,242 | |
Net Assets consist of: |
| |
Paid in capital | $ 320,074,333 | |
Undistributed net investment income | 1,076,615 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,642,625 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 66,226,669 | |
Net Assets, for 30,689,399 shares outstanding | $ 391,020,242 | |
Net Asset Value, offering price and redemption price per share ($391,020,242 ÷ 30,689,399 shares) | $ 12.74 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,952,895 |
Interest |
| 1 |
Income from Fidelity Central Funds (including $272,089 from security lending) |
| 285,072 |
Total income |
| 7,237,968 |
|
|
|
Expenses | ||
Management fee | $ 1,723,679 | |
Transfer agent fees | 897,367 | |
Accounting and security lending fees | 127,176 | |
Custodian fees and expenses | 52,568 | |
Independent trustees' compensation | 1,616 | |
Registration fees | 43,927 | |
Audit | 42,919 | |
Legal | 1,154 | |
Interest | 470 | |
Miscellaneous | 2,778 | |
Total expenses before reductions | 2,893,654 | |
Expense reductions | (19,643) | 2,874,011 |
Net investment income (loss) | 4,363,957 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 10,595,044 | |
Foreign currency transactions | 5,559 | |
Total net realized gain (loss) |
| 10,600,603 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 43,946,054 | |
Assets and liabilities in foreign currencies | (2,394) | |
Total change in net unrealized appreciation (depreciation) |
| 43,943,660 |
Net gain (loss) | 54,544,263 | |
Net increase (decrease) in net assets resulting from operations | $ 58,908,220 |
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) | $ 4,363,957 | $ 2,556,657 |
Net realized gain (loss) | 10,600,603 | 18,349,430 |
Change in net unrealized appreciation (depreciation) | 43,943,660 | 39,165,692 |
Net increase (decrease) in net assets resulting from operations | 58,908,220 | 60,071,779 |
Distributions to shareholders from net investment income | (3,701,597) | (2,794,173) |
Distributions to shareholders from net realized gain | (5,275,707) | - |
Total distributions | (8,977,304) | (2,794,173) |
Share transactions | 216,246,069 | 113,916,553 |
Reinvestment of distributions | 8,779,250 | 2,695,478 |
Cost of shares redeemed | (119,489,514) | (80,373,510) |
Net increase (decrease) in net assets resulting from share transactions | 105,535,805 | 36,238,521 |
Redemption fees | 18,860 | 7,643 |
Total increase (decrease) in net assets | 155,485,581 | 93,523,770 |
|
|
|
Net Assets | ||
Beginning of period | 235,534,661 | 142,010,891 |
End of period (including undistributed net investment income of $1,076,615 and undistributed net investment income of $414,255, respectively) | $ 391,020,242 | $ 235,534,661 |
Other Information Shares | ||
Sold | 18,524,027 | 11,305,331 |
Issued in reinvestment of distributions | 729,723 | 268,688 |
Redeemed | (10,110,998) | (8,706,324) |
Net increase (decrease) | 9,142,752 | 2,867,695 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.93 | $ 7.60 | $ 10.52 | $ 10.88 | $ 10.41 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .17 | .14 | .18 | .10 | .08 |
Net realized and unrealized gain (loss) | 1.96 | 3.35 | (2.91) | .13 | .74 |
Total from investment operations | 2.13 | 3.49 | (2.73) | .23 | .82 |
Distributions from net investment income | (.13) | (.16) | (.13) | (.11) | (.04) |
Distributions from net realized gain | (.19) | - | (.06) | (.48) | (.31) |
Total distributions | (.32) | (.16) | (.19) | (.59) | (.35) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 12.74 | $ 10.93 | $ 7.60 | $ 10.52 | $ 10.88 |
Total Return A, B | 19.68% | 46.05% | (26.23)% | 1.64% | 8.05% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .94% | 1.01% | 1.00% | .95% | 1.02% |
Expenses net of fee waivers, if any | .94% | 1.01% | 1.00% | .95% | 1.02% |
Expenses net of all reductions | .94% | 1.00% | .99% | .95% | 1.01% |
Net investment income (loss) | 1.42% | 1.49% | 1.89% | .85% | .73% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 391,020 | $ 235,535 | $ 142,011 | $ 167,330 | $ 195,128 |
Portfolio turnover rate E | 102% | 221% | 240% | 119% | 204% |
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, 2011
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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for 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, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, net operating losses, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Biotechnology Portfolio | $ 1,128,002,093 | $ 155,936,272 | $ (145,684,057) | $ 10,252,215 |
Health Care Portfolio | 1,612,732,134 | 492,407,881 | (26,369,429) | 466,038,452 |
Medical Delivery Portfolio | 431,205,543 | 162,696,634 | (3,343,951) | 159,352,683 |
Medical Equipment and Systems Portfolio | 1,155,598,918 | 307,329,241 | (28,413,206) | 278,916,035 |
Pharmaceuticals Portfolio | 374,462,847 | 72,350,881 | (9,538,329) | 62,812,552 |
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 |
Biotechnology Portfolio | $ - | $ - | $ (65,361,069) | $ 10,252,215 |
Health Care Portfolio | - | - | (1,010,863) | 466,020,147 |
Medical Delivery Portfolio | - | - | (47,219,442) | 159,353,339 |
Medical Equipment and Systems Portfolio | - | 8,284,711 | - | 278,916,035 |
Pharmaceuticals Portfolio | 4,512,266 | 3,620,975 | - | 62,812,668 |
The tax character of distributions paid was as follows:
February 28, 2011 | Ordinary | Long-term | Total |
Health Care Portfolio | $ 2,484,311 | $ - | $ 2,484,311 |
Pharmaceuticals Portfolio | 5,175,036 | 3,802,268 | 8,977,304 |
February 28, 2010 | Ordinary | Long-term | Total |
Health Care Portfolio | $ 3,893,231 | $ - | $ 3,893,231 |
Pharmaceuticals Portfolio | 2,794,173 | - | 2,794,173 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 | 1,227,267,871 | 1,385,006,299 |
Health Care Portfolio | 1,657,327,594 | 1,754,978,543 |
Medical Delivery Portfolio | 237,440,908 | 237,911,373 |
Medical Equipment and Systems Portfolio | 1,193,772,863 | 1,381,046,858 |
Pharmaceuticals Portfolio | 408,060,184 | 306,398,854 |
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% |
Annual Report
6. Fees and Other Transactions with Affiliates - continued
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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .26% |
|
Health Care Portfolio | .22% |
|
Medical Delivery Portfolio | .27% |
|
Medical Equipment and Systems Portfolio | .26% |
|
Pharmaceuticals 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 |
Biotechnology Portfolio | $ 17,224 |
Health Care Portfolio | 22,399 |
Medical Delivery Portfolio | 15,871 |
Medical Equipment and Systems Portfolio | 16,650 |
Pharmaceuticals Portfolio | 16,241 |
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 |
Biotechnology Portfolio | Borrower | $ 11,090,681 | .45% | $ 12,513 |
Medical Delivery Portfolio | Borrower | 9,609,000 | .45% | 1,325 |
Pharmaceuticals Portfolio | Borrower | 6,033,857 | .40% | 470 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Biotechnology Portfolio | $ 4,004 |
Health Care Portfolio | 6,362 |
Medical Delivery Portfolio | 1,647 |
Medical Equipment and Systems Portfolio | 5,069 |
Pharmaceuticals Portfolio | 1,050 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending | Value of Securities |
Biotechnology Portfolio | $ 63,962 | $ 3,911,517 |
Health Care Portfolio | - | - |
Medical Delivery Portfolio | - | - |
Medical Equipment and Systems Portfolio | 1,318 | - |
Pharmaceuticals Portfolio | 104 | - |
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 |
Biotechnology Portfolio | $ 4,029,000 | .67% | $ 226 |
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. 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 | $ 124,789 | $ - |
Health Care Portfolio | 124,931 | 281 |
Medical Delivery Portfolio | 46,819 | - |
Medical Equipment and Systems Portfolio | 96,576 | 95 |
Pharmaceuticals Portfolio | 19,563 | 80 |
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, the Strategic Advisers U.S. Opportunity Fund was the owner of record of approximately 15% 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, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 | 04/07/11 | 04/06/11 | $0.000 | $0.000 |
Biotechnology Portfolio | 04/07/11 | 04/06/11 | $0.000 | $0.000 |
Pharmaceuticals Portfolio | 04/07/11 | 04/06/11 | $0.035 | $0.225 |
Medical Equipment and Systems Portfolio | 04/07/11 | 04/06/11 | $0.000 | $0.166 |
Medical Delivery Portfolio | 04/07/11 | 04/06/11 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2011, or, if subsequently determined to be different, the net capital gain of such year.
Pharmaceuticals Portfolio | $6,322,349 |
Medical Equipment and Systems Portfolio | $8,284,711 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Health Care Portfolio | 100% | 100% |
Pharmaceuticals Portfolio | 97% | 65% |
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 2010 | December 2010 |
Health Care Portfolio | 100% | 100% |
Pharmaceuticals Portfolio | 99% | 90% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 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.
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
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
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Automated line for quickest service
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Fidelity®
Select Portfolios®
Industrials Sector
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio (formerly Environmental Portfolio)
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Note to shareholders |
| |
Shareholder Expense Example |
| |
Air Transportation Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Defense and Aerospace Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Environment and Alternative Energy Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Industrial Equipment Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Industrials Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Transportation Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
| |
Prospectus | P-1 |
|
Annual Report
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Note to shareholders
Environment and Alternative Energy Portfolio
At a shareholder meeting on June 15, 2010, shareholders approved changes to certain of the fund's fundamental investment policies. As a result, effective July 1, 2010, the fund's investment strategy was broadened to include an emphasis on companies engaged in alternative and renewable energy, energy efficiency, pollution control and water infrastructure, in addition to the fund's current focus on waste management and other environmental companies. At the same time, the fund was renamed Environment and Alternative Energy Portfolio and changed its industry benchmark from the MSCI® U.S. IM Industrials 25/50 Index to the FTSE Environmental Opportunities & Alternative Energy Index. The S&P 500® Index remains the primary benchmark for the fund.
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, 2010 to February 28, 2011).
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 | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,217.40 | $ 4.95 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Defense and Aerospace Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,291.50 | $ 4.94 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Environment and Alternative Energy Portfolio | 1.10% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,280.20 | $ 6.22 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.34 | $ 5.51 |
Industrial Equipment Portfolio | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,417.60 | $ 5.16 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.53 | $ 4.31 |
Industrials Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,377.20 | $ 5.25 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Transportation Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,251.00 | $ 4.97 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Air Transportation Portfolio | 22.26% | 4.66% | 5.26% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Sean Gavin, who became Portfolio Manager of Air Transportation Portfolio on September 1, 2010: During the past year, the fund returned 22.26%, beating the 21.04% advance of the S&P® Custom Air Transportation Index but slightly lagging the broadly based S&P 500®. Versus the air transportation index, rewarding security selection in the air freight/logistics industry was a key factor, along with solid picks in aerospace and defense. In the former group, overweighting package delivery provider United Parcel Service (UPS) - the fund's largest holding at period end - and underweighting FedEx, its primary corporate competitor, lifted performance. The fund also benefited from two out-of-index holdings in the air freight/logistics segment that performed well: U.K.-based Dart Group and Air Transport Services Group. However, the two largest contributors to relative performance were an underweighting in AMR, parent company of American Airlines, and an overweighted stake in United Continental Holdings, which was formed by the October 2010 merger between United Air Lines and Continental Airlines. AMR was hampered by its high cost structure and aging fleet of planes. On the other hand, United Continental was helped by ongoing merger synergies and disciplined capacity management in the face of higher fuel prices. I sold AMR by period end. I'll also mention Canadian commercial aerospace holding Bombardier as a contributor. In absolute terms, the fund's foreign holdings were aided by a depreciating U.S. dollar. Conversely, weak stock selection and an overweighting in the airline group weighed on performance. In fact, the three largest detractors were airlines. Pinnacle Airlines was an illiquid micro-cap position that had done extremely well for the fund in the prior one-year reporting period but posted a sizable loss during the first six months of this review period. Consequently, I sold the stock soon after I began managing the fund. Overweighting major benchmark component Southwest Airlines also detracted, as did untimely ownership of Hawaiian Airlines and Spirit AeroSystems Holdings, a commercial aerospace parts supplier. Hawaiian Airlines and Spirit AeroSystems were not held by the fund 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
Air Transportation Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
United Parcel Service, Inc. Class B | 14.1 | 19.7 |
The Boeing Co. | 13.8 | 7.2 |
Precision Castparts Corp. | 9.0 | 5.2 |
Bombardier, Inc. Class B (sub. vtg.) | 7.3 | 2.7 |
Goodrich Corp. | 6.0 | 4.9 |
Rockwell Collins, Inc. | 5.0 | 3.1 |
FedEx Corp. | 4.9 | 5.3 |
Textron, Inc. | 4.9 | 2.5 |
Ryanair Holdings PLC sponsored ADR | 4.3 | 3.8 |
Southwest Airlines Co. | 4.2 | 4.3 |
| 73.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Aerospace & Defense | 43.6% |
|
![]() | Air Freight & Logistics | 31.3% |
|
![]() | Airlines | 17.3% |
|
![]() | Industrial Conglomerates | 4.9% |
|
![]() | Marine | 1.7% |
|
![]() | All Others* | 1.2% |
|
As of August 31, 2010 | |||
![]() | Air Freight & Logistics | 35.5% |
|
![]() | Aerospace & Defense | 31.8% |
|
![]() | Airlines | 28.7% |
|
![]() | Industrial Conglomerates | 2.5% |
|
![]() | Transportation Infrastructure | 0.8% |
|
![]() | All Others* | 0.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Air Transportation Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 100.2% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 43.6% | |||
Aerospace & Defense - 43.6% | |||
AerCap Holdings NV (a) | 43,000 | $ 583,510 | |
Bombardier, Inc. Class B (sub. vtg.) | 1,284,000 | 8,262,548 | |
Esterline Technologies Corp. (a) | 20,600 | 1,474,342 | |
Goodrich Corp. | 79,300 | 6,838,039 | |
Meggitt PLC | 23,600 | 129,768 | |
Precision Castparts Corp. | 72,200 | 10,234,350 | |
Rockwell Collins, Inc. | 87,500 | 5,638,500 | |
The Boeing Co. | 217,600 | 15,669,376 | |
TransDigm Group, Inc. (a) | 8,400 | 675,192 | |
| 49,505,625 | ||
AIR FREIGHT & LOGISTICS - 31.3% | |||
Air Freight & Logistics - 31.3% | |||
Air Transport Services Group, Inc. (a) | 156,000 | 1,224,600 | |
Atlas Air Worldwide Holdings, Inc. (a) | 19,100 | 1,304,148 | |
C.H. Robinson Worldwide, Inc. | 35,400 | 2,562,606 | |
Dart Group PLC | 1,277,786 | 1,854,158 | |
Expeditors International of Washington, Inc. | 55,000 | 2,629,000 | |
Express-1 Expedited Solutions, Inc. (a) | 231,800 | 521,550 | |
FedEx Corp. | 62,000 | 5,581,240 | |
Hub Group, Inc. Class A (a) | 9,000 | 314,640 | |
Pacer International, Inc. (a) | 41,300 | 224,259 | |
Panalpina Welttransport Holding AG (a) | 5,860 | 758,876 | |
United Parcel Service, Inc. Class B | 217,200 | 16,029,362 | |
UTI Worldwide, Inc. | 126,900 | 2,525,310 | |
| 35,529,749 | ||
AIRLINES - 17.3% | |||
Airlines - 17.3% | |||
Air Canada Class A (a)(e) | 500,000 | 1,492,921 | |
Alaska Air Group, Inc. (a) | 18,500 | 1,099,825 | |
Copa Holdings SA Class A | 41,700 | 2,223,861 | |
Delta Air Lines, Inc. (a) | 188,902 | 2,123,258 | |
Ryanair Holdings PLC sponsored ADR | 173,400 | 4,945,368 | |
SkyWest, Inc. | 29,500 | 486,750 | |
Southwest Airlines Co. | 402,900 | 4,766,307 | |
United Continental Holdings, Inc. | 102,685 | 2,468,547 | |
| 19,606,837 | ||
INDUSTRIAL CONGLOMERATES - 4.9% | |||
Industrial Conglomerates - 4.9% | |||
Textron, Inc. (d) | 203,600 | 5,515,524 | |
| |||
Shares | Value | ||
MACHINERY - 0.3% | |||
Construction & Farm Machinery & Heavy Trucks - 0.3% | |||
ASL Marine Holdings Ltd. | 644,000 | $ 324,076 | |
MARINE - 1.7% | |||
Marine - 1.7% | |||
Kuehne & Nagel International AG | 14,620 | 1,965,701 | |
TRADING COMPANIES & DISTRIBUTORS - 0.6% | |||
Trading Companies & Distributors - 0.6% | |||
Aircastle Ltd. | 57,600 | 695,808 | |
TRANSPORTATION INFRASTRUCTURE - 0.5% | |||
Airport Services - 0.5% | |||
Avantair, Inc. (a) | 245,562 | 577,071 | |
TOTAL COMMON STOCKS (Cost $94,375,167) | 113,720,391 | ||
Money Market Funds - 0.9% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 1,046,175 | 1,046,175 | |
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $95,421,342) | 114,766,566 | ||
NET OTHER ASSETS (LIABILITIES) - (1.1)% | (1,295,598) | ||
NET ASSETS - 100% | $ 113,470,968 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $1,492,921 or 1.3% of net assets. |
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 | $ 4,723 |
Fidelity Securities Lending Cash Central Fund | 20,830 |
Total | $ 25,553 |
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, |
Pinnacle Airlines Corp. | $ 8,000,944 | $ 643,420 | $ 5,932,465 | $ - | $ - |
Total | $ 8,000,944 | $ 643,420 | $ 5,932,465 | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 113,720,391 | $ 113,720,391 | $ - | $ - |
Money Market Funds | 1,046,175 | 1,046,175 | - | - |
Total Investments in Securities: | $ 114,766,566 | $ 114,766,566 | $ - | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 35,000 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | - |
Proceeds of Sales | (35,000) |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 77.4% |
Canada | 8.6% |
Ireland | 4.3% |
Switzerland | 2.4% |
British Virgin Islands | 2.2% |
Panama | 2.0% |
United Kingdom | 1.7% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,021,293) - See accompanying schedule: Unaffiliated issuers (cost $94,375,167) | $ 113,720,391 |
|
Fidelity Central Funds (cost $1,046,175) | 1,046,175 |
|
Total Investments (cost $95,421,342) |
| $ 114,766,566 |
Receivable for investments sold | 3,281,269 | |
Receivable for fund shares sold | 107,740 | |
Dividends receivable | 280,348 | |
Distributions receivable from Fidelity Central Funds | 94 | |
Prepaid expenses | 261 | |
Other receivables | 1,374 | |
Total assets | 118,437,652 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,866,162 | |
Payable for fund shares redeemed | 1,931,880 | |
Accrued management fee | 58,114 | |
Other affiliated payables | 31,960 | |
Other payables and accrued expenses | 32,393 | |
Collateral on securities loaned, at value | 1,046,175 | |
Total liabilities | 4,966,684 | |
|
|
|
Net Assets | $ 113,470,968 | |
Net Assets consist of: |
| |
Paid in capital | $ 86,960,919 | |
Undistributed net investment income | 103,843 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 7,060,651 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,345,555 | |
Net Assets, for 2,635,836 shares outstanding | $ 113,470,968 | |
Net Asset Value, offering price and redemption price per share ($113,470,968 ÷ 2,635,836 shares) | $ 43.05 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,478,252 |
Special dividends |
| 425,311 |
Income from Fidelity Central Funds (including $20,830 from security lending) |
| 25,553 |
Total income |
| 1,929,116 |
|
|
|
Expenses | ||
Management fee | $ 804,198 | |
Transfer agent fees | 355,571 | |
Accounting and security lending fees | 57,995 | |
Custodian fees and expenses | 21,108 | |
Independent trustees' compensation | 781 | |
Registration fees | 39,960 | |
Audit | 37,133 | |
Legal | 486 | |
Miscellaneous | 1,254 | |
Total expenses before reductions | 1,318,486 | |
Expense reductions | (12,119) | 1,306,367 |
Net investment income (loss) | 622,749 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 21,310,583 | |
Other affiliated issuers | 774,486 |
|
Foreign currency transactions | 21,935 | |
Total net realized gain (loss) |
| 22,107,004 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 2,425,305 | |
Assets and liabilities in foreign currencies | 387 | |
Total change in net unrealized appreciation (depreciation) |
| 2,425,692 |
Net gain (loss) | 24,532,696 | |
Net increase (decrease) in net assets resulting from operations | $ 25,155,445 |
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) | $ 622,749 | $ (145,021) |
Net realized gain (loss) | 22,107,004 | (9,140,718) |
Change in net unrealized appreciation (depreciation) | 2,425,692 | 42,620,063 |
Net increase (decrease) in net assets resulting from operations | 25,155,445 | 33,334,324 |
Distributions to shareholders from net investment income | (504,999) | - |
Share transactions | 184,422,953 | 76,201,239 |
Reinvestment of distributions | 483,612 | - |
Cost of shares redeemed | (190,540,995) | (50,030,435) |
Net increase (decrease) in net assets resulting from share transactions | (5,634,430) | 26,170,804 |
Redemption fees | 29,822 | 9,352 |
Total increase (decrease) in net assets | 19,045,838 | 59,514,480 |
|
|
|
Net Assets | ||
Beginning of period | 94,425,130 | 34,910,650 |
End of period (including undistributed net investment income of $103,843 and accumulated net investment loss of $3, respectively) | $ 113,470,968 | $ 94,425,130 |
Other Information Shares | ||
Sold | 4,744,519 | 2,564,524 |
Issued in reinvestment of distributions | 11,392 | - |
Redeemed | (4,793,224) | (1,903,208) |
Net increase (decrease) | (37,313) | 661,316 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 35.32 | $ 17.35 | $ 37.47 | $ 50.74 | $ 43.14 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .17 E | (.07) | (.10) | (.04) F | (.06) |
Net realized and unrealized gain (loss) | 7.68 | 18.04 | (17.05) | (7.61) | 8.48 |
Total from investment operations | 7.85 | 17.97 | (17.15) | (7.65) | 8.42 |
Distributions from net investment income | (.13) | - | - | - | - |
Distributions from net realized gain | - | - | (2.99) | (5.63) | (.86) |
Total distributions | (.13) | - | (2.99) | (5.63) | (.86) |
Redemption fees added to paid in capital B | .01 | - I | .02 | .01 | .04 |
Net asset value, end of period | $ 43.05 | $ 35.32 | $ 17.35 | $ 37.47 | $ 50.74 |
Total Return A | 22.26% | 103.57% | (49.44)% | (16.72)% | 19.81% |
Ratios to Average Net Assets C,G |
|
|
|
|
|
Expenses before reductions | .92% | 1.05% | 1.08% | 1.01% | 1.00% |
Expenses net of fee waivers, if any | .92% | 1.05% | 1.08% | 1.01% | 1.00% |
Expenses net of all reductions | .91% | 1.01% | 1.07% | 1.01% | .99% |
Net investment income (loss) | .43% E | (.28)% | (.37)% | (.08)% F | (.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 113,471 | $ 94,425 | $ 34,911 | $ 46,943 | $ 147,302 |
Portfolio turnover rate D | 161% | 165% | 66% | 47% | 165% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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 .14%. 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Defense and Aerospace Portfolio | 26.79% | 5.10% | 9.72% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2001. 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
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from John Sheehy, Portfolio Manager of Defense and Aerospace Portfolio: During the past year, the fund returned 26.79%, handily beating both the 23.84% advance of the MSCI® U.S. IM Aerospace & Defense 25/50 Index and the broadly based S&P 500®. Favorable stock picking in the fund's primary investment category of aerospace and defense was the main factor lifting performance versus the MSCI index, as my tilt toward commercial aerospace stocks and away from defense contractors paid off nicely. At the stock level, not owning defense contractor and major index component L-3 Communications, a specialist in aircraft modernization and maintenance, added the most to relative performance, given the stock's double-digit decline. Not having a stake in stun-gun maker TASER International proved beneficial as well. TASER's stock price declined by half during the period, as its customers in municipal law enforcement and the military scaled back their buying. Not owning Northrop Grumman and underweighting General Dynamics and Lockheed Martin - all lagging defense contractors - further lifted the fund's return. Among stocks I overweighted, TransDigm Group and Esterline Technologies merit mention as contributors. Both are suppliers to the commercial aerospace industry that benefited from improving order flows. Conversely, underweighting and then selling benchmark component Ladish, a metal fabricator serving the aerospace industry, proved to be ill-timed. The stock spiked higher in November, when the company received a takeover bid from Allegheny Technologies. Likewise, the fund's performance suffered by not owning military support services provider DynCorp International, which was acquired during the period by a private equity firm. Underweighting Honeywell International, one of the largest benchmark components, weighed on performance, as the stock posted a return roughly double that of the index. Lastly, I'll mention Raytheon, the only major defense contractor I overweighted during the period. Downward pressure on the company's revenue hampered its stock, and I trimmed the position a bit.
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, 2011 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 21.3 | 21.0 |
The Boeing Co. | 13.6 | 14.0 |
Precision Castparts Corp. | 8.9 | 9.6 |
Goodrich Corp. | 5.3 | 4.9 |
Honeywell International, Inc. | 4.9 | 4.9 |
Raytheon Co. | 4.9 | 5.4 |
Rockwell Collins, Inc. | 4.9 | 1.1 |
TransDigm Group, Inc. | 4.9 | 4.6 |
Esterline Technologies Corp. | 4.5 | 3.6 |
Lockheed Martin Corp. | 2.6 | 3.7 |
| 75.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Aerospace & Defense | 91.3% |
|
![]() | Industrial Conglomerates | 1.9% |
|
![]() | Metals & Mining | 1.5% |
|
![]() | Household Durables | 1.0% |
|
![]() | Electronic Equipment & Components | 0.8% |
|
![]() | All Others* | 3.5% |
|
As of August 31, 2010 | |||
![]() | Aerospace & Defense | 92.9% |
|
![]() | Metals & Mining | 2.4% |
|
![]() | Electronic Equipment & Components | 1.3% |
|
![]() | Industrial Conglomerates | 1.2% |
|
![]() | Trading Companies & Distributors | 0.9% |
|
![]() | All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Defense and Aerospace Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 91.3% | |||
Aerospace & Defense - 91.3% | |||
AerCap Holdings NV (a) | 384,400 | $ 5,216,308 | |
Alliant Techsystems, Inc. | 209,900 | 15,148,483 | |
BE Aerospace, Inc. (a) | 456,800 | 15,403,296 | |
Bombardier, Inc. Class B (sub. vtg.) | 1,307,300 | 8,412,484 | |
CAE, Inc. | 301,400 | 3,851,093 | |
CPI Aerostructures, Inc. (a) | 56,100 | 834,207 | |
DigitalGlobe, Inc. (a) | 537,927 | 17,364,284 | |
Esterline Technologies Corp. (a) | 429,763 | 30,758,138 | |
General Dynamics Corp. | 64,230 | 4,889,188 | |
Goodrich Corp. | 419,456 | 36,169,691 | |
HEICO Corp. (d) | 147,178 | 8,141,887 | |
Honeywell International, Inc. | 577,210 | 33,426,231 | |
Lockheed Martin Corp. | 225,200 | 17,826,832 | |
Meggitt PLC | 1,374,000 | 7,555,110 | |
Precision Castparts Corp. | 422,900 | 59,946,075 | |
Raytheon Co. | 651,536 | 33,365,159 | |
Rockwell Collins, Inc. | 514,900 | 33,180,156 | |
Teledyne Technologies, Inc. (a) | 334,731 | 17,529,862 | |
The Boeing Co. | 1,276,517 | 91,921,989 | |
TransDigm Group, Inc. (a) | 412,600 | 33,164,788 | |
United Technologies Corp. | 1,731,404 | 144,641,490 | |
| 618,746,751 | ||
AIRLINES - 0.6% | |||
Airlines - 0.6% | |||
Copa Holdings SA Class A | 71,000 | 3,786,430 | |
COMMUNICATIONS EQUIPMENT - 0.6% | |||
Communications Equipment - 0.6% | |||
Comtech Telecommunications Corp. | 140,000 | 3,787,000 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.8% | |||
Electronic Equipment & Instruments - 0.5% | |||
FLIR Systems, Inc. (d) | 104,148 | 3,363,980 | |
Electronic Manufacturing Services - 0.3% | |||
Mercury Computer Systems, Inc. (a) | 127,400 | 2,418,052 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 5,782,032 | ||
HOUSEHOLD DURABLES - 1.0% | |||
Household Appliances - 1.0% | |||
iRobot Corp. (a)(d) | 228,000 | 6,548,160 | |
INDUSTRIAL CONGLOMERATES - 1.9% | |||
Industrial Conglomerates - 1.9% | |||
Textron, Inc. | 483,585 | 13,100,318 | |
| |||
Shares | Value | ||
MACHINERY - 0.8% | |||
Construction & Farm Machinery & Heavy Trucks - 0.8% | |||
Navistar International Corp. (a) | 92,000 | $ 5,702,160 | |
METALS & MINING - 1.5% | |||
Steel - 1.5% | |||
Carpenter Technology Corp. | 242,000 | 10,062,360 | |
Haynes International, Inc. | 3,300 | 171,072 | |
| 10,233,432 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.7% | |||
Trading Companies & Distributors - 0.7% | |||
Kaman Corp. | 157,100 | 5,006,777 | |
TOTAL COMMON STOCKS (Cost $561,394,001) | 672,693,060 | ||
Money Market Funds - 1.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 1,636,938 | 1,636,938 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 8,383,421 | 8,383,421 | |
TOTAL MONEY MARKET FUNDS (Cost $10,020,359) | 10,020,359 | ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $571,414,360) | 682,713,419 | ||
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (4,752,886) | ||
NET ASSETS - 100% | $ 677,960,533 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,392 |
Fidelity Securities Lending Cash Central Fund | 32,427 |
Total | $ 45,819 |
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, 2011, the Fund had a capital loss carryforward of approximately $80,384,065 all of which will expire in fiscal 2018. 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
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,146,833) - See accompanying schedule: Unaffiliated issuers (cost $561,394,001) | $ 672,693,060 |
|
Fidelity Central Funds (cost $10,020,359) | 10,020,359 |
|
Total Investments (cost $571,414,360) |
| $ 682,713,419 |
Receivable for investments sold | 6,968,956 | |
Receivable for fund shares sold | 1,001,587 | |
Dividends receivable | 1,981,817 | |
Distributions receivable from Fidelity Central Funds | 2,613 | |
Prepaid expenses | 1,307 | |
Other receivables | 3,589 | |
Total assets | 692,673,288 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,745,134 | |
Payable for fund shares redeemed | 2,069,632 | |
Accrued management fee | 316,820 | |
Other affiliated payables | 159,309 | |
Other payables and accrued expenses | 38,439 | |
Collateral on securities loaned, at value | 8,383,421 | |
Total liabilities | 14,712,755 | |
|
|
|
Net Assets | $ 677,960,533 | |
Net Assets consist of: |
| |
Paid in capital | $ 648,830,173 | |
Undistributed net investment income | 1,011,940 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (83,184,463) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 111,302,883 | |
Net Assets, for 8,668,351 shares outstanding | $ 677,960,533 | |
Net Asset Value, offering price and redemption price per share ($677,960,533 ÷ 8,668,351 shares) | $ 78.21 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,613,436 |
Interest |
| 1 |
Income from Fidelity Central Funds (including $32,427 from security lending) |
| 45,819 |
Total income |
| 9,659,256 |
|
|
|
Expenses | ||
Management fee | $ 3,609,365 | |
Transfer agent fees | 1,737,076 | |
Accounting and security lending fees | 238,069 | |
Custodian fees and expenses | 23,175 | |
Independent trustees' compensation | 3,596 | |
Registration fees | 40,564 | |
Audit | 38,138 | |
Legal | 2,324 | |
Interest | 917 | |
Miscellaneous | 8,066 | |
Total expenses before reductions | 5,701,290 | |
Expense reductions | (19,315) | 5,681,975 |
Net investment income (loss) | 3,977,281 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 64,443,719 | |
Foreign currency transactions | (22,375) | |
Total net realized gain (loss) |
| 64,421,344 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 79,601,006 | |
Assets and liabilities in foreign currencies | 3,571 | |
Total change in net unrealized appreciation (depreciation) |
| 79,604,577 |
Net gain (loss) | 144,025,921 | |
Net increase (decrease) in net assets resulting from operations | $ 148,003,202 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Defense and Aerospace Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,977,281 | $ 7,509,892 |
Net realized gain (loss) | 64,421,344 | (98,834,454) |
Change in net unrealized appreciation (depreciation) | 79,604,577 | 339,243,575 |
Net increase (decrease) in net assets resulting from operations | 148,003,202 | 247,919,013 |
Distributions to shareholders from net investment income | (3,876,538) | (9,658,561) |
Share transactions | 145,067,549 | 86,172,859 |
Reinvestment of distributions | 3,705,662 | 9,247,495 |
Cost of shares redeemed | (224,052,034) | (160,886,627) |
Net increase (decrease) in net assets resulting from share transactions | (75,278,823) | (65,466,273) |
Redemption fees | 17,537 | 10,302 |
Total increase (decrease) in net assets | 68,865,378 | 172,804,481 |
|
|
|
Net Assets | ||
Beginning of period | 609,095,155 | 436,290,674 |
End of period (including undistributed net investment income of $1,011,940 and undistributed net investment income of $924,640, respectively) | $ 677,960,533 | $ 609,095,155 |
Other Information Shares | ||
Sold | 2,092,104 | 1,573,333 |
Issued in reinvestment of distributions | 51,626 | 168,852 |
Redeemed | (3,291,382) | (3,123,571) |
Net increase (decrease) | (1,147,652) | (1,381,386) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 62.05 | $ 38.96 | $ 79.93 | $ 84.46 | $ 78.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .42 | .73 E | .58 | .24 | .08 |
Net realized and unrealized gain (loss) | 16.17 | 23.32 | (36.29) | 2.46 | 12.07 |
Total from investment operations | 16.59 | 24.05 | (35.71) | 2.70 | 12.15 |
Distributions from net investment income | (.43) | (.96) | (.51) | (.14) | (.05) |
Distributions from net realized gain | - | - | (4.75) | (7.10) | (6.56) |
Total distributions | (.43) | (.96) | (5.26) | (7.24) | (6.61) |
Redemption fees added to paid in capital B | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 78.21 | $ 62.05 | $ 38.96 | $ 79.93 | $ 84.46 |
Total Return A | 26.79% | 62.05% | (47.61)% | 2.80% | 15.90% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .88% | .95% | .88% | .87% | .92% |
Expenses net of fee waivers, if any | .88% | .95% | .88% | .87% | .92% |
Expenses net of all reductions | .88% | .94% | .88% | .87% | .92% |
Net investment income (loss) | .62% | 1.39% E | .91% | .27% | .10% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 677,961 | $ 609,095 | $ 436,291 | $ 1,207,867 | $ 1,203,294 |
Portfolio turnover rate D | 43% | 70% | 58% | 57% | 82% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a special dividend which amounted to $.20 per share. Excluding the special dividends, the ratio of net investment income (loss) to average net assets would have been 1.01%. 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
Environment and Alternative Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Environment and Alternative Energy Portfolio A | 28.96% | 2.49% | 4.22% |
A Prior to July 1, 2010, Environment and Alternative Energy 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 Environment and Alternative Energy Portfolio on February 28, 2001. 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
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Anna Davydova, who became sole Portfolio Manager of Environment and Alternative Energy Portfolio on July 1, 2010, after serving as Co-Manager since March 2010: For the 12 months ending February 28, 2011, the fund returned 28.96%, outperforming the S&P 500® and the 26.76% gain of the FTSE Environmental Opportunities & Alternative Energy Index, and roughly in line with the 28.24% advance of the blended index specific to this fund. This blended index is a combination of the MSCI® U.S. IM Industrials 25/50 Index, with which the fund was compared through June 2010 and the new FTSE benchmark mentioned above, with which the fund was compared during the period's final eight months. (Please see the last page of the performance section in the Shareholder Update for more information on the fund's blended index.) On July 1, 2010, the fund's name was changed and it was restructured to focus more on faster-growing industries such as alternative energy and energy efficiency, while reducing its exposure to slower-growth areas like waste management. Because of this shift, the fund is able to benefit from a broader investment universe and a higher allocation to foreign markets due to the global nature of the alternative and renewable energy industries. During the first four months of the 12-month period, the fund modestly outperformed the MSCI index - which returned -3.85% - mostly because of strong stock selection and a significant overweighting in the environmental and facility services segment. Not having any exposure to the lagging industrial conglomerates and aerospace/defense groups also helped. On the negative side, our underperforming out-of-index investments in construction materials hurt, as did weak security selection and an underweighting in construction and farm machinery/heavy trucks. Contributors included waste management firm Stericycle and industrial machinery company Kadant, while overweighting filtration firm Pall detracted. During the last eight months of the period, the fund slightly underperformed the FTSE index - which returned 33.37% - mainly due to weak security selection in environmental and facility services and poor positioning in industrial machinery. The fund's modest cash stake also held back performance amid a strong market. On the plus side, the fund benefited the most from its positioning in construction and engineering, specialty chemicals and semiconductors. Of further note, a weaker U.S. dollar aided the performance of our foreign holdings during the past 12 months. Overweighting environmental and facility services Republic Services detracted, as its stock lagged. A decline in the share price of Chinese wind turbine manufacturer Xinjiang Goldwind Science & Technology also curtailed performance. On the plus side, the fund benefited from underweighting semiconductor equipment company Applied Materials when the stock underperformed, then overweighting it when it rebounded later in the period. Some stocks mentioned in this review 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
Environment and Alternative Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 9.0 | 8.6 |
3M Co. | 7.0 | 6.6 |
Enel SpA | 6.1 | 4.5 |
Emerson Electric Co. | 5.3 | 5.1 |
Danaher Corp. | 4.8 | 3.5 |
Republic Services, Inc. | 4.0 | 2.2 |
Thermo Fisher Scientific, Inc. | 3.4 | 1.6 |
Air Products & Chemicals, Inc. | 3.3 | 2.2 |
Applied Materials, Inc. | 2.8 | 0.5 |
Johnson Controls, Inc. | 2.8 | 1.5 |
| 48.5 |
Asset Allocation (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Energy Efficiency | 31.5% |
|
![]() | Environmental Support Services | 43.6% |
|
![]() | Pollution Control | 1.0% |
|
![]() | Renewable & Alternative Energy | 10.8% |
|
![]() | Waste Management & Technologies | 7.6% |
|
![]() | Water Infrastructure & Technologies | 4.5% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2010 | |||
![]() | Energy Efficiency | 25.1% |
|
![]() | Environmental Support Services | 17.3% |
|
![]() | Pollution Control | 2.3% |
|
![]() | Renewable & Alternative Energy | 37.2% |
|
![]() | Waste Management & Technologies | 8.6% |
|
![]() | Water Infrastructure & Technologies | 7.5% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Environment and Alternative Energy Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
Energy Efficiency - 31.5% | |||
Buildings Energy Efficiency - 4.6% | |||
Active Power, Inc. (a) | 234,400 | $ 527,400 | |
Johnson Controls, Inc. | 65,700 | 2,680,560 | |
Lighting Science Group Corp. (a) | 112,300 | 459,307 | |
Owens Corning (a) | 23,100 | 825,363 | |
TOTAL BUILDINGS ENERGY EFFICIENCY | 4,492,630 | ||
Diversified Energy Efficiency - 11.5% | |||
Corning, Inc. | 28,500 | 657,210 | |
GrafTech International Ltd. (a) | 39,000 | 780,390 | |
Linear Technology Corp. | 27,600 | 953,856 | |
United Technologies Corp. | 104,300 | 8,713,222 | |
TOTAL DIVERSIFIED ENERGY EFFICIENCY | 11,104,678 | ||
Industrial Energy Efficiency - 6.3% | |||
EMCOR Group, Inc. (a) | 63,100 | 2,010,366 | |
Fluor Corp. | 12,100 | 856,196 | |
Honeywell International, Inc. | 19,800 | 1,146,618 | |
International Rectifier Corp. (a) | 5,400 | 173,556 | |
National Semiconductor Corp. | 55,400 | 858,700 | |
Regal-Beloit Corp. | 14,100 | 1,028,595 | |
TOTAL INDUSTRIAL ENERGY EFFICIENCY | 6,074,031 | ||
Power Network Efficiency - 8.4% | |||
Alstom SA | 18,187 | 1,084,613 | |
Cooper Industries PLC Class A | 30,100 | 1,936,935 | |
Emerson Electric Co. | 85,000 | 5,071,100 | |
TOTAL POWER NETWORK EFFICIENCY | 8,092,648 | ||
Transport Energy Efficiency - 0.7% | |||
Honda Motor Co. Ltd. | 16,100 | 702,682 | |
TOTAL ENERGY EFFICIENCY | 30,466,669 | ||
Environmental Support Services - 43.6% | |||
Diversified Environmental - 36.9% | |||
3M Co. | 73,100 | 6,742,013 | |
Air Products & Chemicals, Inc. | 34,400 | 3,164,800 | |
Danaher Corp. | 92,500 | 4,680,500 | |
EDP Renovaveis SA (a) | 99,683 | 598,397 | |
Enel SpA | 984,528 | 5,866,645 | |
Energias de Portugal SA | 541,063 | 2,051,841 | |
Iberdrola SA | 235,200 | 2,052,294 | |
IDACORP, Inc. | 15,100 | 569,874 | |
PPG Industries, Inc. | 21,100 | 1,864,818 | |
Praxair, Inc. | 12,200 | 1,212,436 | |
Scottish & Southern Energy PLC | 58,200 | 1,172,397 | |
| |||
Shares | Value | ||
Thermo Fisher Scientific, Inc. (a) | 58,200 | $ 3,248,724 | |
Tractebel Energia SA | 161,000 | 2,515,927 | |
TOTAL DIVERSIFIED ENVIRONMENTAL | 35,740,666 | ||
Environmental Consultancies - 6.7% | |||
Foster Wheeler AG (a) | 42,700 | 1,544,032 | |
Jacobs Engineering Group, Inc. (a) | 41,100 | 2,057,466 | |
Shaw Group, Inc. (a) | 37,800 | 1,501,416 | |
URS Corp. (a) | 29,000 | 1,349,370 | |
TOTAL ENVIRONMENTAL CONSULTANCIES | 6,452,284 | ||
TOTAL ENVIRONMENTAL SUPPORT SERVICES | 42,192,950 | ||
Pollution Control - 1.0% | |||
Pollution Control Solutions - 1.0% | |||
CLARCOR, Inc. | 24,600 | 1,012,044 | |
Renewable & Alternative Energy - 10.8% | |||
Biofuels - 3.1% | |||
Amyris, Inc. | 12,700 | 412,623 | |
Archer Daniels Midland Co. | 70,600 | 2,624,908 | |
TOTAL BIOFUELS | 3,037,531 | ||
Renewable Energy Developers and Independent Power Producers (IPPs) - 3.4% | |||
Empresa Nacional de Electricidad SA sponsored (d) | 25,600 | 1,336,064 | |
Norsk Hydro ASA | 239,700 | 1,973,491 | |
TOTAL RENEWABLE ENERGY DEVELOPERS | 3,309,555 | ||
Solar Energy Generation Equipment - 3.7% | |||
Applied Materials, Inc. | 163,300 | 2,683,019 | |
Trina Solar Ltd. (a)(d) | 6,200 | 171,120 | |
Wacker Chemie AG | 3,800 | 701,123 | |
TOTAL SOLAR ENERGY GENERATION EQUIPMENT | 3,555,262 | ||
Wind Power Generation Equipment - 0.6% | |||
Xinjiang Goldwind Science & Technology Co. Ltd. (H Shares) (a) | 366,800 | 590,610 | |
TOTAL RENEWABLE & ALTERNATIVE ENERGY | 10,492,958 | ||
Common Stocks - continued | |||
Shares | Value | ||
Waste Management & Technologies - 7.6% | |||
General Waste Management - 4.0% | |||
Republic Services, Inc. | 130,200 | $ 3,855,222 | |
Recycling and Value Added Waste Processing - 3.6% | |||
Ball Corp. | 38,800 | 1,400,680 | |
Commercial Metals Co. | 126,300 | 2,105,421 | |
TOTAL RECYCLING AND VALUE ADDED WASTE PROCESSING | 3,506,101 | ||
TOTAL WASTE MANAGEMENT & TECHNOLOGIES | 7,361,323 | ||
Water Infrastructure & Technologies - 4.5% | |||
Water Infrastructure - 1.0% | |||
ITT Corp. | 6,700 | 388,131 | |
Watts Water Technologies, Inc. Class A | 14,600 | 571,006 | |
TOTAL WATER INFRASTRUCTURE | 959,137 | ||
Water Treatment Equipment - 3.5% | |||
Ashland, Inc. | 40,700 | 2,291,410 | |
Roper Industries, Inc. | 13,400 | 1,127,342 | |
TOTAL WATER TREATMENT EQUIPMENT | 3,418,752 | ||
TOTAL WATER INFRASTRUCTURE & TECHNOLOGIES | 4,377,889 | ||
Other - 0.5% | |||
Other - 0.5% | |||
Diana Containerships, Inc. (a) | 784 | 9,408 | |
Diana Shipping, Inc. (a) | 39,300 | 489,678 | |
| 499,086 | ||
TOTAL COMMON STOCKS (Cost $82,910,252) | 96,402,919 | ||
Money Market Funds - 1.9% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 1,404,702 | $ 1,404,702 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 424,075 | 424,075 | |
TOTAL MONEY MARKET FUNDS (Cost $1,828,777) | 1,828,777 | ||
TOTAL INVESTMENT PORTFOLIO - 101.4% (Cost $84,739,029) | 98,231,696 | ||
NET OTHER ASSETS (LIABILITIES) - (1.4)% | (1,367,472) | ||
NET ASSETS - 100% | $ 96,864,224 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 1,843 |
Fidelity Securities Lending Cash Central Fund | 22,884 |
Total | $ 24,727 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 96,402,919 | $ 95,700,237 | $ 702,682 | $ - |
Money Market Funds | 1,828,777 | 1,828,777 | - | - |
Total Investments in Securities: | $ 98,231,696 | $ 97,529,014 | $ 702,682 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 74.5% |
Italy | 6.1% |
Spain | 2.7% |
Brazil | 2.6% |
Portugal | 2.1% |
Norway | 2.0% |
Ireland | 2.0% |
Switzerland | 1.6% |
Chile | 1.4% |
United Kingdom | 1.2% |
France | 1.1% |
Others (Individually Less Than 1%) | 2.7% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $6,465,946 all of which will expire in fiscal 2018. 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
Environment and Alternative Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $410,893) - See accompanying schedule: Unaffiliated issuers (cost $82,910,252) | $ 96,402,919 |
|
Fidelity Central Funds (cost $1,828,777) | 1,828,777 |
|
Total Investments (cost $84,739,029) |
| $ 98,231,696 |
Receivable for investments sold | 721,790 | |
Receivable for fund shares sold | 601,547 | |
Dividends receivable | 215,593 | |
Distributions receivable from Fidelity Central Funds | 423 | |
Prepaid expenses | 113 | |
Other receivables | 857 | |
Total assets | 99,772,019 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,295,406 | |
Payable for fund shares redeemed | 93,424 | |
Accrued management fee | 42,327 | |
Other affiliated payables | 22,096 | |
Other payables and accrued expenses | 30,467 | |
Collateral on securities loaned, at value | 424,075 | |
Total liabilities | 2,907,795 | |
|
|
|
Net Assets | $ 96,864,224 | |
Net Assets consist of: |
| |
Paid in capital | $ 89,914,988 | |
Undistributed net investment income | 9,189 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,552,623) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 13,492,670 | |
Net Assets, for 5,048,936 shares outstanding | $ 96,864,224 | |
Net Asset Value, offering price and redemption price per share ($96,864,224 ÷ 5,048,936 shares) | $ 19.19 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 979,310 |
Interest |
| 6 |
Income from Fidelity Central Funds (including $22,884 from security lending) |
| 24,727 |
Total income |
| 1,004,043 |
|
|
|
Expenses | ||
Management fee | $ 339,520 | |
Transfer agent fees | 176,157 | |
Accounting and security lending fees | 24,271 | |
Custodian fees and expenses | 24,612 | |
Independent trustees' compensation | 332 | |
Registration fees | 21,533 | |
Audit | 43,626 | |
Legal | 1,670 | |
Interest | 155 | |
Miscellaneous | 22,773 | |
Total expenses before reductions | 654,649 | |
Expense reductions | (9,789) | 644,860 |
Net investment income (loss) | 359,183 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,170,697 | |
Foreign currency transactions | (74,018) | |
Total net realized gain (loss) |
| 6,096,679 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 10,282,683 | |
Assets and liabilities in foreign currencies | 3 | |
Total change in net unrealized appreciation (depreciation) |
| 10,282,686 |
Net gain (loss) | 16,379,365 | |
Net increase (decrease) in net assets resulting from operations | $ 16,738,548 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Environment and Alternative Energy Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 359,183 | $ 379,310 |
Net realized gain (loss) | 6,096,679 | (1,394,609) |
Change in net unrealized appreciation (depreciation) | 10,282,686 | 14,891,963 |
Net increase (decrease) in net assets resulting from operations | 16,738,548 | 13,876,664 |
Distributions to shareholders from net investment income | (275,920) | (428,453) |
Share transactions | 51,313,257 | 21,183,763 |
Reinvestment of distributions | 265,713 | 413,836 |
Cost of shares redeemed | (18,368,973) | (26,868,543) |
Net increase (decrease) in net assets resulting from share transactions | 33,209,997 | (5,270,944) |
Redemption fees | 5,605 | 4,429 |
Total increase (decrease) in net assets | 49,678,230 | 8,181,696 |
|
|
|
Net Assets | ||
Beginning of period | 47,185,994 | 39,004,298 |
End of period (including undistributed net investment income of $9,189 and accumulated net investment loss of $54, respectively) | $ 96,864,224 | $ 47,185,994 |
Other Information Shares | ||
Sold | 2,989,485 | 1,547,962 |
Issued in reinvestment of distributions | 15,227 | 27,084 |
Redeemed | (1,114,764) | (1,982,874) |
Net increase (decrease) | 1,889,948 | (407,828) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.94 | $ 10.94 | $ 17.71 | $ 17.21 | $ 17.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .10 | .11 | .06 | .04 | (.02) |
Net realized and unrealized gain (loss) | 4.22 | 4.03 | (6.76) | .53 | (.14) |
Total from investment operations | 4.32 | 4.14 | (6.70) | .57 | (.16) |
Distributions from net investment income | (.07) | (.14) | (.07) | (.07) | - |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .02 |
Net asset value, end of period | $ 19.19 | $ 14.94 | $ 10.94 | $ 17.71 | $ 17.21 |
Total Return A | 28.96% | 37.77% | (37.88)% | 3.27% | (.81)% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | 1.08% | 1.08% | 1.06% | 1.08% | 1.11% |
Expenses net of fee waivers, if any | 1.08% | 1.08% | 1.06% | 1.08% | 1.11% |
Expenses net of all reductions | 1.07% | 1.08% | 1.06% | 1.07% | 1.09% |
Net investment income (loss) | .59% | .82% | .37% | .22% | (.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 96,864 | $ 47,186 | $ 39,004 | $ 38,510 | $ 46,377 |
Portfolio turnover rate D | 190% | 132% | 107% | 76% | 224% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Industrial Equipment Portfolio | 38.87% | 6.96% | 7.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 28, 2001. 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
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Steven Bullock, who became Portfolio Manager of Industrial Equipment Portfolio on May 1, 2010: During the past year, the fund returned 38.87%, significantly outpacing the broadly based S&P 500® and the 34.50% gain of the MSCI® U.S. IM Capital Goods 25/50 Index. Relative to its industry benchmark, solid stock picking and an overweighting in the strong-performing construction and farm machinery/heavy trucks industry provided a meaningful boost, as the group benefited from increased demand in emerging markets and improved operational efficiencies. Security selection and a sizable underweighting in the lagging aerospace and defense group helped as well. During the period, I established a larger position in commercial aerospace firms versus pure defense companies, given federal government budget pressure to rein in defense spending. There were several aerospace names I felt were undervalued and could produce an attractive return, and I gradually increased the fund's exposure to the industry. Additionally, performance was lifted by security selection in construction and engineering, along with positioning in trading companies/distributors and industrial conglomerates. In terms of individual securities, an overweighting in Cummins, the world's largest independent diesel engine manufacturer, helped the most, as its stock rose roughly 80% on robust emerging markets production and exposure to the accelerating U.S. truck market. Commercial Vehicle Group - an out-of-index supplier of commercial truck seats - benefited from the onset of the anticipated heavy truck replacement cycle. An average underweighting in diversified technology firm 3M proved productive, as the stock meaningfully underperformed during the final six months of the period. Underweighting two aerospace and defense firms, Boeing and Lockheed Martin, also contributed. I sold Lockheed by period end. Conversely, poor positioning in building products hurt the most, as did weak picks in electrical components and equipment. The fund's modest cash position in a rising market also detracted. On the stock level, a large overweighting in building products company Masco weighed on performance. Despite shifting to an overweighting in the well-performing industrial conglomerate General Electric, minimal exposure to the stock early in the period hurt. Elsewhere, underweighting farm machinery firm Deere also detracted. I sold Deere 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
Industrial Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 17.7 | 17.4 |
United Technologies Corp. | 6.7 | 7.2 |
Caterpillar, Inc. | 6.1 | 6.7 |
Emerson Electric Co. | 4.7 | 1.6 |
The Boeing Co. | 4.4 | 0.0 |
Ingersoll-Rand Co. Ltd. | 3.7 | 3.3 |
Danaher Corp. | 3.5 | 2.9 |
3M Co. | 3.4 | 3.7 |
General Dynamics Corp. | 3.1 | 0.0 |
Jacobs Engineering Group, Inc. | 3.0 | 2.2 |
| 56.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Aerospace & Defense | 26.5% |
|
![]() | Industrial Conglomerates | 22.4% |
|
![]() | Machinery | 22.2% |
|
![]() | Construction & Engineering | 9.7% |
|
![]() | Electrical Equipment | 8.3% |
|
![]() | All Others* | 10.9% |
|
As of August 31, 2010 | |||
![]() | Machinery | 28.0% |
|
![]() | Industrial Conglomerates | 22.6% |
|
![]() | Aerospace & Defense | 17.6% |
|
![]() | Electrical Equipment | 7.9% |
|
![]() | Construction & Engineering | 6.6% |
|
![]() | All Others* | 17.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Industrial Equipment Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 26.5% | |||
Aerospace & Defense - 26.5% | |||
BE Aerospace, Inc. (a) | 104,700 | $ 3,530,484 | |
Bombardier, Inc. Class B (sub. vtg.) | 231,000 | 1,486,486 | |
Esterline Technologies Corp. (a) | 47,100 | 3,370,947 | |
General Dynamics Corp. | 145,700 | 11,090,684 | |
Goodrich Corp. | 52,000 | 4,483,960 | |
L-3 Communications Holdings, Inc. | 84,800 | 6,723,792 | |
Precision Castparts Corp. | 53,000 | 7,512,750 | |
Raytheon Co. | 186,400 | 9,545,544 | |
Rockwell Collins, Inc. | 86,300 | 5,561,172 | |
The Boeing Co. | 221,900 | 15,979,019 | |
TransDigm Group, Inc. (a) | 31,300 | 2,515,894 | |
United Technologies Corp. | 293,000 | 24,477,220 | |
| 96,277,952 | ||
AUTO COMPONENTS - 0.3% | |||
Auto Parts & Equipment - 0.3% | |||
Tenneco, Inc. (a) | 26,800 | 1,068,784 | |
AUTOMOBILES - 0.1% | |||
Automobile Manufacturers - 0.1% | |||
Tesla Motors, Inc. (a) | 16,100 | 384,629 | |
BUILDING PRODUCTS - 5.4% | |||
Building Products - 5.4% | |||
A.O. Smith Corp. | 32,850 | 1,327,140 | |
Gibraltar Industries, Inc. (a) | 264,300 | 2,862,369 | |
Masco Corp. | 453,333 | 6,160,795 | |
Owens Corning (a) | 52,900 | 1,890,117 | |
Quanex Building Products Corp. | 392,000 | 7,404,880 | |
| 19,645,301 | ||
CHEMICALS - 0.3% | |||
Diversified Chemicals - 0.3% | |||
Cabot Corp. | 25,800 | 1,116,108 | |
CONSTRUCTION & ENGINEERING - 9.7% | |||
Construction & Engineering - 9.7% | |||
EMCOR Group, Inc. (a) | 137,100 | 4,368,006 | |
Fluor Corp. | 63,600 | 4,500,336 | |
Foster Wheeler AG (a) | 136,700 | 4,943,072 | |
Jacobs Engineering Group, Inc. (a) | 217,800 | 10,903,068 | |
Larsen & Toubro Ltd. | 80,497 | 2,717,229 | |
Quanta Services, Inc. (a) | 141,600 | 3,229,896 | |
Shaw Group, Inc. (a) | 114,200 | 4,536,024 | |
| 35,197,631 | ||
ELECTRICAL EQUIPMENT - 8.3% | |||
Electrical Components & Equipment - 6.8% | |||
Acuity Brands, Inc. | 37,800 | 2,136,456 | |
Emerson Electric Co. | 288,000 | 17,182,080 | |
Fushi Copperweld, Inc. (a) | 43,027 | 418,653 | |
General Cable Corp. (a) | 57,000 | 2,474,940 | |
| |||
Shares | Value | ||
Regal-Beloit Corp. | 35,800 | $ 2,611,610 | |
Saft Groupe SA | 1 | 38 | |
| 24,823,777 | ||
Heavy Electrical Equipment - 1.5% | |||
Alstom SA | 91,568 | 5,460,813 | |
TOTAL ELECTRICAL EQUIPMENT | 30,284,590 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.7% | |||
Electronic Equipment & Instruments - 0.7% | |||
FLIR Systems, Inc. | 73,300 | 2,367,590 | |
HOUSEHOLD DURABLES - 0.3% | |||
Consumer Electronics - 0.3% | |||
Cobra Electronics Corp. (a) | 246,125 | 950,043 | |
INDUSTRIAL CONGLOMERATES - 22.4% | |||
Industrial Conglomerates - 22.4% | |||
3M Co. | 131,900 | 12,165,137 | |
General Electric Co. | 3,066,855 | 64,158,609 | |
Textron, Inc. | 177,500 | 4,808,475 | |
| 81,132,221 | ||
MACHINERY - 22.2% | |||
Construction & Farm Machinery & Heavy Trucks - 13.2% | |||
Ashok Leyland Ltd. | 775,949 | 801,405 | |
Caterpillar, Inc. | 214,000 | 22,027,020 | |
Commercial Vehicle Group, Inc. (a) | 57,600 | 907,776 | |
Cummins, Inc. | 89,800 | 9,080,576 | |
Manitowoc Co., Inc. | 105,400 | 2,087,974 | |
Marcopolo SA | 167,400 | 546,329 | |
Navistar International Corp. (a) | 33,300 | 2,063,934 | |
PACCAR, Inc. | 80,300 | 4,025,439 | |
Tata Motors Ltd. sponsored ADR | 151,100 | 3,720,082 | |
TIL Ltd. | 30,811 | 371,583 | |
WABCO Holdings, Inc. (a) | 36,900 | 2,156,067 | |
| 47,788,185 | ||
Industrial Machinery - 9.0% | |||
Danaher Corp. | 249,900 | 12,644,940 | |
Harsco Corp. | 49,000 | 1,674,330 | |
Ingersoll-Rand Co. Ltd. | 293,600 | 13,300,080 | |
Key Technology, Inc. (a) | 85,442 | 1,729,346 | |
SmartHeat, Inc. (a)(d) | 177,827 | 812,669 | |
Weg SA | 224,100 | 2,700,568 | |
| 32,861,933 | ||
TOTAL MACHINERY | 80,650,118 | ||
PROFESSIONAL SERVICES - 0.5% | |||
Human Resource & Employment Services - 0.5% | |||
Towers Watson & Co. | 31,000 | 1,822,800 | |
Common Stocks - continued | |||
Shares | Value | ||
ROAD & RAIL - 0.5% | |||
Trucking - 0.5% | |||
Frozen Food Express Industries, Inc. (a) | 365,628 | $ 1,499,075 | |
Tegma Gestao Logistica | 19,100 | 269,659 | |
| 1,768,734 | ||
TRADING COMPANIES & DISTRIBUTORS - 1.2% | |||
Trading Companies & Distributors - 1.2% | |||
Barloworld Ltd. | 127,500 | 1,323,070 | |
Interline Brands, Inc. (a) | 49,300 | 1,080,163 | |
Mills Estruturas e Servicos de Engenharia SA | 82,000 | 928,032 | |
Rush Enterprises, Inc. Class A (a) | 55,587 | 1,043,368 | |
| 4,374,633 | ||
TRANSPORTATION INFRASTRUCTURE - 0.9% | |||
Highways & Railtracks - 0.9% | |||
Companhia de Concessoes Rodoviarias | 111,900 | 3,120,664 | |
TOTAL COMMON STOCKS (Cost $301,629,966) | 360,161,798 | ||
Money Market Funds - 0.2% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 579,000 | $ 579,000 | |
TOTAL INVESTMENT PORTFOLIO - 99.5% (Cost $302,208,966) | 360,740,798 | ||
NET OTHER ASSETS (LIABILITIES) - 0.5% | 1,930,165 | ||
NET ASSETS - 100% | $ 362,670,963 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 5,668 |
Fidelity Securities Lending Cash Central Fund | 22,996 |
Total | $ 28,664 |
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 | 88.5% |
Ireland | 3.7% |
Brazil | 2.1% |
India | 2.0% |
France | 1.5% |
Switzerland | 1.4% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $529,206) - See accompanying schedule: Unaffiliated issuers (cost $301,629,966) | $ 360,161,798 |
|
Fidelity Central Funds (cost $579,000) | 579,000 |
|
Total Investments (cost $302,208,966) |
| $ 360,740,798 |
Receivable for investments sold | 29,704,135 | |
Receivable for fund shares sold | 1,717,942 | |
Dividends receivable | 922,552 | |
Distributions receivable from Fidelity Central Funds | 1,379 | |
Prepaid expenses | 332 | |
Other receivables | 1,799 | |
Total assets | 393,088,937 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 1,360,767 | |
Payable for investments purchased | 25,501,090 | |
Payable for fund shares redeemed | 2,715,356 | |
Accrued management fee | 160,362 | |
Other affiliated payables | 62,388 | |
Other payables and accrued expenses | 39,011 | |
Collateral on securities loaned, at value | 579,000 | |
Total liabilities | 30,417,974 | |
|
|
|
Net Assets | $ 362,670,963 | |
Net Assets consist of: |
| |
Paid in capital | $ 315,025,069 | |
Undistributed net investment income | 691,224 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,574,911) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 58,529,581 | |
Net Assets, for 10,029,507 shares outstanding | $ 362,670,963 | |
Net Asset Value, offering price and redemption price per share ($362,670,963 ÷ 10,029,507 shares) | $ 36.16 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,386,881 |
Interest |
| 3 |
Income from Fidelity Central Funds (including $22,996 from security lending) |
| 28,664 |
Total income |
| 3,415,548 |
|
|
|
Expenses | ||
Management fee | $ 1,109,680 | |
Transfer agent fees | 447,518 | |
Accounting and security lending fees | 77,584 | |
Custodian fees and expenses | 28,194 | |
Independent trustees' compensation | 988 | |
Registration fees | 38,753 | |
Audit | 41,136 | |
Legal | 574 | |
Miscellaneous | 1,703 | |
Total expenses before reductions | 1,746,130 | |
Expense reductions | (5,685) | 1,740,445 |
Net investment income (loss) | 1,675,103 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,873,535 | |
Foreign currency transactions | (148,314) | |
Total net realized gain (loss) |
| 24,725,221 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 36,951,772 | |
Assets and liabilities in foreign currencies | 40 | |
Total change in net unrealized appreciation (depreciation) |
| 36,951,812 |
Net gain (loss) | 61,677,033 | |
Net increase (decrease) in net assets resulting from operations | $ 63,352,136 |
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) | $ 1,675,103 | $ 832,966 |
Net realized gain (loss) | 24,725,221 | (1,512,953) |
Change in net unrealized appreciation (depreciation) | 36,951,812 | 51,981,254 |
Net increase (decrease) in net assets resulting from operations | 63,352,136 | 51,301,267 |
Distributions to shareholders from net investment income | (976,933) | (975,812) |
Share transactions | 258,656,037 | 49,021,581 |
Reinvestment of distributions | 958,393 | 954,775 |
Cost of shares redeemed | (79,705,069) | (27,195,052) |
Net increase (decrease) in net assets resulting from share transactions | 179,909,361 | 22,781,304 |
Redemption fees | 17,967 | 1,867 |
Total increase (decrease) in net assets | 242,302,531 | 73,108,626 |
|
|
|
Net Assets | ||
Beginning of period | 120,368,432 | 47,259,806 |
End of period (including undistributed net investment income of $691,224 and undistributed net investment income of $141,018, respectively) | $ 362,670,963 | $ 120,368,432 |
Other Information Shares | ||
Sold | 8,102,622 | 2,390,272 |
Issued in reinvestment of distributions | 29,482 | 43,393 |
Redeemed | (2,703,586) | (1,214,279) |
Net increase (decrease) | 5,428,518 | 1,219,386 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.16 | $ 13.98 | $ 32.45 | $ 31.50 | $ 29.15 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .26 | .19 | .33 | .28 | .18 |
Net realized and unrealized gain (loss) | 9.89 | 12.22 | (17.96) | 2.73 | 2.59 |
Total from investment operations | 10.15 | 12.41 | (17.63) | 3.01 | 2.77 |
Distributions from net investment income | (.15) | (.23) | (.34) | (.23) | (.10) |
Distributions from net realized gain | - | - | (.50) | (1.83) | (.33) |
Total distributions | (.15) | (.23) | (.84) | (2.06) | (.43) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 36.16 | $ 26.16 | $ 13.98 | $ 32.45 | $ 31.50 |
Total Return A | 38.87% | 89.06% | (55.46)% | 9.25% | 9.59% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .89% | .95% | .90% | .88% | .99% |
Expenses net of fee waivers, if any | .89% | .95% | .90% | .88% | .99% |
Expenses net of all reductions | .88% | .94% | .90% | .88% | .98% |
Net investment income (loss) | .85% | .87% | 1.22% | .80% | .60% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 362,671 | $ 120,368 | $ 47,260 | $ 169,045 | $ 82,528 |
Portfolio turnover rate D | 82% | 74% | 136% | 92% | 104% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Industrials Portfolio A | 37.85% | 7.95% | 9.47% |
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 28, 2001. 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
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Tobias Welo, Portfolio Manager of Industrials Portfolio: During the past year, the fund returned 37.85%, well ahead of the 32.17% gain of the MSCI® U.S. IM Industrials 25/50 Index and the S&P 500®. Stock picking in aerospace and defense, where I tilted the fund's exposure in favor of commercial aerospace firms and away from defense companies, provided a meaningful performance boost versus the MSCI index. Security selection and an overweighting in the strong-performing trading companies/distributors segment also aided fund performance, as did large underweightings in two weak-performing industries: airlines and air freight/logistics. The top relative contributor was Rush Enterprises, a dealer in medium and heavy trucks, and also a provider of comprehensive truck service and parts. During the period, the company made some smart moves to build its dealer network and service operations. Underweighting commercial aerospace firm Boeing also had a positive impact, given the stock's lagging performance. That said, in January I built a sizable position in Boeing after not owning it for most of the period. I thought the stock might be due for a stretch of outperformance, given the 2012 projected completion date of the company's 787 Dreamliner® aircraft, the expected boost in the firm's free cash flow once production ramps up and the recent favorable environment for commercial aerospace companies. Elsewhere, heavy-truck engine maker Cummins lifted performance, delivering a gain of more than 80%. Underweighting and ultimately selling defense contractor Lockheed Martin and not owning package delivery provider FedEx - two weak-performing index components - further bolstered the fund's showing. On the negative side, Chinese holding SmartHeat, which sells clean technology plate heat exchangers (PHEs) and related systems, was hurt by that nation's recent efforts to slow economic growth. The stock slid further in November, when the company issued a disappointing outlook for 2011, and a competitor in the Chinese clean tech space was accused of fraud. Building products supplier Masco - which I sold - struggled amid continued weakness in the U.S. residential and commercial construction markets. Lastly, underweighting industrial conglomerate General Electric early in the period, when its stock enjoyed a strong run, made it the fund's third-largest relative detractor. That said, I boosted the fund's holdings in GE to a slight overweighting 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
Industrials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 13.7 | 13.3 |
United Technologies Corp. | 5.3 | 6.7 |
Caterpillar, Inc. | 4.3 | 4.0 |
Union Pacific Corp. | 3.5 | 4.6 |
Emerson Electric Co. | 3.2 | 1.8 |
Honeywell International, Inc. | 3.0 | 2.8 |
Danaher Corp. | 2.8 | 3.0 |
3M Co. | 2.5 | 5.0 |
The Boeing Co. | 2.3 | 0.0 |
Cummins, Inc. | 2.3 | 2.0 |
| 42.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Machinery | 20.4% |
|
![]() | Industrial Conglomerates | 19.7% |
|
![]() | Aerospace & Defense | 18.5% |
|
![]() | Electrical Equipment | 10.5% |
|
![]() | Road & Rail | 7.5% |
|
![]() | All Others* | 23.4% |
|
As of August 31, 2010 | |||
![]() | Machinery | 22.2% |
|
![]() | Industrial Conglomerates | 20.4% |
|
![]() | Aerospace & Defense | 18.7% |
|
![]() | Road & Rail | 7.8% |
|
![]() | Electrical Equipment | 6.4% |
|
![]() | All Others* | 24.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Industrials Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 96.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 18.5% | |||
Aerospace & Defense - 18.5% | |||
Bombardier, Inc. Class B (sub. vtg.) | 671,900 | $ 4,323,681 | |
DigitalGlobe, Inc. (a) | 129,598 | 4,183,423 | |
Embraer SA sponsored ADR | 55,700 | 1,897,142 | |
Esterline Technologies Corp. (a) | 50,060 | 3,582,794 | |
GeoEye, Inc. (a) | 54,229 | 2,415,902 | |
Goodrich Corp. | 65,458 | 5,644,443 | |
Honeywell International, Inc. | 296,100 | 17,147,151 | |
Meggitt PLC | 315,700 | 1,735,916 | |
Precision Castparts Corp. | 72,048 | 10,212,804 | |
Rockwell Collins, Inc. | 118,512 | 7,636,913 | |
The Boeing Co. | 181,800 | 13,091,418 | |
TransDigm Group, Inc. (a) | 45,500 | 3,657,290 | |
United Technologies Corp. | 360,805 | 30,141,650 | |
| 105,670,527 | ||
AIR FREIGHT & LOGISTICS - 0.4% | |||
Air Freight & Logistics - 0.4% | |||
C.H. Robinson Worldwide, Inc. | 32,096 | 2,323,429 | |
AIRLINES - 0.2% | |||
Airlines - 0.2% | |||
Copa Holdings SA Class A | 21,000 | 1,119,930 | |
BUILDING PRODUCTS - 2.6% | |||
Building Products - 2.6% | |||
A.O. Smith Corp. | 138,066 | 5,577,866 | |
Lennox International, Inc. | 89,800 | 4,355,300 | |
Owens Corning (a) | 141,726 | 5,063,870 | |
| 14,997,036 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.0% | |||
Diversified Support Services - 0.4% | |||
Iron Mountain, Inc. | 95,700 | 2,488,200 | |
Environmental & Facility Services - 0.7% | |||
Republic Services, Inc. | 130,219 | 3,855,785 | |
Security & Alarm Services - 0.9% | |||
The Geo Group, Inc. (a) | 198,300 | 5,042,769 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 11,386,754 | ||
CONSTRUCTION & ENGINEERING - 7.0% | |||
Construction & Engineering - 7.0% | |||
EMCOR Group, Inc. (a) | 234,768 | 7,479,708 | |
Fluor Corp. | 124,619 | 8,818,040 | |
Foster Wheeler AG (a) | 147,968 | 5,350,523 | |
Jacobs Engineering Group, Inc. (a) | 153,291 | 7,673,747 | |
MYR Group, Inc. (a) | 126,552 | 2,855,013 | |
Quanta Services, Inc. (a) | 182,973 | 4,173,614 | |
Shaw Group, Inc. (a) | 96,400 | 3,829,008 | |
| 40,179,653 | ||
| |||
Shares | Value | ||
ELECTRICAL EQUIPMENT - 10.5% | |||
Electrical Components & Equipment - 9.5% | |||
Acuity Brands, Inc. | 30,250 | $ 1,709,730 | |
AMETEK, Inc. | 109,175 | 4,579,891 | |
Cooper Industries PLC Class A | 98,600 | 6,344,910 | |
Emerson Electric Co. | 307,307 | 18,333,936 | |
Fushi Copperweld, Inc. (a) | 141,632 | 1,378,079 | |
General Cable Corp. (a) | 88,200 | 3,829,644 | |
GrafTech International Ltd. (a) | 252,800 | 5,058,528 | |
Polypore International, Inc. (a) | 29,500 | 1,723,980 | |
Prysmian SpA | 274,237 | 5,790,240 | |
Regal-Beloit Corp. | 45,102 | 3,290,191 | |
Sensata Technologies Holding BV | 79,500 | 2,631,450 | |
| 54,670,579 | ||
Heavy Electrical Equipment - 1.0% | |||
Alstom SA | 95,004 | 5,665,725 | |
TOTAL ELECTRICAL EQUIPMENT | 60,336,304 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.1% | |||
Electronic Equipment & Instruments - 0.1% | |||
HLS Systems International Ltd. (a) | 41,736 | 628,127 | |
ENERGY EQUIPMENT & SERVICES - 0.7% | |||
Oil & Gas Equipment & Services - 0.7% | |||
Dresser-Rand Group, Inc. (a) | 80,178 | 3,951,172 | |
HOUSEHOLD DURABLES - 0.9% | |||
Household Appliances - 0.9% | |||
Stanley Black & Decker, Inc. | 71,026 | 5,385,902 | |
INDUSTRIAL CONGLOMERATES - 19.7% | |||
Industrial Conglomerates - 19.7% | |||
3M Co. | 156,603 | 14,443,495 | |
General Electric Co. | 3,743,701 | 78,318,223 | |
Textron, Inc. | 413,760 | 11,208,758 | |
Tyco International Ltd. | 193,576 | 8,776,736 | |
| 112,747,212 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.4% | |||
Life Sciences Tools & Services - 0.4% | |||
Agilent Technologies, Inc. (a) | 58,438 | 2,459,071 | |
MACHINERY - 20.4% | |||
Construction & Farm Machinery & Heavy Trucks - 9.9% | |||
Ashok Leyland Ltd. | 1,162,063 | 1,200,187 | |
Caterpillar, Inc. | 239,647 | 24,666,866 | |
Cummins, Inc. | 129,358 | 13,080,681 | |
Fiat Industrial SpA (a) | 399,396 | 5,577,805 | |
MAN SE | 87 | 11,047 | |
PACCAR, Inc. | 135,003 | 6,767,700 | |
Tata Motors Ltd. sponsored ADR | 135,800 | 3,343,396 | |
Weichai Power Co. Ltd. (H Shares) | 242,000 | 1,609,605 | |
| 56,257,287 | ||
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - CONTINUED | |||
Industrial Machinery - 10.5% | |||
Actuant Corp. Class A | 121,416 | $ 3,436,073 | |
Charter International PLC | 274,493 | 3,385,068 | |
Danaher Corp. | 319,684 | 16,176,010 | |
Gardner Denver, Inc. | 38,700 | 2,830,518 | |
Harsco Corp. | 126,307 | 4,315,910 | |
Ingersoll-Rand Co. Ltd. | 254,505 | 11,529,077 | |
Pall Corp. | 130,387 | 7,087,837 | |
SmartHeat, Inc. (a)(d) | 338,055 | 1,544,911 | |
SPX Corp. | 100,300 | 7,999,928 | |
Weg SA | 160,200 | 1,930,527 | |
| 60,235,859 | ||
TOTAL MACHINERY | 116,493,146 | ||
MARINE - 0.3% | |||
Marine - 0.3% | |||
Kuehne & Nagel International AG | 10,700 | 1,438,646 | |
PROFESSIONAL SERVICES - 2.3% | |||
Human Resource & Employment Services - 1.5% | |||
Towers Watson & Co. | 144,499 | 8,496,541 | |
Research & Consulting Services - 0.8% | |||
IHS, Inc. Class A (a) | 52,577 | 4,400,695 | |
TOTAL PROFESSIONAL SERVICES | 12,897,236 | ||
ROAD & RAIL - 7.5% | |||
Railroads - 7.2% | |||
CSX Corp. | 131,222 | 9,797,035 | |
Kansas City Southern (a) | 85,583 | 4,607,789 | |
Norfolk Southern Corp. | 109,925 | 7,208,882 | |
Union Pacific Corp. | 207,594 | 19,806,544 | |
| 41,420,250 | ||
Trucking - 0.3% | |||
Saia, Inc. (a) | 116,832 | 1,761,827 | |
TOTAL ROAD & RAIL | 43,182,077 | ||
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 3.0% | |||
Trading Companies & Distributors - 3.0% | |||
Barloworld Ltd. | 271,792 | $ 2,820,391 | |
Finning International, Inc. | 58,200 | 1,656,865 | |
Mills Estruturas e Servicos de Engenharia SA | 231,000 | 2,614,335 | |
Rush Enterprises, Inc. Class A (a) | 259,125 | 4,863,776 | |
WESCO International, Inc. (a) | 90,995 | 5,297,729 | |
| 17,253,096 | ||
TOTAL COMMON STOCKS (Cost $435,099,335) | 552,449,318 | ||
Money Market Funds - 5.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 28,416,966 | 28,416,966 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 992,500 | 992,500 | |
TOTAL MONEY MARKET FUNDS (Cost $29,409,466) | 29,409,466 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $464,508,801) | 581,858,784 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (9,407,672) | ||
NET ASSETS - 100% | $ 572,451,112 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 19,706 |
Fidelity Securities Lending Cash Central Fund | 69,739 |
Total | $ 89,445 |
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 | 85.8% |
Ireland | 3.1% |
Switzerland | 2.7% |
Italy | 2.0% |
Brazil | 1.1% |
Canada | 1.1% |
France | 1.0% |
Others (Individually Less Than 1%) | 3.2% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $907,145) - See accompanying schedule: Unaffiliated issuers (cost $435,099,335) | $ 552,449,318 |
|
Fidelity Central Funds (cost $29,409,466) | 29,409,466 |
|
Total Investments (cost $464,508,801) |
| $ 581,858,784 |
Receivable for investments sold | 4,447,885 | |
Receivable for fund shares sold | 2,380,449 | |
Dividends receivable | 1,355,425 | |
Distributions receivable from Fidelity Central Funds | 4,249 | |
Prepaid expenses | 612 | |
Other receivables | 5,088 | |
Total assets | 590,052,492 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 15,292,812 | |
Payable for fund shares redeemed | 903,991 | |
Accrued management fee | 252,917 | |
Other affiliated payables | 112,497 | |
Other payables and accrued expenses | 46,663 | |
Collateral on securities loaned, at value | 992,500 | |
Total liabilities | 17,601,380 | |
|
|
|
Net Assets | $ 572,451,112 | |
Net Assets consist of: |
| |
Paid in capital | $ 446,289,075 | |
Undistributed net investment income | 843,529 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 7,968,357 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 117,350,151 | |
Net Assets, for 22,679,275 shares outstanding | $ 572,451,112 | |
Net Asset Value, offering price and redemption price per share ($572,451,112 ÷ 22,679,275 shares) | $ 25.24 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,620,018 |
Interest |
| 1 |
Income from Fidelity Central Funds (including $69,739 from security lending) |
| 89,445 |
Total income |
| 5,709,464 |
|
|
|
Expenses | ||
Management fee | $ 2,025,549 | |
Transfer agent fees | 935,924 | |
Accounting and security lending fees | 141,508 | |
Custodian fees and expenses | 53,838 | |
Independent trustees' compensation | 1,855 | |
Registration fees | 51,946 | |
Audit | 37,532 | |
Legal | 1,117 | |
Miscellaneous | 3,242 | |
Total expenses before reductions | 3,252,511 | |
Expense reductions | (18,784) | 3,233,727 |
Net investment income (loss) | 2,475,737 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 26,698,864 | |
Foreign currency transactions | (95,593) | |
Total net realized gain (loss) |
| 26,603,271 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 85,408,923 | |
Assets and liabilities in foreign currencies | 359 | |
Total change in net unrealized appreciation (depreciation) |
| 85,409,282 |
Net gain (loss) | 112,012,553 | |
Net increase (decrease) in net assets resulting from operations | $ 114,488,290 |
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) | $ 2,475,737 | $ 1,337,208 |
Net realized gain (loss) | 26,603,271 | 17,902,902 |
Change in net unrealized appreciation (depreciation) | 85,409,282 | 71,578,895 |
Net increase (decrease) in net assets resulting from operations | 114,488,290 | 90,819,005 |
Distributions to shareholders from net investment income | (1,731,948) | (1,344,452) |
Share transactions | 324,950,432 | 152,810,869 |
Reinvestment of distributions | 1,677,754 | 1,313,478 |
Cost of shares redeemed | (120,246,657) | (73,864,430) |
Net increase (decrease) in net assets resulting from share transactions | 206,381,529 | 80,259,917 |
Redemption fees | 26,323 | 10,490 |
Total increase (decrease) in net assets | 319,164,194 | 169,744,960 |
|
|
|
Net Assets | ||
Beginning of period | 253,286,918 | 83,541,958 |
End of period (including undistributed net investment income of $843,529 and undistributed net investment income of $216,667, respectively) | $ 572,451,112 | $ 253,286,918 |
Other Information Shares | ||
Sold | 14,626,207 | 10,033,014 |
Issued in reinvestment of distributions | 73,682 | 79,541 |
Redeemed | (5,796,400) | (4,595,193) |
Net increase (decrease) | 8,903,489 | 5,517,362 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 18.39 | $ 10.12 | $ 20.50 | $ 20.70 | $ 20.97 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .15 | .11 | .18 | .11 | .14 |
Net realized and unrealized gain (loss) | 6.80 | 8.27 | (10.35) | 1.40 | 1.55 |
Total from investment operations | 6.95 | 8.38 | (10.17) | 1.51 | 1.69 |
Distributions from net investment income | (.10) | (.11) | (.15) | (.09) | (.08) |
Distributions from net realized gain | - | - | (.06) | (1.62) | (1.89) |
Total distributions | (.10) | (.11) | (.21) | (1.71) | (1.97) |
Redemption fees added to paid in capital B | - G | - G | - G | - G | .01 |
Net asset value, end of period | $ 25.24 | $ 18.39 | $ 10.12 | $ 20.50 | $ 20.70 |
Total Return A | 37.85% | 82.95% | (49.92)% | 7.14% | 8.34% |
Ratios to Average Net Assets C,E |
|
|
|
|
|
Expenses before reductions | .90% | .97% | 1.00% | 1.00% | 1.10% |
Expenses net of fee waivers, if any | .90% | .97% | 1.00% | 1.00% | 1.10% |
Expenses net of all reductions | .90% | .97% | .99% | .99% | 1.09% |
Net investment income (loss) | .69% | .71% | 1.08% | .49% | .66% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 572,451 | $ 253,287 | $ 83,542 | $ 124,443 | $ 76,011 |
Portfolio turnover rate D | 80% | 106% | 132% | 108% | 185% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. F For the year ended February 29. G 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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Transportation Portfolio | 34.32% | 5.48% | 8.84% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Sean Gavin, who became Portfolio Manager of Transportation Portfolio on September 1, 2010: During the past year, the fund returned 34.32%, well ahead of both the 26.61% gain of the MSCI® U.S. IM Transportation 25/50 Index and the broadly based S&P 500®. Versus the MSCI index, favorable stock picking in the airline group added materially to performance, as did a small out-of-benchmark stake in construction/farm machinery/heavy trucks. Security selection in air freight/logistics and trucking also bolstered the fund's result. A combination of an overweighting and solid picks in railroads had a positive impact as well. The largest individual contributor was a sizable out-of-benchmark position in Quality Distribution, which operates a bulk-chemical tank truck network in North America. The stock performed well in the first half of the period, but I thought there were better opportunities elsewhere and liquidated the position. Overweighting United Continental Holdings, which was formed by the October 2010 merger between United Air Lines and Continental Airlines - and underweighting AMR, parent company of American Airlines, also aided the fund's performance. United Continental was helped by ongoing merger synergies and disciplined capacity management in the face of higher fuel prices. On the other hand, AMR was hampered by its high cost structure and aging fleet of planes. I sold AMR by period end. Further bolstering fund performance was Wabash National, a provider of trailers for Class 8 trucks, railroad CSX and Alaska Air Group. Conversely, weak picks and an underweighting in airport services - a tiny index component - dampened the fund's gain. At the stock level, three out-of-benchmark holdings were notable detractors. Pinnacle Airlines was an illiquid micro-cap position that had done extremely well for the fund in the prior one-year reporting period but posted a sizable loss during the first six months of this review period. Although regional air carriers such as Pinnacle can deliver strong performance when conditions are favorable, their financial results tend to be closely tied to the uncertain fortunes of the larger air carriers, which are their customers. Consequently I sold the stock soon after I began managing the fund. Canadian LTL (less-than-truckload) trucker Vitran - also sold - and Navios Maritime Holdings, a SPAC (special-purpose acquisition company) formed to purchase assets in the shipping industry, 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
Transportation Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Union Pacific Corp. | 16.5 | 17.2 |
United Parcel Service, Inc. Class B | 12.9 | 21.3 |
CSX Corp. | 9.7 | 8.7 |
Norfolk Southern Corp. | 5.8 | 5.3 |
Kansas City Southern | 4.0 | 0.2 |
FedEx Corp. | 3.6 | 0.3 |
Southwest Airlines Co. | 3.4 | 2.8 |
Bombardier, Inc. Class B (sub. vtg.) | 2.5 | 0.0 |
Expeditors International of Washington, Inc. | 2.2 | 0.1 |
C.H. Robinson Worldwide, Inc. | 2.1 | 4.5 |
| 62.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Road & Rail | 48.0% |
|
![]() | Air Freight & Logistics | 26.2% |
|
![]() | Airlines | 10.3% |
|
![]() | Marine | 4.5% |
|
![]() | Machinery | 4.0% |
|
![]() | All Others* | 7.0% |
|
As of August 31, 2010 | |||
![]() | Road & Rail | 46.0% |
|
![]() | Air Freight & Logistics | 29.4% |
|
![]() | Airlines | 19.5% |
|
![]() | Marine | 2.2% |
|
![]() | Machinery | 0.5% |
|
![]() | All Others* | 2.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Transportation Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 3.9% | |||
Aerospace & Defense - 3.9% | |||
AerCap Holdings NV (a) | 89,800 | $ 1,218,586 | |
Bombardier, Inc. Class B (sub. vtg.) | 1,841,000 | 11,846,847 | |
The Boeing Co. | 70,800 | 5,098,308 | |
| 18,163,741 | ||
AIR FREIGHT & LOGISTICS - 26.2% | |||
Air Freight & Logistics - 26.2% | |||
Air Transport Services Group, Inc. (a) | 292,308 | 2,294,618 | |
Atlas Air Worldwide Holdings, Inc. (a) | 54,000 | 3,687,120 | |
C.H. Robinson Worldwide, Inc. | 136,696 | 9,895,423 | |
Dart Group PLC | 2,003,217 | 2,906,810 | |
Expeditors International of Washington, Inc. | 213,200 | 10,190,960 | |
Express-1 Expedited Solutions, Inc. (a) | 791,031 | 1,779,820 | |
FedEx Corp. | 185,200 | 16,671,704 | |
Hub Group, Inc. Class A (a) | 103,500 | 3,618,360 | |
Pacer International, Inc. (a) | 469,500 | 2,549,385 | |
Panalpina Welttransport Holding AG (a) | 30,500 | 3,949,782 | |
United Parcel Service, Inc. Class B | 819,400 | 60,471,720 | |
UTI Worldwide, Inc. | 220,900 | 4,395,910 | |
| 122,411,612 | ||
AIRLINES - 10.3% | |||
Airlines - 10.3% | |||
Air Canada Class A (a)(f) | 125,000 | 373,230 | |
AirTran Holdings, Inc. (a) | 302,600 | 2,208,980 | |
Alaska Air Group, Inc. (a) | 34,000 | 2,021,300 | |
Copa Holdings SA Class A | 133,700 | 7,130,221 | |
Delta Air Lines, Inc. (a) | 443,302 | 4,982,714 | |
Republic Airways Holdings, Inc. (a)(d) | 438,400 | 2,779,456 | |
Ryanair Holdings PLC sponsored ADR | 107,300 | 3,060,196 | |
SkyWest, Inc. | 178,700 | 2,948,550 | |
Southwest Airlines Co. | 1,342,000 | 15,875,860 | |
United Continental Holdings, Inc. (d) | 274,936 | 6,609,461 | |
| 47,989,968 | ||
AUTO COMPONENTS - 0.5% | |||
Auto Parts & Equipment - 0.5% | |||
Federal-Mogul Corp. Class A (a) | 118,430 | 2,488,214 | |
Wescast Industries, Inc. Class A (sub. vtg.) (a) | 10,100 | 66,033 | |
| 2,554,247 | ||
MACHINERY - 4.0% | |||
Construction & Farm Machinery & Heavy Trucks - 4.0% | |||
Accuride Corp. (a) | 342,651 | 4,793,687 | |
ASL Marine Holdings Ltd. | 1,250,200 | 629,130 | |
Cummins, Inc. | 10,100 | 1,021,312 | |
FreightCar America, Inc. | 135,100 | 3,799,012 | |
Navistar International Corp. (a) | 66,100 | 4,096,878 | |
Trinity Industries, Inc. | 76,800 | 2,392,320 | |
| |||
Shares | Value | ||
Wabash National Corp. (a) | 152,435 | $ 1,588,373 | |
Wabtec Corp. | 10,200 | 578,952 | |
| 18,899,664 | ||
MARINE - 4.5% | |||
Marine - 4.5% | |||
Costamare, Inc. | 109,245 | 1,833,131 | |
Kirby Corp. (a) | 133,400 | 7,382,356 | |
Kuehne & Nagel International AG | 64,620 | 8,688,345 | |
Navios Maritime Acquisition Corp. | 726,532 | 2,964,251 | |
| 20,868,083 | ||
OIL, GAS & CONSUMABLE FUELS - 0.1% | |||
Oil & Gas Storage & Transport - 0.1% | |||
K-Sea Transportation Partners LP (a) | 66,800 | 441,548 | |
ROAD & RAIL - 48.0% | |||
Railroads - 37.0% | |||
CSX Corp. | 604,273 | 45,115,022 | |
Kansas City Southern (a) | 349,900 | 18,838,616 | |
Norfolk Southern Corp. | 410,400 | 26,914,032 | |
RailAmerica, Inc. (a) | 326,000 | 4,890,000 | |
Union Pacific Corp. | 806,968 | 76,992,819 | |
| 172,750,489 | ||
Trucking - 11.0% | |||
Arkansas Best Corp. | 268,000 | 6,356,960 | |
Con-way, Inc. | 267,600 | 8,713,056 | |
Contrans Group, Inc.: | |||
(sub. vtg.) (f) | 12,800 | 127,176 | |
Class A | 86,200 | 856,453 | |
Frozen Food Express Industries, Inc. (a)(e) | 916,561 | 3,757,900 | |
Hertz Global Holdings, Inc. (a) | 79,700 | 1,212,237 | |
J.B. Hunt Transport Services, Inc. | 92,500 | 3,848,925 | |
Landstar System, Inc. | 86,800 | 3,859,996 | |
Marten Transport Ltd. | 52,700 | 1,125,145 | |
Old Dominion Freight Lines, Inc. (a) | 222,900 | 6,860,862 | |
Ryder System, Inc. | 13,100 | 626,573 | |
Saia, Inc. (a) | 254,300 | 3,834,844 | |
Swift Transporation Co. (d) | 546,300 | 7,877,646 | |
US 1 Industries, Inc. (a) | 800 | 1,120 | |
USA Truck, Inc. (a) | 130,700 | 1,671,653 | |
Werner Enterprises, Inc. | 33,500 | 788,925 | |
| 51,519,471 | ||
TOTAL ROAD & RAIL | 224,269,960 | ||
TRADING COMPANIES & DISTRIBUTORS - 1.1% | |||
Trading Companies & Distributors - 1.1% | |||
Aircastle Ltd. | 183,200 | 2,213,056 | |
Rush Enterprises, Inc. Class A (a) | 163,700 | 3,072,649 | |
| 5,285,705 | ||
Common Stocks - continued | |||
Shares | Value | ||
TRANSPORTATION INFRASTRUCTURE - 0.4% | |||
Airport Services - 0.4% | |||
Avantair, Inc. (a) | 740,073 | $ 1,739,172 | |
TOTAL COMMON STOCKS (Cost $394,649,758) | 462,623,700 | ||
Money Market Funds - 1.9% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 8,843,950 | 8,843,950 | |
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $403,493,708) | 471,467,650 | ||
NET OTHER ASSETS (LIABILITIES) - (0.9)% | (4,237,987) | ||
NET ASSETS - 100% | $ 467,229,663 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $500,406 or 0.1% of net assets. |
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 | $ 17,522 |
Fidelity Securities Lending Cash Central Fund | 288,328 |
Total | $ 305,850 |
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, |
Frozen Food Express Industries, Inc. | $ 1,001,452 | $ 2,115,707 | $ 225,619 | $ - | $ 3,757,900 |
Quality Distribution, Inc. | 6,070,934 | 3,363,121 | 9,750,335 | - | - |
Vitran Corp., Inc. | 3,186,452 | 11,598,068 | 11,403,743 | - | - |
Total | $ 10,258,838 | $ 17,076,896 | $ 21,379,697 | $ - | $ 3,757,900 |
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 | 88.9% |
Canada | 2.8% |
Switzerland | 2.7% |
Panama | 1.5% |
Marshall Islands | 1.0% |
Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,602,556) - See accompanying schedule: Unaffiliated issuers (cost $391,799,384) | $ 458,865,800 |
|
Fidelity Central Funds (cost $8,843,950) | 8,843,950 |
|
Other affiliated issuers (cost $2,850,374) | 3,757,900 |
|
Total Investments (cost $403,493,708) |
| $ 471,467,650 |
Cash | 785 | |
Receivable for investments sold | 11,629,844 | |
Receivable for fund shares sold | 734,085 | |
Dividends receivable | 1,247,024 | |
Distributions receivable from Fidelity Central Funds | 3,213 | |
Prepaid expenses | 626 | |
Other receivables | 2,638 | |
Total assets | 485,085,865 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 6,771,257 | |
Accrued management fee | 234,950 | |
Notes payable to affiliates | 1,843,000 | |
Other affiliated payables | 121,425 | |
Other payables and accrued expenses | 41,620 | |
Collateral on securities loaned, at value | 8,843,950 | |
Total liabilities | 17,856,202 | |
|
|
|
Net Assets | $ 467,229,663 | |
Net Assets consist of: |
| |
Paid in capital | $ 400,342,315 | |
Undistributed net investment income | 399,764 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,486,703) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 67,974,287 | |
Net Assets, for 8,304,257 shares outstanding | $ 467,229,663 | |
Net Asset Value, offering price and redemption price per share ($467,229,663 ÷ 8,304,257 shares) | $ 56.26 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,813,407 |
Interest |
| 32 |
Income from Fidelity Central Funds (including $288,328 from security lending) |
| 305,850 |
Total income |
| 5,119,289 |
|
|
|
Expenses | ||
Management fee | $ 2,015,746 | |
Transfer agent fees | 893,258 | |
Accounting and security lending fees | 142,605 | |
Custodian fees and expenses | 25,171 | |
Independent trustees' compensation | 1,775 | |
Registration fees | 106,780 | |
Audit | 43,272 | |
Legal | 910 | |
Interest | 2,755 | |
Miscellaneous | 2,678 | |
Total expenses before reductions | 3,234,950 | |
Expense reductions | (25,982) | 3,208,968 |
Net investment income (loss) | 1,910,321 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 24,905,903 | |
Other affiliated issuers | (1,366,609) |
|
Foreign currency transactions | 18,095 | |
Total net realized gain (loss) |
| 23,557,389 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 51,121,073 | |
Assets and liabilities in foreign currencies | 345 | |
Total change in net unrealized appreciation (depreciation) |
| 51,121,418 |
Net gain (loss) | 74,678,807 | |
Net increase (decrease) in net assets resulting from operations | $ 76,589,128 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Transportation Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,910,321 | $ 759,940 |
Net realized gain (loss) | 23,557,389 | (13,777,085) |
Change in net unrealized appreciation (depreciation) | 51,121,418 | 59,150,819 |
Net increase (decrease) in net assets resulting from operations | 76,589,128 | 46,133,674 |
Distributions to shareholders from net investment income | (1,416,143) | (803,963) |
Distributions to shareholders from net realized gain | - | (42,688) |
Total distributions | (1,416,143) | (846,651) |
Share transactions | 686,181,998 | 64,949,271 |
Reinvestment of distributions | 1,369,495 | 822,278 |
Cost of shares redeemed | (403,479,761) | (82,931,981) |
Net increase (decrease) in net assets resulting from share transactions | 284,071,732 | (17,160,432) |
Redemption fees | 143,082 | 9,849 |
Total increase (decrease) in net assets | 359,387,799 | 28,136,440 |
|
|
|
Net Assets | ||
Beginning of period | 107,841,864 | 79,705,424 |
End of period (including undistributed net investment income of $399,764 and undistributed net investment income of $28,264, respectively) | $ 467,229,663 | $ 107,841,864 |
Other Information Shares | ||
Sold | 13,602,544 | 1,857,783 |
Issued in reinvestment of distributions | 24,894 | 22,055 |
Redeemed | (7,890,440) | (2,649,455) |
Net increase (decrease) | 5,736,998 | (769,617) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.01 | $ 23.89 | $ 44.34 | $ 53.00 | $ 50.22 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .27 | .29 | .29 | .19 E | .04 |
Net realized and unrealized gain (loss) | 14.13 | 18.21 | (19.29) | (4.66) | 3.72 |
Total from investment operations | 14.40 | 18.50 | (19.00) | (4.47) | 3.76 |
Distributions from net investment income | (.17) | (.36) | (.25) | (.07) | (.02) |
Distributions from net realized gain | - | (.02) | (1.21) | (4.13) | (1.01) |
Total distributions | (.17) | (.38) | (1.46) | (4.20) | (1.03) |
Redemption fees added to paid in capital B | .02 | - H | .01 | .01 | .05 |
Net asset value, end of period | $ 56.26 | $ 42.01 | $ 23.89 | $ 44.34 | $ 53.00 |
Total Return A | 34.32% | 77.62% | (44.20)% | (8.89)% | 7.65% |
Ratios to Average Net Assets C,F |
|
|
|
|
|
Expenses before reductions | .90% | 1.03% | 1.03% | .99% | 1.03% |
Expenses net of fee waivers, if any | .90% | 1.03% | 1.03% | .99% | 1.03% |
Expenses net of all reductions | .90% | 1.00% | 1.03% | .99% | 1.02% |
Net investment income (loss) | .53% | .90% | .79% | .36% E | .09% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 467,230 | $ 107,842 | $ 79,705 | $ 92,432 | $ 105,027 |
Portfolio turnover rate D | 114% | 265% | 81% | 84% | 133% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividends, the ratio of net investment income (loss) to average net assets would have been .21%. 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, 2011
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio (formerly 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year each Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trutees 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 | Gross | Net unrealized |
Air Transportation Portfolio | $ 95,477,673 | $ 20,271,947 | $ (983,054) | $ 19,288,893 |
Defense and Aerospace Portfolio | 574,214,758 | 136,943,157 | (28,444,496) | 108,498,661 |
Environment and Alternative Energy Portfolio | 84,825,705 | 14,047,075 | (641,084) | 13,405,991 |
Industrial Equipment Portfolio | 314,782,151 | 52,889,045 | (6,930,398) | 45,958,647 |
Industrials Portfolio | 466,146,137 | 119,567,452 | (3,854,805) | 115,712,647 |
Transportation Portfolio | 409,401,938 | 69,749,174 | (7,683,462) | 62,065,712 |
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 for each Fund:
| Undistributed | Undistributed long-term | Capital loss | Net unrealized appreciation |
Air Transportation Portfolio | $ 103,843 | $ 7,116,981 | $ - | $ 19,289,224 |
Defense and Aerospace Portfolio | 1,011,940 | - | (80,384,065) | 108,502,485 |
Environment and Alternative Energy | 9,258 | - | (6,465,946) | 13,405,994 |
Industrial Equipment Portfolio | 691,223 | 998,274 | - | 45,956,396 |
Industrials Portfolio | 843,530 | 9,605,694 | - | 115,712,815 |
Transportation Portfolio | 1,914,524 | 2,906,764 | - | 62,066,057 |
The tax character of distributions paid was as follows:
February 28, 2011 |
|
| Ordinary |
Air Transportation Portfolio | $ 504,999 |
Defense and Aerospace Portfolio | 3,876,538 |
Environment and Alternative Energy Portfolio | 275,920 |
Industrial Equipment Portfolio | 976,933 |
Industrials Portfolio | 1,731,948 |
Transportation Portfolio | 1,416,143 |
February 28, 2010 |
|
| Ordinary |
Air Transportation Portfolio | $ - |
Defense and Aerospace Portfolio | 9,658,561 |
Environment and Alternative Energy Portfolio | 428,453 |
Industrial Equipment Portfolio | 975,812 |
Industrials Portfolio | 1,344,452 |
Transportation Portfolio | 846,651 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 ($) | Sales ($) |
Air Transportation Portfolio | 221,211,374 | 226,273,376 |
Defense and Aerospace Portfolio | 272,392,159 | 347,895,427 |
Environment and Alternative Energy Portfolio | 148,901,086 | 115,024,971 |
Industrial Equipment Portfolio | 342,102,430 | 162,429,643 |
Industrials Portfolio | 476,553,913 | 282,055,684 |
Transportation Portfolio | 672,643,012 | 391,737,000 |
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 |
Air Transportation Portfolio | .30% | .26% | .56% |
Defense and Aerospace Portfolio | .30% | .26% | .56% |
Environment and Alternative Energy 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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .25% |
Defense and Aerospace Portfolio | .27% |
Environment and Alternative Energy Portfolio | .29% |
Industrial Equipment Portfolio | .23% |
Industrials Portfolio | .26% |
Transportation Portfolio | .25% |
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 |
Air Transportation Portfolio | $ 5,089 |
Defense and Aerospace Portfolio | 3,975 |
Environment and Alternative Energy Portfolio | 3,933 |
Industrial Equipment Portfolio | 9,143 |
Industrials Portfolio | 8,412 |
Transportation Portfolio | 19,396 |
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, Defense and Aerospace Portfolio had no interfund loans outstanding and Transportation Portfolio's open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Statement of Assets and Liabilities.
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 | Interest |
Defense and Aerospace Portfolio | Borrower | $ 4,550,000 | .45% | $ 917 |
Transportation Portfolio | Borrower | 8,820,500 | .43% | 2,511 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 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
Annual Report
7. Committed Line of Credit - continued
pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Air Transportation Portfolio | $ 504 |
Defense and Aerospace Portfolio | 2,414 |
Environment and Alternative Energy Portfolio | 208 |
Industrial Equipment Portfolio | 621 |
Industrials Portfolio | 1,201 |
Transportation Portfolio | 1,059 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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 Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending | Value of Securities Loaned to FCM |
Transportation Portfolio | $ 828 | $ 1,009,400 |
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 Loan Balance | Weighted Average Interest Rate | Interest |
Environment and Alternative Energy Portfolio | $ 8,214,000 | .68% | $ 155 |
Transportation Portfolio | $ 4,429,000 | .66% | $ 244 |
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. 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 expense |
Air Transportation Portfolio | $ 12,119 | $ - |
Defense and Aerospace Portfolio | 19,315 | - |
Environment and Alternative Energy Portfolio | 7,740 | 2,049 |
Industrial Equipment Portfolio | 5,685 | - |
Industrials Portfolio | 18,784 | - |
Transportation Portfolio | 25,982 | - |
Annual Report
Notes to Financial Statements - continued
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, VIP FundsManager 60% Portfolio was the owner of record of approximately 12% of the total outstanding shares of the Industrial Equipment Portfolio. Strategic Advisor U.S. Opportunities Fund was the owner of record of approximately 16% and 16% of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio, respectively. In addition, the VIP FundsManager Portfolios and Strategic Advisor Funds were the owners of record, in the aggregate, of approximately 35% and 38% of the total outstanding shares of Industrial Equipment Portfolio and Industrials Portfolio, respectively.
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, Environment and Alternative Energy Portfolio (formerly 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, Environment and Alternative Energy Portfolio (formerly Environmental Portfolio), Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (funds of Fidelity Select Portfolios) at February 28, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009- |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999- |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 |
Air Transportation Portfolio | 04/18/11 | 04/15/11 | $0.050 | $3.230 |
Defense and Aerospace Portfolio | 04/18/11 | 04/15/11 | $0.120 | $0.000 |
Environment and Alternative Energy Portfolio | 04/18/11 | 04/15/11 | $0.005 | $0.000 |
Industrial Equipment Portfolio | 04/18/11 | 04/15/11 | $0.065 | $0.095 |
Industrials Portfolio | 04/18/11 | 04/15/11 | $0.035 | $0.395 |
Transportation Portfolio | 04/18/11 | 04/15/11 | $0.063 | $0.700 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2011, or, if subsequently determined to be different, the net capital gain of such year.
Air Transportation Portfolio | $8,048,148 |
Industrial Equipment Portfolio | $998,274 |
Industrials Portfolio | $9,870,846 |
Transportation Portfolio | $2,906,764 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Air Transportation Portfolio | 0% | 100% |
Defense and Aerospace Portfolio | 100% | 100% |
Environment and Alternative Energy Portfolio | 0% | 100% |
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 2010 | December 2010 |
Air Transportation Portfolio | 0% | 100% |
Defense and Aerospace Portfolio | 100% | 100% |
Environment and Alternative Energy Portfolio | 0% | 100% |
Industrial Equipment Portfolio | 100% | 100% |
Industrials Portfolio | 100% | 100% |
Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of Environment and Alternative Energy Portfolio shareholders was held on June 15, 2010. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1A | ||
To modify the fund's fundamental "invests primarily" policy (the investment policy concerning the fund's primary investments). | ||
| # of | % of |
Affirmative | 24,505,594.91 | 92.016 |
Against | 976,690.69 | 3.667 |
Abstain | 1,149,786.67 | 4.317 |
TOTAL | 26,632,072.27 | 100.000 |
PROPOSAL 1B | ||
To modify the fund's fundamental concentration policy. | ||
Affirmative | 24,246,009.81 | 91.081 |
Against | 1,138,600.64 | 4.275 |
Abstain | 1,247,461.82 | 4.644 |
TOTAL | 26,632,072.27 | 100.000 |
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
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Fidelity Management & Research
(U.K.) Inc.
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Brown Brothers Harriman & Co.
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Fidelity®
Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Chemicals Portfolio | 37.74% | 13.24% | 13.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Mahmoud Sharaf, Portfolio Manager of Chemicals Portfolio: For the 12 months ending February 28, 2011, the fund gained 37.74%, outpacing both the 34.79% rise of the MSCI® U.S. IM Chemicals 25/50 Index and the broad-based S&P 500®. Relative to the MSCI benchmark, the fund benefited from overall positioning in specialty chemicals and good stock picking in commodity chemicals, oil/gas storage and transport (an out-of-index area), and diversified chemicals. An out-of-index investment in commodity chemicals firm LyondellBassell Industries strongly contributed to the fund's outperformance, as the company profited from the falling price of its primary raw material, natural gas. An underweighting in Airgas also helped. The stock was not lifted by the cyclical tail wind boosting most of the industry because investors were focused on the outcome of a hostile takeover bid for Airgas rather than its business fundamentals. Also contributing were overweightings in Rockwood Holdings, Solutia and Huntsman - three highly-leveraged chemicals companies. Worldwide, Rockwood is one of just three large producers of lithium, which is used in making batteries for electric cars and other applications, and the stock benefited from ramped-up investor enthusiasm for autos and electric products. Solutia makes specialty chemicals for the auto, construction and solar markets, and as auto production rose during the period, Solutia's cash flow expanded. Huntsman is a small-cap manufacturer of the whitening pigment titanium dioxide, which was in short supply over the past 12 months. On the other hand, an underweighting in index heavyweight and agribusiness firm Monsanto detracted from relative returns during the second half of the period. The stock outperformed, as rising corn prices raised expectations of future sales growth for the company. Stock picking in two out-of-benchmark areas, construction/engineering and gold, also detracted because of my investments in two Egyptian firms, Orascom Construction Industries and gold miner Centamin Egypt. The stocks of both companies fell sharply in the wake of the insurrection in Egypt, but I believed the market was inappropriately pricing nationalization risk into the shares. Another detractor was Hawkins, a commodity chemicals company I overweighted at an inopportune time. I sold this position 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
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, 2010 to February 28, 2011).
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 | .89% | $ 1,000.00 | $ 1,377.20 | $ 5.25 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
* 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
Chemicals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 9.8 | 11.4 |
Dow Chemical Co. | 9.4 | 10.1 |
Praxair, Inc. | 7.0 | 10.1 |
Monsanto Co. | 7.0 | 11.2 |
Air Products & Chemicals, Inc. | 5.3 | 4.6 |
Celanese Corp. Class A | 4.7 | 3.2 |
CF Industries Holdings, Inc. | 4.3 | 4.1 |
Ashland, Inc. | 3.6 | 2.9 |
Cabot Corp. | 2.6 | 2.3 |
LyondellBasell Industries NV Class A | 2.5 | 2.1 |
| 56.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Chemicals | 84.1% |
|
![]() | Oil, Gas & | 3.2% |
|
![]() | Metals & Mining | 2.1% |
|
![]() | Construction & Engineering | 2.0% |
|
![]() | Food Products | 1.1% |
|
![]() | All Others* | 7.5% |
|
As of August 31, 2010 | |||
![]() | Chemicals | 97.0% |
|
![]() | Oil, Gas & | 0.5% |
|
![]() | Food Products | 0.2% |
|
![]() | Metals & Mining | 0.2% |
|
![]() | All Others* | 2.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Chemicals Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 94.1% | |||
Shares | Value | ||
CHEMICALS - 84.1% | |||
Commodity Chemicals - 7.3% | |||
Arkema SA | 95,900 | $ 7,006,185 | |
Celanese Corp. Class A | 782,761 | 32,445,443 | |
Koppers Holdings, Inc. | 60,100 | 2,428,641 | |
Korea Kumho Petrochemical Co. (a) | 27,382 | 3,260,341 | |
TPC Group, Inc. (a) | 98,300 | 2,855,615 | |
TSRC Corp. | 5,000 | 11,599 | |
Westlake Chemical Corp. | 54,200 | 2,591,302 | |
| 50,599,126 | ||
Diversified Chemicals - 36.4% | |||
Akzo Nobel NV | 103,155 | 7,013,777 | |
Ashland, Inc. | 445,200 | 25,064,760 | |
BASF AG | 128,163 | 10,657,881 | |
Cabot Corp. | 417,600 | 18,065,376 | |
Dow Chemical Co. | 1,743,538 | 64,789,872 | |
E.I. du Pont de Nemours & Co. | 1,236,800 | 67,863,217 | |
Eastman Chemical Co. | 72,700 | 6,790,907 | |
Huntsman Corp. | 579,442 | 10,227,151 | |
Lanxess AG | 92,500 | 6,880,335 | |
Olin Corp. | 161,300 | 3,001,793 | |
PPG Industries, Inc. | 166,700 | 14,732,946 | |
Solutia, Inc. (a) | 733,013 | 17,013,232 | |
| 252,101,247 | ||
Fertilizers & Agricultural Chemicals - 13.6% | |||
CF Industries Holdings, Inc. | 208,525 | 29,460,412 | |
Intrepid Potash, Inc. (a) | 98,400 | 3,798,240 | |
Monsanto Co. | 670,240 | 48,183,554 | |
Potash Corp. of Saskatchewan, Inc. | 69,600 | 4,289,581 | |
The Mosaic Co. | 100,740 | 8,648,529 | |
| 94,380,316 | ||
Industrial Gases - 13.6% | |||
Air Products & Chemicals, Inc. | 397,700 | 36,588,400 | |
Airgas, Inc. | 145,800 | 9,124,164 | |
Praxair, Inc. | 488,460 | 48,543,155 | |
| 94,255,719 | ||
Specialty Chemicals - 13.2% | |||
Ecolab, Inc. | 329,600 | 16,031,744 | |
Ferro Corp. (a) | 410,000 | 6,527,200 | |
Innophos Holdings, Inc. | 239,200 | 10,244,936 | |
Kraton Performance Polymers, Inc. (a) | 157,600 | 5,405,680 | |
Lubrizol Corp. | 47,700 | 5,193,099 | |
LyondellBasell Industries NV Class A (a) | 461,878 | 17,588,314 | |
Minerals Technologies, Inc. | 41,900 | 2,718,472 | |
Rockwood Holdings, Inc. (a) | 298,900 | 13,913,795 | |
| |||
Shares | Value | ||
Sigma Aldrich Corp. | 137,100 | $ 8,759,319 | |
W.R. Grace & Co. (a) | 127,897 | 4,865,202 | |
�� | 91,247,761 | ||
TOTAL CHEMICALS | 582,584,169 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Environmental & Facility Services - 0.5% | |||
Swisher Hygiene, Inc. (a)(d) | 559,700 | 3,376,929 | |
CONSTRUCTION & ENGINEERING - 2.0% | |||
Construction & Engineering - 2.0% | |||
Foster Wheeler AG (a) | 189,300 | 6,845,088 | |
Orascom Construction Industries SAE GDR | 200,500 | 6,857,100 | |
| 13,702,188 | ||
ENERGY EQUIPMENT & SERVICES - 1.1% | |||
Oil & Gas Drilling - 1.1% | |||
Discovery Offshore S.A. (a)(e) | 211,400 | 471,934 | |
Ocean Rig UDW, Inc. (a) | 166,100 | 3,478,154 | |
Rowan Companies, Inc. (a) | 84,200 | 3,592,814 | |
| 7,542,902 | ||
FOOD PRODUCTS - 1.1% | |||
Agricultural Products - 1.1% | |||
Archer Daniels Midland Co. | 182,400 | 6,781,632 | |
Origin Agritech Ltd. (a) | 110,000 | 973,500 | |
| 7,755,132 | ||
METALS & MINING - 2.1% | |||
Diversified Metals & Mining - 0.4% | |||
Compass Minerals International, Inc. | 32,000 | 2,991,040 | |
Gold - 1.5% | |||
Centamin Egypt Ltd. (United Kingdom) (a) | 5,246,900 | 10,108,847 | |
Steel - 0.2% | |||
Reliance Steel & Aluminum Co. | 29,500 | 1,632,235 | |
TOTAL METALS & MINING | 14,732,122 | ||
OIL, GAS & CONSUMABLE FUELS - 3.2% | |||
Oil & Gas Exploration & Production - 1.2% | |||
Chesapeake Energy Corp. | 223,400 | 7,955,274 | |
Oil & Gas Refining & Marketing - 0.5% | |||
CVR Energy, Inc. (a) | 194,100 | 3,668,490 | |
Oil & Gas Storage & Transport - 1.5% | |||
Williams Companies, Inc. | 340,600 | 10,340,616 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 21,964,380 | ||
TOTAL COMMON STOCKS (Cost $535,672,250) | 651,657,822 | ||
Money Market Funds - 7.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 48,024,796 | $ 48,024,796 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 3,633,100 | 3,633,100 | |
TOTAL MONEY MARKET FUNDS (Cost $51,657,896) | 51,657,896 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $587,330,146) | 703,315,718 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (10,983,406) | ||
NET ASSETS - 100% | $ 692,332,312 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $471,934 or 0.1% of net assets. |
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 | $ 25,717 |
Fidelity Securities Lending Cash Central Fund | 63,113 |
Total | $ 88,830 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 651,657,822 | $ 651,646,223 | $ 11,599 | $ - |
Money Market Funds | 51,657,896 | 51,657,896 | - | - |
Total Investments in Securities: | $ 703,315,718 | $ 703,304,119 | $ 11,599 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.7% |
Netherlands | 3.5% |
Germany | 2.5% |
Australia | 1.5% |
France | 1.0% |
Egypt | 1.0% |
Switzerland | 1.0% |
Others (Individually Less Than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $6,136,346 all of which will expire in fiscal 2019. 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
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $3,361,285) - See accompanying schedule: Unaffiliated issuers (cost $535,672,250) | $ 651,657,822 |
|
Fidelity Central Funds (cost $51,657,896) | 51,657,896 |
|
Total Investments (cost $587,330,146) |
| $ 703,315,718 |
Receivable for investments sold | 1,884,228 | |
Receivable for fund shares sold | 3,467,541 | |
Dividends receivable | 905,745 | |
Distributions receivable from Fidelity Central Funds | 14,976 | |
Prepaid expenses | 772 | |
Other receivables | 20,416 | |
Total assets | 709,609,396 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 3,716 | |
Payable for investments purchased | 11,746,812 | |
Payable for fund shares redeemed | 1,401,046 | |
Accrued management fee | 307,777 | |
Other affiliated payables | 143,424 | |
Other payables and accrued expenses | 41,209 | |
Collateral on securities loaned, at value | 3,633,100 | |
Total liabilities | 17,277,084 | |
|
|
|
Net Assets | $ 692,332,312 | |
Net Assets consist of: |
| |
Paid in capital | $ 595,174,321 | |
Undistributed net investment income | 116,858 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,944,439) | |
Net unrealized appreciation (depreciation) on investments | 115,985,572 | |
Net Assets, for 6,865,003 shares outstanding | $ 692,332,312 | |
Net Asset Value, offering price and redemption price per share ($692,332,312 ÷ 6,865,003 shares) | $ 100.85 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,025,467 |
Interest |
| 24,054 |
Income from Fidelity Central Funds |
| 88,830 |
Total income |
| 8,138,351 |
|
|
|
Expenses | ||
Management fee | $ 2,644,027 | |
Transfer agent fees | 1,267,501 | |
Accounting and security lending fees | 181,783 | |
Custodian fees and expenses | 30,977 | |
Independent trustees' compensation | 2,529 | |
Registration fees | 58,763 | |
Audit | 44,422 | |
Legal | 17,449 | |
Miscellaneous | 5,203 | |
Total expenses before reductions | 4,252,654 | |
Expense reductions | (55,021) | 4,197,633 |
Net investment income (loss) | 3,940,718 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 17,821,878 | |
Foreign currency transactions | (38,336) | |
Total net realized gain (loss) |
| 17,783,542 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 138,993,956 | |
Assets and liabilities in foreign currencies | 65 | |
Total change in net unrealized appreciation (depreciation) |
| 138,994,021 |
Net gain (loss) | 156,777,563 | |
Net increase (decrease) in net assets resulting from operations | $ 160,718,281 |
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) | $ 3,940,718 | $ 5,513,067 |
Net realized gain (loss) | 17,783,542 | 89,442,475 |
Change in net unrealized appreciation (depreciation) | 138,994,021 | 90,236,319 |
Net increase (decrease) in net assets resulting from operations | 160,718,281 | 185,191,861 |
Distributions to shareholders from net investment income | (3,360,209) | (5,851,052) |
Distributions to shareholders from net realized gain | (10,408,869) | - |
Total distributions | (13,769,078) | (5,851,052) |
Share transactions | 331,258,688 | 175,471,010 |
Reinvestment of distributions | 13,366,343 | 5,679,451 |
Cost of shares redeemed | (217,023,388) | (185,896,303) |
Net increase (decrease) in net assets resulting from share transactions | 127,601,643 | (4,745,842) |
Redemption fees | 19,986 | 22,053 |
Total increase (decrease) in net assets | 274,570,832 | 174,617,020 |
|
|
|
Net Assets | ||
Beginning of period | 417,761,480 | 243,144,460 |
End of period (including undistributed net investment income of $116,858 and undistributed net investment income of $273,032, respectively) | $ 692,332,312 | $ 417,761,480 |
Other Information Shares | ||
Sold | 3,814,779 | 2,723,419 |
Issued in reinvestment of distributions | 162,366 | 79,491 |
Redeemed | (2,650,727) | (2,953,275) |
Net increase (decrease) | 1,326,418 | (150,365) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 75.43 | $ 42.74 | $ 81.31 | $ 70.60 | $ 69.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .69 | 1.00 F | .73 | .85 | .82 G |
Net realized and unrealized gain (loss) | 27.20 | 32.77 | (38.63) | 12.80 | 11.08 |
Total from investment operations | 27.89 | 33.77 | (37.90) | 13.65 | 11.90 |
Distributions from net investment income | (.57) | (1.08) | (.68) | (.49) | (.87) |
Distributions from net realized gain | (1.91) | - | (.02) | (2.46) | (9.96) |
Total distributions | (2.47) K | (1.08) | (.70) | (2.95) | (10.83) |
Redemption fees added to paid in capital C | - J | - J | .03 | .01 | .03 |
Net asset value, end of period | $ 100.85 | $ 75.43 | $ 42.74 | $ 81.31 | $ 70.60 |
Total Return A, B | 37.74% | 79.15% | (46.68)% | 19.40% | 18.51% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .90% | .96% | .91% | .93% | 1.06% |
Expenses net of fee waivers, if any | .90% | .96% | .91% | .93% | 1.06% |
Expenses net of all reductions | .89% | .95% | .90% | .93% | 1.06% |
Net investment income (loss) | .84% | 1.53% F | 1.05% | 1.08% | 1.19% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 692,332 | $ 417,761 | $ 243,144 | $ 320,835 | $ 119,675 |
Portfolio turnover rate E | 108% | 228% | 201% | 65% | 90% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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%. GInvestment 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%. HExpense 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. IFor the year ended February 29. JAmount represents less than $.01 per share. KTotal distributions of $2.47 per share is comprised of distributions from net investment income of $.565 and distributions from net realized gain of $1.905 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, 2011
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 invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, 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:
Gross unrealized appreciation | $ 121,054,041 |
Gross unrealized depreciation | (16,304,313) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 104,749,728 |
Tax Cost | $ 598,565,990 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 116,988 |
Capital loss carryforward | $ (6,136,346) |
Net unrealized appreciation (depreciation) | $ 104,749,728 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 3,556,186 | $ 5,851,052 |
Long-term Capital Gains | 10,212,892 | - |
Total | $ 13,769,078 | $ 5,851,052 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. 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 $592,275,577 and $503,836,209, 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 .27% 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 $9,955 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,655 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $63,113. During the period, there were no securities loaned to FCM.
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 $54,914 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 $107.
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Gold Portfolio | 37.35% | 15.82% | 22.37% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from S. Joseph Wickwire II, Portfolio Manager of Gold Portfolio: For the 12 months ending February 28, 2011, the fund's Retail Class shares returned 37.35%, compared with the 36.78% gain of the S&P® Global BMI Gold Capped Index and the lower return of the broadly based S&P 500® Index. Our ability to diversify outside the gold space of the industry benchmark and into silver equities was the single largest contributor to relative performance, with Silver Wheaton's 175% return leading the way. Additional contributions came from our positions in gold companies that were acquired at premium prices during a period of heightened merger-and-acquisition activity. Names in this category included Lihir Gold, Fronteer Gold, Andean Resources and Red Back Mining. The next significant contribution came from underweightings in some underperforming gold companies, such as Newmont Mining, Goldcorp, Polyus Gold and Gammon Gold. However, toward the end of 2010, believing that the reasons for Goldcorp's underperformance were about to go away, we overweighted this stock. The last major contributor was our overweightings in some of the top-performing gold producers, Newcrest Mining and Eldorado Gold, and our out-of-benchmark investments in development and exploration names such as Avion Gold and Canaco Resources. Additionally, dollar weakness in relation to our foreign holdings buoyed performance. On the other hand, the largest detractors from relative performance were our underweightings in outperforming emerging-markets and exploration gold names such as SEMAFO, Gabriel Resources, Nevsun Resources and NovaGold Resources. These companies delivered strong performance, but our assessment of risk and reward suggested they did not warrant larger weightings in the fund. Another area of relative underperformance was our gold bullion position, which delivered an approximate 26% return but lagged the returns of gold equities, which tend to outperform bullion in a rising gold price environment. We continued to hold a minor position in bullion because its beta, liquidity and utility in equitizing cash are extremely helpful in portfolio allocation.
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, 2010 to February 28, 2011).
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 | 1.14% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.70 | $ 6.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.71 |
Class T | 1.42% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,124.00 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Class C | 1.86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.50 | $ 9.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.57 | $ 9.30 |
Gold | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.00 | $ 4.64 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.50 | $ 4.38 |
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
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 10.0 |
Barrick Gold Corp. | 11.5 | 10.1 |
Newcrest Mining Ltd. | 9.6 | 10.0 |
AngloGold Ashanti Ltd. sponsored ADR | 6.8 | 6.3 |
Kinross Gold Corp. | 5.9 | 4.2 |
Newmont Mining Corp. | 5.0 | 8.1 |
Agnico-Eagle Mines Ltd. (Canada) | 3.8 | 5.3 |
Yamana Gold, Inc. | 3.5 | 2.7 |
Eldorado Gold Corp. | 3.2 | 3.9 |
Randgold Resources Ltd. sponsored ADR | 3.2 | 4.6 |
| 64.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Gold | 95.8% |
|
![]() | Precious Metals & Minerals | 2.6% |
|
![]() | Diversified Metals & Mining | 0.4% |
|
![]() | Steel | 0.1% |
|
![]() | Construction & Engineering | 0.1% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2010 | |||
![]() | Gold | 96.5% |
|
![]() | Precious Metals & Minerals | 2.2% |
|
![]() | Coal & Consumable Fuels | 0.6% |
|
![]() | Construction & Farm Machinery & Heavy Trucks | 0.2% |
|
![]() | Diversified Metals & Mining | 0.1% |
|
![]() | All Others* | 0.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
Australia - 12.6% | |||
METALS & MINING - 12.6% | |||
Diversified Metals & Mining - 0.1% | |||
Mineral Deposits Ltd. Australia (a) | 637,390 | $ 3,860,725 | |
Sandfire Resources NL (a) | 314,167 | 2,341,230 | |
| 6,201,955 | ||
Gold - 12.5% | |||
Catalpa Resources Ltd. (a)(d) | 1,443,833 | 2,286,806 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 5,326,900 | 10,262,977 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 60,408 | |
(Canada) (a) | 110,000 | 346,564 | |
Intrepid Mines Ltd.: | |||
(Australia) (a)(d) | 8,769,767 | 19,144,065 | |
(Canada) (a) | 320,000 | 682,008 | |
Kingsgate Consolidated NL | 3,375,767 | 32,517,776 | |
Kula Gold Ltd. | 26,245 | 41,629 | |
Medusa Mining Ltd. | 3,127,885 | 22,570,596 | |
Newcrest Mining Ltd. | 11,682,094 | 451,560,440 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,884,308 | 14,714,500 | |
(Canada) (a) | 1,300,000 | 3,961,905 | |
Resolute Mining Ltd. (a)(d) | 3,986,661 | 5,358,385 | |
St Barbara Ltd. (a) | 5,729,676 | 11,765,708 | |
Troy Resources NL (a)(e) | 2,300,000 | 8,619,820 | |
| 583,893,587 | ||
TOTAL METALS & MINING | 590,095,542 | ||
Bailiwick of Jersey - 3.2% | |||
METALS & MINING - 3.2% | |||
Gold - 3.2% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,818,167 | 147,180,619 | |
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 75,100 | 742,301 | |
Precious Metals & Minerals - 0.0% | |||
Aquarius Platinum Ltd. (United Kingdom) | 161,752 | 1,060,353 | |
TOTAL METALS & MINING | 1,802,654 | ||
Canada - 60.1% | |||
METALS & MINING - 60.1% | |||
Diversified Metals & Mining - 0.2% | |||
Clifton Star Resources, Inc. (a) | 25,000 | 117,632 | |
East Asia Minerals Corp. (a) | 5,000 | 29,241 | |
Galway Resources Ltd. (a) | 15,000 | 19,923 | |
Kimber Resources, Inc. (a) | 16,100 | 22,544 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 8,166,301 | |
Sabina Gold & Silver Corp. (a) | 200,000 | 1,361,133 | |
| |||
Shares | Value | ||
Southern Arc Minerals, Inc. (a) | 30,000 | $ 53,745 | |
Valley High Ventures Ltd. (a) | 237,500 | 457,272 | |
| 10,227,791 | ||
Gold - 57.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,554,400 | 179,629,879 | |
Alacer Gold Corp. (a) | 2,409,063 | 23,166,691 | |
Alamos Gold, Inc. | 2,213,800 | 37,882,477 | |
Argonaut Gold, Inc. (a)(d) | 619,800 | 3,171,589 | |
Aurizon Mines Ltd. (a) | 2,664,600 | 19,012,281 | |
Avion Gold Corp. (a) | 5,020,000 | 8,631,557 | |
B2Gold Corp. (a) | 3,627,400 | 9,448,980 | |
Barrick Gold Corp. (d) | 10,177,319 | 537,341,487 | |
Brigus Gold Corp. (a) | 10,000 | 16,268 | |
Canaco Resources, Inc. (a) | 1,065,000 | 6,305,019 | |
Canaco Resources, Inc. (a)(e)(f) | 561,600 | 3,324,788 | |
Centerra Gold, Inc. | 2,166,400 | 41,666,257 | |
China Gold International Resources Corp. Ltd. (a) | 40,000 | 219,923 | |
Colossus Minerals, Inc. (a) | 961,100 | 8,252,843 | |
Corvus Gold, Inc. (a) | 138,350 | 103,985 | |
Detour Gold Corp. (a) | 543,000 | 17,677,900 | |
Detour Gold Corp. (a)(e) | 785,900 | 25,585,748 | |
Eldorado Gold Corp. (d) | 8,747,013 | 149,048,201 | |
European Goldfields Ltd. (a) | 2,004,600 | 25,964,343 | |
Exeter Resource Corp. (a) | 238,000 | 1,274,234 | |
Extorre Gold Mines Ltd. (a) | 453,000 | 2,374,023 | |
Franco-Nevada Corp. (d) | 1,943,400 | 66,150,635 | |
Fronteer Gold, Inc. (a) | 365,000 | 5,392,793 | |
Gabriel Resources Ltd. (a) | 310,000 | 2,572,561 | |
Gammon Gold, Inc. (a) | 2,362,500 | 20,943,243 | |
Goldcorp, Inc. | 11,936,900 | 570,390,248 | |
Golden Star Resources Ltd. (a)(d) | 3,055,769 | 9,658,904 | |
Gran Colombia Gold Corp. (a)(d) | 1,560,000 | 3,083,861 | |
Great Basin Gold Ltd. (a)(d) | 5,937,900 | 15,650,990 | |
Greystar Resources Ltd. (a) | 1,329,200 | 5,200,474 | |
Guyana Goldfields, Inc. (a) | 1,203,000 | 11,358,054 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 1,463,423 | |
IAMGOLD Corp. | 6,277,000 | 133,069,169 | |
International Minerals Corp.: | |||
(Canada) (a) | 152,100 | 1,168,253 | |
(Switzerland) (a) | 15,000 | 116,422 | |
International Tower Hill Mines Ltd. (a) | 341,700 | 3,187,441 | |
Jaguar Mining, Inc. (a)(d) | 884,700 | 4,709,291 | |
Keegan Resources, Inc. (a) | 30,000 | 229,189 | |
Kinross Gold Corp. | 17,439,491 | 276,518,056 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 1,070,756 | |
Kirkland Lake Gold, Inc. (a) | 509,500 | 7,616,927 | |
Lake Shore Gold Corp. (a) | 2,380,000 | 9,875,315 | |
Levon Resources Ltd. (a) | 20,000 | 37,889 | |
Minefinders Corp. Ltd. (a)(d) | 918,000 | 10,671,012 | |
Nevsun Resources Ltd. (a) | 650,000 | 3,654,054 | |
New Gold, Inc. (a) | 6,561,800 | 63,236,497 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 195,987 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Northgate Minerals Corp. (a) | 4,089,900 | $ 11,664,374 | |
Novagold Resources, Inc. (a)(d) | 1,898,200 | 25,993,369 | |
OceanaGold Corp. (a) | 30,000 | 80,927 | |
Osisko Mining Corp. (a) | 1,932,000 | 26,655,135 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 41,389,961 | |
Premier Gold Mines Ltd. (a) | 1,101,800 | 7,725,362 | |
Primero Mining Corp. (a) | 492,800 | 2,004,180 | |
Queenston Mining, Inc. (a) | 45,000 | 273,359 | |
Rainy River Resources Ltd. (a) | 160,000 | 2,100,386 | |
Romarco Minerals, Inc. (a) | 1,840,000 | 4,470,939 | |
Rubicon Minerals Corp. (a) | 1,946,352 | 9,859,513 | |
San Gold Corp. (a) | 2,357,400 | 6,941,739 | |
Seabridge Gold, Inc. (a) | 636,105 | 21,214,103 | |
SEMAFO, Inc. (a) | 4,606,100 | 48,278,093 | |
Teranga Gold Corp. CDI unit | 1,678,197 | 4,585,373 | |
Timmins Gold Corp. (a) | 10,000 | 24,505 | |
Torex Gold Resources, Inc. (a)(d) | 330,000 | 710,116 | |
Yamana Gold, Inc. | 12,767,400 | 162,344,803 | |
| 2,703,636,154 | ||
Precious Metals & Minerals - 2.1% | |||
ATAC Resources Ltd. (a) | 37,200 | 279,215 | |
Dalradian Resources, Inc. (a) | 15,000 | 35,521 | |
First Majestic Silver Corp. (a) | 10,000 | 152,999 | |
Fortuna Mines, Inc. (a) | 40,000 | 203,861 | |
Orko Silver Corp. (a) | 346,000 | 840,731 | |
Pan American Silver Corp. | 949,187 | 37,113,217 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 3,394,480 | |
Silver Standard Resources, Inc. (a) | 1,061,800 | 28,817,258 | |
Silver Wheaton Corp. (a) | 640,200 | 27,222,919 | |
Tahoe Resources, Inc. | 1,000 | 16,329 | |
| 98,076,530 | ||
TOTAL METALS & MINING | 2,811,940,475 | ||
Cayman Islands - 0.1% | |||
METALS & MINING - 0.1% | |||
Gold - 0.1% | |||
Real Gold Mining Ltd. (a)(d) | 2,925,000 | 4,416,795 | |
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 8,187,950 | 34,799,839 | |
Zijin Mining Group Co. Ltd. (H Shares) | 64,542,000 | 52,956,264 | |
| 87,756,103 | ||
| |||
Shares | Value | ||
Luxembourg - 0.1% | |||
METALS & MINING - 0.1% | |||
Steel - 0.1% | |||
Ternium SA sponsored ADR | 144,300 | $ 5,200,572 | |
Peru - 0.5% | |||
METALS & MINING - 0.5% | |||
Precious Metals & Minerals - 0.5% | |||
Compania de Minas Buenaventura SA sponsored ADR | 463,900 | 21,650,213 | |
Russia - 0.5% | |||
METALS & MINING - 0.5% | |||
Gold - 0.5% | |||
Polyus Gold OJSC sponsored ADR | 697,566 | 23,821,879 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 73,300 | 1,383,171 | |
TOTAL METALS & MINING | 25,205,050 | ||
South Africa - 11.2% | |||
METALS & MINING - 11.2% | |||
Gold - 11.2% | |||
AngloGold Ashanti Ltd. sponsored ADR (d) | 6,507,952 | 317,848,376 | |
Gold Fields Ltd. | 55,000 | 985,196 | |
Gold Fields Ltd. sponsored ADR | 7,581,026 | 135,776,176 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 17,391,539 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,491,800 | 52,913,404 | |
| 524,914,691 | ||
Precious Metals & Minerals - 0.0% | |||
Anglo Platinum Ltd. | 5,000 | 486,176 | |
TOTAL METALS & MINING | 525,400,867 | ||
Switzerland - 0.1% | |||
CONSTRUCTION & ENGINEERING - 0.1% | |||
Construction & Engineering - 0.1% | |||
Foster Wheeler AG (a) | 132,618 | 4,795,467 | |
United Kingdom - 1.0% | |||
METALS & MINING - 1.0% | |||
Gold - 1.0% | |||
Petropavlovsk PLC | 2,770,929 | 48,835,446 | |
United States of America - 7.2% | |||
METALS & MINING - 7.2% | |||
Diversified Metals & Mining - 0.1% | |||
Walter Energy, Inc. | 40,000 | 4,840,400 | |
Gold - 7.1% | |||
Allied Nevada Gold Corp. (a) | 1,337,800 | 40,588,852 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 608,288 | |
Newmont Mining Corp. | 4,221,850 | 233,341,650 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Royal Gold, Inc. | 940,413 | $ 46,663,293 | |
US Gold Corp. (a)(d) | 1,310,100 | 9,511,326 | |
| 330,713,409 | ||
Precious Metals & Minerals - 0.0% | |||
Coeur d'Alene Mines Corp. (a) | 30,000 | 945,300 | |
Paramount Gold & Silver Corp. (a)(d) | 10,000 | 39,900 | |
| 985,200 | ||
TOTAL METALS & MINING | 336,539,009 | ||
TOTAL COMMON STOCKS (Cost $3,248,618,022) | 4,610,818,812 | ||
Commodities - 0.5% | |||
Troy |
| ||
Gold Bullion (a) | 18,500 | 26,116,450 | |
Money Market Funds - 13.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 40,583,120 | 40,583,120 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 586,930,925 | 586,930,925 | |
TOTAL MONEY MARKET FUNDS (Cost $627,514,045) | 627,514,045 | ||
TOTAL INVESTMENT PORTFOLIO - 112.4% (Cost $3,890,733,467) | 5,264,449,307 | ||
NET OTHER ASSETS (LIABILITIES) - (12.4)% | (582,662,256) | ||
NET ASSETS - 100% | $ 4,681,787,051 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $88,746,028 or 1.9% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
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 | $ 91,930 |
Fidelity Securities Lending Cash Central Fund | 678,947 |
Total | $ 770,877 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 207,130,454 | $ 24,953,280 | $ 237,367,750 | $ - | $ 26,107,166 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 4,610,818,812 | $ 4,018,239,956 | $ 592,578,856 | $ - |
Commodities | 26,116,450 | 26,116,450 | - | - |
Money Market Funds | 627,514,045 | 627,514,045 | - | - |
Total Investments: | $ 5,264,449,307 | $ 4,671,870,451 | $ 592,578,856 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $569,079,718) - See accompanying schedule: Unaffiliated issuers (cost $3,248,618,022) | $ 4,610,818,812 |
|
Fidelity Central Funds (cost $627,514,045) | 627,514,045 |
|
Commodities (cost $14,601,400) | 26,116,450 |
|
Total Investments (cost $3,890,733,467) |
| $ 5,264,449,307 |
Cash | 3,427 | |
Receivable for investments sold | 16,094,242 | |
Receivable for fund shares sold | 11,759,060 | |
Dividends receivable | 1,436,278 | |
Distributions receivable from Fidelity Central Funds | 63,869 | |
Prepaid expenses | 7,789 | |
Other receivables | 31,365 | |
Total assets | 5,293,845,337 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,682,395 | |
Delayed delivery | 3,122,409 | |
Payable for fund shares redeemed | 8,771,625 | |
Accrued management fee | 2,088,782 | |
Distribution and service plan fees payable | 127,723 | |
Other affiliated payables | 1,143,284 | |
Other payables and accrued expenses | 191,143 | |
Collateral on securities loaned, at value | 586,930,925 | |
Total liabilities | 612,058,286 | |
|
|
|
Net Assets | $ 4,681,787,051 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,463,306,434 | |
Accumulated net investment loss | (1,236) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (155,217,968) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,373,699,821 | |
Net Assets | $ 4,681,787,051 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 50.92 | |
|
|
|
Maximum offering price per share (100/94.25 of $50.92) | $ 54.03 | |
Class T: | $ 50.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $50.68) | $ 52.52 | |
Class B: | $ 50.02 | |
|
|
|
Class C: | $ 49.81 | |
|
|
|
Gold: | $ 51.44 | |
|
|
|
Institutional Class: | $ 51.32 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 20,259,733 |
Interest |
| 215 |
Income from Fidelity Central Funds |
| 770,877 |
Total income |
| 21,030,825 |
|
|
|
Expenses | ||
Management fee | $ 23,221,155 | |
Transfer agent fees | 11,208,569 | |
Distribution and service plan fees | 1,316,746 | |
Accounting and security lending fees | 1,537,791 | |
Custodian fees and expenses | 482,729 | |
Independent trustees' compensation | 22,282 | |
Registration fees | 324,310 | |
Audit | 69,408 | |
Legal | 13,259 | |
Interest | 934 | |
Miscellaneous | 44,541 | |
Total expenses before reductions | 38,241,724 | |
Expense reductions | (843,975) | 37,397,749 |
Net investment income (loss) | (16,366,924) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 335,695,287 | |
Commodities | 65,240,750 |
|
Foreign currency transactions | 639,132 | |
Total net realized gain (loss) |
| 401,575,169 |
Change in net unrealized appreciation (depreciation) on: Investments | 839,874,132 | |
Assets and liabilities in foreign currencies | (9,727) | |
Commodities | (33,347,000) | |
Total change in net unrealized appreciation (depreciation) |
| 806,517,405 |
Net gain (loss) | 1,208,092,574 | |
Net increase (decrease) in net assets resulting from operations | $ 1,191,725,650 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (16,366,924) | $ (11,767,758) |
Net realized gain (loss) | 401,575,169 | 141,739,537 |
Change in net unrealized appreciation (depreciation) | 806,517,405 | 582,559,218 |
Net increase (decrease) in net assets resulting from operations | 1,191,725,650 | 712,530,997 |
Distributions to shareholders from net realized gain | (403,524,767) | (56,010,412) |
Share transactions - net increase (decrease) | 849,828,502 | 418,234,847 |
Redemption fees | 423,645 | 514,829 |
Total increase (decrease) in net assets | 1,638,453,030 | 1,075,270,261 |
|
|
|
Net Assets | ||
Beginning of period | 3,043,334,021 | 1,968,063,760 |
End of period (including accumulated net investment loss of $1,236 and accumulated net investment loss of $919, respectively) | $ 4,681,787,051 | $ 3,043,334,021 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.30) | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.28 | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 14.98 | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.57) | (.71) | (.17) | (5.01) | - |
Total distributions | (4.57) | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 36.99% | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.16% | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.15% | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.14% | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.43) | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.21 | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 14.78 | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.45) | (.63) | (.17) | (4.97) | - |
Total distributions | (4.45) | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 36.62% | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.42% | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.90)% | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.66) | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 15.02 | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 14.36 | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.21) | (.51) | (.17) | (4.84) | - |
Total distributions | (4.21) | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | - K | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 35.97% | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.92% | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.91% | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.39)% | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.64) | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.98 | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 14.34 | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | - | (.17) | - |
Distributions from net realized gain | (4.28) | (.53) | (.17) | (4.89) | - |
Total distributions | (4.28) | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 36.01% | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.88% | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.87% | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.35)% | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | (.16) | (.04) | (.02) | .22 F |
Net realized and unrealized gain (loss) | 15.43 | 11.10 | (15.51) | 15.05 | 5.49 |
Total from investment operations | 15.25 | 10.94 | (15.55) | 15.03 | 5.71 |
Distributions from net investment income | - | - | - | (.18) | (.02) |
Distributions from net realized gain | (4.67) | (.77) | (.17) | (5.03) | (5.10) |
Total distributions | (4.67) | (.77) | (.17) | (5.21) | (5.12) |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .01 | .04 |
Net asset value, end of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Total Return A, B | 37.35% | 35.52% | (33.59)% | 45.10% | 16.19% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | .98% | .89% | .85% | .90% |
Expenses net of fee waivers, if any | .90% | .96% | .87% | .85% | .90% |
Expenses net of all reductions | .89% | .94% | .86% | .81% | .87% |
Net investment income (loss) | (.37)% | (.40)% | (.13)% | (.05)% | .62% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 |
Portfolio turnover rate E | 35% | 46% | 42% | 55% | 85% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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%. GExpense 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. HFor the year ended February 29. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.41 | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 15.26 | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.72) | (.82) | (.17) | (5.04) | - |
Total distributions | (4.72) | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 37.45% | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .85% | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .84% | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .83% | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.31)% | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. HExpense 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. IFor 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, 2011
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Consolidated Subsidiary.
The Fund invests in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2011, the Fund held $26,107,166 in the Subsidiary, representing 0.6% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, is included at the end of the Fund's Consolidated Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Annual Report
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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the 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
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 1,108,022,042 |
Gross unrealized depreciation | (79,873,929) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 1,028,148,113 |
Tax Cost | $ 4,236,301,194 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 158,213,882 |
Undistributed long-term capital gains | $ 25,688,008 |
Net unrealized appreciation (depreciation) | $ 1,028,132,094 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 183,285,077 | $ 56,010,412 |
Long-term Capital Gains | 220,239,690 | - |
Total | $ 403,524,767 | $ 56,010,412 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the 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 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. 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 $1,874,696,211 and $1,415,831,862, 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.
Annual Report
7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 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 $471,020 and is reflected in Expense reductions on the Consolidated Statement of Operations.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 299,324 | $ 12,201 |
Class T | .25% | .25% | 181,474 | 370 |
Class B | .75% | .25% | 241,245 | 181,088 |
Class C | .75% | .25% | 594,703 | 222,899 |
|
|
| $ 1,316,746 | $ 416,558 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 141,146 |
Class T | 20,875 |
Class B* | 49,877 |
Class C* | 19,315 |
| $ 231,213 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 334,693 | .28 |
Class T | 109,369 | .30 |
Class B | 70,450 | .29 |
Class C | 152,333 | .26 |
Gold | 10,351,630 | .28 |
Institutional Class | 190,094 | .22 |
| $ 11,208,569 |
|
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 $5,404 for the period.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
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 |
Borrower | $ 15,940,400 | .42% | $ 934 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $14,493 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $678,947. During the period, there were no securities loaned to FCM.
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 $368,969 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 $3,986.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net realized gain |
|
|
Class A | $ 11,944,959 | $ 1,356,457 |
Class T | 3,497,337 | 386,094 |
Class B | 2,159,100 | 226,465 |
Class C | 5,735,528 | 480,176 |
Gold | 369,777,197 | 53,033,502 |
Institutional Class | 10,410,646 | 527,718 |
Total | $ 403,524,767 | $ 56,010,412 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,813,814 | 1,548,727 | $ 88,297,648 | $ 60,979,204 |
Reinvestment of distributions | 211,919 | 28,941 | 10,924,421 | 1,258,667 |
Shares redeemed | (1,131,112) | (828,099) | (54,494,300) | (32,946,669) |
Net increase (decrease) | 894,621 | 749,569 | $ 44,727,769 | $ 29,291,202 |
Class T |
|
|
|
|
Shares sold | 503,427 | 410,718 | $ 24,561,424 | $ 16,022,649 |
Reinvestment of distributions | 65,695 | 8,602 | 3,372,922 | 372,822 |
Shares redeemed | (315,455) | (271,824) | (15,070,272) | (10,198,558) |
Net increase (decrease) | 253,667 | 147,496 | $ 12,864,074 | $ 6,196,913 |
Class B |
|
|
|
|
Shares sold | 147,555 | 271,111 | $ 6,862,473 | $ 10,287,423 |
Reinvestment of distributions | 37,199 | 4,654 | 1,885,064 | 199,620 |
Shares redeemed | (108,197) | (95,719) | (5,152,463) | (3,721,090) |
Net increase (decrease) | 76,557 | 180,046 | $ 3,595,074 | $ 6,765,953 |
Class C |
|
|
|
|
Shares sold | 736,040 | 698,249 | $ 34,773,958 | $ 27,513,842 |
Reinvestment of distributions | 91,950 | 9,039 | 4,652,354 | 386,528 |
Shares redeemed | (345,478) | (320,512) | (16,458,498) | (12,323,085) |
Net increase (decrease) | 482,512 | 386,776 | $ 22,967,814 | $ 15,577,285 |
Gold |
|
|
|
|
Shares sold | 38,551,839 | 40,468,485 | $ 1,893,619,015 | $ 1,581,099,363 |
Reinvestment of distributions | 6,874,054 | 1,174,296 | 357,359,018 | 51,481,173 |
Shares redeemed | (32,315,161) | (33,470,388) | (1,572,262,287) | (1,303,757,681) |
Net increase (decrease) | 13,110,732 | 8,172,393 | $ 678,715,746 | $ 328,822,855 |
Institutional Class |
|
|
|
|
Shares sold | 2,014,694 | 933,259 | $ 99,860,479 | $ 39,237,749 |
Reinvestment of distributions | 184,813 | 10,089 | 9,641,424 | 441,486 |
Shares redeemed | (457,947) | (208,491) | (22,543,878) | (8,098,596) |
Net increase (decrease) | 1,741,560 | 734,857 | $ 86,958,025 | $ 31,580,639 |
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Materials Portfolio A | 35.70% | 12.73% | 14.81% |
A Prior to October 1, 2006, Materials 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 Materials Portfolio, a class of the fund, on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Tobias Welo, Portfolio Manager of Materials Portfolio: The fund's Retail Class shares returned 35.70% during the year, topping the S&P 500® and the 33.20% gain of the MSCI® U.S. IM Materials 25/50 Index. The specialty chemicals group had the largest positive impact on performance versus the MSCI index, entirely due to favorable stock selection. Fund performance also was lifted by an out-of-benchmark stake in coal and consumable fuels, as well as by solid picks in a number of other industries. Further, a weaker dollar aided our foreign holdings. An out-of-benchmark position in Netherlands-based LyondellBasell Industries was the fund's largest relative contributor. The company - a pure play on the industrial chemical ethylene - emerged from bankruptcy in April 2010, and in short order the stock embarked on an impressive rally, more than doubling from where I bought it. Ferro - a maker of coatings and paints to the construction, auto, appliance and electronics markets - also was a noteworthy contributor, returning almost 80% for the fund. I sold the stock to lock in profits. A third contributor in the specialty chemicals category was Innophos Holdings, which makes specialty-grade phosphate products for food, pharmaceutical and industrial markets. The stock surged higher in early February, when the company reported earnings that solidly beat estimates. Elsewhere, purchasing United States Steel during the period's second half was rewarding, and underweighting, and eventually selling, Vulcan Materials, a provider of crushed stone and other construction aggregates, also paid off in view of the stock's muted gain. Conversely, a modest cash position dampened the fund's gain in a strongly rising market. Out-of-index exposures to the construction/engineering and building products groups also held back performance, as did an underweighting in precious metals/minerals. At the stock level, not owning strong-performing steel producer Cliffs Natural Resources - a benchmark component - worked against the fund. Monsanto also hurt results, as growing competition for the company's popular Roundup® agricultural herbicide and its line of genetically modified seeds led the company to cut prices on some products, which ate into profits. Monsanto was the fund's biggest detractor in absolute terms and its second-largest detractor on a relative basis. Other detractors were Ecolab, which provides cleaning and sanitizing products and related items for hospitality, health care and government customers, and container maker Owens-Illinois, the latter of which I sold.
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, 2010 to February 28, 2011).
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 | $ 1,362.10 | $ 6.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,360.20 | $ 8.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.70 | $ 11.34 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.80 | $ 11.22 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Materials | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.10 | $ 5.10 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Institutional Class | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.20 | $ 4.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 7.8 | 8.0 |
E.I. du Pont de Nemours & Co. | 7.5 | 7.7 |
Freeport-McMoRan Copper & Gold, Inc. | 6.9 | 5.6 |
Monsanto Co. | 4.5 | 6.6 |
Praxair, Inc. | 4.4 | 6.1 |
Newmont Mining Corp. | 3.8 | 3.3 |
Air Products & Chemicals, Inc. | 3.5 | 4.0 |
United States Steel Corp. | 2.8 | 0.0 |
Alcoa, Inc. | 2.1 | 0.0 |
The Mosaic Co. | 2.1 | 2.7 |
| 45.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Chemicals | 53.4% |
|
![]() | Metals & Mining | 31.9% |
|
![]() | Containers & | 5.7% |
|
![]() | Construction Materials | 1.2% |
|
![]() | Food Products | 1.0% |
|
![]() | All Others* | 6.8% |
|
As of August 31, 2010 | |||
![]() | Chemicals | 57.9% |
|
![]() | Metals & Mining | 25.8% |
|
![]() | Containers & | 7.2% |
|
![]() | Construction Materials | 2.3% |
|
![]() | Paper & Forest Products | 1.1% |
|
![]() | All Others* | 5.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
CHEMICALS - 53.4% | |||
Commodity Chemicals - 2.5% | |||
Arkema SA | 65,800 | $ 4,807,164 | |
Celanese Corp. Class A | 738,693 | 30,618,825 | |
Grasim Industries Ltd. | 48,407 | 2,527,047 | |
| 37,953,036 | ||
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 464,683 | 26,161,653 | |
BASF AG | 87,436 | 7,271,073 | |
Cabot Corp. | 527,633 | 22,825,404 | |
Dow Chemical Co. | 3,107,211 | 115,463,957 | |
E.I. du Pont de Nemours & Co. | 2,037,677 | 111,807,337 | |
FMC Corp. | 178,400 | 13,815,296 | |
Huntsman Corp. | 539,333 | 9,519,227 | |
Lanxess AG | 122,493 | 9,111,274 | |
PPG Industries, Inc. | 79,800 | 7,052,724 | |
Solutia, Inc. (a) | 564,936 | 13,112,165 | |
| 336,140,110 | ||
Fertilizers & Agricultural Chemicals - 9.0% | |||
CF Industries Holdings, Inc. | 145,854 | 20,606,253 | |
Intrepid Potash, Inc. (a) | 39,700 | 1,532,420 | |
Monsanto Co. | 933,933 | 67,140,443 | |
The Mosaic Co. | 357,820 | 30,718,847 | |
Uralkali JSC GDR (Reg. S) | 215,814 | 8,820,318 | |
Yara International ASA | 92,100 | 4,883,555 | |
| 133,701,836 | ||
Industrial Gases - 7.9% | |||
Air Products & Chemicals, Inc. | 568,557 | 52,307,244 | |
Praxair, Inc. | 659,831 | 65,574,005 | |
| 117,881,249 | ||
Specialty Chemicals - 11.4% | |||
Albemarle Corp. | 187,835 | 10,811,783 | |
Ecolab, Inc. | 513,770 | 24,989,773 | |
Innophos Holdings, Inc. | 545,936 | 23,382,439 | |
Kraton Performance Polymers, Inc. (a) | 355,100 | 12,179,930 | |
LyondellBasell Industries NV Class A (a) | 376,752 | 14,346,716 | |
OMNOVA Solutions, Inc. (a) | 468,541 | 3,298,529 | |
PolyOne Corp. (a) | 248,260 | 3,445,849 | |
Rockwood Holdings, Inc. (a) | 321,032 | 14,944,040 | |
Sherwin-Williams Co. | 329,437 | 27,053,366 | |
Symrise AG | 366,983 | 9,629,891 | |
Valspar Corp. | 288,942 | 10,985,575 | |
W.R. Grace & Co. (a) | 397,246 | 15,111,238 | |
| 170,179,129 | ||
TOTAL CHEMICALS | 795,855,360 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Environmental & Facility Services - 0.2% | |||
Swisher Hygiene, Inc. (a)(d) | 502,100 | 3,029,401 | |
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 0.4% | |||
Construction & Engineering - 0.4% | |||
Orascom Construction Industries SAE GDR | 190,800 | $ 6,525,360 | |
CONSTRUCTION MATERIALS - 1.2% | |||
Construction Materials - 1.2% | |||
HeidelbergCement AG | 233,726 | 16,362,550 | |
Prism Cement Ltd. | 592,401 | 671,383 | |
| 17,033,933 | ||
CONTAINERS & PACKAGING - 5.7% | |||
Metal & Glass Containers - 4.6% | |||
Ball Corp. | 652,818 | 23,566,730 | |
Crown Holdings, Inc. (a) | 574,640 | 22,112,147 | |
Greif, Inc. Class A | 199,320 | 12,888,031 | |
Silgan Holdings, Inc. | 246,400 | 8,988,672 | |
| 67,555,580 | ||
Paper Packaging - 1.1% | |||
Rock-Tenn Co. Class A (d) | 244,900 | 16,812,385 | |
TOTAL CONTAINERS & PACKAGING | 84,367,965 | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 406,728 | 15,122,147 | |
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
Pall Corp. | 94,100 | 5,115,276 | |
METALS & MINING - 31.9% | |||
Aluminum - 2.1% | |||
Alcoa, Inc. | 1,908,300 | 32,154,855 | |
Diversified Metals & Mining - 14.4% | |||
Anglo American PLC (United Kingdom) | 322,851 | 17,497,785 | |
BHP Billiton PLC | 268,800 | 10,656,389 | |
Compass Minerals International, Inc. | 99,510 | 9,301,200 | |
Freeport-McMoRan Copper & Gold, Inc. | 1,954,362 | 103,483,468 | |
Gujarat NRE Coke Ltd. | 1,276,100 | 1,199,559 | |
Gulf Resources, Inc. (a)(d) | 278,029 | 2,491,140 | |
HudBay Minerals, Inc. | 608,400 | 10,554,996 | |
Ivanhoe Mines Ltd. (a) | 254,200 | 7,202,661 | |
Kazakhmys PLC | 211,900 | 4,974,834 | |
MacArthur Coal Ltd. | 584,412 | 7,068,264 | |
Mongolian Mining Corp. | 3,312,000 | 4,201,664 | |
Teck Resources Ltd. Class B (sub. vtg.) | 186,600 | 10,326,641 | |
Walter Energy, Inc. | 216,135 | 26,154,496 | |
| 215,113,097 | ||
Gold - 7.0% | |||
AngloGold Ashanti Ltd. sponsored ADR | 258,295 | 12,615,128 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 2,503,700 | 4,823,709 | |
Newcrest Mining Ltd. | 279,895 | 10,819,080 | |
Newmont Mining Corp. | 1,029,533 | 56,902,289 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Randgold Resources Ltd. sponsored ADR | 94,100 | $ 7,617,395 | |
Yamana Gold, Inc. | 890,200 | 11,319,403 | |
| 104,097,004 | ||
Precious Metals & Minerals - 0.4% | |||
Pan American Silver Corp. | 140,500 | 5,493,551 | |
Steel - 8.0% | |||
Allegheny Technologies, Inc. (d) | 185,500 | 12,443,340 | |
Carpenter Technology Corp. | 485,471 | 20,185,884 | |
Commercial Metals Co. | 258,987 | 4,317,313 | |
Jindal Steel & Power Ltd. | 222,643 | 3,235,246 | |
Reliance Steel & Aluminum Co. | 474,508 | 26,254,528 | |
Ternium SA sponsored ADR | 137,745 | 4,964,330 | |
United States Steel Corp. (d) | 719,035 | 41,337,322 | |
Vale SA sponsored ADR | 179,550 | 6,145,997 | |
| 118,883,960 | ||
TOTAL METALS & MINING | 475,742,467 | ||
OIL, GAS & CONSUMABLE FUELS - 1.0% | |||
Coal & Consumable Fuels - 1.0% | |||
Paladin Energy Ltd. (a) | 671,007 | 3,405,900 | |
PT Bumi Resources Tbk | 34,153,500 | 11,614,820 | |
| 15,020,720 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.7% | |||
Specialized REITs - 0.7% | |||
Weyerhaeuser Co. | 438,585 | 10,705,860 | |
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 0.2% | |||
Trading Companies & Distributors - 0.2% | |||
Brenntag AG | 30,900 | $ 3,230,132 | |
TOTAL COMMON STOCKS (Cost $1,132,830,983) | 1,431,748,621 | ||
Money Market Funds - 7.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 56,769,086 | 56,769,086 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 59,743,976 | 59,743,976 | |
TOTAL MONEY MARKET FUNDS (Cost $116,513,062) | 116,513,062 | ||
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $1,249,344,045) | 1,548,261,683 | ||
NET OTHER ASSETS (LIABILITIES) - (3.9)% | (57,998,548) | ||
NET ASSETS - 100% | $ 1,490,263,135 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,689 |
Fidelity Securities Lending Cash Central Fund | 60,638 |
Total | $ 118,327 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,431,748,621 | $ 1,397,271,941 | $ 34,476,680 | $ - |
Money Market Funds | 116,513,062 | 116,513,062 | - | - |
Total Investments in Securities: | $ 1,548,261,683 | $ 1,513,785,003 | $ 34,476,680 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.5% |
Germany | 3.1% |
Canada | 3.1% |
United Kingdom | 2.2% |
Australia | 1.7% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 5.4% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $18,182,003 of which $17,489,907, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, respectively. |
A capital loss carryforward of approximately $4,359,948 was acquired from Paper and Forest Products Portfolio, of which $3,667,852, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, 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
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $58,657,243) - See accompanying schedule: Unaffiliated issuers (cost $1,132,830,983) | $ 1,431,748,621 |
|
Fidelity Central Funds (cost $116,513,062) | 116,513,062 |
|
Total Investments (cost $1,249,344,045) |
| $ 1,548,261,683 |
Cash | 1,525,870 | |
Foreign currency held at value (cost $48,163) | 48,097 | |
Receivable for investments sold | 7,446,525 | |
Receivable for fund shares sold | 15,282,091 | |
Dividends receivable | 1,460,733 | |
Distributions receivable from Fidelity Central Funds | 26,829 | |
Prepaid expenses | 1,447 | |
Other receivables | 26,632 | |
Total assets | 1,574,079,907 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 17,278,185 | |
Payable for fund shares redeemed | 5,679,245 | |
Accrued management fee | 669,790 | |
Distribution and service plan fees payable | 82,399 | |
Other affiliated payables | 288,780 | |
Other payables and accrued expenses | 74,397 | |
Collateral on securities loaned, at value | 59,743,976 | |
Total liabilities | 83,816,772 | |
|
|
|
Net Assets | $ 1,490,263,135 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,213,090,370 | |
Distributions in excess of net investment income | (22,442) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (21,722,153) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 298,917,360 | |
Net Assets | $ 1,490,263,135 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 69.96 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.96) | $ 74.23 | |
Class T: | $ 69.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $69.68) | $ 72.21 | |
Class B: | $ 68.95 | |
|
|
|
Class C: | $ 68.78 | |
|
|
|
Materials: | $ 70.11 | |
|
|
|
Institutional Class: | $ 70.05 |
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
Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,034,557 |
Special dividends |
| 12,590,176 |
Interest |
| 42 |
Income from Fidelity Central Funds |
| 118,327 |
Total income |
| 26,743,102 |
|
|
|
Expenses | ||
Management fee | $ 5,076,388 | |
Transfer agent fees | 2,252,029 | |
Distribution and service plan fees | 648,252 | |
Accounting and security lending fees | 309,212 | |
Custodian fees and expenses | 61,955 | |
Independent trustees' compensation | 4,648 | |
Registration fees | 201,055 | |
Audit | 44,669 | |
Legal | 2,812 | |
Interest | 956 | |
Tax expense | 144 |
|
Miscellaneous | 8,289 | |
Total expenses before reductions | 8,610,409 | |
Expense reductions | (94,170) | 8,516,239 |
Net investment income (loss) | 18,226,863 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,324,733 | |
Foreign currency transactions | (73,855) | |
Total net realized gain (loss) |
| 5,250,878 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 249,899,172 | |
Assets and liabilities in foreign currencies | 1,275 | |
Total change in net unrealized appreciation (depreciation) |
| 249,900,447 |
Net gain (loss) | 255,151,325 | |
Net increase (decrease) in net assets resulting from operations | $ 273,378,188 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 18,226,863 | $ 3,695,665 |
Net realized gain (loss) | 5,250,878 | 54,954,095 |
Change in net unrealized appreciation (depreciation) | 249,900,447 | 118,179,943 |
Net increase (decrease) in net assets resulting from operations | 273,378,188 | 176,829,703 |
Distributions to shareholders from net investment income | (18,392,042) | (4,024,717) |
Distributions to shareholders from net realized gain | (379,797) | - |
Total distributions | (18,771,839) | (4,024,717) |
Share transactions - net increase (decrease) | 520,343,234 | 390,197,683 |
Redemption fees | 97,765 | 93,068 |
Total increase (decrease) in net assets | 775,047,348 | 563,095,737 |
|
|
|
Net Assets | ||
Beginning of period | 715,215,787 | 152,120,050 |
End of period (including distributions in excess of net investment income of $22,442 and undistributed net investment income of $21,306, respectively) | $ 1,490,263,135 | $ 715,215,787 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | 1.08 H | .30 I | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 17.40 | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 18.48 | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (1.06) | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | (.01) | - | - | (2.21) | - |
Total distributions | (1.07) | (.32) | (.12) | (2.53) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 35.33% | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.16% | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.16% | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.15% | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | 1.81% H | .65% I | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .41%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.53 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .90 H | .16 I | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 17.34 | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 18.24 | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.92) | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.92) | (.19) | (.03) | (2.42) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 34.98% | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.44% | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.43% | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | 1.54% H | .35% I | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.42 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .60 H | (.07) I | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 17.13 | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 17.73 | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.65) | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.65) | (.04) | - | (2.25) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.93% | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | 1.04% H | (.15)% I | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.25 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .61 H | (.06) I | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 17.09 | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 17.70 | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.72) | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.72) | (.04) | - | (2.33) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.93% | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | 1.04% H | (.13)% I | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.33 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, | 2011 | 2010 | 2009 | 2008 J | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.25 F | .43 G | .38 | .64 | .42 |
Net realized and unrealized gain (loss) | 17.43 | 24.91 | (29.54) | 8.01 | 9.36 |
Total from investment operations | 18.68 | 25.34 | (29.16) | 8.65 | 9.78 |
Distributions from net investment income | (1.16) | (.40) | (.20) | (.36) | (.48) |
Distributions from net realized gain | (.03) | - | - | (2.21) | (4.79) |
Total distributions | (1.19) | (.40) | (.20) | (2.57) K | (5.27) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .06 |
Net asset value, end of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Total Return A, B | 35.70% | 91.77% | (51.15)% | 17.10% | 22.29% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .88% | .96% | .90% | .91% | 1.01% |
Expenses net of fee waivers, if any | .88% | .96% | .90% | .90% | .98% |
Expenses net of all reductions | .87% | .94% | .90% | .89% | .96% |
Net investment income (loss) | 2.10% F | .92% G | .78% | 1.14% | .87% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 |
Portfolio turnover rate E | 87% | 104% I | 117% | 77% | 185% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. GInvestment 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%. HExpense 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. IThe portfolio turnover rate does not include the assets acquired in the merger. JFor the year ended February 29. KTotal distributions of $2.57 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, | 2011 | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.28 G | .46 H | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 17.40 | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 18.68 | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (1.19) | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | (.03) | - | - | (2.21) | - |
Total distributions | (1.22) | (.44) | (.20) | (2.56) M | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 35.73% | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, J |
|
|
|
|
|
Expenses before reductions | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .85% | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | 2.11% G | .94% H | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 87% | 104% K | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. HInvestment 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%. IFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. JExpense 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. KThe portfolio turnover rate does not include the assets acquired in the merger. LFor the year ended February 29. MTotal distributions of $2.56 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, 2011
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 310,846,676 |
Gross unrealized depreciation | (15,469,188) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 295,377,488 |
Tax Cost | $ 1,252,884,195 |
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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:
Capital loss carryforward | $ (18,182,003) |
Net unrealized appreciation (depreciation) | $ 295,377,210 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 18,771,839 | $ 4,024,717 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,261,371,136 and $778,483,528, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 180,708 | $ 8,693 |
Class T | .25% | .25% | 89,160 | 331 |
Class B | .75% | .25% | 112,358 | 84,410 |
Class C | .75% | .25% | 266,026 | 108,067 |
|
|
| $ 648,252 | $ 201,501 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 135,495 |
Class T | 13,835 |
Class B* | 20,335 |
Class C* | 9,166 |
| $ 178,831 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 200,549 | .28 |
Class T | 53,555 | .30 |
Class B | 33,293 | .30 |
Class C | 76,639 | .29 |
Materials | 1,816,001 | .24 |
Institutional Class | 71,992 | .23 |
| $ 2,252,029 |
|
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 $13,777 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 | $ 6,741,091 | .46% | $ 956 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $3,014 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $60,638. During the period, there were no securities loaned to FCM.
Annual Report
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 $94,109 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.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 1,422,379 | $ 238,202 |
Class T | 289,521 | 47,220 |
Class B | 122,322 | 5,848 |
Class C | 341,974 | 12,908 |
Materials | 15,509,343 | 3,662,178 |
Institutional Class | 706,503 | 58,361 |
Total | $ 18,392,042 | $ 4,024,717 |
From net realized gain |
|
|
Class A | $ 10,674 | $ - |
Materials | 358,147 | - |
Institutional Class | 10,976 | - |
Total | $ 379,797 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,281,666 | 858,136 | $ 79,405,808 | $ 40,135,680 |
Reinvestment of distributions | 18,751 | 4,377 | 1,225,248 | 220,619 |
Shares redeemed | (522,145) | (256,610) | (29,567,388) | (11,780,339) |
Net increase (decrease) | 778,272 | 605,903 | $ 51,063,668 | $ 28,575,960 |
Class T |
|
|
|
|
Shares sold | 162,727 | 167,992 | $ 9,996,553 | $ 7,326,294 |
Reinvestment of distributions | 4,298 | 941 | 280,166 | 45,756 |
Shares redeemed | (81,055) | (67,330) | (4,620,393) | (3,005,643) |
Net increase (decrease) | 85,970 | 101,603 | $ 5,656,326 | $ 4,366,407 |
Class B |
|
|
|
|
Shares sold | 78,978 | 131,820 | $ 4,548,346 | $ 5,954,562 |
Reinvestment of distributions | 1,536 | 103 | 99,242 | 4,824 |
Shares redeemed | (68,559) | (43,087) | (3,840,777) | (1,785,370) |
Net increase (decrease) | 11,955 | 88,836 | $ 806,811 | $ 4,174,016 |
Class C |
|
|
|
|
Shares sold | 420,386 | 299,617 | $ 26,286,596 | $ 13,304,163 |
Reinvestment of distributions | 4,421 | 234 | 284,977 | 10,972 |
Shares redeemed | (143,652) | (106,334) | (7,964,201) | (4,538,206) |
Net increase (decrease) | 281,155 | 193,517 | $ 18,607,372 | $ 8,776,929 |
Materials |
|
|
|
|
Shares sold | 11,993,105 | 11,253,841 | $ 750,476,205 | $ 539,188,177 |
Issued in exchange for shares of Paper and Forest Products Portfolio | - | 337,332 | - | 13,304,373 |
Reinvestment of distributions | 229,147 | 68,039 | 14,963,249 | 3,440,550 |
Shares redeemed | (6,662,930) | (4,780,310) | (384,640,831) | (223,285,260) |
Net increase (decrease) | 5,559,322 | 6,878,902 | $ 380,798,623 | $ 332,647,840 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Institutional Class |
|
|
|
|
Shares sold | 1,219,205 | 269,782 | $ 77,607,131 | $ 13,383,120 |
Reinvestment of distributions | 8,764 | 839 | 572,066 | 43,347 |
Shares redeemed | (272,695) | (36,606) | (14,768,763) | (1,769,936) |
Net increase (decrease) | 955,274 | 234,015 | $ 63,410,434 | $ 11,656,531 |
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 the Select 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, 2011, the results of each of their 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 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 | 04/18/10 | 04/15/10 | $0.020 | $0.000 |
Gold Portfolio | 04/18/10 | 04/15/10 | $0.000 | $2.029 |
Materials Portfolio | 04/18/10 | 04/15/10 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2011, or, if subsequently determined to be different, the net capital gain of such year.
Gold Portfolio | $245,927,697 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | 0% | 2% |
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 2010 | December 2010 |
Chemicals Portfolio | 100% | 100% |
Gold Portfolio | 4% | 10% |
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 | 04/12/10 | $0.022 | $0.0023 |
Gold Portfolio | 12/13/10 | $0.098 | $0.0085 |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 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
(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
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
SELMT-UANNPRO-0411
1.910424.101
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, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Communications Equipment Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Computers Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Electronics Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
IT Services Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Software and Computer Services Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Technology Portfolio | Performance | |
| Management's Discussion of Fund Performance | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Prospectus | P-1 |
|
|
|
|
Annual Report
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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, 2010 to February 28, 2011).
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 | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,430.00 | $ 5.42 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Computers Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,384.90 | $ 5.14 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Electronics Portfolio | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,543.20 | $ 5.36 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
IT Services Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,331.90 | $ 5.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Software and Computer Services Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,336.00 | $ 4.81 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
Technology Portfolio | .84% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,398.70 | $ 5.00 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Communications Equipment Portfolio A | 42.38% | 6.58% | 2.22% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Charlie Chai, Portfolio Manager of Communications Equipment Portfolio: During the past year, the fund returned 42.38%, well ahead of the 26.16% return of the S&P® Custom Communications Equipment Index and the broadly based S&P 500®. The majority of the fund's outperformance versus its industry index was traceable to favorable stock picking in its core area of communications equipment. Other factors lifting the fund's performance included out-of-benchmark exposure to a number of strong-performing industries, including semiconductors, electronic manufacturing services and Internet software/services, among others. Within communications equipment, my decision to emphasize smaller, fast-growing companies at the forefront of trends such as cloud computing and smartphones was particularly beneficial. At the same time, I underweighted some large benchmark components that were laggards, which also lifted fund performance. One of those laggards was Finnish wireless handset maker Nokia, the fund's largest contributor to relative performance. During the period, Nokia struggled to compete in the high-end smartphone market. Also boosting fund performance was a sizable underweighting in networking equipment maker Cisco Systems, the largest benchmark component and also the third-largest contributor to relative performance. Although I maintained a significant underweighting in Cisco for most of the period, the stock became a bargain, in my opinion, when it pulled back sharply in November after the company lowered its fiscal 2011 revenue guidance. The fund ended the period with Cisco at almost 13% of net assets, which was roughly a market weighting. Other contributors included Acme Packet, a maker of session-border-control equipment used to integrate Internet Protocol (IP) capabilities with corporate phone systems; Taiwan-based smartphone maker HTC; ADTRAN, which makes network access solutions for communications networks; and Trimble Navigation, a maker of GPS (global positioning system) instruments. HTC and Trimble Navigation were out-of-index holdings. Conversely, relative performance was hampered by Finisar, which makes optical subsystems and components. The fund recorded a triple-digit gain in the stock, but underweighting it hurt relative performance. Untimely ownership of Swedish networking equipment provider Ericsson and Canadian smartphone maker Research In Motion also dampened the fund's gain, as did an underweighting in Motorola - known as Motorola Solutions after the company's January 2011 spinoff of its handset division. Not owning benchmark component InterDigital, a provider of key technologies for wireless networks, 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
Communications Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
QUALCOMM, Inc. | 13.6 | 13.0 |
Cisco Systems, Inc. | 12.9 | 8.2 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 7.4 | 8.3 |
Juniper Networks, Inc. | 5.5 | 4.5 |
HTC Corp. | 4.5 | 1.6 |
Alcatel-Lucent SA sponsored ADR | 3.8 | 0.1 |
Motorola Mobility Holdings, Inc. | 3.2 | 0.0 |
ADTRAN, Inc. | 2.4 | 2.3 |
JDS Uniphase Corp. | 2.3 | 1.4 |
Ciena Corp. | 2.2 | 0.4 |
| 57.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Communications Equipment | 80.8% |
|
![]() | Software | 4.4% |
|
![]() | Semiconductors & Semiconductor Equipment | 3.7% |
|
![]() | Wireless Telecommunication Services | 2.8% |
|
![]() | Electronic Equipment & Components | 2.3% |
|
![]() | All Others* | 6.0% |
|
As of August 31, 2010 | |||
![]() | Communications Equipment | 78.5% |
|
![]() | Semiconductors & Semiconductor Equipment | 4.9% |
|
![]() | Software | 4.6% |
|
![]() | Wireless Telecommunication Services | 3.6% |
|
![]() | Computers & Peripherals | 2.8% |
|
![]() | All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Communications Equipment Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 96.9% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 80.6% | |||
Communications Equipment - 80.6% | |||
Acme Packet, Inc. (a) | 158,490 | $ 11,924,788 | |
ADTRAN, Inc. | 305,100 | 13,875,948 | |
ADVA AG Optical Networking (a) | 372,136 | 3,415,092 | |
Alcatel-Lucent SA sponsored ADR (a)(d) | 4,570,943 | 22,397,621 | |
Arris Group, Inc. (a) | 261,429 | 3,450,863 | |
Aruba Networks, Inc. (a) | 224,760 | 6,843,942 | |
Aviat Networks, Inc. (a) | 74,065 | 452,537 | |
BigBand Networks, Inc. (a) | 704,147 | 1,830,782 | |
Black Box Corp. | 9,800 | 374,262 | |
Blue Coat Systems, Inc. (a) | 70,800 | 1,992,312 | |
Brocade Communications Systems, Inc. (a) | 712,741 | 4,540,160 | |
Ceragon Networks Ltd. (a) | 81,785 | 1,016,588 | |
China Wireless Technologies Ltd. | 2,704,000 | 1,003,410 | |
Ciena Corp. (a)(d) | 477,391 | 13,161,670 | |
Cisco Systems, Inc. (a) | 4,093,826 | 75,981,411 | |
Comverse Technology, Inc. (a) | 44,610 | 323,423 | |
DG FastChannel, Inc. (a) | 74,200 | 2,456,762 | |
Digi International, Inc. (a) | 66,600 | 737,262 | |
DragonWave, Inc. (a) | 207,300 | 1,622,116 | |
EchoStar Holding Corp. Class A (a) | 52,180 | 1,810,646 | |
Emulex Corp. (a) | 242,900 | 2,671,900 | |
F5 Networks, Inc. (a) | 23,170 | 2,734,292 | |
Finisar Corp. (a) | 239,472 | 9,823,141 | |
Harmonic, Inc. (a) | 285,540 | 2,744,039 | |
Harris Corp. | 170,500 | 7,955,530 | |
HTC Corp. | 731,850 | 26,432,194 | |
Infinera Corp. (a) | 64,774 | 518,840 | |
Ixia (a) | 182,204 | 3,197,680 | |
JDS Uniphase Corp. (a) | 538,327 | 13,280,527 | |
Juniper Networks, Inc. (a) | 735,712 | 32,371,328 | |
Motorola Mobility Holdings, Inc. | 624,408 | 18,857,122 | |
Motorola Solutions, Inc. | 29,381 | 1,135,282 | |
Nokia Corp. sponsored ADR (d) | 455,535 | 3,931,267 | |
Oclaro, Inc. (a) | 183,063 | 3,227,401 | |
Oplink Communications, Inc. (a) | 60,746 | 1,652,899 | |
Opnext, Inc. (a) | 258,799 | 1,084,368 | |
Polycom, Inc. (a) | 192,800 | 9,215,840 | |
Powerwave Technologies, Inc. (a) | 389,800 | 1,438,362 | |
QUALCOMM, Inc. | 1,340,819 | 79,885,995 | |
Research In Motion Ltd. (a) | 11,900 | 787,066 | |
Riverbed Technology, Inc. (a) | 300,642 | 12,413,508 | |
Sandvine Corp. (a) | 1,458,000 | 4,622,454 | |
Sandvine Corp. (U.K.) (a) | 118,328 | 389,858 | |
ShoreTel, Inc. (a) | 907,124 | 6,159,372 | |
Sierra Wireless, Inc. (a) | 194,000 | 2,041,369 | |
Sonus Networks, Inc. (a) | 40,232 | 121,903 | |
Sycamore Networks, Inc. | 142,100 | 3,033,835 | |
Tekelec (a) | 192,740 | 1,478,316 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 3,389,180 | 43,517,071 | |
| |||
Shares | Value | ||
Tellabs, Inc. | 334,300 | $ 1,801,877 | |
ZTE Corp. (H Shares) | 1,135,600 | 5,234,725 | |
| 472,970,956 | ||
COMPUTERS & PERIPHERALS - 2.1% | |||
Computer Hardware - 1.9% | |||
Apple, Inc. (a) | 32,077 | 11,329,917 | |
Computer Storage & Peripherals - 0.2% | |||
Novatel Wireless, Inc. (a) | 139,202 | 824,076 | |
TOTAL COMPUTERS & PERIPHERALS | 12,153,993 | ||
ELECTRICAL EQUIPMENT - 0.2% | |||
Electrical Components & Equipment - 0.2% | |||
A123 Systems, Inc. (a) | 1,400 | 13,272 | |
General Cable Corp. (a) | 34,800 | 1,511,016 | |
| 1,524,288 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 2.3% | |||
Electronic Components - 0.3% | |||
Cando Corp. (a) | 1,063,243 | 827,158 | |
Young Fast Optoelectron Co. Ltd. | 82,000 | 727,424 | |
| 1,554,582 | ||
Electronic Manufacturing Services - 2.0% | |||
Jabil Circuit, Inc. | 85,000 | 1,821,550 | |
Trimble Navigation Ltd. (a) | 202,900 | 9,972,535 | |
| 11,794,085 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 13,348,667 | ||
HEALTH CARE TECHNOLOGY - 0.0% | |||
Health Care Technology - 0.0% | |||
athenahealth, Inc. (a) | 400 | 18,136 | |
INTERNET SOFTWARE & SERVICES - 0.6% | |||
Internet Software & Services - 0.6% | |||
Equinix, Inc. (a) | 500 | 43,220 | |
OpenTable, Inc. (a) | 100 | 8,887 | |
Rackspace Hosting, Inc. (a) | 15,800 | 583,178 | |
Tencent Holdings Ltd. | 116,900 | 3,092,116 | |
| 3,727,401 | ||
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.1% | |||
Amadeus IT Holding SA Class A (a) | 17,100 | 332,378 | |
NeuStar, Inc. Class A (a) | 16,400 | 414,100 | |
| 746,478 | ||
IT Consulting & Other Services - 0.1% | |||
Yucheng Technologies Ltd. (a)(d) | 60,300 | 245,421 | |
TOTAL IT SERVICES | 991,899 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.7% | |||
Semiconductors - 3.7% | |||
Applied Micro Circuits Corp. (a) | 110,450 | 1,159,725 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Avago Technologies Ltd. | 31,000 | $ 1,053,690 | |
Cavium Networks, Inc. (a) | 12,701 | 548,429 | |
Cirrus Logic, Inc. (a)(d) | 59,668 | 1,393,248 | |
CSR PLC | 58,483 | 370,545 | |
Cypress Semiconductor Corp. (a) | 32,800 | 687,488 | |
Entropic Communications, Inc. (a) | 3,900 | 36,114 | |
Exar Corp. (a) | 6,701 | 43,355 | |
Hittite Microwave Corp. (a) | 800 | 49,104 | |
Ikanos Communications, Inc. (a) | 183,615 | 231,355 | |
Infineon Technologies AG | 26,084 | 285,376 | |
Inphi Corp. | 57,900 | 1,389,021 | |
Netlogic Microsystems, Inc. (a) | 48,898 | 2,023,888 | |
ON Semiconductor Corp. (a) | 90,444 | 1,008,451 | |
Pericom Semiconductor Corp. (a) | 45,400 | 456,724 | |
Pixelplus Co. Ltd. ADR (a) | 30,925 | 57,211 | |
PLX Technology, Inc. (a) | 21,500 | 80,840 | |
RDA Microelectronics, Inc. sponsored ADR | 126,500 | 1,720,400 | |
Spreadtrum Communications, Inc. ADR (a)(d) | 314,500 | 6,277,420 | |
Standard Microsystems Corp. (a) | 55,597 | 1,474,988 | |
Volterra Semiconductor Corp. (a) | 49,300 | 1,243,839 | |
| 21,591,211 | ||
SOFTWARE - 4.4% | |||
Application Software - 3.0% | |||
AsiaInfo Holdings, Inc. (a) | 70,600 | 1,436,710 | |
AutoNavi Holdings Ltd. ADR | 92,400 | 1,469,160 | |
BroadSoft, Inc. (a) | 224,200 | 7,914,260 | |
NetScout Systems, Inc. (a) | 109,107 | 2,726,584 | |
Smith Micro Software, Inc. (a) | 28,632 | 268,282 | |
SolarWinds, Inc. (a) | 46,871 | 1,052,254 | |
Synchronoss Technologies, Inc. (a) | 76,867 | 2,633,463 | |
Taleo Corp. Class A (a) | 1,800 | 58,122 | |
TeleNav, Inc. | 5,800 | 65,076 | |
| 17,623,911 | ||
Systems Software - 1.4% | |||
Allot Communications Ltd. (a) | 37,800 | 602,343 | |
Fortinet, Inc. (a) | 50,850 | 2,076,714 | |
Opnet Technologies, Inc. | 88,428 | 3,013,626 | |
Rovi Corp. (a) | 35,229 | 1,952,391 | |
TeleCommunication Systems, Inc. Class A (a) | 166,423 | 710,626 | |
| 8,355,700 | ||
TOTAL SOFTWARE | 25,979,611 | ||
| |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - 2.8% | |||
Wireless Telecommunication Services - 2.8% | |||
American Tower Corp. Class A (a) | 121,010 | $ 6,529,700 | |
Crown Castle International Corp. (a) | 87,100 | 3,671,265 | |
SBA Communications Corp. Class A (a) | 129,264 | 5,440,722 | |
SOFTBANK CORP. | 17,400 | 715,429 | |
| 16,357,116 | ||
TOTAL COMMON STOCKS (Cost $479,079,628) | 568,663,278 |
Convertible Bonds - 0.2% | ||||
| Principal |
| ||
COMMUNICATIONS EQUIPMENT - 0.2% | ||||
Communications Equipment - 0.2% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 930,000 | 937,161 |
Money Market Funds - 10.7% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.19% (b) | 11,445,415 | 11,445,415 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 51,670,550 | 51,670,550 | |
TOTAL MONEY MARKET FUNDS (Cost $63,115,965) | 63,115,965 | ||
TOTAL INVESTMENT PORTFOLIO - 107.8% (Cost $543,125,593) | 632,716,404 | ||
NET OTHER ASSETS (LIABILITIES) - (7.8)% | (45,921,572) | ||
NET ASSETS - 100% | $ 586,794,832 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 15,231 |
Fidelity Securities Lending Cash Central Fund | 135,318 |
Total | $ 150,549 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 568,663,278 | $ 539,961,073 | $ 28,702,205 | $ - |
Convertible Bonds | 937,161 | - | 937,161 | - |
Money Market Funds | 63,115,965 | 63,115,965 | - | - |
Total Investments in Securities: | $ 632,716,404 | $ 603,077,038 | $ 29,639,366 | $ - |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
Investments in Securities: | |
Beginning Balance | $ 17,009 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | (17,009) |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 76.9% |
Sweden | 7.4% |
Taiwan | 4.8% |
France | 3.8% |
Cayman Islands | 2.4% |
Canada | 1.6% |
Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $32,212,158 of which $3,347,694, $1,904,449, $13,297,103 and $13,662,912 will expire in fiscal 2012, 2015, 2016 and 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. |
A capital loss carryforward of approximately $17,899,915 was acquired from Networking and Infrastructure Portfolio, of which $3,347,694, $1,904,449, $8,250,126 and $4,397,646 will expire in fiscal 2012, 2015, 2016 and 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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $50,581,972) - See accompanying schedule: Unaffiliated issuers (cost $480,009,628) | $ 569,600,439 |
|
Fidelity Central Funds (cost $63,115,965) | 63,115,965 |
|
Total Investments (cost $543,125,593) |
| $ 632,716,404 |
Receivable for investments sold | 1,826,125 | |
Receivable for fund shares sold | 4,404,196 | |
Dividends receivable | 260,706 | |
Interest receivable | 769 | |
Distributions receivable from Fidelity Central Funds | 8,797 | |
Prepaid expenses | 757 | |
Other receivables | 14,607 | |
Total assets | 639,232,361 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 32 | |
Payable for fund shares redeemed | 345,280 | |
Accrued management fee | 259,397 | |
Other affiliated payables | 125,700 | |
Other payables and accrued expenses | 36,570 | |
Collateral on securities loaned, at value | 51,670,550 | |
Total liabilities | 52,437,529 | |
|
|
|
Net Assets | $ 586,794,832 | |
Net Assets consist of: |
| |
Paid in capital | $ 532,141,744 | |
Accumulated net investment loss | (176) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (34,937,547) | |
Net unrealized appreciation (depreciation) on investments | 89,590,811 | |
Net Assets, for 19,823,265 shares outstanding | $ 586,794,832 | |
Net Asset Value, offering price and redemption price per share ($586,794,832 ÷ 19,823,265 shares) | $ 29.60 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
| �� |
Dividends |
| $ 1,778,909 |
Interest |
| 2,356 |
Income from Fidelity Central Funds (including $135,318 from security lending) |
| 150,549 |
Total income |
| 1,931,814 |
|
|
|
Expenses | ||
Management fee | $ 2,311,158 | |
Transfer agent fees | 1,164,712 | |
Accounting and security lending fees | 166,594 | |
Custodian fees and expenses | 37,565 | |
Independent trustees' compensation | 2,325 | |
Registration fees | 32,842 | |
Audit | 35,068 | |
Legal | 5,212 | |
Interest | 516 | |
Miscellaneous | 4,887 | |
Total expenses before reductions | 3,760,879 | |
Expense reductions | (55,224) | 3,705,655 |
Net investment income (loss) | (1,773,841) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 56,075,215 | |
Foreign currency transactions | 2,648 | |
Total net realized gain (loss) |
| 56,077,863 |
Change in net unrealized appreciation (depreciation) on investment securities | 96,827,694 | |
Net gain (loss) | 152,905,557 | |
Net increase (decrease) in net assets resulting from operations | $ 151,131,716 |
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) | $ (1,773,841) | $ (1,259,876) |
Net realized gain (loss) | 56,077,863 | 54,600,253 |
Change in net unrealized appreciation (depreciation) | 96,827,694 | 100,949,585 |
Net increase (decrease) in net assets resulting from operations | 151,131,716 | 154,289,962 |
Distributions to shareholders from net investment income | - | (937,682) |
Share transactions | 259,307,651 | 227,078,826 |
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 |
Cost of shares redeemed | (160,569,712) | (236,954,161) |
Net increase (decrease) in net assets resulting from share transactions | 98,737,939 | 57,609,374 |
Redemption fees | 15,161 | 30,144 |
Total increase (decrease) in net assets | 249,884,816 | 210,991,798 |
|
|
|
Net Assets | ||
Beginning of period | 336,910,016 | 125,918,218 |
End of period (including accumulated net investment loss of $176 and accumulated net investment loss of $1,821,419, respectively) | $ 586,794,832 | $ 336,910,016 |
Other Information Shares | ||
Sold | 10,453,658 | 13,101,569 |
Issued in exchange for the shares of Networking and Infrastructure Portfolio (Note 12) | - | 3,975,162 |
Issued in reinvestment of distributions | - | 44,790 |
Redeemed | (6,839,533) | (12,657,351) |
Net increase (decrease) | 3,614,125 | 4,464,170 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 20.79 | $ 10.72 | $ 19.50 | $ 20.64 | $ 21.67 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.07) F | .04 | (.12) | (.13) |
Net realized and unrealized gain (loss) | 8.91 | 10.20 | (8.77) | (1.02) | (.90) |
Total from investment operations | 8.81 | 10.13 | (8.73) | (1.14) | (1.03) |
Distributions from net investment income | - | (.06) | (.05) | - | - |
Redemption fees added to paid in capital C, J | - | - | - | - | - |
Net asset value, end of period | $ 29.60 | $ 20.79 | $ 10.72 | $ 19.50 | $ 20.64 |
Total Return A, B | 42.38% | 94.47% | (44.79)% | (5.52)% | (4.75)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | .97% | .95% | .93% | 1.01% |
Expenses net of fee waivers, if any | .91% | .97% | .95% | .93% | 1.01% |
Expenses net of all reductions | .90% | .95% | .94% | .93% | 1.00% |
Net investment income (loss) | (.43)% | (.41)% F | .25% | (.55)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 586,795 | $ 336,910 | $ 125,918 | $ 241,213 | $ 321,967 |
Portfolio turnover rate E | 85% | 143% H | 120% | 39% | 122% |
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 The portfolio turnover rate does not include the assets acquired in the merger. 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
Computers Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Computers Portfolio | 37.19% | 9.75% | 3.77% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Matthew Schuldt, who became Portfolio Manager of Computers Portfolio on April 1, 2010: During the past year, the fund returned 37.19%, about in line with the 37.61% return of the S&P® Custom Computers & Peripherals Index and considerably ahead of the broadly based S&P 500® Index. Versus its industry index, favorable stock selection in computer storage/peripherals aided the fund's performance, as did exposure to several out-of-index groups, including electronic manufacturing services, communications equipment and application software. The top individual contributor was an out-of-index position in HTC, a Hong Kong-based provider of smartphones that rode the explosion in popularity of phones running Google's AndroidTM operating system. Underweightings in Intermec, a maker of bar-coding systems, and computer disk-drive manufacturer Seagate Technology also were timely, given the poor results of those stocks. Further lifting performance was Apple, maker of the popular iPhone® smartphone and iPad® tablet computer. During the period, I increased the fund's stake in Apple - a key contributor to relative performance and the fund's largest absolute contributor by a wide margin - making it by far our largest holding, on average. Timely ownership of data storage player Compellent Technologies provided a performance boost as well. In February, the company was acquired by Dell. Conversely, subpar stock picking and a modest underweighting in computer hardware hampered performance. Small exposures to semiconductors and technology distributors - non-benchmark groups where our performance lagged the industry index by quite a bit - also detracted. Computer maker HP was the fund's largest absolute and relative detractor, as the stock struggled following the sudden departure in August of CEO Mark Hurd in August. Four key detractors resulted from underweighting stocks of companies that were acquired or received takeover bids during the period. All of these companies were in various segments of the data storage industry: Isilon Systems, Hypercom, 3PAR and Netezza.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 17.1 | 17.9 |
Hewlett-Packard Co. | 10.1 | 10.6 |
EMC Corp. | 9.3 | 6.7 |
International Business Machines Corp. | 6.8 | 10.1 |
Dell, Inc. | 5.4 | 5.0 |
NetApp, Inc. | 4.3 | 4.5 |
SanDisk Corp. | 4.0 | 3.0 |
Western Digital Corp. | 2.9 | 3.2 |
Teradata Corp. | 2.8 | 2.8 |
Seagate Technology | 2.6 | 3.1 |
| 65.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Computers & Peripherals | 78.2% |
|
![]() | IT Services | 11.5% |
|
![]() | Semiconductors & Semiconductor Equipment | 3.2% |
|
![]() | Software | 2.2% |
|
![]() | Communications Equipment | 1.7% |
|
![]() | All Others* | 3.2% |
|
As of August 31, 2010 | |||
![]() | Computers & Peripherals | 80.3% |
|
![]() | IT Services | 12.9% |
|
![]() | Communications Equipment | 2.7% |
|
![]() | Software | 1.7% |
|
![]() | Electronic Equipment & Components | 1.3% |
|
![]() | All Others* | 1.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Computers Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 1.7% | |||
Communications Equipment - 1.7% | |||
HTC Corp. | 120,000 | $ 4,334,035 | |
Motorola Mobility Holdings, Inc. | 95,125 | 2,872,775 | |
Motorola Solutions, Inc. | 2,036 | 78,671 | |
Research In Motion Ltd. (a) | 50,000 | 3,307,000 | |
| 10,592,481 | ||
COMPUTERS & PERIPHERALS - 78.2% | |||
Computer Hardware - 40.0% | |||
Apple, Inc. (a) | 294,100 | 103,879,060 | |
Avid Technology, Inc. (a) | 256,500 | 5,658,390 | |
Cray, Inc. (a) | 505,000 | 3,726,900 | |
Dell, Inc. (a) | 2,086,907 | 33,035,738 | |
Diebold, Inc. | 61,800 | 2,172,888 | |
Hewlett-Packard Co. | 1,410,655 | 61,546,878 | |
NCR Corp. (a) | 585,100 | 11,175,410 | |
Silicon Graphics International Corp. (a) | 560,700 | 8,696,457 | |
Stratasys, Inc. (a)(d) | 212,331 | 9,635,581 | |
Super Micro Computer, Inc. (a) | 298,200 | 4,458,090 | |
| 243,985,392 | ||
Computer Storage & Peripherals - 38.2% | |||
Electronics for Imaging, Inc. (a) | 405,115 | 6,250,924 | |
EMC Corp. (a) | 2,076,178 | 56,492,803 | |
Hutchinson Technology, Inc. (a)(d) | 611,225 | 1,919,247 | |
Hypercom Corp. (a) | 395,260 | 3,948,647 | |
Imation Corp. (a) | 410,000 | 4,706,800 | |
Immersion Corp. (a) | 440,000 | 3,124,000 | |
Intermec, Inc. (a) | 406,500 | 4,564,995 | |
Intevac, Inc. (a) | 207,200 | 2,645,944 | |
Lexmark International, Inc. Class A (a) | 250,800 | 9,412,524 | |
NetApp, Inc. (a) | 510,460 | 26,370,364 | |
Novatel Wireless, Inc. (a)(d) | 986,424 | 5,839,630 | |
QLogic Corp. (a) | 362,008 | 6,537,864 | |
Quantum Corp. (a) | 4,168,200 | 10,795,638 | |
Rimage Corp. | 135,000 | 2,026,350 | |
SanDisk Corp. (a) | 489,000 | 24,254,400 | |
Seagate Technology (a) | 1,232,800 | 15,656,560 | |
STEC, Inc. (a)(d) | 573,500 | 11,716,605 | |
Synaptics, Inc. (a)(d) | 492,200 | 14,519,900 | |
Western Digital Corp. (a) | 586,684 | 17,940,797 | |
Xyratex Ltd. (a) | 290,800 | 3,696,068 | |
| 232,420,060 | ||
TOTAL COMPUTERS & PERIPHERALS | 476,405,452 | ||
| |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.9% | |||
Electronic Manufacturing Services - 0.8% | |||
Jabil Circuit, Inc. | 232,400 | $ 4,980,332 | |
Multi-Fineline Electronix, Inc. (a) | 22 | 630 | |
| 4,980,962 | ||
Technology Distributors - 0.1% | |||
Avnet, Inc. (a) | 17,441 | 596,657 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 5,577,619 | ||
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
Rackspace Hosting, Inc. (a)(d) | 84,100 | 3,104,131 | |
IT SERVICES - 11.5% | |||
Data Processing & Outsourced Services - 0.6% | |||
VeriFone Systems, Inc. (a) | 82,400 | 3,744,256 | |
IT Consulting & Other Services - 10.9% | |||
Atos Origin SA (a) | 85,000 | 4,920,149 | |
Cognizant Technology Solutions Corp. Class A (a) | 40,000 | 3,074,800 | |
International Business Machines Corp. | 256,348 | 41,497,614 | |
Teradata Corp. (a) | 350,600 | 16,765,692 | |
| 66,258,255 | ||
TOTAL IT SERVICES | 70,002,511 | ||
OFFICE ELECTRONICS - 1.1% | |||
Office Electronics - 1.1% | |||
Xerox Corp. | 610,000 | 6,557,500 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.2% | |||
Semiconductors - 3.2% | |||
Marvell Technology Group Ltd. (a) | 530,000 | 9,688,400 | |
National Semiconductor Corp. | 339,500 | 5,262,250 | |
NXP Semiconductors NV | 135,000 | 4,313,250 | |
| 19,263,900 | ||
SOFTWARE - 2.2% | |||
Application Software - 0.5% | |||
Autonomy Corp. PLC (a) | 130,000 | 3,472,653 | |
Systems Software - 1.7% | |||
CA, Inc. | 170,000 | 4,212,600 | |
Check Point Software Technologies Ltd. (a) | 120,000 | 5,980,800 | |
| 10,193,400 | ||
TOTAL SOFTWARE | 13,666,053 | ||
TOTAL COMMON STOCKS (Cost $555,874,456) | 605,169,647 | ||
Money Market Funds - 4.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 1,754,158 | $ 1,754,158 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 25,065,610 | 25,065,610 | |
TOTAL MONEY MARKET FUNDS (Cost $26,819,768) | 26,819,768 | ||
TOTAL INVESTMENT PORTFOLIO - 103.7% (Cost $582,694,224) | 631,989,415 | ||
NET OTHER ASSETS (LIABILITIES) - (3.7)% | (22,502,252) | ||
NET ASSETS - 100% | $ 609,487,163 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 16,757 |
Fidelity Securities Lending Cash Central Fund | 358,557 |
Total | $ 375,314 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 605,169,647 | $ 600,835,612 | $ 4,334,035 | $ - |
Money Market Funds | 26,819,768 | 26,819,768 | - | - |
Total Investments in Securities: | $ 631,989,415 | $ 627,655,380 | $ 4,334,035 | $ - |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $23,694,802 all of which will expire in fiscal 2017. 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
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $23,989,681) - See accompanying schedule: Unaffiliated issuers (cost $555,874,456) | $ 605,169,647 |
|
Fidelity Central Funds (cost $26,819,768) | 26,819,768 |
|
Total Investments (cost $582,694,224) |
| $ 631,989,415 |
Receivable for investments sold | 30,807,973 | |
Receivable for fund shares sold | 1,241,512 | |
Dividends receivable | 237,191 | |
Distributions receivable from Fidelity Central Funds | 8,249 | |
Prepaid expenses | 991 | |
Other receivables | 213,261 | |
Total assets | 664,498,592 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 86 | |
Payable for investments purchased | 22,645,378 | |
Payable for fund shares redeemed | 6,842,268 | |
Accrued management fee | 288,623 | |
Other affiliated payables | 136,882 | |
Other payables and accrued expenses | 32,582 | |
Collateral on securities loaned, at value | 25,065,610 | |
Total liabilities | 55,011,429 | |
|
|
|
Net Assets | $ 609,487,163 | |
Net Assets consist of: |
| |
Paid in capital | $ 606,648,956 | |
Accumulated net investment loss | (179) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (46,428,715) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 49,267,101 | |
Net Assets, for 10,191,392 shares outstanding | $ 609,487,163 | |
Net Asset Value, offering price and redemption price per share ($609,487,163 ÷ 10,191,392 shares) | $ 59.80 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,566,938 |
Interest |
| 228 |
Income from Fidelity Central Funds (including $358,557 from security lending) |
| 375,314 |
Total income |
| 1,942,480 |
|
|
|
Expenses | ||
Management fee | $ 2,905,879 | |
Transfer agent fees | 1,340,754 | |
Accounting and security lending fees | 201,758 | |
Custodian fees and expenses | 43,063 | |
Independent trustees' compensation | 3,020 | |
Registration fees | 35,317 | |
Audit | 55,292 | |
Legal | 2,926 | |
Miscellaneous | 6,142 | |
Total expenses before reductions | 4,594,151 | |
Expense reductions | (52,292) | 4,541,859 |
Net investment income (loss) | (2,599,379) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 122,912,539 | |
Foreign currency transactions | 32,532 | |
Total net realized gain (loss) |
| 122,945,071 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 44,951,398 | |
Assets and liabilities in foreign currencies | 4,112 | |
Total change in net unrealized appreciation (depreciation) |
| 44,955,510 |
Net gain (loss) | 167,900,581 | |
Net increase (decrease) in net assets resulting from operations | $ 165,301,202 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,599,379) | $ (742,818) |
Net realized gain (loss) | 122,945,071 | 101,700,728 |
Change in net unrealized appreciation (depreciation) | 44,955,510 | 112,098,723 |
Net increase (decrease) in net assets resulting from operations | 165,301,202 | 213,056,633 |
Share transactions | 149,562,570 | 207,562,448 |
Cost of shares redeemed | (208,100,154) | (125,093,210) |
Net increase (decrease) in net assets resulting from share transactions | (58,537,584) | 82,469,238 |
Redemption fees | 15,450 | 19,148 |
Total increase (decrease) in net assets | 106,779,068 | 295,545,019 |
|
|
|
Net Assets | ||
Beginning of period | 502,708,095 | 207,163,076 |
End of period (including accumulated net investment loss of $179 and accumulated net investment loss of $128, respectively) | $ 609,487,163 | $ 502,708,095 |
Other Information Shares | ||
Sold | 2,870,190 | 5,953,260 |
Redeemed | (4,211,085) | (3,259,453) |
Net increase (decrease) | (1,340,895) | 2,693,807 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 43.59 | $ 23.44 | $ 40.26 | $ 39.29 | $ 37.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.25) | (.07) | (.02) | (.12) | (.10) |
Net realized and unrealized gain (loss) | 16.46 | 20.22 | (16.80) | 1.09 | 1.83 |
Total from investment operations | 16.21 | 20.15 | (16.82) | .97 | 1.73 |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 59.80 | $ 43.59 | $ 23.44 | $ 40.26 | $ 39.29 |
Total Return A, B | 37.19% | 85.96% | (41.78)% | 2.47% | 4.63% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .89% | .95% | .92% | .92% | 1.02% |
Expenses net of fee waivers, if any | .89% | .95% | .92% | .92% | 1.02% |
Expenses net of all reductions | .88% | .92% | .91% | .91% | 1.00% |
Net investment income (loss) | (.50)% | (.18)% | (.05)% | (.26)% | (.28)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 609,487 | $ 502,708 | $ 207,163 | $ 437,251 | $ 460,532 |
Portfolio turnover rate E | 141% | 269% | 183% | 234% | 214% |
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
Electronics Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Electronics Portfolio | 34.87% | 3.32% | 1.29% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Electronics Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Stephen Barwikowski and Christopher Lin, Co-Portfolio Managers of Electronics Portfolio: During the past year, the fund returned 34.87%, topping both the 32.72% advance of the MSCI® U.S. IM Semiconductors & Semiconductor Equipment 25/50 Index and the broadly based S&P 500®. Versus the MSCI index, rewarding stock selection in the fund's primary category of semiconductors - coupled with an underweighting in that group - added the most value. Exposure to several out-of-benchmark groups - including communications equipment, electronic manufacturing services and computer storage/peripherals - also had a positive impact. Moreover, an overweighting and favorable picks in the mid-cap group boosted relative performance. At the stock level, a large underweighting in major index component Intel, a manufacturer of personal computer semiconductors, turned out to be a good call, given the stock's muted gain during the period, and made Intel the fund's largest relative contributor. That said, Intel represented nearly 11% of the fund's net assets at period end, making it by far the largest holding. An out-of-index position in NXP Semiconductors, which had its initial public offering (IPO) in August, also had a positive impact on performance, as did overweighting Singapore-based analog semiconductor maker Avago Technologies, the fund's largest absolute contributor during the period; underweighting benchmark component Cree, a maker of light-emitting diode (LED) lights; an out-of-benchmark stake in wireless chip maker QUALCOMM; and overweighting Fairchild Semiconductor. Conversely, the largest relative detractor was the fund's sizable stake in Marvell Technology Group. Sluggish PC sales hampered the stock, as Marvell's largest customer was Western Digital, which makes hard-disk drives for the PC market. Also hurting Marvell's prospects were delays in the company's plans to enter China's smartphone market. Other notable detractors included an underweighted position in major index component Texas Instruments; overweighting Monolithic Power Systems, a maker of integrated circuits for power management; and underweighting and ultimately selling Atmel, which makes chips used in touch-screen products such as smartphones and tablet computers.
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, 2011 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 10.7 | 12.6 |
Marvell Technology Group Ltd. | 9.0 | 9.5 |
Broadcom Corp. Class A | 7.9 | 2.8 |
Micron Technology, Inc. | 5.1 | 5.1 |
National Semiconductor Corp. | 5.1 | 1.5 |
Advanced Micro Devices, Inc. | 5.0 | 3.8 |
Avago Technologies Ltd. | 4.4 | 3.2 |
Applied Materials, Inc. | 3.9 | 4.8 |
Amkor Technology, Inc. | 3.6 | 3.7 |
NVIDIA Corp. | 3.5 | 2.2 |
| 58.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Semiconductors & Semiconductor Equipment | 86.5% |
|
![]() | Electronic Equipment & Components | 6.6% |
|
![]() | Communications Equipment | 3.4% |
|
![]() | Computers & Peripherals | 2.0% |
|
![]() | Internet Software & Services | 0.4% |
|
![]() | All Others* | 1.1% |
|
As of August 31, 2010 | |||
![]() | Semiconductors & Semiconductor Equipment | 88.2% |
|
![]() | Electronic Equipment & Components | 4.8% |
|
![]() | Communications Equipment | 3.7% |
|
![]() | Computers & Peripherals | 3.1% |
|
![]() | Life Sciences Tools & Services | 0.0% |
|
![]() | All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Electronics Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 3.4% | |||
Communications Equipment - 3.4% | |||
Brocade Communications Systems, Inc. (a) | 379,045 | $ 2,414,517 | |
Cisco Systems, Inc. (a) | 365,385 | 6,781,546 | |
Motorola Mobility Holdings, Inc. | 166,123 | 5,016,915 | |
Motorola Solutions, Inc. | 1,283 | 49,575 | |
QUALCOMM, Inc. | 557,093 | 33,191,601 | |
| 47,454,154 | ||
COMPUTERS & PERIPHERALS - 2.0% | |||
Computer Hardware - 0.0% | |||
Hewlett-Packard Co. | 5,500 | 239,965 | |
Computer Storage & Peripherals - 2.0% | |||
Gemalto NV | 24,730 | 1,229,440 | |
SanDisk Corp. (a) | 86,780 | 4,304,288 | |
Seagate Technology (a) | 722,643 | 9,177,566 | |
Synaptics, Inc. (a) | 292,000 | 8,614,000 | |
Western Digital Corp. (a) | 159,638 | 4,881,730 | |
| 28,207,024 | ||
TOTAL COMPUTERS & PERIPHERALS | 28,446,989 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 6.6% | |||
Electronic Components - 0.7% | |||
Amphenol Corp. Class A | 7,100 | 408,108 | |
Corning, Inc. | 204,932 | 4,725,732 | |
Universal Display Corp. (a) | 105,000 | 4,419,450 | |
| 9,553,290 | ||
Electronic Equipment & Instruments - 0.0% | |||
Hitachi High-Technologies Corp. | 7,600 | 176,528 | |
SNU Precision Co. Ltd. | 11,190 | 200,354 | |
| 376,882 | ||
Electronic Manufacturing Services - 5.9% | |||
Benchmark Electronics, Inc. (a) | 369,935 | 6,976,974 | |
Flextronics International Ltd. (a) | 3,131,772 | 25,336,035 | |
Jabil Circuit, Inc. | 1,036,312 | 22,208,166 | |
Multi-Fineline Electronix, Inc. (a) | 80,800 | 2,312,496 | |
Plexus Corp. (a) | 281,636 | 8,851,819 | |
SMART Modular Technologies (WWH), Inc. (a) | 1,068,991 | 7,408,108 | |
Tyco Electronics Ltd. | 121,100 | 4,364,444 | |
Viasystems Group, Inc. (a) | 193,922 | 4,603,708 | |
| 82,061,750 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 91,991,922 | ||
INTERNET SOFTWARE & SERVICES - 0.4% | |||
Internet Software & Services - 0.4% | |||
Google, Inc. Class A (a) | 8,300 | 5,091,220 | |
Support.com, Inc. (a) | 13,100 | 73,098 | |
| 5,164,318 | ||
| |||
Shares | Value | ||
IT SERVICES - 0.3% | |||
IT Consulting & Other Services - 0.3% | |||
BCD Semiconductor Manufacturing Ltd. ADR | 364,200 | $ 3,824,100 | |
LEISURE EQUIPMENT & PRODUCTS - 0.1% | |||
Photographic Products - 0.1% | |||
Eastman Kodak Co. (a)(d) | 382,600 | 1,300,840 | |
LIFE SCIENCES TOOLS & SERVICES - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a)(e) | 285,468 | 0 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 86.3% | |||
Semiconductor Equipment - 14.1% | |||
Advanced Energy Industries, Inc. (a) | 795 | 12,815 | |
Amkor Technology, Inc. (a)(d) | 6,728,734 | 49,590,770 | |
Applied Materials, Inc. | 3,316,800 | 54,495,024 | |
ASM International NV unit (a) | 62,700 | 2,541,231 | |
ASML Holding NV | 95,960 | 4,183,856 | |
Brooks Automation, Inc. (a) | 26,400 | 331,320 | |
Cabot Microelectronics Corp. (a) | 3,100 | 151,342 | |
Cohu, Inc. | 1,100 | 16,192 | |
Cymer, Inc. (a) | 22,200 | 1,123,320 | |
Entegris, Inc. (a) | 566,925 | 4,943,586 | |
FormFactor, Inc. (a) | 196,272 | 1,929,354 | |
KLA-Tencor Corp. | 139,000 | 6,785,980 | |
Lam Research Corp. (a) | 584,600 | 32,094,540 | |
MEMC Electronic Materials, Inc. (a) | 651,858 | 8,845,713 | |
Nanometrics, Inc. (a) | 22,800 | 410,856 | |
Nova Measuring Instruments Ltd. (a) | 14,700 | 138,180 | |
Novellus Systems, Inc. (a) | 72,300 | 2,889,108 | |
Teradyne, Inc. (a) | 47,600 | 886,788 | |
Tessera Technologies, Inc. (a) | 257,387 | 4,481,108 | |
Ultratech, Inc. (a) | 13,600 | 336,192 | |
Ulvac, Inc. | 7,000 | 168,068 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 389,117 | 18,564,772 | |
Verigy Ltd. (a) | 35,500 | 460,435 | |
| 195,380,550 | ||
Semiconductors - 72.2% | |||
Advanced Micro Devices, Inc. (a)(d) | 7,509,898 | 69,166,161 | |
Alpha & Omega Semiconductor Ltd. (a) | 508,087 | 6,635,616 | |
Altera Corp. | 28,700 | 1,201,382 | |
Analog Devices, Inc. | 177,200 | 7,066,736 | |
Applied Micro Circuits Corp. (a) | 482,396 | 5,065,158 | |
ARM Holdings PLC sponsored ADR | 17 | 515 | |
Atheros Communications, Inc. (a) | 48,565 | 2,176,198 | |
Avago Technologies Ltd. | 1,797,409 | 61,093,932 | |
Broadcom Corp. Class A | 2,666,457 | 109,911,358 | |
Cree, Inc. (a)(d) | 83,400 | 4,392,678 | |
Cypress Semiconductor Corp. (a) | 44,600 | 934,816 | |
Duksan Hi-Metal Co. Ltd. (a) | 73,835 | 1,469,614 | |
Exar Corp. (a) | 15,000 | 97,050 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Fairchild Semiconductor International, Inc. (a) | 1,628,320 | $ 28,674,715 | |
First Solar, Inc. (a)(d) | 11,642 | 1,715,914 | |
Himax Technologies, Inc. sponsored ADR | 1,129,801 | 2,858,397 | |
Ikanos Communications, Inc. (a) | 1,054,000 | 1,328,040 | |
Intel Corp. | 6,899,829 | 148,139,328 | |
International Rectifier Corp. (a) | 389,711 | 12,525,312 | |
Intersil Corp. Class A | 3,372,458 | 43,133,738 | |
Linear Technology Corp. | 2,100 | 72,576 | |
LSI Corp. (a) | 2,992,758 | 18,824,448 | |
Marvell Technology Group Ltd. (a) | 6,837,566 | 124,990,706 | |
Maxim Integrated Products, Inc. | 143,100 | 3,946,698 | |
Micron Technology, Inc. (a) | 6,388,200 | 71,100,666 | |
Monolithic Power Systems, Inc. (a) | 423,579 | 6,544,296 | |
Motech Industries, Inc. | 1 | 4 | |
National Semiconductor Corp. | 4,534,829 | 70,289,850 | |
NVIDIA Corp. (a) | 2,133,782 | 48,351,500 | |
NXP Semiconductors NV | 573,568 | 18,325,498 | |
ON Semiconductor Corp. (a) | 3,029,558 | 33,779,572 | |
PMC-Sierra, Inc. (a) | 1,772,657 | 14,003,990 | |
RDA Microelectronics, Inc. sponsored ADR | 225,600 | 3,068,160 | |
Rensas Electronics Corp. (a)(d) | 355,800 | 4,049,509 | |
RF Micro Devices, Inc. (a) | 203,400 | 1,525,500 | |
Semtech Corp. (a) | 82,684 | 1,957,957 | |
Skyworks Solutions, Inc. (a) | 53,804 | 1,933,716 | |
Standard Microsystems Corp. (a) | 179,851 | 4,771,447 | |
STMicroelectronics NV (NY Shares) unit (d) | 261,110 | 3,352,652 | |
SunPower Corp. Class B (a) | 385,210 | 6,502,345 | |
Supertex, Inc. (a) | 266,779 | 6,098,568 | |
Texas Instruments, Inc. | 520,414 | 18,531,943 | |
TriQuint Semiconductor, Inc. (a) | 268,425 | 3,825,056 | |
Volterra Semiconductor Corp. (a) | 194,800 | 4,914,804 | |
Xilinx, Inc. | 705,283 | 23,450,660 | |
| 1,001,798,779 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,197,179,329 | ||
TOTAL COMMON STOCKS (Cost $1,272,263,236) | 1,375,361,652 |
Convertible Bonds - 0.2% | ||||
| Principal | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.2% | ||||
Semiconductor Equipment - 0.1% | ||||
Amkor Technology, Inc. 6% 4/15/14 | $ 610,000 | $ 1,573,983 | ||
| ||||
| Principal | Value | ||
Semiconductors - 0.1% | ||||
SunPower Corp. 4.75% 4/15/14 | $ 470,000 | $ 488,213 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 2,062,196 |
Money Market Funds - 6.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.19% (b) | 15,004,023 | 15,004,023 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 79,609,774 | 79,609,774 | |
TOTAL MONEY MARKET FUNDS (Cost $94,613,797) | 94,613,797 | ||
TOTAL INVESTMENT PORTFOLIO - 106.1% (Cost $1,367,957,033) | 1,472,037,645 | ||
NET OTHER ASSETS (LIABILITIES) - (6.1)% | (84,773,492) | ||
NET ASSETS - 100% | $ 1,387,264,153 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $0 or 0.0% of net assets. |
Security | Acquisition Date | Acquisition Cost |
Arrowhead Research Corp. warrants 5/21/17 | 5/18/07 | $ 1,033,745 |
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 | $ 20,543 |
Fidelity Securities Lending Cash Central Fund | 105,098 |
Total | $ 125,641 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,375,361,652 | $ 1,375,361,648 | $ 4 | $ - |
Convertible Bonds | 2,062,196 | - | 2,062,196 | - |
Money Market Funds | 94,613,797 | 94,613,797 | - | - |
Total Investments in Securities: | $ 1,472,037,645 | $ 1,469,975,445 | $ 2,062,200 | $ - |
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 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (3) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ (3) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 79.6% |
Bermuda | 9.5% |
Singapore | 6.2% |
Netherlands | 2.1% |
Cayman Islands | 1.2% |
Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $397,386,518 of which $67,503,898, $258,803,490 and $71,079,130 will expire in fiscal 2012, 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
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $76,523,817) - See accompanying schedule: Unaffiliated issuers (cost $1,273,343,236) | $ 1,377,423,848 |
|
Fidelity Central Funds (cost $94,613,797) | 94,613,797 |
|
Total Investments (cost $1,367,957,033) |
| $ 1,472,037,645 |
Receivable for investments sold | 6,626,040 | |
Receivable for fund shares sold | 3,076,635 | |
Dividends receivable | 2,144,058 | |
Interest receivable | 22,097 | |
Distributions receivable from Fidelity Central Funds | 26,376 | |
Prepaid expenses | 2,071 | |
Other receivables | 48,056 | |
Total assets | 1,483,982,978 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 13,050,864 | |
Payable for fund shares redeemed | 3,065,073 | |
Accrued management fee | 643,211 | |
Other affiliated payables | 276,365 | |
Other payables and accrued expenses | 73,538 | |
Collateral on securities loaned, at value | 79,609,774 | |
Total liabilities | 96,718,825 | |
|
|
|
Net Assets | $ 1,387,264,153 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,705,371,961 | |
Undistributed net investment income | 166,854 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (422,355,274) | |
Net unrealized appreciation (depreciation) on investments | 104,080,612 | |
Net Assets, for 25,999,833 shares outstanding | $ 1,387,264,153 | |
Net Asset Value, offering price and redemption price per share ($1,387,264,153 ÷ 25,999,833 shares) | $ 53.36 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,701,988 |
Interest |
| 58,984 |
Income from Fidelity Central Funds (including $105,098 from security lending) |
| 125,641 |
Total income |
| 10,886,613 |
|
|
|
Expenses | ||
Management fee | $ 6,158,514 | |
Transfer agent fees | 2,723,636 | |
Accounting and security lending fees | 366,591 | |
Custodian fees and expenses | 109,500 | |
Independent trustees' compensation | 6,545 | |
Appreciation in deferred trustee compensation account | 86 | |
Registration fees | 45,684 | |
Audit | 42,544 | |
Legal | 8,014 | |
Interest | 1,094 | |
Miscellaneous | 13,844 | |
Total expenses before reductions | 9,476,052 | |
Expense reductions | (68,915) | 9,407,137 |
Net investment income (loss) | 1,479,476 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 133,127,496 | |
Foreign currency transactions | (28) | |
Total net realized gain (loss) |
| 133,127,468 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 195,573,476 | |
Assets and liabilities in foreign currencies | (441) | |
Total change in net unrealized appreciation (depreciation) |
| 195,573,035 |
Net gain (loss) | 328,700,503 | |
Net increase (decrease) in net assets resulting from operations | $ 330,179,979 |
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) | $ 1,479,476 | $ 8,867,699 |
Net realized gain (loss) | 133,127,468 | 103,595,012 |
Change in net unrealized appreciation (depreciation) | 195,573,035 | 401,726,714 |
Net increase (decrease) in net assets resulting from operations | 330,179,979 | 514,189,425 |
Distributions to shareholders from net investment income | (2,841,742) | (9,465,569) |
Distributions to shareholders from net realized gain | - | (285,675) |
Total distributions | (2,841,742) | (9,751,244) |
Share transactions | 301,891,145 | 344,238,190 |
Reinvestment of distributions | 2,700,459 | 9,290,540 |
Cost of shares redeemed | (349,256,599) | (316,936,032) |
Net increase (decrease) in net assets resulting from share transactions | (44,664,995) | 36,592,698 |
Redemption fees | 49,756 | 56,833 |
Total increase (decrease) in net assets | 282,722,998 | 541,087,712 |
|
|
|
Net Assets | ||
Beginning of period | 1,104,541,155 | 563,453,443 |
End of period (including undistributed net investment income of $166,854 and undistributed net investment income of $1,608,523, respectively) | $ 1,387,264,153 | $ 1,104,541,155 |
Other Information Shares | ||
Sold | 6,256,503 | 9,995,209 |
Issued in reinvestment of distributions | 59,948 | 258,297 |
Redeemed | (8,165,876) | (9,071,377) |
Net increase (decrease) | (1,849,425) | 1,182,129 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.66 | $ 21.13 | $ 37.17 | $ 46.14 | $ 46.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .31 | .34 | .17 | .05 |
Net realized and unrealized gain (loss) | 13.75 | 18.57 | (16.19) | (8.85) | (.48) |
Total from investment operations | 13.81 | 18.88 | (15.85) | (8.68) | (.43) |
Distributions from net investment income | (.11) | (.34) | (.19) | (.17) | (.03) |
Distributions from net realized gain | - | (.01) | - | (.12) | - |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Total distributions | (.11) | (.35) | (.19) | (.29) | (.03) |
Net asset value, end of period | $ 53.36 | $ 39.66 | $ 21.13 | $ 37.17 | $ 46.14 |
Total Return A, B | 34.87% | 89.51% | (42.63)% | (18.95)% | (.92)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .86% | .92% | .89% | .87% | .91% |
Expenses net of fee waivers, if any | .86% | .92% | .89% | .87% | .91% |
Expenses net of all reductions | .86% | .91% | .88% | .86% | .89% |
Net investment income (loss) | .13% | .92% | 1.05% | .36% | .11% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,387,264 | $ 1,104,541 | $ 563,453 | $ 1,201,825 | $ 1,944,223 |
Portfolio turnover rate E | 101% | 71% | 91% | 87% | 97% |
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 years |
IT Services Portfolio A | 30.62% | 10.05% | 7.48% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kyle Weaver, Portfolio Manager of IT Services Portfolio: During the past year, the fund returned 30.62%, handily beating the 24.04% advance of the MSCI® U.S. IM IT Services 25/50 Index and the broadly based S&P 500® Index. Solid stock picking in data processing/outsourced services accounted for more than half of the fund's outperformance versus the MSCI index. Favorable security selection in IT consulting/other services also lifted performance. While the fund's sizable underweighting in this group detracted, the negative impact was more than offset by the value added by investments in a number of out-of-benchmark industries. At the stock level, the top relative contributor was VeriFone Systems, the world's largest provider of point-of-sale terminals. A strong upgrade cycle in some of its core markets, combined with technology improvements and an accretive acquisition, drove the stock to more than double during the period. Virtusa, a small India-based provider of outsourced software development, also contributed, as did another India-based company, Cognizant Technology Solutions, a leading provider of outsourced application development. Other contributors included banking/payments technology provider Fidelity National Information Services and an underweighting in lagging benchmark component SAIC, an IT services firm primarily serving various branches of the federal government. Conversely, underweighting IBM (International Business Machines) - which was added to the benchmark early in the period and was by far its largest component - detracted from relative performance, in view of the stock's benchmark-beating performance. Overweighting TNS, which supplies network and payment services to banks, retailers and legacy telecom carriers, worked against results, as did underweighting money transfer agent Western Union - a strong-performing benchmark component - and an out-of-index position in India-based WNS Holdings, a provider of business process outsourcing services.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
IT Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Accenture PLC Class A | 11.5 | 9.7 |
Visa, Inc. Class A | 9.3 | 4.9 |
International Business Machines Corp. | 9.3 | 10.1 |
Cognizant Technology Solutions Corp. Class A | 8.2 | 7.8 |
Fidelity National Information Services, Inc. | 6.2 | 3.1 |
Alliance Data Systems Corp. | 5.7 | 8.2 |
MasterCard, Inc. Class A | 4.8 | 11.2 |
Oracle Corp. | 4.5 | 0.0 |
VeriFone Systems, Inc. | 3.1 | 3.2 |
Virtusa Corp. | 2.7 | 0.8 |
| 65.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | IT Services | 84.8% |
|
![]() | Software | 12.3% |
|
![]() | Communications Equipment | 0.9% |
|
![]() | Office Electronics | 0.9% |
|
![]() | Internet Software & Services | 0.5% |
|
![]() | All Others* | 0.6% |
|
As of August 31, 2010 | |||
![]() | IT Services | 87.0% |
|
![]() | Software | 4.5% |
|
![]() | Internet Software & Services | 2.6% |
|
![]() | Diversified Financial Services | 2.3% |
|
![]() | Office Electronics | 1.5% |
|
![]() | All Others* | 2.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
IT Services Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.9% | |||
Communications Equipment - 0.9% | |||
DG FastChannel, Inc. (a) | 35,700 | $ 1,182,027 | |
CONSUMER FINANCE - 0.2% | |||
Consumer Finance - 0.2% | |||
Green Dot Corp. Class A (d) | 4,300 | 224,503 | |
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||
Hotels, Resorts & Cruise Lines - 0.1% | |||
Thomas Cook Group PLC | 41,300 | 126,976 | |
INTERNET SOFTWARE & SERVICES - 0.5% | |||
Internet Software & Services - 0.5% | |||
Constant Contact, Inc. (a) | 9,605 | 277,873 | |
IntraLinks Holdings, Inc. | 11,800 | 332,642 | |
RightNow Technologies, Inc. (a) | 4,700 | 125,443 | |
| 735,958 | ||
IT SERVICES - 84.8% | |||
Data Processing & Outsourced Services - 40.7% | |||
Alliance Data Systems Corp. (a)(d) | 95,448 | 7,515,576 | |
Automatic Data Processing, Inc. | 66,900 | 3,345,000 | |
Cass Information Systems, Inc. | 7,800 | 304,590 | |
Convergys Corp. (a) | 63,000 | 886,410 | |
CoreLogic, Inc. (a) | 28,100 | 524,065 | |
CSG Systems International, Inc. (a) | 13,100 | 256,105 | |
DST Systems, Inc. | 1,300 | 66,300 | |
Euronet Worldwide, Inc. (a) | 27,400 | 495,118 | |
ExlService Holdings, Inc. (a) | 13,900 | 308,858 | |
Fidelity National Information Services, Inc. | 251,000 | 8,129,890 | |
Fiserv, Inc. (a) | 20,700 | 1,309,689 | |
FleetCor Technologies, Inc. | 21,500 | 687,785 | |
Global Cash Access Holdings, Inc. (a) | 57,200 | 196,768 | |
Heartland Payment Systems, Inc. | 20,200 | 395,516 | |
MasterCard, Inc. Class A | 26,140 | 6,288,238 | |
NeuStar, Inc. Class A (a) | 23,500 | 593,375 | |
Paychex, Inc. | 4,100 | 137,883 | |
Syntel, Inc. | 49,500 | 2,606,175 | |
Teletech Holdings, Inc. (a) | 29,200 | 665,176 | |
The Western Union Co. | 14,000 | 307,860 | |
TNS, Inc. (a) | 62,800 | 1,183,780 | |
VeriFone Systems, Inc. (a) | 90,000 | 4,089,600 | |
Visa, Inc. Class A | 167,712 | 12,251,362 | |
WNS Holdings Ltd. sponsored ADR (a) | 58,600 | 587,172 | |
Wright Express Corp. (a) | 10,100 | 515,100 | |
| 53,647,391 | ||
IT Consulting & Other Services - 44.1% | |||
Accenture PLC Class A | 294,100 | 15,140,267 | |
Acxiom Corp. (a) | 90,100 | 1,544,314 | |
Atos Origin SA (a) | 11,342 | 656,521 | |
CACI International, Inc. Class A (a) | 2,100 | 124,572 | |
| |||
Shares | Value | ||
Camelot Information Systems, Inc. ADR | 67,800 | $ 1,413,630 | |
China Information Technology, Inc. (a)(d) | 112,900 | 547,565 | |
Cognizant Technology Solutions Corp. Class A (a) | 140,916 | 10,832,213 | |
Forrester Research, Inc. | 5,700 | 206,226 | |
Gartner, Inc. Class A (a) | 5,700 | 215,004 | |
HCL Technologies Ltd. | 75,355 | 736,570 | |
hiSoft Technology International Ltd. ADR (a) | 44,300 | 1,097,311 | |
iGate Corp. | 183,407 | 3,319,667 | |
Integral Systems, Inc. (a) | 25,900 | 317,016 | |
International Business Machines Corp. | 75,500 | 12,221,940 | |
Lionbridge Technologies, Inc. (a) | 221,900 | 816,592 | |
ManTech International Corp. Class A (a) | 2,100 | 90,720 | |
Maximus, Inc. | 5,200 | 384,800 | |
NCI, Inc. Class A (a) | 2,200 | 50,380 | |
Ness Technologies, Inc. (a) | 157,700 | 935,161 | |
Rolta India Ltd. | 281,305 | 870,980 | |
SAIC, Inc. (a) | 5,000 | 81,700 | |
Sapient Corp. | 79,000 | 936,150 | |
SRA International, Inc. Class A (a) | 12,800 | 348,544 | |
Teradata Corp. (a) | 11,200 | 535,584 | |
Unisys Corp. (a) | 26,920 | 1,000,347 | |
Virtusa Corp. (a) | 215,198 | 3,634,694 | |
Yucheng Technologies Ltd. (a)(d) | 46,900 | 190,883 | |
| 58,249,351 | ||
TOTAL IT SERVICES | 111,896,742 | ||
OFFICE ELECTRONICS - 0.9% | |||
Office Electronics - 0.9% | |||
Xerox Corp. | 111,100 | 1,194,325 | |
PROFESSIONAL SERVICES - 0.1% | |||
Research & Consulting Services - 0.1% | |||
CRA International, Inc. (a) | 3,700 | 95,978 | |
SOFTWARE - 12.3% | |||
Application Software - 6.7% | |||
Aspen Technology, Inc. (a) | 132,800 | 2,022,544 | |
Descartes Systems Group, Inc. (a) | 18,200 | 122,739 | |
Intuit, Inc. (a) | 13,200 | 694,056 | |
JDA Software Group, Inc. (a) | 21,600 | 637,200 | |
Kenexa Corp. (a) | 53,900 | 1,249,941 | |
Longtop Financial Technologies Ltd. ADR (a) | 55,546 | 1,609,168 | |
Nuance Communications, Inc. (a) | 6,600 | 123,156 | |
Parametric Technology Corp. (a) | 10,900 | 258,330 | |
Pegasystems, Inc. (d) | 27,500 | 1,107,700 | |
RealPage, Inc. | 4,900 | 121,520 | |
Ultimate Software Group, Inc. (a) | 2,700 | 144,288 | |
VanceInfo Technologies, Inc. ADR (a)(d) | 22,100 | 733,720 | |
| 8,824,362 | ||
Systems Software - 5.6% | |||
Ariba, Inc. (a) | 8,000 | 247,600 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - continued | |||
CA, Inc. | 39,600 | $ 981,288 | |
NetSuite, Inc. (a)(d) | 5,400 | 162,054 | |
Oracle Corp. | 181,400 | 5,968,060 | |
| 7,359,002 | ||
TOTAL SOFTWARE | 16,183,364 | ||
TOTAL COMMON STOCKS (Cost $104,501,948) | 131,639,873 | ||
Money Market Funds - 7.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 516,915 | 516,915 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 9,519,350 | 9,519,350 | |
TOTAL MONEY MARKET FUNDS (Cost $10,036,265) | 10,036,265 | ||
TOTAL INVESTMENT PORTFOLIO - 107.4% (Cost $114,538,213) | 141,676,138 | ||
NET OTHER ASSETS (LIABILITIES) - (7.4)% | (9,703,978) | ||
NET ASSETS - 100% | $ 131,972,160 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 3,201 |
Fidelity Securities Lending Cash Central Fund | 48,947 |
Total | $ 52,148 |
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 | 82.3% |
Ireland | 11.5% |
Cayman Islands | 2.6% |
India | 1.3% |
British Virgin Islands | 1.2% |
Others (Individually Less Than 1%) | 1.1% |
| 100.0% |
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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $9,362,217) - See accompanying schedule: Unaffiliated issuers (cost $104,501,948) | $ 131,639,873 |
|
Fidelity Central Funds (cost $10,036,265) | 10,036,265 |
|
Total Investments (cost $114,538,213) |
| $ 141,676,138 |
Foreign currency held at value (cost $72,384) | 72,384 | |
Receivable for investments sold | 3,195,834 | |
Receivable for fund shares sold | 279,622 | |
Dividends receivable | 72,503 | |
Distributions receivable from Fidelity Central Funds | 3,244 | |
Prepaid expenses | 178 | |
Other receivables | 9,819 | |
Total assets | 145,309,722 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 3,175,028 | |
Payable for fund shares redeemed | 515,612 | |
Accrued management fee | 63,716 | |
Other affiliated payables | 31,058 | |
Other payables and accrued expenses | 32,798 | |
Collateral on securities loaned, at value | 9,519,350 | |
Total liabilities | 13,337,562 | |
|
|
|
Net Assets | $ 131,972,160 | |
Net Assets consist of: |
| |
Paid in capital | $ 103,533,710 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,301,056 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 27,137,394 | |
Net Assets, for 5,914,114 shares outstanding | $ 131,972,160 | |
Net Asset Value, offering price and redemption price per share ($131,972,160 ÷ 5,914,114 shares) | $ 22.31 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 751,810 |
Interest |
| 2 |
Income from Fidelity Central Funds (including $48,947 from security lending) |
| 52,148 |
Total income |
| 803,960 |
|
|
|
Expenses | ||
Management fee | $ 576,381 | |
Transfer agent fees | 264,390 | |
Accounting and security lending fees | 41,925 | |
Custodian fees and expenses | 21,844 | |
Independent trustees' compensation | 555 | |
Registration fees | 24,725 | |
Audit | 37,047 | |
Legal | 362 | |
Miscellaneous | 1,029 | |
Total expenses before reductions | 968,258 | |
Expense reductions | (1,892) | 966,366 |
Net investment income (loss) | (162,406) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 11,162,446 | |
Foreign currency transactions | 2,641 | |
Total net realized gain (loss) |
| 11,165,087 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 16,679,129 | |
Assets and liabilities in foreign currencies | 484 | |
Total change in net unrealized appreciation (depreciation) |
| 16,679,613 |
Net gain (loss) | 27,844,700 | |
Net increase (decrease) in net assets resulting from operations | $ 27,682,294 |
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) | $ (162,406) | $ (238,288) |
Net realized gain (loss) | 11,165,087 | 9,622,158 |
Change in net unrealized appreciation (depreciation) | 16,679,613 | 20,862,550 |
Net increase (decrease) in net assets resulting from operations | 27,682,294 | 30,246,420 |
Share transactions | 71,359,841 | 73,302,554 |
Cost of shares redeemed | (63,705,976) | (54,961,487) |
Net increase (decrease) in net assets resulting from share transactions | 7,653,865 | 18,341,067 |
Redemption fees | 4,955 | 5,004 |
Total increase (decrease) in net assets | 35,341,114 | 48,592,491 |
|
|
|
Net Assets | ||
Beginning of period | 96,631,046 | 48,038,555 |
End of period | $ 131,972,160 | $ 96,631,046 |
Other Information Shares | ||
Sold | 3,524,419 | 4,765,050 |
Redeemed | (3,267,048) | (3,632,823) |
Net increase (decrease) | 257,371 | 1,132,227 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.08 | $ 10.62 | $ 14.77 | $ 17.40 | $ 17.43 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.03) | (.05) | (.02) | (.06) | (.07) |
Net realized and unrealized gain (loss) | 5.26 | 6.51 | (4.14) | (.25) | 1.73 |
Total from investment operations | 5.23 | 6.46 | (4.16) | (.31) | 1.66 |
Distributions from net realized gain | - | - | - | (2.32) | (1.70) |
Redemption fees added to paid in capital C | - H | - H | .01 | - H | .01 |
Net asset value, end of period | $ 22.31 | $ 17.08 | $ 10.62 | $ 14.77 | $ 17.40 |
Total Return A, B | 30.62% | 60.83% | (28.10)% | (2.94)% | 10.11% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .94% | .99% | 1.00% | 1.06% | 1.19% |
Expenses net of fee waivers, if any | .94% | .99% | 1.00% | 1.06% | 1.16% |
Expenses net of all reductions | .94% | .99% | 1.00% | 1.06% | 1.15% |
Net investment income (loss) | (.16)% | (.31)% | (.14)% | (.32)% | (.42)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 131,972 | $ 96,631 | $ 48,039 | $ 38,842 | $ 34,104 |
Portfolio turnover rate E | 156% | 131% | 140% | 212% | 200% |
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
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Software and Computer Services Portfolio | 30.85% | 11.89% | 7.81% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and Computer Services Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Brian Lempel, Portfolio Manager of Software and Computer Services Portfolio: For the year ending February 28, 2011, the fund gained 30.85%, solidly outpacing the 22.98% rise of its industry benchmark, the MSCI® U.S. IM Software & Computer Services 25/50 Index, and the broadly based S&P 500®. Relative to its industry benchmark, stock selection and an overweighting in application software, as well as holdings in systems software, drove the fund's results. Ariba, a provider of business commerce solutions, rose solidly as its software-as-a-service (SaaS) business model gained traction. SaaS allows consumers to access software more easily over the Internet. Ariba's stock continued to improve in line with the company's growing revenues. Magma Design Automation, which produces semiconductor design tools, also benefited from a recovery in the semiconductor industry. The company also gained from its shift to a subscription-based business model. I sold the stock by period end. Underweighting software giant Microsoft, which was challenged by competitors, provided a boost as well. Citrix Systems, a leading provider of desktop virtualization, was another top contributor. Desktop virtualization allows consumers to access their desktop environment from a variety of portable devices, such as tablets, which was a popular trend in the technology marketplace during the period. Lastly, I'd like to mention the fund's out-of-index stake in Apple, the maker of the iPad® computing tablet, iPhone® mobile device and a number of other top-selling computer and digital devices. I believed the stock was well priced in relation to other technology names and the position proved to be advantageous, given strong consumer demand for Apple's products. Underweighting several strong-performing index components - most notably information technology company International Business Machines, which was added to the MSCI index during the period - was detrimental to the fund's performance. While I believed IBM was a strong, steadily growing company, I felt I could find faster-growing stocks within the fund's investment parameters. Underweighting Western Union also hurt. This money transfer service provider exceeded investors' expectations, despite a poor employment environment and competitive challenges from online services, such as PayPal, Visa and MasterCard. I sold Western Union during the period. The fund's positioning in Intuit, which sells tax-preparation software for small business and personal use, also held back performance. Intuit gained a strong competitive position, and its stock rose as more consumers converted to online tax preparation. Even though I shifted the fund's positioning to an overweighting here in December, it wasn't sufficient to capture much of this stock's early-period upswing.
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 and Computer Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Oracle Corp. | 11.7 | 6.4 |
Microsoft Corp. | 11.1 | 11.9 |
Google, Inc. Class A | 9.3 | 8.7 |
International Business Machines Corp. | 5.7 | 10.6 |
eBay, Inc. | 3.2 | 5.7 |
CA, Inc. | 3.1 | 2.0 |
Visa, Inc. Class A | 2.8 | 3.3 |
Accenture PLC Class A | 2.1 | 1.3 |
Xerox Corp. | 2.0 | 0.8 |
BMC Software, Inc. | 1.9 | 3.4 |
| 52.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Software | 53.7% |
|
![]() | IT Services | 19.7% |
|
![]() | Internet Software & Services | 18.6% |
|
![]() | Computers & Peripherals | 3.4% |
|
![]() | Office Electronics | 2.0% |
|
![]() | All Others* | 2.6% |
|
As of August 31, 2010 | |||
![]() | Software | 50.0% |
|
![]() | IT Services | 23.6% |
|
![]() | Internet Software & Services | 20.5% |
|
![]() | Computers & Peripherals | 3.7% |
|
![]() | Office Electronics | 0.8% |
|
![]() | All Others* | 1.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Software and Computer Services Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.4% | |||
Communications Equipment - 0.4% | |||
Calix Networks, Inc. (a)(d) | 100,500 | $ 1,787,895 | |
Sandvine Corp. (U.K.) (a) | 1,214,500 | 4,001,441 | |
| 5,789,336 | ||
COMPUTERS & PERIPHERALS - 3.4% | |||
Computer Hardware - 2.4% | |||
Apple, Inc. (a) | 39,300 | 13,881,153 | |
Hewlett-Packard Co. | 409,800 | 17,879,574 | |
| 31,760,727 | ||
Computer Storage & Peripherals - 1.0% | |||
EMC Corp. (a) | 150,800 | 4,103,268 | |
NetApp, Inc. (a) | 105,100 | 5,429,466 | |
Quantum Corp. (a) | 1,224,300 | 3,170,937 | |
| 12,703,671 | ||
TOTAL COMPUTERS & PERIPHERALS | 44,464,398 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% | |||
Alternative Carriers - 0.4% | |||
inContact, Inc. (a) | 1,479,190 | 4,689,032 | |
INTERNET & CATALOG RETAIL - 0.2% | |||
Internet Retail - 0.2% | |||
Expedia, Inc. | 139,400 | 2,768,484 | |
INTERNET SOFTWARE & SERVICES - 18.6% | |||
Internet Software & Services - 18.6% | |||
Akamai Technologies, Inc. (a) | 185,600 | 6,965,568 | |
AOL, Inc. (a) | 118,800 | 2,479,356 | |
Constant Contact, Inc. (a) | 39,865 | 1,153,294 | |
eBay, Inc. (a) | 1,242,600 | 41,633,313 | |
Equinix, Inc. (a) | 66,000 | 5,705,040 | |
Google, Inc. Class A (a) | 197,200 | 120,962,480 | |
LivePerson, Inc. (a) | 88,400 | 886,652 | |
LogMeIn, Inc. (a) | 24,100 | 864,949 | |
Mercadolibre, Inc. | 26,200 | 1,723,436 | |
Rackspace Hosting, Inc. (a) | 239,877 | 8,853,860 | |
RightNow Technologies, Inc. (a) | 104,819 | 2,797,619 | |
Saba Software, Inc. (a) | 567,041 | 4,008,980 | |
SAVVIS, Inc. (a) | 129,600 | 4,210,704 | |
SPS Commerce, Inc. (a) | 363,557 | 5,635,134 | |
Support.com, Inc. (a) | 166,910 | 931,358 | |
The Knot, Inc. (a) | 147,811 | 1,482,544 | |
VeriSign, Inc. | 257,100 | 9,073,059 | |
VistaPrint Ltd. (a) | 29,600 | 1,515,816 | |
Vocus, Inc. (a) | 80,158 | 1,947,839 | |
WebMD Health Corp. (a) | 22,100 | 1,281,800 | |
Yahoo!, Inc. (a) | 1,112,300 | 18,241,720 | |
| 242,354,521 | ||
| |||
Shares | Value | ||
IT SERVICES - 19.7% | |||
Data Processing & Outsourced Services - 7.2% | |||
Alliance Data Systems Corp. (a) | 83,000 | $ 6,535,420 | |
Fidelity National Information Services, Inc. | 524,189 | 16,978,482 | |
Fiserv, Inc. (a) | 27,300 | 1,727,271 | |
FleetCor Technologies, Inc. | 88,695 | 2,837,353 | |
Lender Processing Services, Inc. | 56,700 | 1,931,769 | |
MasterCard, Inc. Class A | 100,400 | 24,152,224 | |
Syntel, Inc. | 64,236 | 3,382,025 | |
Visa, Inc. Class A | 500,300 | 36,546,915 | |
WNS Holdings Ltd. sponsored ADR (a) | 1,302 | 13,046 | |
| 94,104,505 | ||
IT Consulting & Other Services - 12.5% | |||
Accenture PLC Class A | 519,000 | 26,718,120 | |
Acxiom Corp. (a) | 72,500 | 1,242,650 | |
Atos Origin SA (a) | 295,829 | 17,123,795 | |
Cognizant Technology Solutions Corp. Class A (a) | 311,200 | 23,921,944 | |
iGate Corp. | 27,000 | 488,700 | |
International Business Machines Corp. | 456,300 | 73,865,844 | |
Lionbridge Technologies, Inc. (a) | 2,488,110 | 9,156,245 | |
Sapient Corp. | 141,400 | 1,675,590 | |
Unisys Corp. (a) | 70,200 | 2,608,632 | |
Virtusa Corp. (a) | 298,195 | 5,036,514 | |
| 161,838,034 | ||
TOTAL IT SERVICES | 255,942,539 | ||
MEDIA - 0.2% | |||
Advertising - 0.2% | |||
MDC Partners, Inc. Class A (sub. vtg.) | 116,900 | 2,028,215 | |
OFFICE ELECTRONICS - 2.0% | |||
Office Electronics - 2.0% | |||
Xerox Corp. | 2,361,749 | 25,388,802 | |
SOFTWARE - 53.7% | |||
Application Software - 21.5% | |||
Actuate Corp. (a) | 45,000 | 214,650 | |
Adobe Systems, Inc. (a) | 586,400 | 20,230,800 | |
AsiaInfo Holdings, Inc. (a) | 70,000 | 1,424,500 | |
Aspen Technology, Inc. (a) | 288,900 | 4,399,947 | |
Autodesk, Inc. (a) | 281,000 | 11,816,050 | |
Autonomy Corp. PLC (a) | 294,777 | 7,874,294 | |
Blackboard, Inc. (a)(d) | 94,600 | 3,311,946 | |
Callidus Software, Inc. (a) | 1,095,497 | 6,496,297 | |
Citrix Systems, Inc. (a) | 283,000 | 19,855,280 | |
Compuware Corp. (a) | 1,017,500 | 11,457,050 | |
Concur Technologies, Inc. (a) | 149,000 | 7,752,470 | |
Convio, Inc. (a) | 539,373 | 5,517,786 | |
Descartes Systems Group, Inc. (a) | 346,700 | 2,338,106 | |
ebix.com, Inc. (a)(d) | 350,003 | 9,219,079 | |
Epicor Software Corp. (a) | 119,700 | 1,232,910 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
EPIQ Systems, Inc. | 1,900 | $ 26,239 | |
Guidance Software, Inc. (a) | 90,109 | 689,334 | |
Informatica Corp. (a) | 253,900 | 11,935,839 | |
Interactive Intelligence, Inc. (a) | 52,969 | 1,822,663 | |
Intuit, Inc. (a) | 460,600 | 24,218,348 | |
JDA Software Group, Inc. (a) | 232,700 | 6,864,650 | |
Kenexa Corp. (a) | 736,157 | 17,071,481 | |
Kingdee International Software Group Co. Ltd. | 3,200,000 | 1,943,503 | |
Lawson Software, Inc. (a) | 206,200 | 2,090,868 | |
Longtop Financial Technologies Ltd. ADR (a) | 74,400 | 2,155,368 | |
Mentor Graphics Corp. (a) | 452,100 | 7,188,390 | |
MicroStrategy, Inc. Class A (a) | 26,500 | 3,149,525 | |
Misys PLC | 208,337 | 1,113,049 | |
Nuance Communications, Inc. (a) | 569,500 | 10,626,870 | |
Parametric Technology Corp. (a) | 484,400 | 11,480,280 | |
Pegasystems, Inc. | 53,600 | 2,159,008 | |
PROS Holdings, Inc. (a) | 25,000 | 286,250 | |
QAD, Inc.: | |||
Class A (a) | 98,998 | 899,892 | |
Class B | 24,690 | 220,729 | |
QLIK Technologies, Inc. | 62,677 | 1,639,630 | |
RealPage, Inc. | 38,700 | 959,760 | |
Royalblue Group PLC | 103,100 | 2,765,815 | |
Sage Group PLC | 281,400 | 1,300,713 | |
salesforce.com, Inc. (a) | 100,678 | 13,316,679 | |
SolarWinds, Inc. (a) | 423,400 | 9,505,330 | |
SuccessFactors, Inc. (a) | 32,162 | 1,154,937 | |
Synchronoss Technologies, Inc. (a) | 199,300 | 6,828,018 | |
Synopsys, Inc. (a) | 141,000 | 3,908,520 | |
Taleo Corp. Class A (a) | 348,112 | 11,240,536 | |
TIBCO Software, Inc. (a) | 82,200 | 2,023,764 | |
TiVo, Inc. (a) | 552,300 | 5,677,644 | |
| 279,404,797 | ||
Home Entertainment Software - 0.0% | |||
Electronic Arts, Inc. (a) | 4,100 | 77,080 | |
Systems Software - 32.2% | |||
Ariba, Inc. (a) | 173,900 | 5,382,205 | |
BMC Software, Inc. (a) | 504,800 | 24,987,600 | |
CA, Inc. | 1,599,200 | 39,628,176 | |
Check Point Software Technologies Ltd. (a) | 77,000 | 3,837,680 | |
CommVault Systems, Inc. (a) | 343,400 | 12,544,402 | |
DemandTec, Inc. (a) | 330,100 | 4,294,601 | |
Microsoft Corp. | 5,401,800 | 143,579,844 | |
| |||
Shares | Value | ||
Oracle Corp. | 4,605,300 | $ 151,514,371 | |
Pervasive Software, Inc. (a) | 41,484 | 238,533 | |
Radiant Systems, Inc. (a) | 7,500 | 128,625 | |
Rovi Corp. (a) | 266,177 | 14,751,529 | |
Sourcefire, Inc. (a) | 49,900 | 1,352,290 | |
Totvs SA | 42,200 | 3,980,821 | |
VMware, Inc. Class A (a) | 142,200 | 11,895,030 | |
| 418,115,707 | ||
TOTAL SOFTWARE | 697,597,584 | ||
SPECIALTY RETAIL - 0.0% | |||
Computer & Electronics Retail - 0.0% | |||
GameStop Corp. Class A (a) | 2,300 | 45,885 | |
TOTAL COMMON STOCKS (Cost $1,007,954,952) | 1,281,068,796 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
|
|
|
|
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
Misys PLC (a) | 238,100 | 147,104 | |
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 24,542,703 | 24,542,703 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 7,927,750 | 7,927,750 | |
TOTAL MONEY MARKET FUNDS (Cost $32,470,453) | 32,470,453 | ||
TOTAL INVESTMENT PORTFOLIO - 101.1% (Cost $1,040,570,156) | 1,313,686,353 | ||
NET OTHER ASSETS (LIABILITIES) - (1.1)% | (14,433,002) | ||
NET ASSETS - 100% | $ 1,299,253,351 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,482 |
Fidelity Securities Lending Cash Central Fund | 179,559 |
Total | $ 193,041 |
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. | $ 11,965,915 | $ 638 | $ 19,053,028 | $ - | $ - |
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
Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,079,846) - See accompanying schedule: Unaffiliated issuers (cost $1,008,099,703) | $ 1,281,215,900 |
|
Fidelity Central Funds (cost $32,470,453) | 32,470,453 |
|
Total Investments (cost $1,040,570,156) |
| $ 1,313,686,353 |
Cash | 49,856 | |
Receivable for investments sold | 20,288,113 | |
Receivable for fund shares sold | 2,275,150 | |
Dividends receivable | 1,386,138 | |
Distributions receivable from Fidelity Central Funds | 12,313 | |
Prepaid expenses | 2,036 | |
Other receivables | 194,625 | |
Total assets | 1,337,894,584 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 28,176,446 | |
Payable for fund shares redeemed | 1,630,854 | |
Accrued management fee | 608,927 | |
Other affiliated payables | 256,922 | |
Other payables and accrued expenses | 40,334 | |
Collateral on securities loaned, at value | 7,927,750 | |
Total liabilities | 38,641,233 | |
|
|
|
Net Assets | $ 1,299,253,351 | |
Net Assets consist of: |
| |
Paid in capital | $ 948,699,334 | |
Accumulated net investment loss | (85,526) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 77,543,412 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 273,096,131 | |
Net Assets, for 14,179,291 shares outstanding | $ 1,299,253,351 | |
Net Asset Value, offering price and redemption price per share ($1,299,253,351 ÷ 14,179,291 shares) | $ 91.63 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,297,826 |
Interest |
| 9 |
Income from Fidelity Central Funds (including $179,559 from security lending) |
| 193,041 |
Total income |
| 7,490,876 |
|
|
|
Expenses | ||
Management fee | $ 6,014,029 | |
Transfer agent fees | 2,425,637 | |
Accounting and security lending fees | 358,100 | |
Custodian fees and expenses | 59,343 | |
Independent trustees' compensation | 6,014 | |
Registration fees | 52,677 | |
Audit | 83,418 | |
Legal | 6,816 | |
Interest | 4,168 | |
Miscellaneous | 12,033 | |
Total expenses before reductions | 9,022,235 | |
Expense reductions | (88,153) | 8,934,082 |
Net investment income (loss) | (1,443,206) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 195,883,923 | |
Other affiliated issuers | 8,117,055 |
|
Foreign currency transactions | (110,339) | |
Total net realized gain (loss) |
| 203,890,639 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 86,842,152 | |
Assets and liabilities in foreign currencies | 2,582 | |
Total change in net unrealized appreciation (depreciation) |
| 86,844,734 |
Net gain (loss) | 290,735,373 | |
Net increase (decrease) in net assets resulting from operations | $ 289,292,167 |
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) | $ (1,443,206) | $ (537,230) |
Net realized gain (loss) | 203,890,639 | 9,671,010 |
Change in net unrealized appreciation (depreciation) | 86,844,734 | 312,201,599 |
Net increase (decrease) in net assets resulting from operations | 289,292,167 | 321,335,379 |
Distributions to shareholders from net realized gain | (37,331,222) | - |
Share transactions | 346,693,434 | 388,679,187 |
Reinvestment of distributions | 35,792,951 | - |
Cost of shares redeemed | (320,024,033) | (214,224,835) |
Net increase (decrease) in net assets resulting from share transactions | 62,462,352 | 174,454,352 |
Redemption fees | 27,318 | 32,753 |
Total increase (decrease) in net assets | 314,450,615 | 495,822,484 |
|
|
|
Net Assets | ||
Beginning of period | 984,802,736 | 488,980,252 |
End of period (including accumulated net investment loss of $85,526 and accumulated net investment loss of $286, respectively) | $ 1,299,253,351 | $ 984,802,736 |
Other Information Shares | ||
Sold | 4,173,870 | 5,962,082 |
Issued in reinvestment of distributions | 408,782 | - |
Redeemed | (4,027,117) | (3,355,441) |
Net increase (decrease) | 555,535 | 2,606,641 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 G | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 72.29 | $ 44.38 | $ 66.77 | $ 65.47 | $ 53.94 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.11) | (.04) | (.07) | (.20) | (.21) |
Net realized and unrealized gain (loss) | 22.28 | 27.95 | (22.32) | 1.49 | 11.73 |
Total from investment operations | 22.17 | 27.91 | (22.39) | 1.29 | 11.52 |
Distributions from net realized gain | (2.83) | - | - | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 91.63 | $ 72.29 | $ 44.38 | $ 66.77 | $ 65.47 |
Total Return A, B | 30.85% | 62.89% | (33.53)% | 1.99% | 21.38% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .84% | .90% | .87% | .86% | .92% |
Expenses net of fee waivers, if any | .84% | .90% | .87% | .86% | .92% |
Expenses net of all reductions | .83% | .89% | .87% | .86% | .91% |
Net investment income (loss) | (.13)% | (.07)% | (.12)% | (.27)% | (.34)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,299,253 | $ 984,803 | $ 488,980 | $ 767,777 | $ 924,664 |
Portfolio turnover rate E | 189% | 56% | 49% | 38% | 139% |
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
Technology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Technology Portfolio | 41.71% | 9.49% | 4.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Charlie Chai, Portfolio Manager of Select Technology Portfolio: During the past year, the fund returned 41.71%, handily beating the 25.41% return of the MSCI® U.S. IM Information Technology 25/50 Index and the broadly based S&P 500® Index. Relative to the sector benchmark, stock selection in communications equipment, computer hardware, semiconductors and systems software accounted for the lion's share of the fund's outperformance. Within communications equipment, a large underweighting in networking equipment manufacturer Cisco Systems - a key benchmark component - and an out-of-index stake in smartphone maker HTC were important contributors. While the fund had negligible exposure to Cisco during some of the period, the stock became too cheap to ignore, in my opinion, after it pulled back in November, when the company lowered its fiscal 2011 revenue guidance. Underweighted exposures to several weak-performing benchmark components - software heavyweight Microsoft, personal computer chip maker Intel and computer manufacturer Hewlett-Packard - also paid off. I'll also mention consumer electronics and computer manufacturer Apple, which helped relative performance and was by far the fund's largest absolute contributor, as well as its largest holding at period end. The company recorded impressive sales and earnings growth across many of its product lines, notably the iPad® tablet computer and the iPhone®, Apple's popular smartphone. Conversely, weak stock selection in electronic components worked against the fund, as did a large underweighting in IT consulting/other services. The latter was mostly because of relatively light exposure to major index component International Business Machines, which proved unrewarding, as the stock posted a solid gain, due in part to the company's upwardly revised earnings estimate in January. Likewise, lighter-than-index weightings in semiconductor manufacturer Texas Instruments and enterprise software maker Oracle were counterproductive, given those stocks' robust gains. Moreover, an out-of-benchmark stake in Canada's Research In Motion was ill-timed, as the company's BlackBerry smartphone lost market share to competitors during the period. The fund did not hold Research In Motion 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
Technology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 14.0 | 14.4 |
Google, Inc. Class A | 6.1 | 6.0 |
Oracle Corp. | 4.6 | 1.5 |
QUALCOMM, Inc. | 3.3 | 4.1 |
EMC Corp. | 2.6 | 0.7 |
Cisco Systems, Inc. | 2.4 | 2.7 |
Hewlett-Packard Co. | 2.4 | 1.0 |
Accenture PLC Class A | 2.0 | 0.5 |
Corning, Inc. | 1.8 | 1.1 |
Cognizant Technology Solutions Corp. Class A | 1.7 | 0.6 |
| 40.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Software | 22.3% |
|
![]() | Computers & Peripherals | 21.7% |
|
![]() | Semiconductors & Semiconductor Equipment | 13.5% |
|
![]() | Internet Software & Services | 11.5% |
|
![]() | Communications Equipment | 10.4% |
|
![]() | All Others* | 20.6% |
|
As of August 31, 2010 | |||
![]() | Computers & Peripherals | 20.2% |
|
![]() | Software | 19.2% |
|
![]() | Semiconductors & Semiconductor Equipment | 15.7% |
|
![]() | Communications Equipment | 15.6% |
|
![]() | Internet Software & Services | 12.9% |
|
![]() | All Others* | 16.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Technology Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value | ||
AUTOMOBILES - 0.0% | |||
Automobile Manufacturers - 0.0% | |||
Tesla Motors, Inc. (a) | 23,995 | $ 573,241 | |
BUILDING PRODUCTS - 0.0% | |||
Building Products - 0.0% | |||
Asahi Glass Co. Ltd. | 21,000 | 293,646 | |
CHEMICALS - 0.0% | |||
Commodity Chemicals - 0.0% | |||
STR Holdings, Inc. (a)(d) | 45,173 | 818,083 | |
COMMUNICATIONS EQUIPMENT - 10.4% | |||
Communications Equipment - 10.4% | |||
Acme Packet, Inc. (a) | 85,362 | 6,422,637 | |
ADTRAN, Inc. | 243,474 | 11,073,198 | |
Alcatel-Lucent SA sponsored ADR (a) | 438,046 | 2,146,425 | |
Balda AG (a) | 278,562 | 3,224,093 | |
China Wireless Technologies Ltd. | 3,888,000 | 1,442,774 | |
Ciena Corp. (a)(d) | 406,594 | 11,209,797 | |
Cisco Systems, Inc. (a) | 3,771,241 | 69,994,233 | |
DG FastChannel, Inc. (a) | 98,671 | 3,266,997 | |
F5 Networks, Inc. (a) | 2,025 | 238,970 | |
Finisar Corp. (a) | 11,700 | 479,934 | |
HTC Corp. | 1,018,350 | 36,779,702 | |
Infinera Corp. (a) | 206,300 | 1,652,463 | |
Juniper Networks, Inc. (a) | 202,745 | 8,920,780 | |
Motorola Mobility Holdings, Inc. | 658,468 | 19,885,734 | |
QUALCOMM, Inc. | 1,600,626 | 95,365,297 | |
Riverbed Technology, Inc. (a) | 158,287 | 6,535,670 | |
Sandvine Corp. (a) | 1,941,200 | 6,154,395 | |
Sandvine Corp. (U.K.) (a) | 2,302,512 | 7,586,140 | |
Telefonaktiebolaget LM Ericsson | 335,609 | 4,309,220 | |
ZTE Corp. (H Shares) | 740,000 | 3,411,145 | |
| 300,099,604 | ||
COMPUTERS & PERIPHERALS - 21.7% | |||
Computer Hardware - 16.7% | |||
Apple, Inc. (a) | 1,148,698 | 405,731,608 | |
Hewlett-Packard Co. | 1,561,920 | 68,146,570 | |
Stratasys, Inc. (a) | 185,792 | 8,431,241 | |
| 482,309,419 | ||
Computer Storage & Peripherals - 5.0% | |||
EMC Corp. (a) | 2,781,312 | 75,679,500 | |
Imagination Technologies Group PLC (a) | 1,013,800 | 6,776,107 | |
NetApp, Inc. (a) | 375,959 | 19,422,042 | |
Quantum Corp. (a) | 729,000 | 1,888,110 | |
SanDisk Corp. (a) | 432,395 | 21,446,792 | |
Seagate Technology (a) | 561,014 | 7,124,878 | |
| |||
Shares | Value | ||
Smart Technologies, Inc. Class A (a)(d) | 167,700 | $ 1,541,163 | |
Western Digital Corp. (a) | 276,926 | 8,468,397 | |
| 142,346,989 | ||
TOTAL COMPUTERS & PERIPHERALS | 624,656,408 | ||
CONSUMER FINANCE - 0.1% | |||
Consumer Finance - 0.1% | |||
Discover Financial Services | 128,200 | 2,788,350 | |
Netspend Holdings, Inc. | 9,900 | 129,789 | |
| 2,918,139 | ||
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||
Education Services - 0.0% | |||
Educomp Solutions Ltd. | 53,012 | 547,804 | |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 2,792 | 269,735 | |
| 817,539 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.0% | |||
Specialized Finance - 0.0% | |||
CME Group, Inc. | 3,980 | 1,238,894 | |
ELECTRICAL EQUIPMENT - 0.1% | |||
Electrical Components & Equipment - 0.1% | |||
A123 Systems, Inc. (a)(d) | 50,600 | 479,688 | |
Acuity Brands, Inc. | 4,804 | 271,522 | |
American Superconductor Corp. (a) | 34,431 | 913,110 | |
| 1,664,320 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 6.9% | |||
Electronic Components - 3.4% | |||
Aeroflex Holding Corp. | 41,746 | 820,309 | |
Amphenol Corp. Class A | 4,200 | 241,416 | |
AU Optronics Corp. sponsored ADR (a)(d) | 697,400 | 6,262,652 | |
Cando Corp. (a) | 4,566,782 | 3,552,765 | |
Chimei Innolux Corp. (a) | 4,047,000 | 4,341,507 | |
Corning, Inc. | 2,286,974 | 52,737,620 | |
DigiTech Systems Co., Ltd. | 211,748 | 4,026,486 | |
DTS, Inc. (a) | 6,386 | 289,605 | |
E Ink Holdings, Inc. GDR (a)(e) | 14,900 | 260,131 | |
J Touch Corp. | 463,000 | 1,569,480 | |
J Touch Corp. rights 3/11/11 (a) | 30,912 | 20,781 | |
LG Display Co. Ltd. sponsored ADR (d) | 412,743 | 6,595,633 | |
Nippon Electric Glass Co. Ltd. | 381,000 | 6,391,749 | |
Vishay Intertechnology, Inc. (a) | 173,546 | 3,028,378 | |
Wintek Corp. (a) | 822,000 | 1,598,776 | |
Young Fast Optoelectron Co. Ltd. | 635,000 | 5,633,098 | |
| 97,370,386 | ||
Electronic Equipment & Instruments - 0.3% | |||
Chroma ATE, Inc. | 1,135,120 | 3,390,716 | |
Itron, Inc. (a) | 77,174 | 4,376,538 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Electronic Equipment & Instruments - continued | |||
Test Research, Inc. | 818,550 | $ 1,341,144 | |
Vishay Precision Group, Inc. (a) | 16,110 | 266,621 | |
| 9,375,019 | ||
Electronic Manufacturing Services - 2.4% | |||
Benchmark Electronics, Inc. (a) | 14,900 | 281,014 | |
Flextronics International Ltd. (a) | 354,500 | 2,867,905 | |
IPG Photonics Corp. (a) | 7,400 | 421,208 | |
Jabil Circuit, Inc. | 687,800 | 14,739,554 | |
Ju Teng International Holdings Ltd. | 598,000 | 228,819 | |
KEMET Corp. (a) | 184,228 | 2,560,769 | |
Trimble Navigation Ltd. (a) | 719,011 | 35,339,391 | |
Tyco Electronics Ltd. | 384,600 | 13,860,984 | |
| 70,299,644 | ||
Technology Distributors - 0.8% | |||
Anixter International, Inc. | 110,765 | 7,932,989 | |
Digital China Holdings Ltd. (H Shares) | 2,620,000 | 4,790,550 | |
Ingram Micro, Inc. Class A (a) | 210,900 | 4,203,237 | |
Inspur International Ltd. | 8,592,000 | 562,650 | |
Synnex Technology International Corp. | 510,329 | 1,212,648 | |
VST Holdings Ltd. (a) | 7,866,000 | 2,575,539 | |
WPG Holding Co. Ltd. | 661,652 | 1,147,491 | |
| 22,425,104 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 199,470,153 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Health Care Equipment - 0.3% | |||
Biosensors International Group Ltd. (a) | 6,519,000 | 5,740,903 | |
China Medical Technologies, Inc. sponsored ADR (a)(d) | 5,306 | 69,721 | |
Microport Scientific Corp. | 1,625,000 | 1,132,993 | |
Mingyuan Medicare Development Co. Ltd. | 890,000 | 95,994 | |
| 7,039,611 | ||
Health Care Supplies - 0.1% | |||
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 1,592,000 | 3,924,807 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 10,964,418 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.1% | |||
Health Care Distributors & Services - 0.1% | |||
Sinopharm Group Co. Ltd. (H Shares) | 430,800 | 1,565,439 | |
HEALTH CARE TECHNOLOGY - 0.1% | |||
Health Care Technology - 0.1% | |||
athenahealth, Inc. (a) | 1,500 | 68,010 | |
Medidata Solutions, Inc. (a) | 54,700 | 1,417,277 | |
| 1,485,287 | ||
| |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Hotels, Resorts & Cruise Lines - 0.3% | |||
Ctrip.com International Ltd. sponsored ADR (a) | 202,707 | $ 7,858,950 | |
eLong, Inc. sponsored ADR (a) | 100 | 1,295 | |
| 7,860,245 | ||
HOUSEHOLD DURABLES - 0.1% | |||
Consumer Electronics - 0.0% | |||
Skyworth Digital Holdings Ltd. | 8,419 | 5,319 | |
TomTom Group BV (a) | 160 | 1,409 | |
| 6,728 | ||
Household Appliances - 0.1% | |||
Haier Electronics Group Co. Ltd. (a) | 3,185,000 | 2,944,530 | |
TOTAL HOUSEHOLD DURABLES | 2,951,258 | ||
INTERNET & CATALOG RETAIL - 0.6% | |||
Internet Retail - 0.6% | |||
Amazon.com, Inc. (a) | 15,161 | 2,627,250 | |
E-Commerce China Dangdang, Inc. ADR | 990 | 25,196 | |
Expedia, Inc. | 354,200 | 7,034,412 | |
MakeMyTrip Ltd. (d) | 27,400 | 724,730 | |
Priceline.com, Inc. (a) | 15,525 | 7,046,487 | |
| 17,458,075 | ||
INTERNET SOFTWARE & SERVICES - 11.5% | |||
Internet Software & Services - 11.5% | |||
Akamai Technologies, Inc. (a) | 7,098 | 266,388 | |
Alibaba.com Ltd. (d) | 4,815,500 | 8,978,051 | |
Baidu.com, Inc. sponsored ADR (a) | 37,882 | 4,589,783 | |
Blinkx PLC (a)(d) | 500,000 | 697,083 | |
China Finance Online Co. Ltd. ADR (a) | 270,139 | 1,474,959 | |
ChinaCache International Holdings Ltd. sponsored ADR | 4,600 | 97,842 | |
DealerTrack Holdings, Inc. (a) | 7,000 | 141,260 | |
Digital River, Inc. (a) | 78,136 | 2,623,807 | |
eBay, Inc. (a) | 1,178,089 | 39,471,872 | |
Google, Inc. Class A (a) | 286,792 | 175,918,213 | |
IntraLinks Holdings, Inc. | 234,230 | 6,602,944 | |
Kakaku.com, Inc. | 548 | 3,195,550 | |
LogMeIn, Inc. (a)(d) | 104,800 | 3,761,272 | |
LoopNet, Inc. (a) | 150,000 | 1,785,000 | |
Mail.ru Group Ltd. GDR unit (a)(e) | 82,400 | 2,987,000 | |
MediaMind Technologies, Inc. (a) | 16,500 | 224,070 | |
Mercadolibre, Inc. | 123,645 | 8,133,368 | |
Monster Worldwide, Inc. (a)(d) | 637,036 | 10,925,167 | |
NetEase.com, Inc. sponsored ADR (a) | 173,700 | 8,103,105 | |
Open Text Corp. (a) | 5,600 | 329,398 | |
OpenTable, Inc. (a) | 43,600 | 3,874,732 | |
Rackspace Hosting, Inc. (a) | 86,700 | 3,200,097 | |
RightNow Technologies, Inc. (a) | 49,587 | 1,323,477 | |
Saba Software, Inc. (a) | 10,000 | 70,700 | |
Tencent Holdings Ltd. | 1,035,600 | 27,392,604 | |
Common Stocks - continued | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - CONTINUED | |||
Internet Software & Services - continued | |||
The Knot, Inc. (a) | 16,300 | $ 163,489 | |
VeriSign, Inc. | 69,500 | 2,452,655 | |
VistaPrint Ltd. (a) | 226,413 | 11,594,610 | |
Vocus, Inc. (a) | 45,600 | 1,108,080 | |
YouKu.com, Inc. ADR (a)(d) | 8,600 | 357,674 | |
| 331,844,250 | ||
IT SERVICES - 8.0% | |||
Data Processing & Outsourced Services - 2.8% | |||
DST Systems, Inc. | 87,824 | 4,479,024 | |
Fidelity National Information Services, Inc. | 227,900 | 7,381,681 | |
Fiserv, Inc. (a) | 4,100 | 259,407 | |
MasterCard, Inc. Class A | 57,610 | 13,858,662 | |
Paychex, Inc. | 351,192 | 11,810,587 | |
Syntel, Inc. | 25,001 | 1,316,303 | |
VeriFone Systems, Inc. (a) | 262,108 | 11,910,188 | |
Visa, Inc. Class A | 396,819 | 28,987,628 | |
WNS Holdings Ltd. sponsored ADR (a) | 26,900 | 269,538 | |
| 80,273,018 | ||
IT Consulting & Other Services - 5.2% | |||
Accenture PLC Class A | 1,108,070 | 57,043,444 | |
Atos Origin SA (a) | 149,558 | 8,657,030 | |
Camelot Information Systems, Inc. ADR | 163,300 | 3,404,805 | |
Cognizant Technology Solutions Corp. Class A (a) | 624,496 | 48,005,008 | |
Hi Sun Technology (China) Ltd. (a) | 1,290,000 | 450,539 | |
hiSoft Technology International Ltd. ADR (a) | 306,348 | 7,588,240 | |
International Business Machines Corp. | 84,176 | 13,626,411 | |
Sapient Corp. | 268,700 | 3,184,095 | |
Teradata Corp. (a) | 179,000 | 8,559,780 | |
| 150,519,352 | ||
TOTAL IT SERVICES | 230,792,370 | ||
LEISURE EQUIPMENT & PRODUCTS - 0.0% | |||
Photographic Products - 0.0% | |||
Eastman Kodak Co. (a)(d) | 257,370 | 875,058 | |
LIFE SCIENCES TOOLS & SERVICES - 0.1% | |||
Life Sciences Tools & Services - 0.1% | |||
Agilent Technologies, Inc. (a) | 6,800 | 286,144 | |
Illumina, Inc. (a) | 42,700 | 2,963,380 | |
| 3,249,524 | ||
MACHINERY - 0.1% | |||
Industrial Machinery - 0.1% | |||
Meyer Burger Technology AG (a) | 276 | 9,522 | |
Mirle Automation Corp. | 1,102,000 | 1,202,824 | |
Sunpower Group Ltd. (a) | 4,225,000 | 1,395,267 | |
| 2,607,613 | ||
| |||
Shares | Value | ||
MEDIA - 0.7% | |||
Advertising - 0.7% | |||
AirMedia Group, Inc. ADR (a)(d) | 299,201 | $ 1,971,735 | |
Focus Media Holding Ltd. ADR (a) | 371,400 | 9,849,528 | |
ReachLocal, Inc. (d) | 421,787 | 8,030,824 | |
VisionChina Media, Inc. ADR (a) | 307,000 | 1,335,450 | |
| 21,187,537 | ||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.0% | |||
Globe Specialty Metals, Inc. | 17,285 | 402,568 | |
Timminco Ltd. (a) | 13,700 | 6,559 | |
| 409,127 | ||
Steel - 0.1% | |||
Xingda International Holdings Ltd. | 2,279,000 | 2,016,219 | |
TOTAL METALS & MINING | 2,425,346 | ||
OFFICE ELECTRONICS - 0.2% | |||
Office Electronics - 0.2% | |||
Xerox Corp. | 477,084 | 5,128,653 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.1% | |||
Real Estate Services - 0.1% | |||
China Real Estate Information Corp. ADR (a)(d) | 545,801 | 3,602,287 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.5% | |||
Semiconductor Equipment - 2.4% | |||
Advanced Energy Industries, Inc. (a) | 18,634 | 300,380 | |
Amkor Technology, Inc. (a)(d) | 1,365,572 | 10,064,266 | |
ASM International NV unit (a) | 41,200 | 1,669,836 | |
ASML Holding NV | 36,905 | 1,609,058 | |
ATMI, Inc. (a) | 11,200 | 204,288 | |
centrotherm photovoltaics AG (a) | 4,737 | 213,108 | |
Cymer, Inc. (a) | 216,022 | 10,930,713 | |
GCL-Poly Energy Holdings Ltd. (a) | 825,000 | 415,254 | |
Kulicke & Soffa Industries, Inc. (a) | 111,300 | 1,067,367 | |
Lam Research Corp. (a) | 10,758 | 590,614 | |
LTX-Credence Corp. (a) | 104,988 | 938,593 | |
MEMC Electronic Materials, Inc. (a) | 24,500 | 332,465 | |
Novellus Systems, Inc. (a) | 19,383 | 774,545 | |
Renewable Energy Corp. ASA (a)(d) | 58,200 | 202,686 | |
Roth & Rau AG (a) | 9,022 | 183,643 | |
Sumco Corp. (a) | 500 | 9,195 | |
Teradyne, Inc. (a) | 967,755 | 18,029,276 | |
Tessera Technologies, Inc. (a) | 11,466 | 199,623 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 260,142 | 12,411,375 | |
Verigy Ltd. (a) | 654,033 | 8,482,808 | |
| 68,629,093 | ||
Semiconductors - 11.1% | |||
Advanced Micro Devices, Inc. (a) | 147,524 | 1,358,696 | |
Alpha & Omega Semiconductor Ltd. (a) | 228,306 | 2,981,676 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Altera Corp. | 135,114 | $ 5,655,872 | |
ANADIGICS, Inc. (a) | 100 | 543 | |
Applied Micro Circuits Corp. (a) | 108,425 | 1,138,463 | |
ARM Holdings PLC sponsored ADR (d) | 54,091 | 1,637,335 | |
Atmel Corp. (a) | 23,876 | 350,500 | |
Avago Technologies Ltd. | 629,663 | 21,402,245 | |
Broadcom Corp. Class A | 219,265 | 9,038,103 | |
Canadian Solar, Inc. (a) | 18,800 | 273,164 | |
Cavium Networks, Inc. (a) | 91,195 | 3,937,800 | |
Cirrus Logic, Inc. (a)(d) | 393,130 | 9,179,586 | |
Cree, Inc. (a) | 4,050 | 213,314 | |
CSR PLC (d) | 344,436 | 2,182,325 | |
Cypress Semiconductor Corp. (a) | 527,573 | 11,057,930 | |
Duksan Hi-Metal Co. Ltd. (a) | 125,077 | 2,489,537 | |
Elpida Memory, Inc. (a)(d) | 489,900 | 7,342,511 | |
Energy Conversion Devices, Inc. (a)(d) | 29,549 | 115,832 | |
Fairchild Semiconductor International, Inc. (a) | 626,191 | 11,027,224 | |
First Solar, Inc. (a)(d) | 1,619 | 238,624 | |
Hittite Microwave Corp. (a) | 4,300 | 263,934 | |
Hynix Semiconductor, Inc. (a) | 301,390 | 7,592,329 | |
Inotera Memories, Inc. (a) | 25,696,000 | 13,616,316 | |
Inphi Corp. | 157,295 | 3,773,507 | |
Intel Corp. | 8,925 | 191,620 | |
International Rectifier Corp. (a) | 166,345 | 5,346,328 | |
Intersil Corp. Class A | 1,211,673 | 15,497,298 | |
JA Solar Holdings Co. Ltd. ADR (a) | 34,202 | 241,466 | |
Jinkosolar Holdings Co. Ltd. ADR (d) | 8,739 | 246,265 | |
LSI Corp. (a) | 308,310 | 1,939,270 | |
Marvell Technology Group Ltd. (a) | 1,099,847 | 20,105,203 | |
Micron Technology, Inc. (a) | 3,339,778 | 37,171,729 | |
Microsemi Corp. (a) | 13,100 | 288,593 | |
Monolithic Power Systems, Inc. (a) | 177,599 | 2,743,905 | |
National Semiconductor Corp. | 285,900 | 4,431,450 | |
Netlogic Microsystems, Inc. (a) | 8,000 | 331,120 | |
NVIDIA Corp. (a) | 1,679,255 | 38,051,918 | |
NXP Semiconductors NV | 328,287 | 10,488,770 | |
O2Micro International Ltd. sponsored ADR (a) | 126,600 | 1,035,588 | |
PMC-Sierra, Inc. (a) | 57,600 | 455,040 | |
Power Integrations, Inc. | 210,500 | 8,386,320 | |
Powertech Technology, Inc. | 313,000 | 1,097,998 | |
Radiant Opto-Electronics Corp. | 24,194 | 54,224 | |
Ralink Technology Corp. | 666,000 | 2,054,074 | |
Rambus, Inc. (a) | 117,400 | 2,412,570 | |
RDA Microelectronics, Inc. sponsored ADR | 196,102 | 2,666,987 | |
Rensas Electronics Corp. (a)(d) | 410,000 | 4,666,381 | |
RF Micro Devices, Inc. (a) | 100 | 750 | |
Richtek Technology Corp. | 38,000 | 301,425 | |
Silicon Laboratories, Inc. (a) | 26,000 | 1,180,400 | |
| |||
Shares | Value | ||
Siliconware Precision Industries Co. Ltd. sponsored ADR | 868,400 | $ 5,896,436 | |
Skyworks Solutions, Inc. (a) | 202,379 | 7,273,501 | |
Spreadtrum Communications, Inc. ADR (a)(d) | 534,900 | 10,676,604 | |
Standard Microsystems Corp. (a) | 252,155 | 6,689,672 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 9,500 | 90,250 | |
Texas Instruments, Inc. | 163,947 | 5,838,153 | |
Trina Solar Ltd. (a)(d) | 202,956 | 5,601,586 | |
Wolfson Microelectronics PLC (a) | 288,200 | 1,344,796 | |
Xilinx, Inc. | 7,920 | 263,340 | |
YoungTek Electronics Corp. | 108,500 | 343,568 | |
| 322,271,964 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 390,901,057 | ||
SOFTWARE - 22.3% | |||
Application Software - 13.7% | |||
Adobe Systems, Inc. (a) | 864,394 | 29,821,593 | |
ANSYS, Inc. (a) | 143,861 | 8,102,252 | |
AsiaInfo Holdings, Inc. (a)(d) | 491,980 | 10,011,793 | |
Aspen Technology, Inc. (a) | 702,827 | 10,704,055 | |
Autodesk, Inc. (a) | 445,782 | 18,745,133 | |
AutoNavi Holdings Ltd. ADR | 150,411 | 2,391,535 | |
Autonomy Corp. PLC (a) | 110,825 | 2,960,437 | |
Blackboard, Inc. (a)(d) | 234,144 | 8,197,381 | |
BroadSoft, Inc. (a) | 405,607 | 14,317,927 | |
Cadence Design Systems, Inc. (a) | 302,400 | 3,008,880 | |
Citrix Systems, Inc. (a) | 81,719 | 5,733,405 | |
Compuware Corp. (a) | 1,184,417 | 13,336,535 | |
Concur Technologies, Inc. (a) | 362,260 | 18,848,388 | |
Descartes Systems Group, Inc. (a) | 591,700 | 3,990,358 | |
Epicor Software Corp. (a) | 147,602 | 1,520,301 | |
Informatica Corp. (a) | 531,200 | 24,971,712 | |
Intuit, Inc. (a) | 704,865 | 37,061,802 | |
JDA Software Group, Inc. (a) | 165,210 | 4,873,695 | |
Kenexa Corp. (a) | 63,520 | 1,473,029 | |
Kingdee International Software Group Co. Ltd. | 31,586,000 | 19,183,588 | |
Longtop Financial Technologies Ltd. ADR (a) | 295,725 | 8,567,153 | |
Manhattan Associates, Inc. (a) | 7,155 | 230,391 | |
MicroStrategy, Inc. Class A (a) | 24,729 | 2,939,042 | |
Nuance Communications, Inc. (a) | 544,051 | 10,151,992 | |
Parametric Technology Corp. (a) | 821,496 | 19,469,455 | |
Pegasystems, Inc. | 231,551 | 9,326,874 | |
QLIK Technologies, Inc. | 18,700 | 489,192 | |
Quest Software, Inc. (a) | 213,114 | 5,709,324 | |
RealPage, Inc. | 47,600 | 1,180,480 | |
salesforce.com, Inc. (a) | 318,654 | 42,148,365 | |
Smith Micro Software, Inc. (a) | 16,479 | 154,408 | |
SolarWinds, Inc. (a) | 140,000 | 3,143,000 | |
SuccessFactors, Inc. (a) | 461,000 | 16,554,510 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
Synopsys, Inc. (a) | 363,400 | $ 10,073,448 | |
Taleo Corp. Class A (a) | 283,896 | 9,167,002 | |
TIBCO Software, Inc. (a) | 314,236 | 7,736,490 | |
TiVo, Inc. (a) | 26,100 | 268,308 | |
VanceInfo Technologies, Inc. ADR (a)(d) | 244,000 | 8,100,800 | |
| 394,664,033 | ||
Home Entertainment Software - 0.1% | |||
Activision Blizzard, Inc. | 18,200 | 202,384 | |
Perfect World Co. Ltd. sponsored ADR Class B (a) | 81,500 | 1,729,430 | |
RealD, Inc. | 11,400 | 255,930 | |
| 2,187,744 | ||
Systems Software - 8.5% | |||
Ariba, Inc. (a) | 535,492 | 16,573,477 | |
BMC Software, Inc. (a) | 462,503 | 22,893,899 | |
CA, Inc. | 579,572 | 14,361,794 | |
Check Point Software Technologies Ltd. (a) | 5,669 | 282,543 | |
CommVault Systems, Inc. (a) | 425,499 | 15,543,478 | |
Fortinet, Inc. (a) | 173,578 | 7,088,926 | |
Insyde Software Corp. | 313,262 | 1,457,815 | |
MICROS Systems, Inc. (a) | 50,400 | 2,401,056 | |
Microsoft Corp. | 10,949 | 291,024 | |
Novell, Inc. (a) | 890 | 5,233 | |
Oracle Corp. | 4,037,692 | 132,840,067 | |
Red Hat, Inc. (a) | 115,813 | 4,780,761 | |
Rovi Corp. (a) | 177,361 | 9,829,347 | |
TeleCommunication Systems, Inc. | 105,200 | 449,204 | |
Totvs SA | 36,400 | 3,433,694 | |
VMware, Inc. Class A (a) | 168,197 | 14,069,679 | |
| 246,301,997 | ||
TOTAL SOFTWARE | 643,153,774 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.6% | |||
Wireless Telecommunication Services - 0.6% | |||
American Tower Corp. Class A (a) | 102,361 | 5,523,400 | |
| |||
Shares | Value | ||
Crown Castle International Corp. (a) | 122,100 | $ 5,146,515 | |
SBA Communications Corp. | 128,653 | 5,415,005 | |
Sprint Nextel Corp. (a) | 60,951 | 266,356 | |
| 16,351,276 | ||
TOTAL COMMON STOCKS (Cost $2,276,277,366) | 2,826,953,494 | ||
Money Market Funds - 3.6% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 43,966,503 | 43,966,503 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 60,334,419 | 60,334,419 | |
TOTAL MONEY MARKET FUNDS (Cost $104,300,922) | 104,300,922 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $2,380,578,288) | 2,931,254,416 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (45,434,664) | ||
NET ASSETS - 100% | $ 2,885,819,752 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $3,247,131 or 0.1% of net assets. |
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 | $ 66,454 |
Fidelity Securities Lending Cash Central Fund | 585,514 |
Total | $ 651,968 |
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, |
Ulticom, Inc. | $ 361,441 | $ 5,023,228 | $ 1,509,840 | $ 3,719,520 | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 2,826,953,494 | $ 2,739,542,552 | $ 87,410,942 | $ - |
Money Market Funds | 104,300,922 | 104,300,922 | - | - |
Total Investments in Securities: | $ 2,931,254,416 | $ 2,843,843,474 | $ 87,410,942 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 81.0% |
Cayman Islands | 4.6% |
Taiwan | 3.2% |
Ireland | 2.3% |
Bermuda | 1.6% |
China | 1.4% |
Singapore | 1.1% |
Others (Individually Less Than 1%) | 4.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $321,594,298 of which $266,401,775 and $55,192,523 will expire in fiscal 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
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $57,444,172) - See accompanying schedule: Unaffiliated issuers (cost $2,276,277,366) | $ 2,826,953,494 |
|
Fidelity Central Funds (cost $104,300,922) | 104,300,922 |
|
Total Investments (cost $2,380,578,288) |
| $ 2,931,254,416 |
Receivable for investments sold | 23,603,019 | |
Receivable for fund shares sold | 5,912,456 | |
Dividends receivable | 1,006,512 | |
Distributions receivable from Fidelity Central Funds | 46,667 | |
Prepaid expenses | 4,136 | |
Other receivables | 88,531 | |
Total assets | 2,961,915,737 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,373,307 | |
Payable for fund shares redeemed | 4,405,449 | |
Accrued management fee | 1,338,855 | |
Other affiliated payables | 557,388 | |
Other payables and accrued expenses | 86,567 | |
Collateral on securities loaned, at value | 60,334,419 | |
Total liabilities | 76,095,985 | |
|
|
|
Net Assets | $ 2,885,819,752 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,663,538,936 | |
Accumulated net investment loss | (204,763) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (328,191,015) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 550,676,594 | |
Net Assets, for 28,188,844 shares outstanding | $ 2,885,819,752 | |
Net Asset Value, offering price and redemption price per share ($2,885,819,752 ÷ 28,188,844 shares) | $ 102.37 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends (including $3,719,520 earned from other affiliated issuers) |
| $ 8,091,411 |
Interest |
| 1,193 |
Income from Fidelity Central Funds (including $585,514 from security lending) |
| 651,968 |
Total income |
| 8,744,572 |
|
|
|
Expenses | ||
Management fee | $ 12,545,618 | |
Transfer agent fees | 5,260,996 | |
Accounting and security lending fees | 684,905 | |
Custodian fees and expenses | 276,920 | |
Independent trustees' compensation | 12,475 | |
Registration fees | 83,162 | |
Audit | 46,326 | |
Legal | 9,281 | |
Interest | 4,251 | |
Miscellaneous | 24,685 | |
Total expenses before reductions | 18,948,619 | |
Expense reductions | (436,513) | 18,512,106 |
Net investment income (loss) | (9,767,534) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 478,331,908 | |
Other affiliated issuers | (4,598,893) |
|
Foreign currency transactions | (188,999) | |
Total net realized gain (loss) |
| 473,544,016 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 318,649,630 | |
Assets and liabilities in foreign currencies | 429 | |
Total change in net unrealized appreciation (depreciation) |
| 318,650,059 |
Net gain (loss) | 792,194,075 | |
Net increase (decrease) in net assets resulting from operations | $ 782,426,541 |
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) | $ (9,767,534) | $ (3,203,642) |
Net realized gain (loss) | 473,544,016 | 213,534,220 |
Change in net unrealized appreciation (depreciation) | 318,650,059 | 610,437,723 |
Net increase (decrease) in net assets resulting from operations | 782,426,541 | 820,768,301 |
Share transactions | 927,195,806 | 925,056,280 |
Cost of shares redeemed | (818,800,764) | (524,406,625) |
Net increase (decrease) in net assets resulting from share transactions | 108,395,042 | 400,649,655 |
Redemption fees | 104,594 | 102,995 |
Total increase (decrease) in net assets | 890,926,177 | 1,221,520,951 |
|
|
|
Net Assets | ||
Beginning of period | 1,994,893,575 | 773,372,624 |
End of period (including accumulated net investment loss of $204,763 and accumulated net investment loss of $260, respectively) | $ 2,885,819,752 | $ 1,994,893,575 |
Other Information Shares | ||
Sold | 10,535,743 | 14,932,330 |
Redeemed | (9,962,012) | (8,150,557) |
Net increase (decrease) | 573,731 | 6,781,773 |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 72.24 | $ 37.12 | $ 66.65 | $ 69.84 | $ 65.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.37) | (.13) | .15 | (.36) F | (.15) |
Net realized and unrealized gain (loss) | 30.50 | 35.25 | (29.57) | (2.84) | 4.75 |
Total from investment operations | 30.13 | 35.12 | (29.42) | (3.20) | 4.60 |
Distributions from net investment income | - | - | (.11) | - | - |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | - I |
Net asset value, end of period | $ 102.37 | $ 72.24 | $ 37.12 | $ 66.65 | $ 69.84 |
Total Return A, B | 41.71% | 94.61% | (44.15)% | (4.57)% | 7.05% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .85% | .92% | .90% | .89% | .95% |
Expenses net of fee waivers, if any | .85% | .92% | .90% | .89% | .95% |
Expenses net of all reductions | .83% | .89% | .89% | .88% | .95% |
Net investment income (loss) | (.44)% | (.21)% | .26% | (.47)% F | (.24)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,885,820 | $ 1,994,894 | $ 773,373 | $ 1,549,499 | $ 1,696,389 |
Portfolio turnover rate E | 136% | 127% | 235% | 204% | 113% |
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, 2011
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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
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 market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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
Debt securities, including restricted securities, are valued based on evaluated prices 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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.
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, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, Software and Computer Services Portfolio 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 foreign currency transactions, deferred trustees compensation, net operating losses, 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 cost | Gross | Gross | Net unrealized |
Communications Equipment Portfolio | $ 545,850,981 | $ 122,983,149 | $ (36,117,726) | $ 86,865,423 |
Computers Portfolio | 605,428,136 | 80,651,386 | (54,090,107) | 26,561,279 |
Electronics Portfolio | 1,392,925,789 | 204,927,228 | (125,815,372) | 79,111,856 |
IT Services Portfolio | 115,186,589 | 27,752,608 | (1,263,059) | 26,489,549 |
Software and Computer Services Portfolio | 1,045,851,249 | 284,022,674 | (16,187,570) | 267,835,104 |
Technology Portfolio | 2,387,175,005 | 613,235,203 | (69,155,792) | 544,079,411 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital | Net unrealized |
Communications Equipment Portfolio | $ - | $ - | $ (32,212,158) | $ 86,865,423 |
Computers Portfolio | - | - | (23,694,802) | 26,533,189 |
Electronics Portfolio | 200,419 | - | (397,386,518) | 79,111,856 |
IT Services Portfolio | - | 1,949,433 | - | 26,489,018 |
Software and Computer Services Portfolio | 56,359,773 | 26,464,731 | - | 267,815,038 |
Technology Portfolio | - | - | (321,594,298) | 544,079,877 |
The tax character of distributions paid was as follows:
February 28, 2011 |
|
|
|
| Ordinary | Long-term | Total |
Electronics Portfolio | $ 2,841,742 | $ - | $ 2,841,742 |
Software and Computer Services Portfolio | - | 37,331,222 | 37,331,222 |
February 28, 2010 |
|
|
|
| Ordinary | Long-term | Total |
Communications Equipment Portfolio | $ 937,682 | $ - | $ 937,682 |
Electronics Portfolio | 9,751,244 | - | 9,751,244 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
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 ($) | Sales ($) |
Communications Equipment Portfolio | 441,966,106 | 345,281,265 |
Computers Portfolio | 718,360,461 | 773,344,061 |
Electronics Portfolio | 1,102,021,780 | 1,151,797,342 |
Annual Report
Notes to Financial Statements - continued
5. Purchases and Sales of Investments - continued
| Purchases ($) | Sales ($) |
IT Services Portfolio | 164,792,819 | 158,465,492 |
Software and Computer Services Portfolio | 2,019,445,495 | 2,011,557,467 |
Technology Portfolio | 3,048,541,777 | 3,007,838,138 |
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, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .28% |
Computers Portfolio | .26% |
Electronics Portfolio | .25% |
IT Services Portfolio | .26% |
Software and Computer Services Portfolio | .23% |
Technology Portfolio | .24% |
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 | $ 22,137 |
Computers Portfolio | 60,632 |
Electronics Portfolio | 132,897 |
IT Services Portfolio | 9,764 |
Software and Computer Services Portfolio | 94,619 |
Technology Portfolio | 106,664 |
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 Loan Balance | Weighted | Interest |
Communications Equipment Portfolio | Borrower | $ 5,925,000 | .45% | $ 516 |
Electronics Portfolio | Borrower | 8,379,200 | .47% | 1,094 |
Software and Computer Services Portfolio | Borrower | 9,243,250 | .45% | 4,168 |
Technology Portfolio | Borrower | 8,612,733 | .45% | 3,261 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Communications Equipment Portfolio | $ 1,447 |
Computers Portfolio | 1,921 |
Electronics Portfolio | 4,105 |
IT Services Portfolio | 376 |
Software and Computer Services Portfolio | 3,910 |
Technology Portfolio | 8,055 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Funds. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. FCM security lending activity as of and during the period was as follows:
| Security Lending | Value of Securities Loaned to FCM |
Computers Portfolio | $ 3,069 | $ - |
IT Services Portfolio | 2,371 | 328,830 |
Software and Computer Services Portfolio | 354 | - |
Technology Portfolio | 3,389 | - |
Annual Report
Notes to Financial Statements - continued
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 Loan Balance | Weighted Average Interest Rate | Interest |
Technology Portfolio | $ 12,594,000 | .71% | $ 990 |
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. 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 |
Communications Equipment Portfolio | $ 55,224 | $ - |
Computers Portfolio | 52,289 | 3 |
Electronics Portfolio | 68,915 | - |
IT Services Portfolio | 1,892 | - |
Software and Computer Services Portfolio | 87,510 | 643 |
Technology Portfolio | 436,513 | - |
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 period, Strategic Advisors U.S. Opportunity Fund was the owner of record of approximately 12% of the total outstanding shares of Communication Equipment 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 |
Annual Report
12. Merger Information - continued
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, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 |
Communications Equipment Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.00 |
Computers Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.00 |
Electronics Portfolio | 04/07/11 | 04/06/11 | $0.01 | $0.00 |
IT Services Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.35 |
Software and Computer Services Portfolio | 04/07/11 | 04/06/11 | $0.00 | $5.93 |
Technology Portfolio | 04/07/11 | 04/06/11 | $0.00 | $0.00 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2011, or, if subsequently determined to be different, the net capital gain of such year.
IT Services Portfolio | $1,949,433 |
Software and Computer Services Portfolio | $63,795,953 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2010 | December 2010 |
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 2010 | December 2010 |
Electronics Portfolio | 100% | 100% |
The funds will notify shareholders in January 2012 of amounts for use in preparing 2011 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.
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
SELTEC-UANNPRO-0411
1.910423.101
Fidelity®
Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Telecommunications Portfolio | 27.24% | 3.80% | 1.23% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kristina Salen, Portfolio Manager of Telecommunications Portfolio: During the year, the fund's Retail Class shares gained 27.24%, falling short of the 30.04% gain of the MSCI® U.S. IM Telecommunications Services 25/50 Index, but handily outpacing the broadly based S&P 500®. Relative to the MSCI index, underweighting benchmark heavyweight Verizon Communications hurt the most, as the stock was lifted amid speculation the company would begin carrying Apple's iPhone® mobile digital device. Disappointing stock picks in wireless telecom services also proved detrimental, including a position in Clearwire, a provider of wireless high-speed Internet service. Elsewhere in wireless, an overweighting in pre-paid wireless provider Leap Wireless International detracted, as did a stake in Netherlands-based VimpleCom. Underweighting Vonage Holdings, a provider of phone service over the Web using Voice over Internet Protocol (VoIP), hurt. On the flip side, underweighting integrated telecom giant AT&T was the biggest relative contributor. The stock underperformed on reports the company may lose exclusivity with the iPhone, which represented a good deal of its business. The fund also was aided by out-of-benchmark exposure to the high-growth cable and satellite industry. Specifically, I focused on video-related stocks in this area that I believed would perform well, including Germany-listed Kabel Deutschland Holding, U.K.-based Virgin Media and Comcast. Some of the stocks I've mentioned in this report were out-of-index holdings and some 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, 2010 to February 28, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,192.40 | $ 6.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,190.70 | $ 7.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.20 | $ 10.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.10 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Telecommunications | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.30 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.20 | $ 4.90 |
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
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 10.5 | 8.6 |
American Tower Corp. Class A | 7.1 | 7.5 |
Verizon Communications, Inc. | 7.0 | 15.0 |
Qwest Communications International, Inc. | 6.5 | 5.8 |
Crown Castle International Corp. | 5.8 | 6.3 |
Sprint Nextel Corp. | 4.3 | 5.4 |
NII Holdings, Inc. | 4.0 | 3.3 |
CenturyLink, Inc. | 4.0 | 4.8 |
SBA Communications Corp.Class A | 3.9 | 3.9 |
tw telecom, inc. | 3.7 | 2.7 |
| 56.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Diversified Telecommunication Services | 47.8% |
|
![]() | Wireless Telecommunication Services | 36.2% |
|
![]() | Media | 10.2% |
|
![]() | Internet Software & Services | 2.3% |
|
![]() | Software | 2.0% |
|
![]() | All Others* | 1.5% |
|
As of August 31, 2010 | |||
![]() | Diversified Telecommunication Services | 46.2% |
|
![]() | Wireless Telecommunication Services | 39.6% |
|
![]() | Media | 9.5% |
|
![]() | Internet Software & Services | 1.5% |
|
![]() | Software | 0.9% |
|
![]() | All Others* | 2.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.6% | |||
Diversified Support Services - 0.6% | |||
Blue Label Telecoms Ltd. | 2,829,100 | $ 2,316,103 | |
COMMUNICATIONS EQUIPMENT - 0.5% | |||
Communications Equipment - 0.5% | |||
Aruba Networks, Inc. (a) | 392 | 11,936 | |
F5 Networks, Inc. (a) | 40 | 4,720 | |
Juniper Networks, Inc. (a) | 44,947 | 1,977,668 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 40 | 1,912 | |
Sandvine Corp. (U.K.) (a) | 3,200 | 10,543 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 7,704 | |
| 2,014,483 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
NetApp, Inc. (a) | 20 | 1,033 | |
Synaptics, Inc. (a) | 450 | 13,275 | |
| 14,308 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 47.8% | |||
Alternative Carriers - 12.3% | |||
AboveNet, Inc. | 113,300 | 7,352,037 | |
Cable & Wireless Worldwide PLC | 5 | 6 | |
Cogent Communications Group, Inc. (a) | 251,017 | 3,699,991 | |
Global Crossing Ltd. (a) | 302,086 | 4,757,855 | |
Iliad Group SA | 44,410 | 4,973,956 | |
Level 3 Communications, Inc. (a)(d) | 1,835,376 | 2,569,526 | |
PAETEC Holding Corp. (a) | 73,600 | 279,680 | |
tw telecom, inc. (a) | 739,957 | 13,763,200 | |
Vonage Holdings Corp. (a) | 1,782,800 | 7,879,976 | |
| 45,276,227 | ||
Integrated Telecommunication Services - 35.5% | |||
AT&T, Inc. | 1,366,919 | 38,793,161 | |
BT Group PLC | 5,351 | 15,896 | |
Cable & Wireless PLC | 5 | 4 | |
Cbeyond, Inc. (a) | 177,698 | 2,484,218 | |
CenturyLink, Inc. (d) | 352,890 | 14,532,010 | |
China Unicom (Hong Kong) Ltd. sponsored ADR (d) | 342,100 | 5,709,649 | |
Cincinnati Bell, Inc. New (a) | 225,000 | 594,000 | |
Deutsche Telekom AG | 763 | 10,261 | |
FairPoint Communications, Inc. (a) | 34,149 | 0 | |
Frontier Communications Corp. | 12,732 | 108,095 | |
Hellenic Telecommunications Organization SA | 163 | 1,676 | |
Qwest Communications International, Inc. | 3,513,189 | 23,959,949 | |
Telecom Italia SpA sponsored ADR | 226 | 3,526 | |
Telenor ASA sponsored ADR | 125,100 | 6,237,486 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 699,041 | $ 25,808,594 | |
Windstream Corp. | 963,015 | 12,076,208 | |
| 130,334,733 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 175,610,960 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 40 | 1,966 | |
INTERNET SOFTWARE & SERVICES - 2.3% | |||
Internet Software & Services - 2.3% | |||
Akamai Technologies, Inc. (a) | 35,700 | 1,339,821 | |
Google, Inc. Class A (a) | 3,000 | 1,840,200 | |
Rackspace Hosting, Inc. (a)(d) | 90,700 | 3,347,737 | |
SAVVIS, Inc. (a) | 99 | 3,217 | |
Support.com, Inc. (a) | 326,000 | 1,819,080 | |
| 8,350,055 | ||
MEDIA - 10.2% | |||
Broadcasting - 0.0% | |||
Ten Network Holdings Ltd. | 5 | 7 | |
Cable & Satellite - 10.2% | |||
Comcast Corp. Class A | 408,100 | 10,512,656 | |
DIRECTV (a) | 9 | 414 | |
Dish TV India Ltd. (a) | 5,888 | 7,629 | |
Kabel Deutschland Holding AG | 165,600 | 9,022,285 | |
Liberty Global, Inc. Class A (a)(d) | 98,400 | 4,142,640 | |
Naspers Ltd. Class N | 36,200 | 2,079,453 | |
Time Warner Cable, Inc. | 51,172 | 3,693,595 | |
Virgin Media, Inc. | 290,600 | 7,915,944 | |
| 37,374,616 | ||
Movies & Entertainment - 0.0% | |||
Madison Square Garden, Inc. Class A (a) | 525 | 14,994 | |
TOTAL MEDIA | 37,389,617 | ||
SOFTWARE - 2.0% | |||
Application Software - 2.0% | |||
AsiaInfo Holdings, Inc. (a)(d) | 170,800 | 3,475,780 | |
Gameloft (a) | 583,902 | 3,601,858 | |
Nuance Communications, Inc. (a) | 800 | 14,928 | |
Synchronoss Technologies, Inc. (a) | 5,003 | 171,403 | |
| 7,263,969 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 3 | 14 | |
TOTAL SOFTWARE | 7,263,983 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.2% | |||
Wireless Telecommunication Services - 36.2% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 17,226 | |
American Tower Corp. Class A (a) | 484,800 | 26,159,808 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Axiata Group Bhd (a) | 3,095,100 | $ 4,951,348 | |
Clearwire Corp. Class A (a)(d) | 1,476,236 | 7,425,467 | |
Crown Castle International Corp. (a) | 502,383 | 21,175,443 | |
ICO Global Communications Holdings Ltd. Class A (a) | 3,059,577 | 7,006,431 | |
Idea Cellular Ltd. (a) | 3,710 | 4,717 | |
Leap Wireless International, Inc. (a) | 371,258 | 4,536,773 | |
MetroPCS Communications, Inc. (a) | 659,406 | 9,495,446 | |
MTN Group Ltd. | 25 | 441 | |
NII Holdings, Inc. (a) | 358,100 | 14,667,776 | |
NTELOS Holdings Corp. | 632 | 12,273 | |
PT Indosat Tbk | 3,305,600 | 1,892,334 | |
SBA Communications Corp. Class A (a) | 336,282 | 14,154,109 | |
Sprint Nextel Corp. (a) | 3,616,150 | 15,802,576 | |
Telephone & Data Systems, Inc. | 15,255 | 513,331 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 55,900 | 2,164,448 | |
Turkcell Iletisim Hizmet AS | 162,000 | 911,697 | |
Vivo Participacoes SA sponsored ADR | 59,325 | 2,183,753 | |
| 133,075,397 | ||
TOTAL COMMON STOCKS (Cost $346,800,462) | 366,036,872 | ||
Money Market Funds - 7.4% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 27,411,975 | $ 27,411,975 | |
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $374,212,437) | 393,448,847 | ||
NET OTHER ASSETS (LIABILITIES) - (7.0)% | (25,841,113) | ||
NET ASSETS - 100% | $ 367,607,734 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,718 |
Fidelity Securities Lending Cash Central Fund | 217,589 |
Total | $ 231,307 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 366,036,872 | $ 365,109,272 | $ 927,600 | $ - |
Money Market Funds | 27,411,975 | 27,411,975 | - | - |
Total Investments in Securities: | $ 393,448,847 | $ 392,521,247 | $ 927,600 | $ - |
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) | (905) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 905 |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ (905) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 86.0% |
Germany | 2.5% |
France | 2.4% |
Norway | 1.7% |
Hong Kong | 1.6% |
Malaysia | 1.3% |
Bermuda | 1.3% |
South Africa | 1.2% |
Brazil | 1.2% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $76,308,957 of which $11,764,473, $52,002,796 and $12,541,688 will expire in fiscal 2012, 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
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,618,806) - See accompanying schedule: Unaffiliated issuers (cost $346,800,462) | $ 366,036,872 |
|
Fidelity Central Funds (cost $27,411,975) | 27,411,975 |
|
Total Investments (cost $374,212,437) |
| $ 393,448,847 |
Receivable for investments sold | 11,306,725 | |
Receivable for fund shares sold | 397,208 | |
Dividends receivable | 59,363 | |
Distributions receivable from Fidelity Central Funds | 14,970 | |
Prepaid expenses | 679 | |
Other receivables | 26,419 | |
Total assets | 405,254,211 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 115,353 | |
Payable for investments purchased | 9,565,852 | |
Payable for fund shares redeemed | 235,627 | |
Accrued management fee | 177,334 | |
Distribution and service plan fees payable | 5,186 | |
Other affiliated payables | 95,722 | |
Other payables and accrued expenses | 39,428 | |
Collateral on securities loaned, at value | 27,411,975 | |
Total liabilities | 37,646,477 | |
|
|
|
Net Assets | $ 367,607,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 431,017,434 | |
Undistributed net investment income | 260,753 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (82,905,063) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,234,610 | |
Net Assets | $ 367,607,734 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 46.93 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.93) | $ 49.79 | |
Class T: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.81) | $ 48.51 | |
Class B: | $ 46.93 | |
|
|
|
Class C: | $ 46.89 | |
|
|
|
Telecommunications: | $ 47.07 | |
|
|
|
Institutional Class: | $ 47.02 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,724,568 |
Interest |
| 210 |
Income from Fidelity Central Funds |
| 231,307 |
Total income |
| 8,956,085 |
|
|
|
Expenses | ||
Management fee | $ 1,983,895 | |
Transfer agent fees | 968,784 | |
Distribution and service plan fees | 54,207 | |
Accounting and security lending fees | 142,914 | |
Custodian fees and expenses | 37,525 | |
Independent trustees' compensation | 2,020 | |
Registration fees | 80,175 | |
Audit | 45,986 | |
Legal | 5,440 | |
Interest | 1,085 | |
Miscellaneous | 4,129 | |
Total expenses before reductions | 3,326,160 | |
Expense reductions | (60,818) | 3,265,342 |
Net investment income (loss) | 5,690,743 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 23,993,138 | |
Foreign currency transactions | 1,042 | |
Total net realized gain (loss) |
| 23,994,180 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,962,770 | |
Assets and liabilities in foreign currencies | 10,023 | |
Total change in net unrealized appreciation (depreciation) |
| 56,972,793 |
Net gain (loss) | 80,966,973 | |
Net increase (decrease) in net assets resulting from operations | $ 86,657,716 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,690,743 | $ 5,996,295 |
Net realized gain (loss) | 23,994,180 | 5,413,597 |
Change in net unrealized appreciation (depreciation) | 56,972,793 | 79,572,437 |
Net increase (decrease) in net assets resulting from operations | 86,657,716 | 90,982,329 |
Distributions to shareholders from net investment income | (7,366,695) | (2,355,415) |
Distributions to shareholders from net realized gain | - | (402,567) |
Total distributions | (7,366,695) | (2,757,982) |
Share transactions - net increase (decrease) | (685,685) | 989,027 |
Redemption fees | 11,018 | 12,272 |
Total increase (decrease) in net assets | 78,616,354 | 89,225,646 |
|
|
|
Net Assets | ||
Beginning of period | 288,991,380 | 199,765,734 |
End of period (including undistributed net investment income of $260,753 and undistributed net investment income of $1,935,664, respectively) | $ 367,607,734 | $ 288,991,380 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .57 | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 9.49 | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 10.06 | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.77) | (.19) | (.35) N | (.51) | - |
Distributions from net realized gain | - | (.05) | (.18) N | - | - |
Total distributions | (.77) | (.24) M | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 26.87% | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.18% | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.35% | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .45 | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 9.47 | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 9.92 | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.66) | (.22) | (.24) N | (.42) | - |
Distributions from net realized gain | - | (.03) | (.13) N | - | - |
Total distributions | (.66) | (.24) M | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 26.54% | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.46% | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.06% | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .25 | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 9.48 | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 9.73 | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.40) | (.04) | (.11) N | (.20) | - |
Distributions from net realized gain | - | (.01) | (.06) N | - | - |
Total distributions | (.40) | (.05) M | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 25.96% | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.93% | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | .60% | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 706 | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .26 | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 9.46 | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 9.72 | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.44) | (.10) | (.07) N | (.22) | - |
Distributions from net realized gain | - | (.02) | (.05) N | - | - |
Total distributions | (.44) | (.12) M | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 25.95% | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | .61% | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,035 | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .69 | .76 | .30 | .43 | .61 F |
Net realized and unrealized gain (loss) | 9.52 | 10.59 | (15.65) | (8.12) | 8.85 |
Total from investment operations | 10.21 | 11.35 | (15.35) | (7.69) | 9.46 |
Distributions from net investment income | (.87) | (.31) | (.41) L | (.52) | (.53) |
Distributions from net realized gain | - | (.05) | (.20) L | - | - |
Total distributions | (.87) | (.36) K | (.61) J | (.52) | (.53) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Total Return A, B | 27.24% | 42.43% | (36.00)% | (15.30)% | 22.69% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .92% | .99% | .97% | .91% | .99% |
Expenses net of fee waivers, if any | .92% | .99% | .97% | .90% | .97% |
Expenses net of all reductions | .91% | .98% | .96% | .90% | .97% |
Net investment income (loss) | 1.62% | 2.15% | .85% | .79% | 1.34% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 |
Portfolio turnover rate E | 72% | 90% | 168% | 134% | 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 $.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 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. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .71 | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 9.50 | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 10.21 | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.88) | (.38) | (.40) M | (.62) | - |
Distributions from net realized gain | - | (.05) | (.20) M | - | - |
Total distributions | (.88) | (.43) L | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - | - |
Net asset value, end of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 27.27% | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .91% | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .89% | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 1.64% | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,743 | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 72% | 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 Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2011
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 55,735,629 |
Gross unrealized depreciation | (43,095,325) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 12,640,304 |
Tax Cost | $ 380,808,543 |
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 | $ 260,995 |
Capital loss carryforward | $ (76,308,957) |
Net unrealized appreciation (depreciation) | $ 12,638,504 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 7,366,695 | $ 2,757,982 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $256,842,819 and $247,000,001, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 9,195 | $ 586 |
Class T | .25% | .25% | 12,588 | 15 |
Class B | .75% | .25% | 6,770 | 5,078 |
Class C | .75% | .25% | 25,654 | 9,305 |
|
|
| $ 54,207 | $ 14,984 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,026 |
Class T | 1,778 |
Class B* | 2,024 |
Class C* | 255 |
| $ 9,083 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 10,916 | .30 |
Class T | 8,246 | .33 |
Class B | 2,000 | .30 |
Class C | 7,300 | .29 |
Telecommunications | 934,079 | .27 |
Institutional Class | 6,243 | .26 |
| $ 968,784 |
|
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 $9,209 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 | $ 8,032,250 | .41% | $ 1,085 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,283 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $217,589. During the period, there were no securities loaned to FCM.
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 $60,818 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 67,506 | $ 15,094 |
Class T | 39,660 | 11,817 |
Class B | 6,185 | 821 |
Class C | 26,169 | 5,697 |
Telecommunications | 7,180,244 | 2,311,098 |
Institutional Class | 46,931 | 10,888 |
Total | $ 7,366,695 | $ 2,355,415 |
From net realized gain |
|
|
Class A | $ - | $ 4,245 |
Class T | - | 827 |
Class B | - | 139 |
Class C | - | 504 |
Telecommunications | - | 396,621 |
Institutional Class | - | 231 |
Total | $ - | $ 402,567 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 40,645 | 88,778 | $ 1,741,332 | $ 3,085,616 |
Reinvestment of distributions | 1,359 | 476 | 59,381 | 17,722 |
Shares redeemed | (39,099) | (79,650) | (1,642,347) | (2,900,645) |
Net increase (decrease) | 2,905 | 9,604 | $ 158,366 | $ 202,693 |
Class T |
|
|
|
|
Shares sold | 23,206 | 45,905 | $ 981,887 | $ 1,589,430 |
Reinvestment of distributions | 894 | 314 | 39,051 | 12,167 |
Shares redeemed | (17,166) | (14,845) | (731,684) | (532,433) |
Net increase (decrease) | 6,934 | 31,374 | $ 289,254 | $ 1,069,164 |
Class B |
|
|
|
|
Shares sold | 3,985 | 15,431 | $ 164,934 | $ 522,557 |
Reinvestment of distributions | 125 | 22 | 5,371 | 836 |
Shares redeemed | (6,122) | (11,987) | (254,241) | (408,765) |
Net increase (decrease) | (2,012) | 3,466 | $ (83,936) | $ 114,628 |
Class C |
|
|
|
|
Shares sold | 29,965 | 62,598 | $ 1,283,190 | $ 2,159,620 |
Reinvestment of distributions | 433 | 129 | 18,769 | 5,000 |
Shares redeemed | (22,865) | (19,418) | (981,215) | (702,765) |
Net increase (decrease) | 7,533 | 43,309 | $ 320,744 | $ 1,461,855 |
Telecommunications |
|
|
|
|
Shares sold | 3,169,647 | 3,331,732 | $ 131,656,721 | $ 111,276,252 |
Reinvestment of distributions | 156,783 | 68,653 | 6,893,743 | 2,606,513 |
Shares redeemed | (3,199,430) | (3,325,834) | (139,972,066) | (116,676,048) |
Net increase (decrease) | 127,000 | 74,551 | $ (1,421,602) | $ (2,793,283) |
Institutional Class |
|
|
|
|
Shares sold | 131,873 | 35,372 | $ 5,646,597 | $ 1,243,451 |
Reinvestment of distributions | 800 | 37 | 36,161 | 1,435 |
Shares redeemed | (124,838) | (8,744) | (5,631,269) | (310,916) |
Net increase (decrease) | 7,835 | 26,665 | $ 51,489 | $ 933,970 |
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Wireless Portfolio | 29.55% | 5.50% | 2.69% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kyle Weaver and Gavin Baker, Lead Portfolio Manager and Co-Portfolio Manager, respectively, of Wireless Portfolio: During the past year, the fund returned 29.55%, outdistancing both the 24.56% return of the S&P® Custom Wireless Index and the broadly based S&P 500® Index. Favorable picks in wireless telecommunication services bolstered the fund's performance versus the wireless index, as did stock selection and an underweighting in communications equipment. In the latter group, one holding added significant value - Finland-based handset manufacturer Nokia, a large, weak-performing index component in which the fund had a substantial underweighting. Nokia fought losing battles on two fronts, giving up share at the high end of the market to Apple's iPhone® and a wave of smartphones based on Google's AndroidTM wireless operating system, while grappling with competition from Chinese manufacturers on the low end. Nokia was not held by the fund at period end. The fund also benefited from the other side of that trade, with out-of-index exposure to Apple. An allocation to application software - primarily through an out-of-index position in Gameloft, a developer of mobile video games, was beneficial as well. Underweighting lagging benchmark component China Mobile, the largest wireless carrier in that nation, aided performance, as did overweighted exposure to U.K.-based wireless carrier Vodafone Group, the fund's largest holding at period end, and data clearinghouse provider Syniverse Holdings, which was bought by a private-equity firm during the period. Conversely, a small cash position held back performance. Moreover, underweighting a strong-performing benchmark component, integrated telecom carrier Verizon Communications, weighed on the fund's result. Also detracting were overweighted positions in Canadian smartphone maker Research In Motion; Clearwire, a builder and operator of wireless broadband networks; and wireless tower provider Crown Castle International.
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, 2010 to February 28, 2011).
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 | .90% | $ 1,000.00 | $ 1,245.40 | $ 5.01 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
* 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, 2011 | ||
| % of fund's | % of fund's net assets |
Vodafone Group PLC sponsored ADR | 13.4 | 15.8 |
QUALCOMM, Inc. | 9.9 | 8.1 |
Sprint Nextel Corp. | 6.3 | 8.9 |
Research In Motion Ltd. | 5.1 | 3.5 |
Verizon Communications, Inc. | 5.0 | 3.8 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 4.9 | 1.4 |
Crown Castle International Corp. | 4.3 | 4.6 |
Telefonica SA sponsored ADR | 4.2 | 4.8 |
American Tower Corp. Class A | 4.1 | 4.7 |
Apple, Inc. | 4.0 | 2.5 |
| 61.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Wireless Telecommunication Services | 46.7% |
|
![]() | Communications Equipment | 25.9% |
|
![]() | Diversified Telecommunication Services | 11.7% |
|
![]() | Software | 4.3% |
|
![]() | Computers & Peripherals | 4.0% |
|
![]() | All Others* | 7.4% |
|
As of August 31, 2010 | |||
![]() | Wireless Telecommunication Services | 58.7% |
|
![]() | Communications Equipment | 18.0% |
|
![]() | Diversified Telecommunication Services | 15.3% |
|
![]() | Computers & Peripherals | 2.5% |
|
![]() | Software | 2.4% |
|
![]() | All Others* | 3.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Wireless Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 25.9% | |||
Communications Equipment - 25.9% | |||
Aruba Networks, Inc. (a)(d) | 119,684 | $ 3,644,378 | |
Harris Corp. | 28,400 | 1,325,144 | |
InterDigital, Inc. (d) | 41,900 | 1,997,792 | |
Motorola Mobility Holdings, Inc. | 173,660 | 5,244,532 | |
Motorola Solutions, Inc. | 198,468 | 7,668,804 | |
QUALCOMM, Inc. | 602,650 | 35,905,887 | |
Research In Motion Ltd. (a) | 276,600 | 18,294,325 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,391,000 | 17,860,440 | |
ViaSat, Inc. (a) | 39,700 | 1,651,917 | |
| 93,593,219 | ||
COMPUTERS & PERIPHERALS - 4.0% | |||
Computer Hardware - 4.0% | |||
Apple, Inc. (a) | 40,800 | 14,410,968 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 11.7% | |||
Alternative Carriers - 0.1% | |||
Neutral Tandem, Inc. (a) | 20,600 | 354,320 | |
Integrated Telecommunication Services - 11.6% | |||
China Unicom (Hong Kong) Ltd. sponsored ADR (d) | 529,500 | 8,837,355 | |
Deutsche Telekom AG | 100 | 1,345 | |
Telefonica SA sponsored ADR | 591,000 | 15,111,870 | |
Verizon Communications, Inc. | 485,500 | 17,924,660 | |
| 41,875,230 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 42,229,550 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Components - 0.0% | |||
E Ink Holdings, Inc. GDR (a)(e) | 2,700 | 47,138 | |
INTERNET SOFTWARE & SERVICES - 1.0% | |||
Internet Software & Services - 1.0% | |||
Google, Inc. Class A (a) | 5,900 | 3,619,060 | |
IT SERVICES - 0.5% | |||
IT Consulting & Other Services - 0.5% | |||
Amdocs Ltd. (a) | 60,700 | 1,811,288 | |
MEDIA - 2.5% | |||
Cable & Satellite - 2.5% | |||
Virgin Media, Inc. | 328,500 | 8,948,340 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1% | |||
Semiconductors - 3.1% | |||
Atheros Communications, Inc. (a) | 83,500 | 3,741,635 | |
Avago Technologies Ltd. | 10,900 | 370,491 | |
NVIDIA Corp. (a) | 306,000 | 6,933,960 | |
| 11,046,086 | ||
| |||
Shares | Value | ||
SOFTWARE - 4.3% | |||
Application Software - 4.3% | |||
AsiaInfo Holdings, Inc. (a)(d) | 318,800 | $ 6,487,580 | |
BroadSoft, Inc. (a) | 9,800 | 345,940 | |
Gameloft (a) | 1,338,462 | 8,256,437 | |
Synchronoss Technologies, Inc. (a) | 10,600 | 363,156 | |
| 15,453,113 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a)(d) | 28,623 | 129,662 | |
TOTAL SOFTWARE | 15,582,775 | ||
WIRELESS TELECOMMUNICATION SERVICES - 46.7% | |||
Wireless Telecommunication Services - 46.7% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 22,968 | |
American Tower Corp. Class A (a) | 273,692 | 14,768,420 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 142,900 | 6,754,883 | |
Clearwire Corp. Class A (a)(d) | 934,700 | 4,701,541 | |
Crown Castle International Corp. (a) | 370,600 | 15,620,790 | |
KDDI Corp. | 6 | 38,967 | |
Leap Wireless International, Inc. (a) | 25,750 | 314,665 | |
MetroPCS Communications, Inc. (a) | 967,700 | 13,934,880 | |
Millicom International Cellular SA | 68,900 | 6,035,640 | |
NII Holdings, Inc. (a) | 322,700 | 13,217,792 | |
NTELOS Holdings Corp. | 175,800 | 3,414,036 | |
NTT DoCoMo, Inc. | 1,697 | 3,188,138 | |
NTT DoCoMo, Inc. sponsored ADR (d) | 19,100 | 358,698 | |
PT Indosat Tbk | 2,700 | 1,546 | |
SBA Communications Corp. Class A (a) | 334,800 | 14,091,732 | |
Sprint Nextel Corp. (a) | 5,178,231 | 22,628,869 | |
Telephone & Data Systems, Inc. | 9,006 | 303,052 | |
U.S. Cellular Corp. (a) | 23,100 | 1,154,538 | |
Vodafone Group PLC sponsored ADR | 1,686,600 | 48,270,492 | |
| 168,821,647 | ||
TOTAL COMMON STOCKS (Cost $324,391,663) | 360,110,071 | ||
Money Market Funds - 7.1% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 3,040,666 | $ 3,040,666 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 22,517,400 | 22,517,400 | |
TOTAL MONEY MARKET FUNDS (Cost $25,558,066) | 25,558,066 |
TOTAL INVESTMENT PORTFOLIO - 106.8% (Cost $349,949,729) | 385,668,137 |
NET OTHER ASSETS (LIABILITIES) - (6.8)% | (24,585,954) | ||
NET ASSETS - 100% | $ 361,082,183 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $47,138 or 0.0% of net assets. |
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 | $ 6,960 |
Fidelity Securities Lending Cash Central Fund | 238,987 |
Total | $ 245,947 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 360,110,071 | $ 356,882,966 | $ 3,227,105 | $ - |
Money Market Funds | 25,558,066 | 25,558,066 | - | - |
Total Investments in Securities: | $ 385,668,137 | $ 382,441,032 | $ 3,227,105 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 62.5% |
United Kingdom | 13.4% |
Canada | 5.1% |
Sweden | 4.9% |
Hong Kong | 4.3% |
Spain | 4.2% |
France | 2.3% |
Luxembourg | 1.7% |
Japan | 1.0% |
Others (Individually Less Than 1%) | 0.6% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $2,779,539 all of which will expire in fiscal 2017. 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
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $22,019,575) - See accompanying schedule: Unaffiliated issuers (cost $324,391,663) | $ 360,110,071 |
|
Fidelity Central Funds (cost $25,558,066) | 25,558,066 |
|
Total Investments (cost $349,949,729) |
| $ 385,668,137 |
Receivable for fund shares sold | 634,862 | |
Dividends receivable | 131,077 | |
Distributions receivable from Fidelity Central Funds | 10,556 | |
Prepaid expenses | 585 | |
Other receivables | 41,394 | |
Total assets | 386,486,611 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,000,147 | |
Payable for fund shares redeemed | 598,043 | |
Accrued management fee | 166,702 | |
Other affiliated payables | 86,473 | |
Other payables and accrued expenses | 35,663 | |
Collateral on securities loaned, at value | 22,517,400 | |
Total liabilities | 25,404,428 | |
|
|
|
Net Assets | $ 361,082,183 | |
Net Assets consist of: |
| |
Paid in capital | $ 337,360,369 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,994,791) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 35,716,605 | |
Net Assets, for 43,579,428 shares outstanding | $ 361,082,183 | |
Net Asset Value, offering price and redemption price per share ($361,082,183 ÷ 43,579,428 shares) | $ 8.29 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 5,901,447 |
Interest |
| 117 |
Income from Fidelity Central Funds |
| 245,947 |
Total income |
| 6,147,511 |
|
|
|
Expenses | ||
Management fee | $ 1,731,134 | |
Transfer agent fees | 874,441 | |
Accounting and security lending fees | 127,384 | |
Custodian fees and expenses | 30,370 | |
Independent trustees' compensation | 1,699 | |
Registration fees | 36,457 | |
Audit | 45,812 | |
Legal | 1,196 | |
Interest | 70 | |
Miscellaneous | 4,276 | |
Total expenses before reductions | 2,852,839 | |
Expense reductions | (35,733) | 2,817,106 |
Net investment income (loss) | 3,330,405 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 22,941,066 | |
Foreign currency transactions | 9,658 | |
Total net realized gain (loss) |
| 22,950,724 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,266,023 | |
Assets and liabilities in foreign currencies | 608 | |
Total change in net unrealized appreciation (depreciation) |
| 56,266,631 |
Net gain (loss) | 79,217,355 | |
Net increase (decrease) in net assets resulting from operations | $ 82,547,760 |
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) | $ 3,330,405 | $ 3,040,934 |
Net realized gain (loss) | 22,950,724 | 51,080,210 |
Change in net unrealized appreciation (depreciation) | 56,266,631 | 56,889,554 |
Net increase (decrease) in net assets resulting from operations | 82,547,760 | 111,010,698 |
Distributions to shareholders from net investment income | (3,588,883) | (3,156,705) |
Share transactions | 100,945,127 | 237,928,725 |
Reinvestment of distributions | 3,455,935 | 3,059,703 |
Cost of shares redeemed | (127,181,095) | (225,090,166) |
Net increase (decrease) in net assets resulting from share transactions | (22,780,033) | 15,898,262 |
Redemption fees | 7,728 | 29,313 |
Total increase (decrease) in net assets | 56,186,572 | 123,781,568 |
|
|
|
Net Assets | ||
Beginning of period | 304,895,611 | 181,114,043 |
End of period | $ 361,082,183 | $ 304,895,611 |
Other Information Shares | ||
Sold | 13,788,692 | 41,992,382 |
Issued in reinvestment of distributions | 460,791 | 468,561 |
Redeemed | (17,824,633) | (36,067,880) |
Net increase (decrease) | (3,575,150) | 6,393,063 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 6.47 | $ 4.44 | $ 7.23 | $ 7.13 | $ 7.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .08 | .06 | .05 | .03 F | .05 |
Net realized and unrealized gain (loss) | 1.82 | 2.03 | (2.78) | .36 | .32 |
Total from investment operations | 1.90 | 2.09 | (2.73) | .39 | .37 |
Distributions from net investment income | (.08) | (.06) | (.06) | (.03) | - |
Distributions from net realized gain | - | - | - | (.26) | (.44) |
Total distributions | (.08) | (.06) | (.06) | (.29) | (.44) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 8.29 | $ 6.47 | $ 4.44 | $ 7.23 | $ 7.13 |
Total Return A, B | 29.55% | 47.06% | (37.68)% | 4.71% | 5.16% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .92% | .96% | .95% | .91% | .97% |
Expenses net of fee waivers, if any | .92% | .96% | .95% | .91% | .97% |
Expenses net of all reductions | .91% | .94% | .94% | .91% | .96% |
Net investment income (loss) | 1.08% | .90% | .85% | .32% F | .69% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 361,082 | $ 304,896 | $ 181,114 | $ 434,916 | $ 278,371 |
Portfolio turnover rate E | 111% | 154% | 191% | 191% | 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 $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .19%. 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, 2011
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 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 43,669,332 |
Gross unrealized depreciation | (17,166,176) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 26,503,156 |
Tax Cost | $ 359,164,981 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (2,779,539) |
Net unrealized appreciation (depreciation) | $ 26,501,353 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 3,588,883 | $ 3,156,705 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. 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 $338,781,854 and $361,601,360, 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 .28% 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 $28,118 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 | $ 5,439,000 | .46% | $ 70 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,167 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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
Annual Report
8. Security Lending - continued
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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $238,987. During the period, there were no securities loaned to FCM.
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 $35,733 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, 2011, 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 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 2012 of amounts for use in preparing 2011 income tax returns.
Annual Report
Distributions (Unaudited)
Wireless designates 24% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Wireless designates 93% of the dividends distributed in April, 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 2012 of amounts for use in preparing 2011 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.
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
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Automated line for quickest service
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Fidelity®
Select Portfolios®
Utilities Sector
Utilities Portfolio
Annual Report
February 28, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Performance |
| |
Management's Discussion of Fund Performance |
| |
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 saving 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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 distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Utilities Portfolio A | 22.07% | 3.78% | 2.02% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Douglas Simmons, Portfolio Manager of Utilities Portfolio: For the year ending February 28, 2011, the fund returned 22.07%, significantly outperforming the MSCI® U.S. IM Utilities 25/20 Index, which returned 17.10%, and roughly in line with the broadly based S&P 500®. Favorable security selection in the gas utilities, multi-utilities and oil/gas exploration & production (E&P) groups helped performance relative to the MSCI index. Individual contributors included gas utility ONEOK, an underweighting in Chicago-based electric utility and major benchmark component Exelon, Las Vegas electric utility NV Energy, gas utility National Fuel Gas, out-of-index oil/natural gas E&P company Canacol Energy and long-range electricity transmission firm ITC Holdings. On the downside, underweighting water utilities hurt - albeit slightly - as did the fund's modest cash position amid a strong market. Among individual detractors were Pennsylvania electric utility PPL, an underweighting in Atlanta-based electric utility and large index constituent Southern Company, and positions in New Jersey multi-utility Public Service Enterprise Group and Ohio-based electric utility FirstEnergy. Some 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
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, 2010 to February 28, 2011).
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 | .89% | $ 1,000.00 | $ 1,114.40 | $ 4.67 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
* 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, 2011 | ||
| % of fund's | % of fund's net assets |
NextEra Energy, Inc. | 11.5 | 10.6 |
Sempra Energy | 7.5 | 8.7 |
Dominion Resources, Inc. | 6.5 | 0.0 |
ONEOK, Inc. | 6.3 | 0.0 |
Edison International | 6.3 | 4.8 |
ITC Holdings Corp. | 5.6 | 4.2 |
National Fuel Gas Co. New Jersey | 5.0 | 1.3 |
Public Service Enterprise Group, Inc. | 4.9 | 8.4 |
PG&E Corp. | 4.9 | 4.8 |
American Electric Power Co., Inc. | 4.8 | 7.5 |
| 63.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Electric Utilities | 42.0% |
|
![]() | Multi-Utilities | 34.2% |
|
![]() | Gas Utilities | 11.3% |
|
![]() | Independent Power Producers & Energy Traders | 8.8% |
|
![]() | Water Utilities | 2.0% |
|
![]() | All Others* | 1.7% |
|
As of August 31, 2010 | |||
![]() | Electric Utilities | 47.6% |
|
![]() | Multi-Utilities | 39.9% |
|
![]() | Independent Power Producers & Energy Traders | 7.6% |
|
![]() | Oil, Gas & Consumable Fuels | 2.2% |
|
![]() | Gas Utilities | 1.3% |
|
![]() | All Others* | 1.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Utilities Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
ELECTRIC UTILITIES - 42.0% | |||
Electric Utilities - 42.0% | |||
American Electric Power Co., Inc. | 614,100 | $ 21,972,498 | |
Companhia Energetica de Minas Gerais (CEMIG) (PN) sponsored ADR (non-vtg.) | 136,200 | 2,296,332 | |
Edison International | 766,416 | 28,449,362 | |
Exelon Corp. | 126,940 | 5,301,014 | |
ITC Holdings Corp. | 370,270 | 25,382,009 | |
NextEra Energy, Inc. | 941,579 | 52,229,388 | |
NV Energy, Inc. | 1,484,292 | 21,804,249 | |
Pepco Holdings, Inc. | 326,800 | 6,120,964 | |
Pinnacle West Capital Corp. | 209,206 | 8,834,769 | |
Scottish & Southern Energy PLC | 116,700 | 2,350,838 | |
Southern Co. | 417,604 | 15,914,888 | |
| 190,656,311 | ||
GAS UTILITIES - 11.3% | |||
Gas Utilities - 11.3% | |||
National Fuel Gas Co. | 307,192 | 22,394,297 | |
ONEOK, Inc. | 444,699 | 28,714,214 | |
| 51,108,511 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 8.8% | |||
Independent Power Producers & Energy Traders - 8.8% | |||
AES Corp. (a) | 968,059 | 11,974,890 | |
Calpine Corp. (a) | 480,696 | 7,272,930 | |
Constellation Energy Group, Inc. | 400,473 | 12,442,696 | |
GenOn Energy, Inc. (a) | 713,290 | 2,888,825 | |
NRG Energy, Inc. (a) | 270,100 | 5,399,299 | |
| 39,978,640 | ||
MULTI-UTILITIES - 34.2% | |||
Multi-Utilities - 34.2% | |||
CenterPoint Energy, Inc. | 864,657 | 13,713,460 | |
Dominion Resources, Inc. | 647,731 | 29,555,966 | |
NiSource, Inc. | 918,250 | 17,593,670 | |
OGE Energy Corp. | 218,661 | 10,517,594 | |
PG&E Corp. | 480,324 | 22,123,723 | |
| |||
Shares | Value | ||
Public Service Enterprise Group, Inc. | 677,811 | $ 22,164,420 | |
SCANA Corp. | 139,900 | 5,663,152 | |
Sempra Energy | 638,791 | 34,002,845 | |
| 155,334,830 | ||
OIL, GAS & CONSUMABLE FUELS - 0.5% | |||
Oil & Gas Storage & Transport - 0.5% | |||
SemGroup Corp. Class A (a) | 71,983 | 2,311,374 | |
WATER UTILITIES - 2.0% | |||
Water Utilities - 2.0% | |||
American Water Works Co., Inc. | 329,347 | 9,136,086 | |
TOTAL COMMON STOCKS (Cost $415,249,258) | 448,525,752 | ||
Money Market Funds - 0.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 2,567,192 | 2,567,192 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 721,525 | 721,525 | |
TOTAL MONEY MARKET FUNDS (Cost $3,288,717) | 3,288,717 |
TOTAL INVESTMENT PORTFOLIO - 99.5% (Cost $418,537,975) | 451,814,469 |
NET OTHER ASSETS (LIABILITIES) - 0.5% | 2,282,874 | ||
NET ASSETS - 100% | $ 454,097,343 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 9,127 |
Fidelity Securities Lending Cash Central Fund | 30,917 |
Total | $ 40,044 |
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, 2011, the Fund had a capital loss carryforward of approximately $88,061,838 of which $43,377,782 and $44,684,056 will expire in fiscal 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, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $713,496) - See accompanying schedule: Unaffiliated issuers (cost $415,249,258) | $ 448,525,752 |
|
Fidelity Central Funds (cost $3,288,717) | 3,288,717 |
|
Total Investments (cost $418,537,975) |
| $ 451,814,469 |
Receivable for investments sold | 11,292,338 | |
Receivable for fund shares sold | 430,998 | |
Dividends receivable | 1,134,102 | |
Distributions receivable from Fidelity Central Funds | 2,078 | |
Prepaid expenses | 878 | |
Other receivables | 23,654 | |
Total assets | 464,698,517 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,810,736 | |
Payable for fund shares redeemed | 718,867 | |
Accrued management fee | 209,040 | |
Other affiliated payables | 108,766 | |
Other payables and accrued expenses | 32,240 | |
Collateral on securities loaned, at value | 721,525 | |
Total liabilities | 10,601,174 | |
|
|
|
Net Assets | $ 454,097,343 | |
Net Assets consist of: |
| |
Paid in capital | $ 509,960,725 | |
Undistributed net investment income | 966,206 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (90,106,098) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 33,276,510 | |
Net Assets, for 9,030,796 shares outstanding | $ 454,097,343 | |
Net Asset Value, offering price and redemption price per share ($454,097,343 ÷ 9,030,796 shares) | $ 50.28 |
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 13,354,925 |
Interest |
| 235 |
Income from Fidelity Central Funds |
| 40,044 |
Total income |
| 13,395,204 |
|
|
|
Expenses | ||
Management fee | $ 2,252,105 | |
Transfer agent fees | 1,107,264 | |
Accounting and security lending fees | 159,596 | |
Custodian fees and expenses | 32,234 | |
Independent trustees' compensation | 2,276 | |
Registration fees | 35,016 | |
Audit | 40,669 | |
Legal | 3,648 | |
Interest | 533 | |
Miscellaneous | 4,950 | |
Total expenses before reductions | 3,638,291 | |
Expense reductions | (122,399) | 3,515,892 |
Net investment income (loss) | 9,879,312 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 46,653,963 | |
Foreign currency transactions | (215,032) | |
Total net realized gain (loss) |
| 46,438,931 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 25,449,099 | |
Assets and liabilities in foreign currencies | 16 | |
Total change in net unrealized appreciation (depreciation) |
| 25,449,115 |
Net gain (loss) | 71,888,046 | |
Net increase (decrease) in net assets resulting from operations | $ 81,767,358 |
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) | $ 9,879,312 | $ 9,660,723 |
Net realized gain (loss) | 46,438,931 | (4,992,551) |
Change in net unrealized appreciation (depreciation) | 25,449,115 | 62,908,435 |
Net increase (decrease) in net assets resulting from operations | 81,767,358 | 67,576,607 |
Distributions to shareholders from net investment income | (10,194,963) | (9,685,916) |
Share transactions | 219,227,003 | 90,279,207 |
Reinvestment of distributions | 9,735,945 | 9,242,809 |
Cost of shares redeemed | (182,439,130) | (122,958,619) |
Net increase (decrease) in net assets resulting from share transactions | 46,523,818 | (23,436,603) |
Redemption fees | 9,278 | 8,819 |
Total increase (decrease) in net assets | 118,105,491 | 34,462,907 |
|
|
|
Net Assets | ||
Beginning of period | 335,991,852 | 301,528,945 |
End of period (including undistributed net investment income of $966,206 and undistributed net investment income of $1,464,587, respectively) | $ 454,097,343 | $ 335,991,852 |
Other Information Shares | ||
Sold | 4,768,833 | 2,151,894 |
Issued in reinvestment of distributions | 207,555 | 220,108 |
Redeemed | (3,899,333) | (3,048,247) |
Net increase (decrease) | 1,077,055 | (676,245) |
Financial Highlights
Years ended February 28, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.24 | $ 34.94 | $ 57.09 | $ 58.27 | $ 46.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.14 | 1.21 | .99 | .84 | 1.00 |
Net realized and unrealized gain (loss) | 8.09 | 7.34 | (22.29) | (.82) | 11.45 |
Total from investment operations | 9.23 | 8.55 | (21.30) | .02 | 12.45 |
Distributions from net investment income | (1.19) | (1.25) | (.85) | (1.21) | (.64) |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | .02 |
Net asset value, end of period | $ 50.28 | $ 42.24 | $ 34.94 | $ 57.09 | $ 58.27 |
Total Return A | 22.07% | 24.50% | (37.47)% | (.22)% | 26.95% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .90% | .95% | .89% | .88% | .93% |
Expenses net of fee waivers, if any | .90% | .95% | .89% | .88% | .93% |
Expenses net of all reductions | .87% | .93% | .89% | .87% | .93% |
Net investment income (loss) | 2.46% | 2.98% | 1.95% | 1.35% | 1.93% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 454,097 | $ 335,992 | $ 301,529 | $ 606,083 | $ 795,683 |
Portfolio turnover rate D | 238% | 226% | 167% | 121% | 107% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C 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.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G 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, 2011
1. Organization.
Utilities Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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. 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 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. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. 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, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 33,551,780 |
Gross unrealized depreciation | (2,319,531) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 31,232,249 |
Tax Cost | $ 420,582,220 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 966,579 |
Capital loss carryforward | $ (88,061,838) |
Net unrealized appreciation (depreciation) | $ 31,232,249 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 10,194,963 | $ 9,685,916 |
Annual Report
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $997,145,095 and $943,359,446, 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 .28% 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 $20,713 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 | $ 6,888,333 | .46% | $ 533 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,465 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the
Annual Report
Notes to Financial Statements - continued
7. Security Lending - continued
loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $30,917. During the period, there were no securities loaned to FCM.
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 $122,399 for the period.
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 Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Utilities Portfolio (a fund of Fidelity Select Portfolios) at February 28, 2011, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Utilities Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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 funds, is provided below.
Board Structure and Oversight Function. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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, the 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 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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolios (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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 Portfolios (2008-present), President and Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Annual Report
Distributions (Unaudited)
The fund designates 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% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividends distributed in April and December, respectively, 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 2012 of amounts for use in preparing 2011 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.
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-0411
1.910427.101
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, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Consumer Staples Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications 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 |
|
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 years | Past 10 |
Class A (incl. 5.75% sales charge) A | 6.76% | 7.32% | 7.03% |
Class T (incl. 3.50% sales charge) B | 8.98% | 7.56% | 7.15% |
Class B (incl. contingent deferred | 7.35% | 7.56% | 7.30% |
Class C (incl. contingent deferred sales charge) D | 11.44% | 7.90% | 7.32% |
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 28, 2001, 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the 12 months ending February 28, 2011, the fund's Class A, Class T, Class B and Class C shares gained 13.27%, 12.93%, 12.35% and 12.44%, respectively (excluding sales charges), underperforming the 13.96% return of the MSCI® U.S. IM Consumer Staples 25/50 Index and the S&P 500®. Relative to its sector benchmark, the portfolio benefited from strong security selection in the soft drinks industry, where an overweighting in Coca-Cola boosted performance, as the company built momentum in higher-growth emerging markets and achieved better-than-expected results in more-developed markets, such as the U.S., Japan and Western Europe. Underweighting PepsiCo, which had a lesser emerging-markets presence, also contributed. Rising agricultural input costs in its snack business also hurt Pepsi's shares. The fund's out-of-index stake in British American Tobacco was another beneficiary of higher growth overseas. Distillers and vintners was a strong area, with holdings in global wine distributor Constellation Brands and British-based premium spirits producer Diageo - not found in the index - boosting the fund's return, as rebounding alcohol sales in restaurants and bars supported earnings gains. An underweighting and robust stock picking in the lagging hypermarkets/super centers area helped, including a smaller-than-index stake in Wal-Mart Stores and an overweighting in BJ's Wholesale Club. Favorable market selection in household products and brewers also buoyed performance, as did dollar weakness in relation to our foreign holdings. On the flip side, positioning in packaged foods/meats hurt the most, including an overweighting in Dean Foods - a company that sells milk across North America - which got caught in a competitive pricing trap. An out-of-index position in Netherlands-based Unilever also detracted here. Unfavorable security selection in the personal products industry was costly, including not owning two benchmark components, cosmetics manufacturer Estee Lauder and nutritional supplement marketer Herbalife. Elsewhere, a non-index stake in pharmaceutical and medical products giant Johnson & Johnson hurt, as did underweighting cigarette manufacturer Philip Morris International. Lastly, not having any exposure to premium grocer and index constituent Whole Foods Market 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
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, 2010 to February 28, 2011).
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 | $ 1,145.40 | $ 5.90 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.39% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.70 | $ 7.39 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.90 | $ 6.95 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,140.70 | $ 10.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.20 | $ 9.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Consumer Staples | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.80 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.90 | $ 4.63 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
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, 2011 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.8 | 12.1 |
The Coca-Cola Co. | 12.0 | 11.4 |
CVS Caremark Corp. | 6.6 | 4.0 |
British American Tobacco PLC sponsored ADR | 6.1 | 4.9 |
Altria Group, Inc. | 5.6 | 5.0 |
PepsiCo, Inc. | 4.4 | 5.5 |
Colgate-Palmolive Co. | 4.2 | 1.4 |
Unilever NV unit | 3.1 | 2.3 |
Diageo PLC sponsored ADR | 3.1 | 2.5 |
Johnson & Johnson | 3.0 | 3.0 |
| 63.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Beverages | 30.1% |
|
![]() | Household Products | 20.0% |
|
![]() | Food & Staples Retailing | 15.7% |
|
![]() | Tobacco | 14.8% |
|
![]() | Food Products | 12.7% |
|
![]() | All Others* | 6.7% |
|
As of August 31, 2010 | |||
![]() | Beverages | 31.1% |
|
![]() | Food & Staples Retailing | 19.8% |
|
![]() | Household Products | 14.5% |
|
![]() | Tobacco | 12.8% |
|
![]() | Food Products | 12.0% |
|
![]() | All Others* | 9.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BEVERAGES - 30.1% | |||
Brewers - 5.7% | |||
Anadolu Efes Biracilik ve Malt Sanayii AS | 253,611 | $ 3,426,533 | |
Anheuser-Busch InBev SA NV | 558,113 | 31,170,509 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 260,285 | 7,030,298 | |
Molson Coors Brewing Co. Class B | 859,203 | 39,291,353 | |
| 80,918,693 | ||
Distillers & Vintners - 6.0% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,752,181 | 35,604,318 | |
Diageo PLC sponsored ADR | 547,406 | 42,839,994 | |
Pernod-Ricard SA | 58,700 | 5,412,011 | |
| 83,856,323 | ||
Soft Drinks - 18.4% | |||
Coca-Cola Bottling Co. Consolidated | 147,913 | 8,534,580 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 92,029 | 6,723,639 | |
Coca-Cola Icecek AS | 300,073 | 3,322,257 | |
Cott Corp. (a) | 21,000 | 175,135 | |
Embotelladora Andina SA sponsored ADR | 263,641 | 7,018,123 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 61,087 | 3,434,922 | |
PepsiCo, Inc. | 968,207 | 61,403,688 | |
The Coca-Cola Co. | 2,639,308 | 168,704,567 | |
| 259,316,911 | ||
TOTAL BEVERAGES | 424,091,927 | ||
FOOD & STAPLES RETAILING - 15.7% | |||
Drug Retail - 9.6% | |||
CVS Caremark Corp. | 2,814,108 | 93,034,410 | |
Drogasil SA | 217,800 | 1,662,495 | |
Walgreen Co. | 928,945 | 40,260,476 | |
| 134,957,381 | ||
Food Distributors - 0.3% | |||
United Natural Foods, Inc. (a) | 102,934 | 4,369,548 | |
Food Retail - 3.1% | |||
Fresh Market, Inc. | 1,300 | 53,040 | |
Koninklijke Ahold NV | 501,177 | 6,728,121 | |
Safeway, Inc. | 1,357,313 | 29,616,570 | |
Susser Holdings Corp. (a) | 251,104 | 3,477,790 | |
The Pantry, Inc. (a) | 267,987 | 4,223,475 | |
| 44,098,996 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 2.7% | |||
BJ's Wholesale Club, Inc. (a) | 101,322 | $ 4,906,011 | |
Wal-Mart Stores, Inc. | 627,188 | 32,601,232 | |
| 37,507,243 | ||
TOTAL FOOD & STAPLES RETAILING | 220,933,168 | ||
FOOD PRODUCTS - 12.7% | |||
Agricultural Products - 4.4% | |||
Archer Daniels Midland Co. | 489,290 | 18,191,802 | |
Bunge Ltd. | 461,378 | 33,297,650 | |
Cresud S.A.C.I.F. y A. sponsored ADR | 91,600 | 1,594,756 | |
Origin Agritech Ltd. (a) | 95,200 | 842,520 | |
SLC Agricola SA | 276,300 | 3,593,660 | |
Viterra, Inc. | 312,700 | 3,831,279 | |
| 61,351,667 | ||
Packaged Foods & Meats - 8.3% | |||
Ausnutria Dairy Hunan Co. Ltd. | 314,000 | 89,507 | |
Brasil Foods SA | 2,000 | 34,740 | |
Calavo Growers, Inc. | 158,742 | 3,685,989 | |
Cermaq ASA | 227,670 | 3,883,072 | |
Cosan Ltd. Class A | 111,100 | 1,528,736 | |
Danone | 58,620 | 3,675,087 | |
Dean Foods Co. (a) | 673,558 | 7,112,772 | |
Kraft Foods, Inc. Class A | 273,127 | 8,696,364 | |
Lindt & Spruengli AG (d) | 111 | 3,475,957 | |
Mead Johnson Nutrition Co. Class A | 148,440 | 8,884,134 | |
Nestle SA | 510,464 | 28,904,038 | |
Smart Balance, Inc. (a) | 67,600 | 293,384 | |
Unilever NV unit | 1,459,991 | 44,150,128 | |
Want Want China Holdings Ltd. | 4,014,000 | 2,999,676 | |
| 117,413,584 | ||
TOTAL FOOD PRODUCTS | 178,765,251 | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Restaurants - 0.3% | |||
Domino's Pizza, Inc. (a) | 101,404 | 1,710,685 | |
Sonic Corp. (a) | 266,504 | 2,366,556 | |
| 4,077,241 | ||
HOUSEHOLD DURABLES - 0.1% | |||
Household Appliances - 0.0% | |||
SodaStream International Ltd. (d) | 24,200 | 1,070,366 | |
Housewares & Specialties - 0.1% | |||
Tupperware Brands Corp. | 21,400 | 1,148,110 | |
TOTAL HOUSEHOLD DURABLES | 2,218,476 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOUSEHOLD PRODUCTS - 20.0% | |||
Household Products - 20.0% | |||
Colgate-Palmolive Co. | 756,907 | $ 59,432,338 | |
Procter & Gamble Co. | 3,524,352 | 222,210,399 | |
| 281,642,737 | ||
PERSONAL PRODUCTS - 2.4% | |||
Personal Products - 2.4% | |||
Avon Products, Inc. | 898,363 | 24,983,475 | |
Hypermarcas SA (a) | 138,400 | 1,580,478 | |
Natura Cosmeticos SA | 138,800 | 3,521,305 | |
Nu Skin Enterprises, Inc. Class A | 109,000 | 3,479,280 | |
| 33,564,538 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 692,820 | 42,566,861 | |
Perrigo Co. | 1,000 | 76,430 | |
| 42,643,291 | ||
TOBACCO - 14.8% | |||
Tobacco - 14.8% | |||
Altria Group, Inc. | 3,088,731 | 78,361,105 | |
British American Tobacco PLC sponsored ADR (d) | 1,055,541 | 85,636,041 | |
KT&G Corp. | 61,159 | 3,113,925 | |
Lorillard, Inc. | 69,198 | 5,312,330 | |
Philip Morris International, Inc. | 509,803 | 32,005,432 | |
Souza Cruz Industria Comerico | 73,500 | 3,525,243 | |
| 207,954,076 | ||
TOTAL COMMON STOCKS (Cost $1,198,155,448) | 1,395,890,705 | ||
Money Market Funds - 1.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 15,137,132 | $ 15,137,132 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 4,824,339 | 4,824,339 | |
TOTAL MONEY MARKET FUNDS (Cost $19,961,471) | 19,961,471 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $1,218,116,919) | 1,415,852,176 | ||
NET OTHER ASSETS (LIABILITIES) - (0.5)% | (7,126,334) | ||
NET ASSETS - 100% | $ 1,408,725,842 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,915 |
Fidelity Securities Lending Cash Central Fund | 242,084 |
Total | $ 299,999 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,395,890,705 | $ 1,364,720,196 | $ 31,170,509 | $ - |
Money Market Funds | 19,961,471 | 19,961,471 | - | - |
Total Investments in Securities: | $ 1,415,852,176 | $ 1,384,681,667 | $ 31,170,509 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 75.3% |
United Kingdom | 9.2% |
Netherlands | 3.6% |
Bermuda | 2.5% |
Switzerland | 2.3% |
Belgium | 2.2% |
Brazil | 1.4% |
Others (Individually Less Than 1%) | 3.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,773,853) - See accompanying schedule: Unaffiliated issuers (cost $1,198,155,448) | $ 1,395,890,705 |
|
Fidelity Central Funds (cost $19,961,471) | 19,961,471 |
|
Total Investments (cost $1,218,116,919) |
| $ 1,415,852,176 |
Receivable for fund shares sold | 1,507,366 | |
Dividends receivable | 1,756,097 | |
Distributions receivable from Fidelity Central Funds | 20,089 | |
Prepaid expenses | 2,695 | |
Other receivables | 5,404 | |
Total assets | 1,419,143,827 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 80,369 | |
Payable for fund shares redeemed | 4,344,746 | |
Accrued management fee | 655,955 | |
Distribution and service plan fees payable | 132,062 | |
Other affiliated payables | 313,090 | |
Other payables and accrued expenses | 67,424 | |
Collateral on securities loaned, at value | 4,824,339 | |
Total liabilities | 10,417,985 | |
|
|
|
Net Assets | $ 1,408,725,842 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,127,374 | |
Undistributed net investment income | 3,223,201 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,638,829 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 197,736,438 | |
Net Assets | $ 1,408,725,842 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 67.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $67.65) | $ 71.78 | |
Class T: | $ 67.30 | |
|
|
|
Maximum offering price per share (100/96.50 of $67.30) | $ 69.74 | |
Class B: | $ 66.83 | |
|
|
|
Class C: | $ 66.71 | |
|
|
|
Consumer Staples: | $ 67.98 | |
|
|
|
Institutional Class: | $ 67.84 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 34,561,280 |
Interest |
| 265 |
Income from Fidelity Central Funds |
| 299,999 |
Total income |
| 34,861,544 |
|
|
|
Expenses | ||
Management fee | $ 7,388,443 | |
Transfer agent fees | 3,240,147 | |
Distribution and service plan fees | 1,550,109 | |
Accounting and security lending fees | 422,444 | |
Custodian fees and expenses | 116,156 | |
Independent trustees' compensation | 7,316 | |
Registration fees | 134,969 | |
Audit | 44,861 | |
Legal | 4,847 | |
Miscellaneous | 16,243 | |
Total expenses before reductions | 12,925,535 | |
Expense reductions | (35,683) | 12,889,852 |
Net investment income (loss) | 21,971,692 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,316,174 | |
Foreign currency transactions | (125,434) | |
Total net realized gain (loss) |
| 37,190,740 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 108,090,796 | |
Assets and liabilities in foreign currencies | 2,058 | |
Total change in net unrealized appreciation (depreciation) |
| 108,092,854 |
Net gain (loss) | 145,283,594 | |
Net increase (decrease) in net assets resulting from operations | $ 167,255,286 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 21,971,692 | $ 17,630,422 |
Net realized gain (loss) | 37,190,740 | 34,351,921 |
Change in net unrealized appreciation (depreciation) | 108,092,854 | 298,589,963 |
Net increase (decrease) in net assets resulting from operations | 167,255,286 | 350,572,306 |
Distributions to shareholders from net investment income | (18,562,633) | (15,962,478) |
Distributions to shareholders from net realized gain | (13,301,800) | - |
Total distributions | (31,864,433) | (15,962,478) |
Share transactions - net increase (decrease) | 3,732,087 | 33,089,434 |
Redemption fees | 35,627 | 34,831 |
Total increase (decrease) in net assets | 139,158,567 | 367,734,093 |
|
|
|
Net Assets | ||
Beginning of period | 1,269,567,275 | 901,833,182 |
End of period (including undistributed net investment income of $3,223,201 and undistributed net investment income of $1,438,918, respectively) | $ 1,408,725,842 | $ 1,269,567,275 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .98 | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.10 | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 8.08 | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.83) | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | (.66) | - | (.02) | (2.44) | - |
Total distributions | (1.49) | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 13.27% | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.11% | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.53% | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .79 | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.05 | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 7.84 | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.65) | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.31) | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 12.93% | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.24% | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .46 | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 6.98 | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 7.44 | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.32) | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (.98) | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 12.35% | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .73% | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .49 | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.00 | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 7.49 | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.41) | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.07) | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 12.44% | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.85% | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .79% | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.14 | .96 | .88 | .71 | .56 |
Net realized and unrealized gain (loss) | 7.14 | 17.11 | (19.31) | 7.30 | 8.88 |
Total from investment operations | 8.28 | 18.07 | (18.43) | 8.01 | 9.44 |
Distributions from net investment income | (.98) | (.87) | (.67) | (.46) | (.32) |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | (3.18) |
Total distributions | (1.64) | (.87) | (.69) H | (2.90) | (3.50) |
Redemption fees added to paid in capital B | - G | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Total Return A | 13.55% | 40.96% | (29.23)% | 13.72% | 18.43% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .86% | .92% | .91% | .91% | 1.01% |
Expenses net of fee waivers, if any | .86% | .92% | .91% | .90% | .99% |
Expenses net of all reductions | .86% | .91% | .90% | .90% | .98% |
Net investment income (loss) | 1.78% | 1.73% | 1.55% | 1.12% | .99% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 |
Portfolio turnover rate D | 57% | 69% | 70% | 71% | 99% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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. F For the year ended February 29. G Amount represents less than $.01 per share. H 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, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.15 | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 7.13 | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 8.28 | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (1.04) | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | - |
Total distributions | (1.70) | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | - J | .01 | .01 | - J |
Net asset value, end of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 13.57% | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .87% | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.77% | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 57% | 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. EFees 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, 2011
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | |
Gross unrealized depreciation | |
Net unrealized appreciation (depreciation) on securities and other investments | |
Tax Cost |
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 | $ 3,273,198 |
Undistributed long-term capital gain | $ 9,389,077 |
Net unrealized appreciation (depreciation) | $ 191,937,229 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 20,981,143 | $ 15,962,478 |
Long-term Capital Gains | 10,883,290 | - |
Total | $ 31,864,433 | $ 15,962,478 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $758,599,862 and $731,559,150, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 397,107 | $ 750 |
Class T | .25% | .25% | 151,642 | 730 |
Class B | .75% | .25% | 206,719 | 155,566 |
Class C | .75% | .25% | 794,641 | 171,222 |
|
|
| $ 1,550,109 | $ 328,268 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 74,644 |
Class T | 11,773 |
Class B* | 44,031 |
Class C* | 9,882 |
| $ 140,330 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 384,629 | .24 |
Class T | 85,440 | .28 |
Class B | 61,736 | .30 |
Class C | 189,687 | .24 |
Consumer Staples | 2,187,260 | .24 |
Institutional Class | 331,395 | .26 |
| $ 3,240,147 |
|
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 $17,374 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,935 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $242,084, including $4,962 from securities loaned to FCM.
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 $35,625 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 $58.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 2,005,855 | $ 2,068,687 |
Class T | 304,100 | 279,551 |
Class B | 100,155 | 121,683 |
Class C | 513,058 | 461,837 |
Consumer Staples | 13,026,528 | 12,515,444 |
Institutional Class | 2,612,937 | 515,276 |
Total | $ 18,562,633 | $ 15,962,478 |
From net realized gain |
|
|
Class A | $ 1,585,279 | $ - |
Class T | 307,782 | - |
Class B | 204,642 | - |
Class C | 836,095 | - |
Consumer Staples | 8,597,123 | - |
Institutional Class | 1,770,879 | - |
Total | $ 13,301,800 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 610,485 | 1,132,943 | $ 39,028,355 | $ 59,482,737 |
Reinvestment of distributions | 47,297 | 31,495 | 3,150,891 | 1,903,559 |
Shares redeemed | (944,038) | (1,263,286) | (60,078,639) | (70,043,896) |
Net increase (decrease) | (286,256) | (98,848) | $ (17,899,393) | $ (8,657,600) |
Class T |
|
|
|
|
Shares sold | 91,776 | 173,895 | $ 5,882,190 | $ 9,112,154 |
Reinvestment of distributions | 8,541 | 4,329 | 566,923 | 262,823 |
Shares redeemed | (120,454) | (207,203) | (7,689,132) | (10,599,980) |
Net increase (decrease) | (20,137) | (28,979) | $ (1,240,019) | $ (1,225,003) |
Class B |
|
|
|
|
Shares sold | 35,654 | 104,786 | $ 2,191,455 | $ 5,439,880 |
Reinvestment of distributions | 3,610 | 1,610 | 238,429 | 97,230 |
Shares redeemed | (89,029) | (99,879) | (5,598,851) | (5,370,134) |
Net increase (decrease) | (49,765) | 6,517 | $ (3,168,967) | $ 166,976 |
Class C |
|
|
|
|
Shares sold | 340,893 | 378,183 | $ 21,482,594 | $ 19,816,576 |
Reinvestment of distributions | 14,479 | 5,180 | 954,487 | 312,378 |
Shares redeemed | (362,057) | (422,141) | (23,068,564) | (22,614,834) |
Net increase (decrease) | (6,685) | (38,778) | $ (631,483) | $ (2,485,880) |
Consumer Staples |
|
|
|
|
Shares sold | 4,055,609 | 6,969,074 | $ 260,108,965 | $ 390,940,582 |
Reinvestment of distributions | 309,170 | 198,030 | 20,671,323 | 11,983,104 |
Shares redeemed | (6,885,851) | (6,628,713) | (436,510,553) | (351,735,799) |
Net increase (decrease) | (2,521,072) | 538,391 | $ (155,730,265) | $ 51,187,887 |
Institutional Class |
|
|
|
|
Shares sold | 3,382,703 | 333,805 | $ 212,714,327 | $ 17,656,120 |
Reinvestment of distributions | 58,392 | 4,184 | 3,904,787 | 251,491 |
Shares redeemed | (524,454) | (449,527) | (34,216,900) | (23,804,557) |
Net increase (decrease) | 2,916,641 | (111,538) | $ 182,402,214 | $ (5,896,946) |
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
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 29.12% | 14.18% | 21.50% |
Class T (incl. 3.50% sales charge) B | 31.83% | 14.48% | 21.66% |
Class B (incl. contingent deferred sales charge) C | 30.97% | 14.57% | 21.83% |
Class C (incl. contingent deferred sales charge) D | 35.01% | 14.79% | 21.83% |
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 28, 2001, 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 Gold Fund
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor® Gold Fund: For the 12 months ending February 28, 2011, the fund's Class A, Class T, Class B and Class C shares returned 36.99%, 36.62%, 35.97% and 36.01%, respectively (excluding sales charges), compared with the 36.78% gain of the S&P® Global BMI Gold Capped Index and the lower return of the broadly based S&P 500® Index. Our ability to diversify outside the gold space of the industry benchmark and into silver equities was the single largest contributor to relative performance, with Silver Wheaton's 175% return leading the way. Additional contributions came from our positions in gold companies that were acquired at premium prices during a period of heightened merger-and-acquisition activity. Names in this category included Lihir Gold, Fronteer Gold, Andean Resources and Red Back Mining. The next significant contribution came from underweightings in some underperforming gold companies, such as Newmont Mining, Goldcorp, Polyus Gold and Gammon Gold. However, toward the end of 2010, believing that the reasons for Goldcorp's underperformance were about to go away, we overweighted this stock. The last major contributor was our overweightings in some of the top-performing gold producers, Newcrest Mining and Eldorado Gold, and our out-of-benchmark investments in development and exploration names such as Avion Gold and Canaco Resources. Additionally, dollar weakness in relation to our foreign holdings buoyed performance. On the other hand, the largest detractors from relative performance were our underweightings in outperforming emerging-markets and exploration gold names such as SEMAFO, Gabriel Resources, Nevsun Resources and NovaGold Resources. These companies delivered strong performance, but our assessment of risk and reward suggested they did not warrant larger weightings in the fund. Another area of relative underperformance was our gold bullion position, which delivered an approximate 26% return but lagged the returns of gold equities, which tend to outperform bullion in a rising gold price environment. We continued to hold a minor position in bullion because its beta, liquidity and utility in equitizing cash are extremely helpful in portfolio allocation.
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, 2010 to February 28, 2011).
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 | 1.14% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.70 | $ 6.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.71 |
Class T | 1.42% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,124.00 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Class C | 1.86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.50 | $ 9.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.57 | $ 9.30 |
Gold | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.00 | $ 4.64 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.50 | $ 4.38 |
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
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 10.0 |
Barrick Gold Corp. | 11.5 | 10.1 |
Newcrest Mining Ltd. | 9.6 | 10.0 |
AngloGold Ashanti Ltd. sponsored ADR | 6.8 | 6.3 |
Kinross Gold Corp. | 5.9 | 4.2 |
Newmont Mining Corp. | 5.0 | 8.1 |
Agnico-Eagle Mines Ltd. (Canada) | 3.8 | 5.3 |
Yamana Gold, Inc. | 3.5 | 2.7 |
Eldorado Gold Corp. | 3.2 | 3.9 |
Randgold Resources Ltd. sponsored ADR | 3.2 | 4.6 |
| 64.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Gold | 95.8% |
|
![]() | Precious Metals & Minerals | 2.6% |
|
![]() | Diversified Metals & Mining | 0.4% |
|
![]() | Steel | 0.1% |
|
![]() | Construction & Engineering | 0.1% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2010 | |||
![]() | Gold | 96.5% |
|
![]() | Precious Metals & Minerals | 2.2% |
|
![]() | Coal & Consumable Fuels | 0.6% |
|
![]() | Construction & Farm Machinery & Heavy Trucks | 0.2% |
|
![]() | Diversified Metals & Mining | 0.1% |
|
![]() | All Others* | 0.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
Australia - 12.6% | |||
METALS & MINING - 12.6% | |||
Diversified Metals & Mining - 0.1% | |||
Mineral Deposits Ltd. Australia (a) | 637,390 | $ 3,860,725 | |
Sandfire Resources NL (a) | 314,167 | 2,341,230 | |
| 6,201,955 | ||
Gold - 12.5% | |||
Catalpa Resources Ltd. (a)(d) | 1,443,833 | 2,286,806 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 5,326,900 | 10,262,977 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 60,408 | |
(Canada) (a) | 110,000 | 346,564 | |
Intrepid Mines Ltd.: | |||
(Australia) (a)(d) | 8,769,767 | 19,144,065 | |
(Canada) (a) | 320,000 | 682,008 | |
Kingsgate Consolidated NL | 3,375,767 | 32,517,776 | |
Kula Gold Ltd. | 26,245 | 41,629 | |
Medusa Mining Ltd. | 3,127,885 | 22,570,596 | |
Newcrest Mining Ltd. | 11,682,094 | 451,560,440 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,884,308 | 14,714,500 | |
(Canada) (a) | 1,300,000 | 3,961,905 | |
Resolute Mining Ltd. (a)(d) | 3,986,661 | 5,358,385 | |
St Barbara Ltd. (a) | 5,729,676 | 11,765,708 | |
Troy Resources NL (a)(e) | 2,300,000 | 8,619,820 | |
| 583,893,587 | ||
TOTAL METALS & MINING | 590,095,542 | ||
Bailiwick of Jersey - 3.2% | |||
METALS & MINING - 3.2% | |||
Gold - 3.2% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,818,167 | 147,180,619 | |
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 75,100 | 742,301 | |
Precious Metals & Minerals - 0.0% | |||
Aquarius Platinum Ltd. (United Kingdom) | 161,752 | 1,060,353 | |
TOTAL METALS & MINING | 1,802,654 | ||
Canada - 60.1% | |||
METALS & MINING - 60.1% | |||
Diversified Metals & Mining - 0.2% | |||
Clifton Star Resources, Inc. (a) | 25,000 | 117,632 | |
East Asia Minerals Corp. (a) | 5,000 | 29,241 | |
Galway Resources Ltd. (a) | 15,000 | 19,923 | |
Kimber Resources, Inc. (a) | 16,100 | 22,544 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 8,166,301 | |
Sabina Gold & Silver Corp. (a) | 200,000 | 1,361,133 | |
| |||
Shares | Value | ||
Southern Arc Minerals, Inc. (a) | 30,000 | $ 53,745 | |
Valley High Ventures Ltd. (a) | 237,500 | 457,272 | |
| 10,227,791 | ||
Gold - 57.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,554,400 | 179,629,879 | |
Alacer Gold Corp. (a) | 2,409,063 | 23,166,691 | |
Alamos Gold, Inc. | 2,213,800 | 37,882,477 | |
Argonaut Gold, Inc. (a)(d) | 619,800 | 3,171,589 | |
Aurizon Mines Ltd. (a) | 2,664,600 | 19,012,281 | |
Avion Gold Corp. (a) | 5,020,000 | 8,631,557 | |
B2Gold Corp. (a) | 3,627,400 | 9,448,980 | |
Barrick Gold Corp. (d) | 10,177,319 | 537,341,487 | |
Brigus Gold Corp. (a) | 10,000 | 16,268 | |
Canaco Resources, Inc. (a) | 1,065,000 | 6,305,019 | |
Canaco Resources, Inc. (a)(e)(f) | 561,600 | 3,324,788 | |
Centerra Gold, Inc. | 2,166,400 | 41,666,257 | |
China Gold International Resources Corp. Ltd. (a) | 40,000 | 219,923 | |
Colossus Minerals, Inc. (a) | 961,100 | 8,252,843 | |
Corvus Gold, Inc. (a) | 138,350 | 103,985 | |
Detour Gold Corp. (a) | 543,000 | 17,677,900 | |
Detour Gold Corp. (a)(e) | 785,900 | 25,585,748 | |
Eldorado Gold Corp. (d) | 8,747,013 | 149,048,201 | |
European Goldfields Ltd. (a) | 2,004,600 | 25,964,343 | |
Exeter Resource Corp. (a) | 238,000 | 1,274,234 | |
Extorre Gold Mines Ltd. (a) | 453,000 | 2,374,023 | |
Franco-Nevada Corp. (d) | 1,943,400 | 66,150,635 | |
Fronteer Gold, Inc. (a) | 365,000 | 5,392,793 | |
Gabriel Resources Ltd. (a) | 310,000 | 2,572,561 | |
Gammon Gold, Inc. (a) | 2,362,500 | 20,943,243 | |
Goldcorp, Inc. | 11,936,900 | 570,390,248 | |
Golden Star Resources Ltd. (a)(d) | 3,055,769 | 9,658,904 | |
Gran Colombia Gold Corp. (a)(d) | 1,560,000 | 3,083,861 | |
Great Basin Gold Ltd. (a)(d) | 5,937,900 | 15,650,990 | |
Greystar Resources Ltd. (a) | 1,329,200 | 5,200,474 | |
Guyana Goldfields, Inc. (a) | 1,203,000 | 11,358,054 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 1,463,423 | |
IAMGOLD Corp. | 6,277,000 | 133,069,169 | |
International Minerals Corp.: | |||
(Canada) (a) | 152,100 | 1,168,253 | |
(Switzerland) (a) | 15,000 | 116,422 | |
International Tower Hill Mines Ltd. (a) | 341,700 | 3,187,441 | |
Jaguar Mining, Inc. (a)(d) | 884,700 | 4,709,291 | |
Keegan Resources, Inc. (a) | 30,000 | 229,189 | |
Kinross Gold Corp. | 17,439,491 | 276,518,056 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 1,070,756 | |
Kirkland Lake Gold, Inc. (a) | 509,500 | 7,616,927 | |
Lake Shore Gold Corp. (a) | 2,380,000 | 9,875,315 | |
Levon Resources Ltd. (a) | 20,000 | 37,889 | |
Minefinders Corp. Ltd. (a)(d) | 918,000 | 10,671,012 | |
Nevsun Resources Ltd. (a) | 650,000 | 3,654,054 | |
New Gold, Inc. (a) | 6,561,800 | 63,236,497 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 195,987 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Northgate Minerals Corp. (a) | 4,089,900 | $ 11,664,374 | |
Novagold Resources, Inc. (a)(d) | 1,898,200 | 25,993,369 | |
OceanaGold Corp. (a) | 30,000 | 80,927 | |
Osisko Mining Corp. (a) | 1,932,000 | 26,655,135 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 41,389,961 | |
Premier Gold Mines Ltd. (a) | 1,101,800 | 7,725,362 | |
Primero Mining Corp. (a) | 492,800 | 2,004,180 | |
Queenston Mining, Inc. (a) | 45,000 | 273,359 | |
Rainy River Resources Ltd. (a) | 160,000 | 2,100,386 | |
Romarco Minerals, Inc. (a) | 1,840,000 | 4,470,939 | |
Rubicon Minerals Corp. (a) | 1,946,352 | 9,859,513 | |
San Gold Corp. (a) | 2,357,400 | 6,941,739 | |
Seabridge Gold, Inc. (a) | 636,105 | 21,214,103 | |
SEMAFO, Inc. (a) | 4,606,100 | 48,278,093 | |
Teranga Gold Corp. CDI unit | 1,678,197 | 4,585,373 | |
Timmins Gold Corp. (a) | 10,000 | 24,505 | |
Torex Gold Resources, Inc. (a)(d) | 330,000 | 710,116 | |
Yamana Gold, Inc. | 12,767,400 | 162,344,803 | |
| 2,703,636,154 | ||
Precious Metals & Minerals - 2.1% | |||
ATAC Resources Ltd. (a) | 37,200 | 279,215 | |
Dalradian Resources, Inc. (a) | 15,000 | 35,521 | |
First Majestic Silver Corp. (a) | 10,000 | 152,999 | |
Fortuna Mines, Inc. (a) | 40,000 | 203,861 | |
Orko Silver Corp. (a) | 346,000 | 840,731 | |
Pan American Silver Corp. | 949,187 | 37,113,217 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 3,394,480 | |
Silver Standard Resources, Inc. (a) | 1,061,800 | 28,817,258 | |
Silver Wheaton Corp. (a) | 640,200 | 27,222,919 | |
Tahoe Resources, Inc. | 1,000 | 16,329 | |
| 98,076,530 | ||
TOTAL METALS & MINING | 2,811,940,475 | ||
Cayman Islands - 0.1% | |||
METALS & MINING - 0.1% | |||
Gold - 0.1% | |||
Real Gold Mining Ltd. (a)(d) | 2,925,000 | 4,416,795 | |
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 8,187,950 | 34,799,839 | |
Zijin Mining Group Co. Ltd. (H Shares) | 64,542,000 | 52,956,264 | |
| 87,756,103 | ||
| |||
Shares | Value | ||
Luxembourg - 0.1% | |||
METALS & MINING - 0.1% | |||
Steel - 0.1% | |||
Ternium SA sponsored ADR | 144,300 | $ 5,200,572 | |
Peru - 0.5% | |||
METALS & MINING - 0.5% | |||
Precious Metals & Minerals - 0.5% | |||
Compania de Minas Buenaventura SA sponsored ADR | 463,900 | 21,650,213 | |
Russia - 0.5% | |||
METALS & MINING - 0.5% | |||
Gold - 0.5% | |||
Polyus Gold OJSC sponsored ADR | 697,566 | 23,821,879 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 73,300 | 1,383,171 | |
TOTAL METALS & MINING | 25,205,050 | ||
South Africa - 11.2% | |||
METALS & MINING - 11.2% | |||
Gold - 11.2% | |||
AngloGold Ashanti Ltd. sponsored ADR (d) | 6,507,952 | 317,848,376 | |
Gold Fields Ltd. | 55,000 | 985,196 | |
Gold Fields Ltd. sponsored ADR | 7,581,026 | 135,776,176 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 17,391,539 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,491,800 | 52,913,404 | |
| 524,914,691 | ||
Precious Metals & Minerals - 0.0% | |||
Anglo Platinum Ltd. | 5,000 | 486,176 | |
TOTAL METALS & MINING | 525,400,867 | ||
Switzerland - 0.1% | |||
CONSTRUCTION & ENGINEERING - 0.1% | |||
Construction & Engineering - 0.1% | |||
Foster Wheeler AG (a) | 132,618 | 4,795,467 | |
United Kingdom - 1.0% | |||
METALS & MINING - 1.0% | |||
Gold - 1.0% | |||
Petropavlovsk PLC | 2,770,929 | 48,835,446 | |
United States of America - 7.2% | |||
METALS & MINING - 7.2% | |||
Diversified Metals & Mining - 0.1% | |||
Walter Energy, Inc. | 40,000 | 4,840,400 | |
Gold - 7.1% | |||
Allied Nevada Gold Corp. (a) | 1,337,800 | 40,588,852 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 608,288 | |
Newmont Mining Corp. | 4,221,850 | 233,341,650 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Royal Gold, Inc. | 940,413 | $ 46,663,293 | |
US Gold Corp. (a)(d) | 1,310,100 | 9,511,326 | |
| 330,713,409 | ||
Precious Metals & Minerals - 0.0% | |||
Coeur d'Alene Mines Corp. (a) | 30,000 | 945,300 | |
Paramount Gold & Silver Corp. (a)(d) | 10,000 | 39,900 | |
| 985,200 | ||
TOTAL METALS & MINING | 336,539,009 | ||
TOTAL COMMON STOCKS (Cost $3,248,618,022) | 4,610,818,812 | ||
Commodities - 0.5% | |||
Troy |
| ||
Gold Bullion (a) | 18,500 | 26,116,450 | |
Money Market Funds - 13.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 40,583,120 | 40,583,120 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 586,930,925 | 586,930,925 | |
TOTAL MONEY MARKET FUNDS (Cost $627,514,045) | 627,514,045 | ||
TOTAL INVESTMENT PORTFOLIO - 112.4% (Cost $3,890,733,467) | 5,264,449,307 | ||
NET OTHER ASSETS (LIABILITIES) - (12.4)% | (582,662,256) | ||
NET ASSETS - 100% | $ 4,681,787,051 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $88,746,028 or 1.9% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
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 | $ 91,930 |
Fidelity Securities Lending Cash Central Fund | 678,947 |
Total | $ 770,877 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 207,130,454 | $ 24,953,280 | $ 237,367,750 | $ - | $ 26,107,166 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 4,610,818,812 | $ 4,018,239,956 | $ 592,578,856 | $ - |
Commodities | 26,116,450 | 26,116,450 | - | - |
Money Market Funds | 627,514,045 | 627,514,045 | - | - |
Total Investments: | $ 5,264,449,307 | $ 4,671,870,451 | $ 592,578,856 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $569,079,718) - See accompanying schedule: Unaffiliated issuers (cost $3,248,618,022) | $ 4,610,818,812 |
|
Fidelity Central Funds (cost $627,514,045) | 627,514,045 |
|
Commodities (cost $14,601,400) | 26,116,450 |
|
Total Investments (cost $3,890,733,467) |
| $ 5,264,449,307 |
Cash | 3,427 | |
Receivable for investments sold | 16,094,242 | |
Receivable for fund shares sold | 11,759,060 | |
Dividends receivable | 1,436,278 | |
Distributions receivable from Fidelity Central Funds | 63,869 | |
Prepaid expenses | 7,789 | |
Other receivables | 31,365 | |
Total assets | 5,293,845,337 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,682,395 | |
Delayed delivery | 3,122,409 | |
Payable for fund shares redeemed | 8,771,625 | |
Accrued management fee | 2,088,782 | |
Distribution and service plan fees payable | 127,723 | |
Other affiliated payables | 1,143,284 | |
Other payables and accrued expenses | 191,143 | |
Collateral on securities loaned, at value | 586,930,925 | |
Total liabilities | 612,058,286 | |
|
|
|
Net Assets | $ 4,681,787,051 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,463,306,434 | |
Accumulated net investment loss | (1,236) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (155,217,968) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,373,699,821 | |
Net Assets | $ 4,681,787,051 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 50.92 | |
|
|
|
Maximum offering price per share (100/94.25 of $50.92) | $ 54.03 | |
Class T: | $ 50.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $50.68) | $ 52.52 | |
Class B: | $ 50.02 | |
|
|
|
Class C: | $ 49.81 | |
|
|
|
Gold: | $ 51.44 | |
|
|
|
Institutional Class: | $ 51.32 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 20,259,733 |
Interest |
| 215 |
Income from Fidelity Central Funds |
| 770,877 |
Total income |
| 21,030,825 |
|
|
|
Expenses | ||
Management fee | $ 23,221,155 | |
Transfer agent fees | 11,208,569 | |
Distribution and service plan fees | 1,316,746 | |
Accounting and security lending fees | 1,537,791 | |
Custodian fees and expenses | 482,729 | |
Independent trustees' compensation | 22,282 | |
Registration fees | 324,310 | |
Audit | 69,408 | |
Legal | 13,259 | |
Interest | 934 | |
Miscellaneous | 44,541 | |
Total expenses before reductions | 38,241,724 | |
Expense reductions | (843,975) | 37,397,749 |
Net investment income (loss) | (16,366,924) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 335,695,287 | |
Commodities | 65,240,750 |
|
Foreign currency transactions | 639,132 | |
Total net realized gain (loss) |
| 401,575,169 |
Change in net unrealized appreciation (depreciation) on: Investments | 839,874,132 | |
Assets and liabilities in foreign currencies | (9,727) | |
Commodities | (33,347,000) | |
Total change in net unrealized appreciation (depreciation) |
| 806,517,405 |
Net gain (loss) | 1,208,092,574 | |
Net increase (decrease) in net assets resulting from operations | $ 1,191,725,650 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (16,366,924) | $ (11,767,758) |
Net realized gain (loss) | 401,575,169 | 141,739,537 |
Change in net unrealized appreciation (depreciation) | 806,517,405 | 582,559,218 |
Net increase (decrease) in net assets resulting from operations | 1,191,725,650 | 712,530,997 |
Distributions to shareholders from net realized gain | (403,524,767) | (56,010,412) |
Share transactions - net increase (decrease) | 849,828,502 | 418,234,847 |
Redemption fees | 423,645 | 514,829 |
Total increase (decrease) in net assets | 1,638,453,030 | 1,075,270,261 |
|
|
|
Net Assets | ||
Beginning of period | 3,043,334,021 | 1,968,063,760 |
End of period (including accumulated net investment loss of $1,236 and accumulated net investment loss of $919, respectively) | $ 4,681,787,051 | $ 3,043,334,021 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.30) | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.28 | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 14.98 | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.57) | (.71) | (.17) | (5.01) | - |
Total distributions | (4.57) | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 36.99% | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.16% | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.15% | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.14% | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.43) | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.21 | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 14.78 | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.45) | (.63) | (.17) | (4.97) | - |
Total distributions | (4.45) | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 36.62% | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.42% | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.90)% | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.66) | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 15.02 | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 14.36 | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.21) | (.51) | (.17) | (4.84) | - |
Total distributions | (4.21) | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | - K | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 35.97% | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.92% | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.91% | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.39)% | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.64) | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.98 | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 14.34 | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | - | (.17) | - |
Distributions from net realized gain | (4.28) | (.53) | (.17) | (4.89) | - |
Total distributions | (4.28) | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 36.01% | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.88% | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.87% | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.35)% | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | (.16) | (.04) | (.02) | .22 F |
Net realized and unrealized gain (loss) | 15.43 | 11.10 | (15.51) | 15.05 | 5.49 |
Total from investment operations | 15.25 | 10.94 | (15.55) | 15.03 | 5.71 |
Distributions from net investment income | - | - | - | (.18) | (.02) |
Distributions from net realized gain | (4.67) | (.77) | (.17) | (5.03) | (5.10) |
Total distributions | (4.67) | (.77) | (.17) | (5.21) | (5.12) |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .01 | .04 |
Net asset value, end of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Total Return A, B | 37.35% | 35.52% | (33.59)% | 45.10% | 16.19% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | .98% | .89% | .85% | .90% |
Expenses net of fee waivers, if any | .90% | .96% | .87% | .85% | .90% |
Expenses net of all reductions | .89% | .94% | .86% | .81% | .87% |
Net investment income (loss) | (.37)% | (.40)% | (.13)% | (.05)% | .62% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 |
Portfolio turnover rate E | 35% | 46% | 42% | 55% | 85% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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%. GExpense 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. HFor the year ended February 29. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.41 | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 15.26 | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.72) | (.82) | (.17) | (5.04) | - |
Total distributions | (4.72) | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 37.45% | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .85% | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .84% | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .83% | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.31)% | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. HExpense 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. IFor 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, 2011
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Consolidated Subsidiary.
The Fund invests in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2011, the Fund held $26,107,166 in the Subsidiary, representing 0.6% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, is included at the end of the Fund's Consolidated 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the 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 foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 1,108,022,042 |
Gross unrealized depreciation | (79,873,929) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 1,028,148,113 |
Tax Cost | $ 4,236,301,194 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 158,213,882 |
Undistributed long-term capital gains | $ 25,688,008 |
Net unrealized appreciation (depreciation) | $ 1,028,132,094 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 183,285,077 | $ 56,010,412 |
Long-term Capital Gains | 220,239,690 | - |
Total | $ 403,524,767 | $ 56,010,412 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the 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 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. 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 $1,874,696,211 and $1,415,831,862, 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.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 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 $471,020 and is reflected in Expense reductions on the Consolidated Statement of Operations.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 299,324 | $ 12,201 |
Class T | .25% | .25% | 181,474 | 370 |
Class B | .75% | .25% | 241,245 | 181,088 |
Class C | .75% | .25% | 594,703 | 222,899 |
|
|
| $ 1,316,746 | $ 416,558 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 141,146 |
Class T | 20,875 |
Class B* | 49,877 |
Class C* | 19,315 |
| $ 231,213 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 334,693 | .28 |
Class T | 109,369 | .30 |
Class B | 70,450 | .29 |
Class C | 152,333 | .26 |
Gold | 10,351,630 | .28 |
Institutional Class | 190,094 | .22 |
| $ 11,208,569 |
|
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 $5,404 for the period.
Annual Report
7. Fees and Other Transactions with Affiliates - continued
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 |
Borrower | $ 15,940,400 | .42% | $ 934 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $14,493 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $678,947. During the period, there were no securities loaned to FCM.
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 $368,969 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 $3,986.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net realized gain |
|
|
Class A | $ 11,944,959 | $ 1,356,457 |
Class T | 3,497,337 | 386,094 |
Class B | 2,159,100 | 226,465 |
Class C | 5,735,528 | 480,176 |
Gold | 369,777,197 | 53,033,502 |
Institutional Class | 10,410,646 | 527,718 |
Total | $ 403,524,767 | $ 56,010,412 |
Annual Report
Notes to Consolidated Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,813,814 | 1,548,727 | $ 88,297,648 | $ 60,979,204 |
Reinvestment of distributions | 211,919 | 28,941 | 10,924,421 | 1,258,667 |
Shares redeemed | (1,131,112) | (828,099) | (54,494,300) | (32,946,669) |
Net increase (decrease) | 894,621 | 749,569 | $ 44,727,769 | $ 29,291,202 |
Class T |
|
|
|
|
Shares sold | 503,427 | 410,718 | $ 24,561,424 | $ 16,022,649 |
Reinvestment of distributions | 65,695 | 8,602 | 3,372,922 | 372,822 |
Shares redeemed | (315,455) | (271,824) | (15,070,272) | (10,198,558) |
Net increase (decrease) | 253,667 | 147,496 | $ 12,864,074 | $ 6,196,913 |
Class B |
|
|
|
|
Shares sold | 147,555 | 271,111 | $ 6,862,473 | $ 10,287,423 |
Reinvestment of distributions | 37,199 | 4,654 | 1,885,064 | 199,620 |
Shares redeemed | (108,197) | (95,719) | (5,152,463) | (3,721,090) |
Net increase (decrease) | 76,557 | 180,046 | $ 3,595,074 | $ 6,765,953 |
Class C |
|
|
|
|
Shares sold | 736,040 | 698,249 | $ 34,773,958 | $ 27,513,842 |
Reinvestment of distributions | 91,950 | 9,039 | 4,652,354 | 386,528 |
Shares redeemed | (345,478) | (320,512) | (16,458,498) | (12,323,085) |
Net increase (decrease) | 482,512 | 386,776 | $ 22,967,814 | $ 15,577,285 |
Gold |
|
|
|
|
Shares sold | 38,551,839 | 40,468,485 | $ 1,893,619,015 | $ 1,581,099,363 |
Reinvestment of distributions | 6,874,054 | 1,174,296 | 357,359,018 | 51,481,173 |
Shares redeemed | (32,315,161) | (33,470,388) | (1,572,262,287) | (1,303,757,681) |
Net increase (decrease) | 13,110,732 | 8,172,393 | $ 678,715,746 | $ 328,822,855 |
Institutional Class |
|
|
|
|
Shares sold | 2,014,694 | 933,259 | $ 99,860,479 | $ 39,237,749 |
Reinvestment of distributions | 184,813 | 10,089 | 9,641,424 | 441,486 |
Shares redeemed | (457,947) | (208,491) | (22,543,878) | (8,098,596) |
Net increase (decrease) | 1,741,560 | 734,857 | $ 86,958,025 | $ 31,580,639 |
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 27.55% | 11.19% | 14.02% |
Class T (incl. 3.50% sales charge) B | 30.25% | 11.42% | 14.14% |
Class B (incl. contingent deferred sales charge) C | 29.29% | 11.48% | 14.30% |
Class C (incl. contingent deferred sales charge) D | 33.29% | 11.74% | 14.30% |
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 28, 2001, 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 Materials Fund
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned 35.33%, 34.98%, 34.29% and 34.29%, respectively (excluding sales charges), topping the S&P 500® and the 33.20% gain of the MSCI® U.S. IM Materials 25/50 Index. The specialty chemicals group had the largest positive impact on performance versus the MSCI index, entirely due to favorable stock selection. Fund performance also was lifted by an out-of-benchmark stake in coal and consumable fuels, as well as by solid picks in a number of other industries. Further, a weaker dollar aided our foreign holdings. An out-of-benchmark position in Netherlands-based LyondellBasell Industries was the fund's largest relative contributor. The company - a pure play on the industrial chemical ethylene - emerged from bankruptcy in April 2010, and in short order the stock embarked on an impressive rally, more than doubling from where I bought it. Ferro - a maker of coatings and paints to the construction, auto, appliance and electronics markets - also was a noteworthy contributor, returning almost 80% for the fund. I sold the stock to lock in profits. A third contributor in the specialty chemicals category was Innophos Holdings, which makes specialty-grade phosphate products for food, pharmaceutical and industrial markets. The stock surged higher in early February, when the company reported earnings that solidly beat estimates. Elsewhere, purchasing United States Steel during the period's second half was rewarding, and underweighting, and eventually selling, Vulcan Materials, a provider of crushed stone and other construction aggregates, also paid off in view of the stock's muted gain. Conversely, a modest cash position dampened the fund's gain in a strongly rising market. Out-of-index exposures to the construction/engineering and building products groups also held back performance, as did an underweighting in precious metals/minerals. At the stock level, not owning strong-performing steel producer Cliffs Natural Resources worked against the fund. Monsanto also hurt results, as growing competition for the company's popular Roundup® agricultural herbicide and its line of genetically modified seeds led the company to cut prices on some products, which ate into profits. Monsanto was the fund's biggest detractor in absolute terms and its second-largest detractor on a relative basis. Other detractors were Ecolab, which provides cleaning and sanitizing products and related items for hospitality, health care and government customers, and container maker Owens-Illinois, the latter of which I sold.
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, 2010 to February 28, 2011).
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 | $ 1,362.10 | $ 6.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,360.20 | $ 8.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.70 | $ 11.34 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.80 | $ 11.22 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Materials | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.10 | $ 5.10 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Institutional Class | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.20 | $ 4.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 7.8 | 8.0 |
E.I. du Pont de Nemours & Co. | 7.5 | 7.7 |
Freeport-McMoRan Copper & Gold, Inc. | 6.9 | 5.6 |
Monsanto Co. | 4.5 | 6.6 |
Praxair, Inc. | 4.4 | 6.1 |
Newmont Mining Corp. | 3.8 | 3.3 |
Air Products & Chemicals, Inc. | 3.5 | 4.0 |
United States Steel Corp. | 2.8 | 0.0 |
Alcoa, Inc. | 2.1 | 0.0 |
The Mosaic Co. | 2.1 | 2.7 |
| 45.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Chemicals | 53.4% |
|
![]() | Metals & Mining | 31.9% |
|
![]() | Containers & | 5.7% |
|
![]() | Construction Materials | 1.2% |
|
![]() | Food Products | 1.0% |
|
![]() | All Others* | 6.8% |
|
As of August 31, 2010 | |||
![]() | Chemicals | 57.9% |
|
![]() | Metals & Mining | 25.8% |
|
![]() | Containers & | 7.2% |
|
![]() | Construction Materials | 2.3% |
|
![]() | Paper & Forest Products | 1.1% |
|
![]() | All Others* | 5.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
CHEMICALS - 53.4% | |||
Commodity Chemicals - 2.5% | |||
Arkema SA | 65,800 | $ 4,807,164 | |
Celanese Corp. Class A | 738,693 | 30,618,825 | |
Grasim Industries Ltd. | 48,407 | 2,527,047 | |
| 37,953,036 | ||
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 464,683 | 26,161,653 | |
BASF AG | 87,436 | 7,271,073 | |
Cabot Corp. | 527,633 | 22,825,404 | |
Dow Chemical Co. | 3,107,211 | 115,463,957 | |
E.I. du Pont de Nemours & Co. | 2,037,677 | 111,807,337 | |
FMC Corp. | 178,400 | 13,815,296 | |
Huntsman Corp. | 539,333 | 9,519,227 | |
Lanxess AG | 122,493 | 9,111,274 | |
PPG Industries, Inc. | 79,800 | 7,052,724 | |
Solutia, Inc. (a) | 564,936 | 13,112,165 | |
| 336,140,110 | ||
Fertilizers & Agricultural Chemicals - 9.0% | |||
CF Industries Holdings, Inc. | 145,854 | 20,606,253 | |
Intrepid Potash, Inc. (a) | 39,700 | 1,532,420 | |
Monsanto Co. | 933,933 | 67,140,443 | |
The Mosaic Co. | 357,820 | 30,718,847 | |
Uralkali JSC GDR (Reg. S) | 215,814 | 8,820,318 | |
Yara International ASA | 92,100 | 4,883,555 | |
| 133,701,836 | ||
Industrial Gases - 7.9% | |||
Air Products & Chemicals, Inc. | 568,557 | 52,307,244 | |
Praxair, Inc. | 659,831 | 65,574,005 | |
| 117,881,249 | ||
Specialty Chemicals - 11.4% | |||
Albemarle Corp. | 187,835 | 10,811,783 | |
Ecolab, Inc. | 513,770 | 24,989,773 | |
Innophos Holdings, Inc. | 545,936 | 23,382,439 | |
Kraton Performance Polymers, Inc. (a) | 355,100 | 12,179,930 | |
LyondellBasell Industries NV Class A (a) | 376,752 | 14,346,716 | |
OMNOVA Solutions, Inc. (a) | 468,541 | 3,298,529 | |
PolyOne Corp. (a) | 248,260 | 3,445,849 | |
Rockwood Holdings, Inc. (a) | 321,032 | 14,944,040 | |
Sherwin-Williams Co. | 329,437 | 27,053,366 | |
Symrise AG | 366,983 | 9,629,891 | |
Valspar Corp. | 288,942 | 10,985,575 | |
W.R. Grace & Co. (a) | 397,246 | 15,111,238 | |
| 170,179,129 | ||
TOTAL CHEMICALS | 795,855,360 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Environmental & Facility Services - 0.2% | |||
Swisher Hygiene, Inc. (a)(d) | 502,100 | 3,029,401 | |
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 0.4% | |||
Construction & Engineering - 0.4% | |||
Orascom Construction Industries SAE GDR | 190,800 | $ 6,525,360 | |
CONSTRUCTION MATERIALS - 1.2% | |||
Construction Materials - 1.2% | |||
HeidelbergCement AG | 233,726 | 16,362,550 | |
Prism Cement Ltd. | 592,401 | 671,383 | |
| 17,033,933 | ||
CONTAINERS & PACKAGING - 5.7% | |||
Metal & Glass Containers - 4.6% | |||
Ball Corp. | 652,818 | 23,566,730 | |
Crown Holdings, Inc. (a) | 574,640 | 22,112,147 | |
Greif, Inc. Class A | 199,320 | 12,888,031 | |
Silgan Holdings, Inc. | 246,400 | 8,988,672 | |
| 67,555,580 | ||
Paper Packaging - 1.1% | |||
Rock-Tenn Co. Class A (d) | 244,900 | 16,812,385 | |
TOTAL CONTAINERS & PACKAGING | 84,367,965 | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 406,728 | 15,122,147 | |
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
Pall Corp. | 94,100 | 5,115,276 | |
METALS & MINING - 31.9% | |||
Aluminum - 2.1% | |||
Alcoa, Inc. | 1,908,300 | 32,154,855 | |
Diversified Metals & Mining - 14.4% | |||
Anglo American PLC (United Kingdom) | 322,851 | 17,497,785 | |
BHP Billiton PLC | 268,800 | 10,656,389 | |
Compass Minerals International, Inc. | 99,510 | 9,301,200 | |
Freeport-McMoRan Copper & Gold, Inc. | 1,954,362 | 103,483,468 | |
Gujarat NRE Coke Ltd. | 1,276,100 | 1,199,559 | |
Gulf Resources, Inc. (a)(d) | 278,029 | 2,491,140 | |
HudBay Minerals, Inc. | 608,400 | 10,554,996 | |
Ivanhoe Mines Ltd. (a) | 254,200 | 7,202,661 | |
Kazakhmys PLC | 211,900 | 4,974,834 | |
MacArthur Coal Ltd. | 584,412 | 7,068,264 | |
Mongolian Mining Corp. | 3,312,000 | 4,201,664 | |
Teck Resources Ltd. Class B (sub. vtg.) | 186,600 | 10,326,641 | |
Walter Energy, Inc. | 216,135 | 26,154,496 | |
| 215,113,097 | ||
Gold - 7.0% | |||
AngloGold Ashanti Ltd. sponsored ADR | 258,295 | 12,615,128 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 2,503,700 | 4,823,709 | |
Newcrest Mining Ltd. | 279,895 | 10,819,080 | |
Newmont Mining Corp. | 1,029,533 | 56,902,289 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Randgold Resources Ltd. sponsored ADR | 94,100 | $ 7,617,395 | |
Yamana Gold, Inc. | 890,200 | 11,319,403 | |
| 104,097,004 | ||
Precious Metals & Minerals - 0.4% | |||
Pan American Silver Corp. | 140,500 | 5,493,551 | |
Steel - 8.0% | |||
Allegheny Technologies, Inc. (d) | 185,500 | 12,443,340 | |
Carpenter Technology Corp. | 485,471 | 20,185,884 | |
Commercial Metals Co. | 258,987 | 4,317,313 | |
Jindal Steel & Power Ltd. | 222,643 | 3,235,246 | |
Reliance Steel & Aluminum Co. | 474,508 | 26,254,528 | |
Ternium SA sponsored ADR | 137,745 | 4,964,330 | |
United States Steel Corp. (d) | 719,035 | 41,337,322 | |
Vale SA sponsored ADR | 179,550 | 6,145,997 | |
| 118,883,960 | ||
TOTAL METALS & MINING | 475,742,467 | ||
OIL, GAS & CONSUMABLE FUELS - 1.0% | |||
Coal & Consumable Fuels - 1.0% | |||
Paladin Energy Ltd. (a) | 671,007 | 3,405,900 | |
PT Bumi Resources Tbk | 34,153,500 | 11,614,820 | |
| 15,020,720 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.7% | |||
Specialized REITs - 0.7% | |||
Weyerhaeuser Co. | 438,585 | 10,705,860 | |
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 0.2% | |||
Trading Companies & Distributors - 0.2% | |||
Brenntag AG | 30,900 | $ 3,230,132 | |
TOTAL COMMON STOCKS (Cost $1,132,830,983) | 1,431,748,621 | ||
Money Market Funds - 7.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 56,769,086 | 56,769,086 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 59,743,976 | 59,743,976 | |
TOTAL MONEY MARKET FUNDS (Cost $116,513,062) | 116,513,062 | ||
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $1,249,344,045) | 1,548,261,683 | ||
NET OTHER ASSETS (LIABILITIES) - (3.9)% | (57,998,548) | ||
NET ASSETS - 100% | $ 1,490,263,135 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,689 |
Fidelity Securities Lending Cash Central Fund | 60,638 |
Total | $ 118,327 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,431,748,621 | $ 1,397,271,941 | $ 34,476,680 | $ - |
Money Market Funds | 116,513,062 | 116,513,062 | - | - |
Total Investments in Securities: | $ 1,548,261,683 | $ 1,513,785,003 | $ 34,476,680 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.5% |
Germany | 3.1% |
Canada | 3.1% |
United Kingdom | 2.2% |
Australia | 1.7% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 5.4% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $18,182,003 of which $17,489,907, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, respectively. |
A capital loss carryforward of approximately $4,359,948 was acquired from Paper and Forest Products Portfolio, of which $3,667,852, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, 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
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $58,657,243) - See accompanying schedule: Unaffiliated issuers (cost $1,132,830,983) | $ 1,431,748,621 |
|
Fidelity Central Funds (cost $116,513,062) | 116,513,062 |
|
Total Investments (cost $1,249,344,045) |
| $ 1,548,261,683 |
Cash | 1,525,870 | |
Foreign currency held at value (cost $48,163) | 48,097 | |
Receivable for investments sold | 7,446,525 | |
Receivable for fund shares sold | 15,282,091 | |
Dividends receivable | 1,460,733 | |
Distributions receivable from Fidelity Central Funds | 26,829 | |
Prepaid expenses | 1,447 | |
Other receivables | 26,632 | |
Total assets | 1,574,079,907 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 17,278,185 | |
Payable for fund shares redeemed | 5,679,245 | |
Accrued management fee | 669,790 | |
Distribution and service plan fees payable | 82,399 | |
Other affiliated payables | 288,780 | |
Other payables and accrued expenses | 74,397 | |
Collateral on securities loaned, at value | 59,743,976 | |
Total liabilities | 83,816,772 | |
|
|
|
Net Assets | $ 1,490,263,135 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,213,090,370 | |
Distributions in excess of net investment income | (22,442) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (21,722,153) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 298,917,360 | |
Net Assets | $ 1,490,263,135 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 69.96 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.96) | $ 74.23 | |
Class T: | $ 69.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $69.68) | $ 72.21 | |
Class B: | $ 68.95 | |
|
|
|
Class C: | $ 68.78 | |
|
|
|
Materials: | $ 70.11 | |
|
|
|
Institutional Class: | $ 70.05 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,034,557 |
Special dividends |
| 12,590,176 |
Interest |
| 42 |
Income from Fidelity Central Funds |
| 118,327 |
Total income |
| 26,743,102 |
|
|
|
Expenses | ||
Management fee | $ 5,076,388 | |
Transfer agent fees | 2,252,029 | |
Distribution and service plan fees | 648,252 | |
Accounting and security lending fees | 309,212 | |
Custodian fees and expenses | 61,955 | |
Independent trustees' compensation | 4,648 | |
Registration fees | 201,055 | |
Audit | 44,669 | |
Legal | 2,812 | |
Interest | 956 | |
Tax expense | 144 |
|
Miscellaneous | 8,289 | |
Total expenses before reductions | 8,610,409 | |
Expense reductions | (94,170) | 8,516,239 |
Net investment income (loss) | 18,226,863 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,324,733 | |
Foreign currency transactions | (73,855) | |
Total net realized gain (loss) |
| 5,250,878 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 249,899,172 | |
Assets and liabilities in foreign currencies | 1,275 | |
Total change in net unrealized appreciation (depreciation) |
| 249,900,447 |
Net gain (loss) | 255,151,325 | |
Net increase (decrease) in net assets resulting from operations | $ 273,378,188 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 18,226,863 | $ 3,695,665 |
Net realized gain (loss) | 5,250,878 | 54,954,095 |
Change in net unrealized appreciation (depreciation) | 249,900,447 | 118,179,943 |
Net increase (decrease) in net assets resulting from operations | 273,378,188 | 176,829,703 |
Distributions to shareholders from net investment income | (18,392,042) | (4,024,717) |
Distributions to shareholders from net realized gain | (379,797) | - |
Total distributions | (18,771,839) | (4,024,717) |
Share transactions - net increase (decrease) | 520,343,234 | 390,197,683 |
Redemption fees | 97,765 | 93,068 |
Total increase (decrease) in net assets | 775,047,348 | 563,095,737 |
|
|
|
Net Assets | ||
Beginning of period | 715,215,787 | 152,120,050 |
End of period (including distributions in excess of net investment income of $22,442 and undistributed net investment income of $21,306, respectively) | $ 1,490,263,135 | $ 715,215,787 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | 1.08 H | .30 I | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 17.40 | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 18.48 | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (1.06) | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | (.01) | - | - | (2.21) | - |
Total distributions | (1.07) | (.32) | (.12) | (2.53) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 35.33% | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, K |
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|
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|
|
Expenses before reductions | 1.16% | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.16% | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.15% | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | 1.81% H | .65% I | .47% | .83% | 1.76% A |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .41%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.53 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
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|
|
|
|
Net investment income (loss) E | .90 H | .16 I | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 17.34 | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 18.24 | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.92) | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.92) | (.19) | (.03) | (2.42) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 34.98% | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.44% | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.43% | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | 1.54% H | .35% I | .22% | .57% | 1.18% A |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.42 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
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|
|
Net asset value, beginning of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
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|
|
Net investment income (loss) E | .60 H | (.07) I | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 17.13 | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 17.73 | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.65) | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.65) | (.04) | - | (2.25) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, K |
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|
Expenses before reductions | 1.93% | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.93% | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | 1.04% H | (.15)% I | (.27)% | .07% | .60% A |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.25 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
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|
|
|
|
Net investment income (loss) E | .61 H | (.06) I | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 17.09 | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 17.70 | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.72) | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.72) | (.04) | - | (2.33) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, K |
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|
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|
|
Expenses before reductions | 1.93% | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.93% | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | 1.04% H | (.13)% I | (.27)% | .07% | .89% A |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.33 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, | 2011 | 2010 | 2009 | 2008 J | 2007 |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Income from Investment Operations |
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|
|
|
|
Net investment income (loss) C | 1.25 F | .43 G | .38 | .64 | .42 |
Net realized and unrealized gain (loss) | 17.43 | 24.91 | (29.54) | 8.01 | 9.36 |
Total from investment operations | 18.68 | 25.34 | (29.16) | 8.65 | 9.78 |
Distributions from net investment income | (1.16) | (.40) | (.20) | (.36) | (.48) |
Distributions from net realized gain | (.03) | - | - | (2.21) | (4.79) |
Total distributions | (1.19) | (.40) | (.20) | (2.57) K | (5.27) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .06 |
Net asset value, end of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Total Return A, B | 35.70% | 91.77% | (51.15)% | 17.10% | 22.29% |
Ratios to Average Net Assets D, H |
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|
|
Expenses before reductions | .88% | .96% | .90% | .91% | 1.01% |
Expenses net of fee waivers, if any | .88% | .96% | .90% | .90% | .98% |
Expenses net of all reductions | .87% | .94% | .90% | .89% | .96% |
Net investment income (loss) | 2.10% F | .92% G | .78% | 1.14% | .87% |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 |
Portfolio turnover rate E | 87% | 104% I | 117% | 77% | 185% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. GInvestment 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%. HExpense 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. IThe portfolio turnover rate does not include the assets acquired in the merger. JFor the year ended February 29. KTotal distributions of $2.57 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, | 2011 | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.28 G | .46 H | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 17.40 | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 18.68 | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (1.19) | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | (.03) | - | - | (2.21) | - |
Total distributions | (1.22) | (.44) | (.20) | (2.56) M | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 35.73% | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, J |
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|
|
|
|
Expenses before reductions | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .85% | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | 2.11% G | .94% H | .78% | 1.14% | .79% A |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 87% | 104% K | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. HInvestment 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%. IFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. JExpense 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. KThe portfolio turnover rate does not include the assets acquired in the merger. LFor the year ended February 29. MTotal distributions of $2.56 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, 2011
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 310,846,676 |
Gross unrealized depreciation | (15,469,188) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 295,377,488 |
Tax Cost | $ 1,252,884,195 |
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:
Capital loss carryforward | $ (18,182,003) |
Net unrealized appreciation (depreciation) | $ 295,377,210 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 18,771,839 | $ 4,024,717 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,261,371,136 and $778,483,528, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 180,708 | $ 8,693 |
Class T | .25% | .25% | 89,160 | 331 |
Class B | .75% | .25% | 112,358 | 84,410 |
Class C | .75% | .25% | 266,026 | 108,067 |
|
|
| $ 648,252 | $ 201,501 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 135,495 |
Class T | 13,835 |
Class B* | 20,335 |
Class C* | 9,166 |
| $ 178,831 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 200,549 | .28 |
Class T | 53,555 | .30 |
Class B | 33,293 | .30 |
Class C | 76,639 | .29 |
Materials | 1,816,001 | .24 |
Institutional Class | 71,992 | .23 |
| $ 2,252,029 |
|
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 $13,777 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 | $ 6,741,091 | .46% | $ 956 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $3,014 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $60,638. During the period, there were no securities loaned to FCM.
Annual Report
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 $94,109 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.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 1,422,379 | $ 238,202 |
Class T | 289,521 | 47,220 |
Class B | 122,322 | 5,848 |
Class C | 341,974 | 12,908 |
Materials | 15,509,343 | 3,662,178 |
Institutional Class | 706,503 | 58,361 |
Total | $ 18,392,042 | $ 4,024,717 |
From net realized gain |
|
|
Class A | $ 10,674 | $ - |
Materials | 358,147 | - |
Institutional Class | 10,976 | - |
Total | $ 379,797 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,281,666 | 858,136 | $ 79,405,808 | $ 40,135,680 |
Reinvestment of distributions | 18,751 | 4,377 | 1,225,248 | 220,619 |
Shares redeemed | (522,145) | (256,610) | (29,567,388) | (11,780,339) |
Net increase (decrease) | 778,272 | 605,903 | $ 51,063,668 | $ 28,575,960 |
Class T |
|
|
|
|
Shares sold | 162,727 | 167,992 | $ 9,996,553 | $ 7,326,294 |
Reinvestment of distributions | 4,298 | 941 | 280,166 | 45,756 |
Shares redeemed | (81,055) | (67,330) | (4,620,393) | (3,005,643) |
Net increase (decrease) | 85,970 | 101,603 | $ 5,656,326 | $ 4,366,407 |
Class B |
|
|
|
|
Shares sold | 78,978 | 131,820 | $ 4,548,346 | $ 5,954,562 |
Reinvestment of distributions | 1,536 | 103 | 99,242 | 4,824 |
Shares redeemed | (68,559) | (43,087) | (3,840,777) | (1,785,370) |
Net increase (decrease) | 11,955 | 88,836 | $ 806,811 | $ 4,174,016 |
Class C |
|
|
|
|
Shares sold | 420,386 | 299,617 | $ 26,286,596 | $ 13,304,163 |
Reinvestment of distributions | 4,421 | 234 | 284,977 | 10,972 |
Shares redeemed | (143,652) | (106,334) | (7,964,201) | (4,538,206) |
Net increase (decrease) | 281,155 | 193,517 | $ 18,607,372 | $ 8,776,929 |
Materials |
|
|
|
|
Shares sold | 11,993,105 | 11,253,841 | $ 750,476,205 | $ 539,188,177 |
Issued in exchange for shares of Paper and Forest Products Portfolio | - | 337,332 | - | 13,304,373 |
Reinvestment of distributions | 229,147 | 68,039 | 14,963,249 | 3,440,550 |
Shares redeemed | (6,662,930) | (4,780,310) | (384,640,831) | (223,285,260) |
Net increase (decrease) | 5,559,322 | 6,878,902 | $ 380,798,623 | $ 332,647,840 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Institutional Class |
|
|
|
|
Shares sold | 1,219,205 | 269,782 | $ 77,607,131 | $ 13,383,120 |
Reinvestment of distributions | 8,764 | 839 | 572,066 | 43,347 |
Shares redeemed | (272,695) | (36,606) | (14,768,763) | (1,769,936) |
Net increase (decrease) | 955,274 | 234,015 | $ 63,410,434 | $ 11,656,531 |
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 the Select 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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 19.58% | 2.35% | 0.52% |
Class T (incl. 3.50% sales charge) B | 22.11% | 2.59% | 0.64% |
Class B (incl. contingent deferred sales charge) C | 20.96% | 2.56% | 0.80% |
Class C (incl. contingent deferred sales charge) D | 24.95% | 2.92% | 0.80% |
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 28, 2001, 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 Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor® Telecommunications Fund: During the year, the fund's Class A, Class T, Class B and Class C shares advanced 26.87%, 26.54%, 25.96% and 25.95%, respectively (excluding sales charges), falling short of the 30.04% gain of the MSCI® U.S. IM Telecommunications Services 25/50 Index, but handily outpacing the broadly based S&P 500®. Relative to the MSCI index, underweighting benchmark heavyweight Verizon Communications hurt the most, as the stock was lifted amid speculation the company would begin carrying Apple's iPhone® mobile digital device. Disappointing stock picks in wireless telecom services also proved detrimental, including a position in Clearwire, a provider of wireless high-speed Internet service. Elsewhere in wireless, an overweighting in pre-paid wireless provider Leap Wireless International detracted, as did a stake in Netherlands-based VimpleCom. Underweighting Vonage Holdings, a provider of phone service over the Web using Voice over Internet Protocol (VoIP), hurt. On the flip side, underweighting integrated telecom giant AT&T was the biggest relative contributor. The stock underperformed on reports the company may lose exclusivity with the iPhone, which represented a good deal of its business. The fund also was aided by out-of-benchmark exposure to the high-growth cable and satellite industry. Specifically, I focused on video-related stocks in this area that I believed would perform well, including Germany-listed Kabel Deutschland Holding, U.K.-based Virgin Media and Comcast. Some of the stocks I've mentioned in this report were out-of-index holdings and some 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, 2010 to February 28, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,192.40 | $ 6.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,190.70 | $ 7.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.20 | $ 10.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.10 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Telecommunications | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.30 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.20 | $ 4.90 |
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
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 10.5 | 8.6 |
American Tower Corp. Class A | 7.1 | 7.5 |
Verizon Communications, Inc. | 7.0 | 15.0 |
Qwest Communications International, Inc. | 6.5 | 5.8 |
Crown Castle International Corp. | 5.8 | 6.3 |
Sprint Nextel Corp. | 4.3 | 5.4 |
NII Holdings, Inc. | 4.0 | 3.3 |
CenturyLink, Inc. | 4.0 | 4.8 |
SBA Communications Corp.Class A | 3.9 | 3.9 |
tw telecom, inc. | 3.7 | 2.7 |
| 56.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Diversified Telecommunication Services | 47.8% |
|
![]() | Wireless Telecommunication Services | 36.2% |
|
![]() | Media | 10.2% |
|
![]() | Internet Software & Services | 2.3% |
|
![]() | Software | 2.0% |
|
![]() | All Others* | 1.5% |
|
As of August 31, 2010 | |||
![]() | Diversified Telecommunication Services | 46.2% |
|
![]() | Wireless Telecommunication Services | 39.6% |
|
![]() | Media | 9.5% |
|
![]() | Internet Software & Services | 1.5% |
|
![]() | Software | 0.9% |
|
![]() | All Others* | 2.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.6% | |||
Diversified Support Services - 0.6% | |||
Blue Label Telecoms Ltd. | 2,829,100 | $ 2,316,103 | |
COMMUNICATIONS EQUIPMENT - 0.5% | |||
Communications Equipment - 0.5% | |||
Aruba Networks, Inc. (a) | 392 | 11,936 | |
F5 Networks, Inc. (a) | 40 | 4,720 | |
Juniper Networks, Inc. (a) | 44,947 | 1,977,668 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 40 | 1,912 | |
Sandvine Corp. (U.K.) (a) | 3,200 | 10,543 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 7,704 | |
| 2,014,483 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
NetApp, Inc. (a) | 20 | 1,033 | |
Synaptics, Inc. (a) | 450 | 13,275 | |
| 14,308 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 47.8% | |||
Alternative Carriers - 12.3% | |||
AboveNet, Inc. | 113,300 | 7,352,037 | |
Cable & Wireless Worldwide PLC | 5 | 6 | |
Cogent Communications Group, Inc. (a) | 251,017 | 3,699,991 | |
Global Crossing Ltd. (a) | 302,086 | 4,757,855 | |
Iliad Group SA | 44,410 | 4,973,956 | |
Level 3 Communications, Inc. (a)(d) | 1,835,376 | 2,569,526 | |
PAETEC Holding Corp. (a) | 73,600 | 279,680 | |
tw telecom, inc. (a) | 739,957 | 13,763,200 | |
Vonage Holdings Corp. (a) | 1,782,800 | 7,879,976 | |
| 45,276,227 | ||
Integrated Telecommunication Services - 35.5% | |||
AT&T, Inc. | 1,366,919 | 38,793,161 | |
BT Group PLC | 5,351 | 15,896 | |
Cable & Wireless PLC | 5 | 4 | |
Cbeyond, Inc. (a) | 177,698 | 2,484,218 | |
CenturyLink, Inc. (d) | 352,890 | 14,532,010 | |
China Unicom (Hong Kong) Ltd. sponsored ADR (d) | 342,100 | 5,709,649 | |
Cincinnati Bell, Inc. New (a) | 225,000 | 594,000 | |
Deutsche Telekom AG | 763 | 10,261 | |
FairPoint Communications, Inc. (a) | 34,149 | 0 | |
Frontier Communications Corp. | 12,732 | 108,095 | |
Hellenic Telecommunications Organization SA | 163 | 1,676 | |
Qwest Communications International, Inc. | 3,513,189 | 23,959,949 | |
Telecom Italia SpA sponsored ADR | 226 | 3,526 | |
Telenor ASA sponsored ADR | 125,100 | 6,237,486 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 699,041 | $ 25,808,594 | |
Windstream Corp. | 963,015 | 12,076,208 | |
| 130,334,733 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 175,610,960 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 40 | 1,966 | |
INTERNET SOFTWARE & SERVICES - 2.3% | |||
Internet Software & Services - 2.3% | |||
Akamai Technologies, Inc. (a) | 35,700 | 1,339,821 | |
Google, Inc. Class A (a) | 3,000 | 1,840,200 | |
Rackspace Hosting, Inc. (a)(d) | 90,700 | 3,347,737 | |
SAVVIS, Inc. (a) | 99 | 3,217 | |
Support.com, Inc. (a) | 326,000 | 1,819,080 | |
| 8,350,055 | ||
MEDIA - 10.2% | |||
Broadcasting - 0.0% | |||
Ten Network Holdings Ltd. | 5 | 7 | |
Cable & Satellite - 10.2% | |||
Comcast Corp. Class A | 408,100 | 10,512,656 | |
DIRECTV (a) | 9 | 414 | |
Dish TV India Ltd. (a) | 5,888 | 7,629 | |
Kabel Deutschland Holding AG | 165,600 | 9,022,285 | |
Liberty Global, Inc. Class A (a)(d) | 98,400 | 4,142,640 | |
Naspers Ltd. Class N | 36,200 | 2,079,453 | |
Time Warner Cable, Inc. | 51,172 | 3,693,595 | |
Virgin Media, Inc. | 290,600 | 7,915,944 | |
| 37,374,616 | ||
Movies & Entertainment - 0.0% | |||
Madison Square Garden, Inc. Class A (a) | 525 | 14,994 | |
TOTAL MEDIA | 37,389,617 | ||
SOFTWARE - 2.0% | |||
Application Software - 2.0% | |||
AsiaInfo Holdings, Inc. (a)(d) | 170,800 | 3,475,780 | |
Gameloft (a) | 583,902 | 3,601,858 | |
Nuance Communications, Inc. (a) | 800 | 14,928 | |
Synchronoss Technologies, Inc. (a) | 5,003 | 171,403 | |
| 7,263,969 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 3 | 14 | |
TOTAL SOFTWARE | 7,263,983 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.2% | |||
Wireless Telecommunication Services - 36.2% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 17,226 | |
American Tower Corp. Class A (a) | 484,800 | 26,159,808 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Axiata Group Bhd (a) | 3,095,100 | $ 4,951,348 | |
Clearwire Corp. Class A (a)(d) | 1,476,236 | 7,425,467 | |
Crown Castle International Corp. (a) | 502,383 | 21,175,443 | |
ICO Global Communications Holdings Ltd. Class A (a) | 3,059,577 | 7,006,431 | |
Idea Cellular Ltd. (a) | 3,710 | 4,717 | |
Leap Wireless International, Inc. (a) | 371,258 | 4,536,773 | |
MetroPCS Communications, Inc. (a) | 659,406 | 9,495,446 | |
MTN Group Ltd. | 25 | 441 | |
NII Holdings, Inc. (a) | 358,100 | 14,667,776 | |
NTELOS Holdings Corp. | 632 | 12,273 | |
PT Indosat Tbk | 3,305,600 | 1,892,334 | |
SBA Communications Corp. Class A (a) | 336,282 | 14,154,109 | |
Sprint Nextel Corp. (a) | 3,616,150 | 15,802,576 | |
Telephone & Data Systems, Inc. | 15,255 | 513,331 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 55,900 | 2,164,448 | |
Turkcell Iletisim Hizmet AS | 162,000 | 911,697 | |
Vivo Participacoes SA sponsored ADR | 59,325 | 2,183,753 | |
| 133,075,397 | ||
TOTAL COMMON STOCKS (Cost $346,800,462) | 366,036,872 | ||
Money Market Funds - 7.4% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 27,411,975 | $ 27,411,975 | |
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $374,212,437) | 393,448,847 | ||
NET OTHER ASSETS (LIABILITIES) - (7.0)% | (25,841,113) | ||
NET ASSETS - 100% | $ 367,607,734 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,718 |
Fidelity Securities Lending Cash Central Fund | 217,589 |
Total | $ 231,307 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 366,036,872 | $ 365,109,272 | $ 927,600 | $ - |
Money Market Funds | 27,411,975 | 27,411,975 | - | - |
Total Investments in Securities: | $ 393,448,847 | $ 392,521,247 | $ 927,600 | $ - |
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) | (905) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 905 |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ (905) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 86.0% |
Germany | 2.5% |
France | 2.4% |
Norway | 1.7% |
Hong Kong | 1.6% |
Malaysia | 1.3% |
Bermuda | 1.3% |
South Africa | 1.2% |
Brazil | 1.2% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $76,308,957 of which $11,764,473, $52,002,796 and $12,541,688 will expire in fiscal 2012, 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
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,618,806) - See accompanying schedule: Unaffiliated issuers (cost $346,800,462) | $ 366,036,872 |
|
Fidelity Central Funds (cost $27,411,975) | 27,411,975 |
|
Total Investments (cost $374,212,437) |
| $ 393,448,847 |
Receivable for investments sold | 11,306,725 | |
Receivable for fund shares sold | 397,208 | |
Dividends receivable | 59,363 | |
Distributions receivable from Fidelity Central Funds | 14,970 | |
Prepaid expenses | 679 | |
Other receivables | 26,419 | |
Total assets | 405,254,211 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 115,353 | |
Payable for investments purchased | 9,565,852 | |
Payable for fund shares redeemed | 235,627 | |
Accrued management fee | 177,334 | |
Distribution and service plan fees payable | 5,186 | |
Other affiliated payables | 95,722 | |
Other payables and accrued expenses | 39,428 | |
Collateral on securities loaned, at value | 27,411,975 | |
Total liabilities | 37,646,477 | |
|
|
|
Net Assets | $ 367,607,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 431,017,434 | |
Undistributed net investment income | 260,753 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (82,905,063) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,234,610 | |
Net Assets | $ 367,607,734 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 46.93 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.93) | $ 49.79 | |
Class T: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.81) | $ 48.51 | |
Class B: | $ 46.93 | |
|
|
|
Class C: | $ 46.89 | |
|
|
|
Telecommunications: | $ 47.07 | |
|
|
|
Institutional Class: | $ 47.02 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,724,568 |
Interest |
| 210 |
Income from Fidelity Central Funds |
| 231,307 |
Total income |
| 8,956,085 |
|
|
|
Expenses | ||
Management fee | $ 1,983,895 | |
Transfer agent fees | 968,784 | |
Distribution and service plan fees | 54,207 | |
Accounting and security lending fees | 142,914 | |
Custodian fees and expenses | 37,525 | |
Independent trustees' compensation | 2,020 | |
Registration fees | 80,175 | |
Audit | 45,986 | |
Legal | 5,440 | |
Interest | 1,085 | |
Miscellaneous | 4,129 | |
Total expenses before reductions | 3,326,160 | |
Expense reductions | (60,818) | 3,265,342 |
Net investment income (loss) | 5,690,743 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 23,993,138 | |
Foreign currency transactions | 1,042 | |
Total net realized gain (loss) |
| 23,994,180 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,962,770 | |
Assets and liabilities in foreign currencies | 10,023 | |
Total change in net unrealized appreciation (depreciation) |
| 56,972,793 |
Net gain (loss) | 80,966,973 | |
Net increase (decrease) in net assets resulting from operations | $ 86,657,716 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,690,743 | $ 5,996,295 |
Net realized gain (loss) | 23,994,180 | 5,413,597 |
Change in net unrealized appreciation (depreciation) | 56,972,793 | 79,572,437 |
Net increase (decrease) in net assets resulting from operations | 86,657,716 | 90,982,329 |
Distributions to shareholders from net investment income | (7,366,695) | (2,355,415) |
Distributions to shareholders from net realized gain | - | (402,567) |
Total distributions | (7,366,695) | (2,757,982) |
Share transactions - net increase (decrease) | (685,685) | 989,027 |
Redemption fees | 11,018 | 12,272 |
Total increase (decrease) in net assets | 78,616,354 | 89,225,646 |
|
|
|
Net Assets | ||
Beginning of period | 288,991,380 | 199,765,734 |
End of period (including undistributed net investment income of $260,753 and undistributed net investment income of $1,935,664, respectively) | $ 367,607,734 | $ 288,991,380 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .57 | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 9.49 | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 10.06 | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.77) | (.19) | (.35) N | (.51) | - |
Distributions from net realized gain | - | (.05) | (.18) N | - | - |
Total distributions | (.77) | (.24) M | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 26.87% | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.18% | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.35% | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .45 | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 9.47 | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 9.92 | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.66) | (.22) | (.24) N | (.42) | - |
Distributions from net realized gain | - | (.03) | (.13) N | - | - |
Total distributions | (.66) | (.24) M | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 26.54% | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.46% | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.06% | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .25 | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 9.48 | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 9.73 | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.40) | (.04) | (.11) N | (.20) | - |
Distributions from net realized gain | - | (.01) | (.06) N | - | - |
Total distributions | (.40) | (.05) M | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 25.96% | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.93% | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | .60% | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 706 | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .26 | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 9.46 | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 9.72 | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.44) | (.10) | (.07) N | (.22) | - |
Distributions from net realized gain | - | (.02) | (.05) N | - | - |
Total distributions | (.44) | (.12) M | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 25.95% | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | .61% | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,035 | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .69 | .76 | .30 | .43 | .61 F |
Net realized and unrealized gain (loss) | 9.52 | 10.59 | (15.65) | (8.12) | 8.85 |
Total from investment operations | 10.21 | 11.35 | (15.35) | (7.69) | 9.46 |
Distributions from net investment income | (.87) | (.31) | (.41) L | (.52) | (.53) |
Distributions from net realized gain | - | (.05) | (.20) L | - | - |
Total distributions | (.87) | (.36) K | (.61) J | (.52) | (.53) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Total Return A, B | 27.24% | 42.43% | (36.00)% | (15.30)% | 22.69% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .92% | .99% | .97% | .91% | .99% |
Expenses net of fee waivers, if any | .92% | .99% | .97% | .90% | .97% |
Expenses net of all reductions | .91% | .98% | .96% | .90% | .97% |
Net investment income (loss) | 1.62% | 2.15% | .85% | .79% | 1.34% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 |
Portfolio turnover rate E | 72% | 90% | 168% | 134% | 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 $.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 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. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .71 | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 9.50 | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 10.21 | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.88) | (.38) | (.40) M | (.62) | - |
Distributions from net realized gain | - | (.05) | (.20) M | - | - |
Total distributions | (.88) | (.43) L | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - | - |
Net asset value, end of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 27.27% | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .91% | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .89% | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 1.64% | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,743 | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 72% | 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 Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2011
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 55,735,629 |
Gross unrealized depreciation | (43,095,325) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 12,640,304 |
Tax Cost | $ 380,808,543 |
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 | $ 260,995 |
Capital loss carryforward | $ (76,308,957) |
Net unrealized appreciation (depreciation) | $ 12,638,504 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 7,366,695 | $ 2,757,982 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $256,842,819 and $247,000,001, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 9,195 | $ 586 |
Class T | .25% | .25% | 12,588 | 15 |
Class B | .75% | .25% | 6,770 | 5,078 |
Class C | .75% | .25% | 25,654 | 9,305 |
|
|
| $ 54,207 | $ 14,984 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,026 |
Class T | 1,778 |
Class B* | 2,024 |
Class C* | 255 |
| $ 9,083 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 10,916 | .30 |
Class T | 8,246 | .33 |
Class B | 2,000 | .30 |
Class C | 7,300 | .29 |
Telecommunications | 934,079 | .27 |
Institutional Class | 6,243 | .26 |
| $ 968,784 |
|
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 $9,209 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 | $ 8,032,250 | .41% | $ 1,085 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,283 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $217,589. During the period, there were no securities loaned to FCM.
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 $60,818 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 67,506 | $ 15,094 |
Class T | 39,660 | 11,817 |
Class B | 6,185 | 821 |
Class C | 26,169 | 5,697 |
Telecommunications | 7,180,244 | 2,311,098 |
Institutional Class | 46,931 | 10,888 |
Total | $ 7,366,695 | $ 2,355,415 |
From net realized gain |
|
|
Class A | $ - | $ 4,245 |
Class T | - | 827 |
Class B | - | 139 |
Class C | - | 504 |
Telecommunications | - | 396,621 |
Institutional Class | - | 231 |
Total | $ - | $ 402,567 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 40,645 | 88,778 | $ 1,741,332 | $ 3,085,616 |
Reinvestment of distributions | 1,359 | 476 | 59,381 | 17,722 |
Shares redeemed | (39,099) | (79,650) | (1,642,347) | (2,900,645) |
Net increase (decrease) | 2,905 | 9,604 | $ 158,366 | $ 202,693 |
Class T |
|
|
|
|
Shares sold | 23,206 | 45,905 | $ 981,887 | $ 1,589,430 |
Reinvestment of distributions | 894 | 314 | 39,051 | 12,167 |
Shares redeemed | (17,166) | (14,845) | (731,684) | (532,433) |
Net increase (decrease) | 6,934 | 31,374 | $ 289,254 | $ 1,069,164 |
Class B |
|
|
|
|
Shares sold | 3,985 | 15,431 | $ 164,934 | $ 522,557 |
Reinvestment of distributions | 125 | 22 | 5,371 | 836 |
Shares redeemed | (6,122) | (11,987) | (254,241) | (408,765) |
Net increase (decrease) | (2,012) | 3,466 | $ (83,936) | $ 114,628 |
Class C |
|
|
|
|
Shares sold | 29,965 | 62,598 | $ 1,283,190 | $ 2,159,620 |
Reinvestment of distributions | 433 | 129 | 18,769 | 5,000 |
Shares redeemed | (22,865) | (19,418) | (981,215) | (702,765) |
Net increase (decrease) | 7,533 | 43,309 | $ 320,744 | $ 1,461,855 |
Telecommunications |
|
|
|
|
Shares sold | 3,169,647 | 3,331,732 | $ 131,656,721 | $ 111,276,252 |
Reinvestment of distributions | 156,783 | 68,653 | 6,893,743 | 2,606,513 |
Shares redeemed | (3,199,430) | (3,325,834) | (139,972,066) | (116,676,048) |
Net increase (decrease) | 127,000 | 74,551 | $ (1,421,602) | $ (2,793,283) |
Institutional Class |
|
|
|
|
Shares sold | 131,873 | 35,372 | $ 5,646,597 | $ 1,243,451 |
Reinvestment of distributions | 800 | 37 | 36,161 | 1,435 |
Shares redeemed | (124,838) | (8,744) | (5,631,269) | (310,916) |
Net increase (decrease) | 7,835 | 26,665 | $ 51,489 | $ 933,970 |
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
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 28, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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 1-877-208-0098.
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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 | 04/18/11 | 04/15/11 | $0.146 | $0.465 |
Class T | 04/18/11 | 04/15/11 | $0.114 | $0.465 |
Class B | 04/18/11 | 04/15/11 | $0.050 | $0.465 |
Class C | 04/18/11 | 04/15/11 | $0.056 | $0.465 |
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/18/11 | 04/15/11 | $0.000 | $2.008 |
Class T | 04/18/11 | 04/15/11 | $0.000 | $1.990 |
Class B | 04/18/11 | 04/15/11 | $0.000 | $1.947 |
Class C | 04/18/11 | 04/15/11 | $0.000 | $1.954 |
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Class T | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Class B | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Class C | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/18/11 | 04/15/11 | $0.014 | $0.000 |
Class T | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Class B | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Class C | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 2011, or, if subsequently determined to be different, the net capital gain of such year.
Fund | |
Consumer Staples Portfolio | $20,272,367 |
Gold Portfolio | $245,927,697 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April | December |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 0% | 100% |
Class C | 0% | 100% |
Gold Portfolio |
|
|
Class A | 0% | 2% |
Class T | 0% | 2% |
Class B | 0% | 2% |
Class C | 0% | 2% |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 0% | 100% |
Class B | 0% | 100% |
Class C | 0% | 100% |
| April | December |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 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 | December |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 0% | 100% |
Class C | 0% | 100% |
Gold Portfolio |
|
|
Class A | 4% | 10% |
Class T | 5% | 11% |
Class B | 5% | 12% |
Class C | 5% | 12% |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 0% | 100% |
Class B | 0% | 100% |
Class C | 0% | 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:
| Pay Date | Income | Taxes |
Gold Portfolio |
|
|
|
Class A | 04/12/2010 | $0.022 | $0.0023 |
| 12/13/2010 | $0.094 | $0.0085 |
Class T | 04/12/2010 | $0.020 | $0.0023 |
| 12/13/2010 | $0.088 | $0.0085 |
Class B | 04/12/2010 | $0.019 | $0.0023 |
| 12/13/2010 | $0.077 | $0.0085 |
Class C | 04/12/2010 | $0.019 | $0.0023 |
| 12/13/2010 | $0.080 | $0.0085 |
The fund will notify shareholders in January 2012 of amounts for use in preparing 2011 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.
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-0411
1.845779.104
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, 2011
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders | |
Consumer Staples Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications 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 |
|
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, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_James_C_Curvey)
Dear Shareholder:
Following a year in which the investment environment was volatile but generally supportive of most major asset classes, 2011 has begun on a positive note. U.S. equities gained ground in January and February, reaching their highest point since June 2008, amid indications the U.S. economy had turned a corner. Still, questions remained about the longer-term outlook, most notably persistently high unemployment. 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 acting chairman's signature appears here.)
James C. Curvey
Acting Chairman
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 13.57% | 8.84% | 7.79% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the 12 months ending February 28, 2011, the fund's Institutional Class shares gained 13.57%, underperforming the 13.96% return of the MSCI® U.S. IM Consumer Staples 25/50 Index and the S&P 500®. Relative to its sector benchmark, the portfolio benefited from strong security selection in the soft drinks industry, where an overweighting in Coca-Cola boosted performance, as the company built momentum in higher-growth emerging markets and achieved better-than-expected results in more-developed markets, such as the U.S., Japan and Western Europe. Underweighting PepsiCo, which had a lesser emerging-markets presence, also contributed. Rising agricultural input costs in its snack business also hurt Pepsi's shares. The fund's out-of-index stake in British American Tobacco was another beneficiary of higher growth overseas. Distillers and vintners was a strong area, with holdings in global wine distributor Constellation Brands and British-based premium spirits producer Diageo - not found in the index - boosting the fund's return, as rebounding alcohol sales in restaurants and bars supported earnings gains. An underweighting and robust stock picking in the lagging hypermarkets/super centers area helped, including a smaller-than-index stake in Wal-Mart Stores and an overweighting in BJ's Wholesale Club. Favorable market selection in household products and brewers also buoyed performance, as did dollar weakness in relation to our foreign holdings. On the flip side, positioning in packaged foods/meats hurt the most, including an overweighting in Dean Foods - a company that sells milk across North America - which got caught in a competitive pricing trap. An out-of-index position in Netherlands-based Unilever also detracted here. Unfavorable security selection in the personal products industry was costly, including not owning two benchmark components, cosmetics manufacturer Estee Lauder and nutritional supplement marketer Herbalife. Elsewhere, a non-index stake in pharmaceutical and medical products giant Johnson & Johnson hurt, as did underweighting cigarette manufacturer Philip Morris International. Lastly, not having any exposure to premium grocer and index constituent Whole Foods Market 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
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, 2010 to February 28, 2011).
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 | $ 1,145.40 | $ 5.90 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.29 | $ 5.56 |
Class T | 1.39% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,143.70 | $ 7.39 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.90 | $ 6.95 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,140.70 | $ 10.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,141.20 | $ 9.82 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Consumer Staples | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.80 | $ 4.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
Institutional Class | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,146.90 | $ 4.63 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
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, 2011 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.8 | 12.1 |
The Coca-Cola Co. | 12.0 | 11.4 |
CVS Caremark Corp. | 6.6 | 4.0 |
British American Tobacco PLC sponsored ADR | 6.1 | 4.9 |
Altria Group, Inc. | 5.6 | 5.0 |
PepsiCo, Inc. | 4.4 | 5.5 |
Colgate-Palmolive Co. | 4.2 | 1.4 |
Unilever NV unit | 3.1 | 2.3 |
Diageo PLC sponsored ADR | 3.1 | 2.5 |
Johnson & Johnson | 3.0 | 3.0 |
| 63.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Beverages | 30.1% |
|
![]() | Household Products | 20.0% |
|
![]() | Food & Staples Retailing | 15.7% |
|
![]() | Tobacco | 14.8% |
|
![]() | Food Products | 12.7% |
|
![]() | All Others* | 6.7% |
|
As of August 31, 2010 | |||
![]() | Beverages | 31.1% |
|
![]() | Food & Staples Retailing | 19.8% |
|
![]() | Household Products | 14.5% |
|
![]() | Tobacco | 12.8% |
|
![]() | Food Products | 12.0% |
|
![]() | All Others* | 9.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BEVERAGES - 30.1% | |||
Brewers - 5.7% | |||
Anadolu Efes Biracilik ve Malt Sanayii AS | 253,611 | $ 3,426,533 | |
Anheuser-Busch InBev SA NV | 558,113 | 31,170,509 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 260,285 | 7,030,298 | |
Molson Coors Brewing Co. Class B | 859,203 | 39,291,353 | |
| 80,918,693 | ||
Distillers & Vintners - 6.0% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,752,181 | 35,604,318 | |
Diageo PLC sponsored ADR | 547,406 | 42,839,994 | |
Pernod-Ricard SA | 58,700 | 5,412,011 | |
| 83,856,323 | ||
Soft Drinks - 18.4% | |||
Coca-Cola Bottling Co. Consolidated | 147,913 | 8,534,580 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 92,029 | 6,723,639 | |
Coca-Cola Icecek AS | 300,073 | 3,322,257 | |
Cott Corp. (a) | 21,000 | 175,135 | |
Embotelladora Andina SA sponsored ADR | 263,641 | 7,018,123 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 61,087 | 3,434,922 | |
PepsiCo, Inc. | 968,207 | 61,403,688 | |
The Coca-Cola Co. | 2,639,308 | 168,704,567 | |
| 259,316,911 | ||
TOTAL BEVERAGES | 424,091,927 | ||
FOOD & STAPLES RETAILING - 15.7% | |||
Drug Retail - 9.6% | |||
CVS Caremark Corp. | 2,814,108 | 93,034,410 | |
Drogasil SA | 217,800 | 1,662,495 | |
Walgreen Co. | 928,945 | 40,260,476 | |
| 134,957,381 | ||
Food Distributors - 0.3% | |||
United Natural Foods, Inc. (a) | 102,934 | 4,369,548 | |
Food Retail - 3.1% | |||
Fresh Market, Inc. | 1,300 | 53,040 | |
Koninklijke Ahold NV | 501,177 | 6,728,121 | |
Safeway, Inc. | 1,357,313 | 29,616,570 | |
Susser Holdings Corp. (a) | 251,104 | 3,477,790 | |
The Pantry, Inc. (a) | 267,987 | 4,223,475 | |
| 44,098,996 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 2.7% | |||
BJ's Wholesale Club, Inc. (a) | 101,322 | $ 4,906,011 | |
Wal-Mart Stores, Inc. | 627,188 | 32,601,232 | |
| 37,507,243 | ||
TOTAL FOOD & STAPLES RETAILING | 220,933,168 | ||
FOOD PRODUCTS - 12.7% | |||
Agricultural Products - 4.4% | |||
Archer Daniels Midland Co. | 489,290 | 18,191,802 | |
Bunge Ltd. | 461,378 | 33,297,650 | |
Cresud S.A.C.I.F. y A. sponsored ADR | 91,600 | 1,594,756 | |
Origin Agritech Ltd. (a) | 95,200 | 842,520 | |
SLC Agricola SA | 276,300 | 3,593,660 | |
Viterra, Inc. | 312,700 | 3,831,279 | |
| 61,351,667 | ||
Packaged Foods & Meats - 8.3% | |||
Ausnutria Dairy Hunan Co. Ltd. | 314,000 | 89,507 | |
Brasil Foods SA | 2,000 | 34,740 | |
Calavo Growers, Inc. | 158,742 | 3,685,989 | |
Cermaq ASA | 227,670 | 3,883,072 | |
Cosan Ltd. Class A | 111,100 | 1,528,736 | |
Danone | 58,620 | 3,675,087 | |
Dean Foods Co. (a) | 673,558 | 7,112,772 | |
Kraft Foods, Inc. Class A | 273,127 | 8,696,364 | |
Lindt & Spruengli AG (d) | 111 | 3,475,957 | |
Mead Johnson Nutrition Co. Class A | 148,440 | 8,884,134 | |
Nestle SA | 510,464 | 28,904,038 | |
Smart Balance, Inc. (a) | 67,600 | 293,384 | |
Unilever NV unit | 1,459,991 | 44,150,128 | |
Want Want China Holdings Ltd. | 4,014,000 | 2,999,676 | |
| 117,413,584 | ||
TOTAL FOOD PRODUCTS | 178,765,251 | ||
HOTELS, RESTAURANTS & LEISURE - 0.3% | |||
Restaurants - 0.3% | |||
Domino's Pizza, Inc. (a) | 101,404 | 1,710,685 | |
Sonic Corp. (a) | 266,504 | 2,366,556 | |
| 4,077,241 | ||
HOUSEHOLD DURABLES - 0.1% | |||
Household Appliances - 0.0% | |||
SodaStream International Ltd. (d) | 24,200 | 1,070,366 | |
Housewares & Specialties - 0.1% | |||
Tupperware Brands Corp. | 21,400 | 1,148,110 | |
TOTAL HOUSEHOLD DURABLES | 2,218,476 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOUSEHOLD PRODUCTS - 20.0% | |||
Household Products - 20.0% | |||
Colgate-Palmolive Co. | 756,907 | $ 59,432,338 | |
Procter & Gamble Co. | 3,524,352 | 222,210,399 | |
| 281,642,737 | ||
PERSONAL PRODUCTS - 2.4% | |||
Personal Products - 2.4% | |||
Avon Products, Inc. | 898,363 | 24,983,475 | |
Hypermarcas SA (a) | 138,400 | 1,580,478 | |
Natura Cosmeticos SA | 138,800 | 3,521,305 | |
Nu Skin Enterprises, Inc. Class A | 109,000 | 3,479,280 | |
| 33,564,538 | ||
PHARMACEUTICALS - 3.0% | |||
Pharmaceuticals - 3.0% | |||
Johnson & Johnson | 692,820 | 42,566,861 | |
Perrigo Co. | 1,000 | 76,430 | |
| 42,643,291 | ||
TOBACCO - 14.8% | |||
Tobacco - 14.8% | |||
Altria Group, Inc. | 3,088,731 | 78,361,105 | |
British American Tobacco PLC sponsored ADR (d) | 1,055,541 | 85,636,041 | |
KT&G Corp. | 61,159 | 3,113,925 | |
Lorillard, Inc. | 69,198 | 5,312,330 | |
Philip Morris International, Inc. | 509,803 | 32,005,432 | |
Souza Cruz Industria Comerico | 73,500 | 3,525,243 | |
| 207,954,076 | ||
TOTAL COMMON STOCKS (Cost $1,198,155,448) | 1,395,890,705 | ||
Money Market Funds - 1.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.19% (b) | 15,137,132 | $ 15,137,132 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 4,824,339 | 4,824,339 | |
TOTAL MONEY MARKET FUNDS (Cost $19,961,471) | 19,961,471 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% (Cost $1,218,116,919) | 1,415,852,176 | ||
NET OTHER ASSETS (LIABILITIES) - (0.5)% | (7,126,334) | ||
NET ASSETS - 100% | $ 1,408,725,842 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,915 |
Fidelity Securities Lending Cash Central Fund | 242,084 |
Total | $ 299,999 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,395,890,705 | $ 1,364,720,196 | $ 31,170,509 | $ - |
Money Market Funds | 19,961,471 | 19,961,471 | - | - |
Total Investments in Securities: | $ 1,415,852,176 | $ 1,384,681,667 | $ 31,170,509 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 75.3% |
United Kingdom | 9.2% |
Netherlands | 3.6% |
Bermuda | 2.5% |
Switzerland | 2.3% |
Belgium | 2.2% |
Brazil | 1.4% |
Others (Individually Less Than 1%) | 3.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $4,773,853) - See accompanying schedule: Unaffiliated issuers (cost $1,198,155,448) | $ 1,395,890,705 |
|
Fidelity Central Funds (cost $19,961,471) | 19,961,471 |
|
Total Investments (cost $1,218,116,919) |
| $ 1,415,852,176 |
Receivable for fund shares sold | 1,507,366 | |
Dividends receivable | 1,756,097 | |
Distributions receivable from Fidelity Central Funds | 20,089 | |
Prepaid expenses | 2,695 | |
Other receivables | 5,404 | |
Total assets | 1,419,143,827 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 80,369 | |
Payable for fund shares redeemed | 4,344,746 | |
Accrued management fee | 655,955 | |
Distribution and service plan fees payable | 132,062 | |
Other affiliated payables | 313,090 | |
Other payables and accrued expenses | 67,424 | |
Collateral on securities loaned, at value | 4,824,339 | |
Total liabilities | 10,417,985 | |
|
|
|
Net Assets | $ 1,408,725,842 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,204,127,374 | |
Undistributed net investment income | 3,223,201 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,638,829 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 197,736,438 | |
Net Assets | $ 1,408,725,842 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 67.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $67.65) | $ 71.78 | |
Class T: | $ 67.30 | |
|
|
|
Maximum offering price per share (100/96.50 of $67.30) | $ 69.74 | |
Class B: | $ 66.83 | |
|
|
|
Class C: | $ 66.71 | |
|
|
|
Consumer Staples: | $ 67.98 | |
|
|
|
Institutional Class: | $ 67.84 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 34,561,280 |
Interest |
| 265 |
Income from Fidelity Central Funds |
| 299,999 |
Total income |
| 34,861,544 |
|
|
|
Expenses | ||
Management fee | $ 7,388,443 | |
Transfer agent fees | 3,240,147 | |
Distribution and service plan fees | 1,550,109 | |
Accounting and security lending fees | 422,444 | |
Custodian fees and expenses | 116,156 | |
Independent trustees' compensation | 7,316 | |
Registration fees | 134,969 | |
Audit | 44,861 | |
Legal | 4,847 | |
Miscellaneous | 16,243 | |
Total expenses before reductions | 12,925,535 | |
Expense reductions | (35,683) | 12,889,852 |
Net investment income (loss) | 21,971,692 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 37,316,174 | |
Foreign currency transactions | (125,434) | |
Total net realized gain (loss) |
| 37,190,740 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 108,090,796 | |
Assets and liabilities in foreign currencies | 2,058 | |
Total change in net unrealized appreciation (depreciation) |
| 108,092,854 |
Net gain (loss) | 145,283,594 | |
Net increase (decrease) in net assets resulting from operations | $ 167,255,286 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 21,971,692 | $ 17,630,422 |
Net realized gain (loss) | 37,190,740 | 34,351,921 |
Change in net unrealized appreciation (depreciation) | 108,092,854 | 298,589,963 |
Net increase (decrease) in net assets resulting from operations | 167,255,286 | 350,572,306 |
Distributions to shareholders from net investment income | (18,562,633) | (15,962,478) |
Distributions to shareholders from net realized gain | (13,301,800) | - |
Total distributions | (31,864,433) | (15,962,478) |
Share transactions - net increase (decrease) | 3,732,087 | 33,089,434 |
Redemption fees | 35,627 | 34,831 |
Total increase (decrease) in net assets | 139,158,567 | 367,734,093 |
|
|
|
Net Assets | ||
Beginning of period | 1,269,567,275 | 901,833,182 |
End of period (including undistributed net investment income of $3,223,201 and undistributed net investment income of $1,438,918, respectively) | $ 1,408,725,842 | $ 1,269,567,275 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .98 | .84 | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.10 | 17.02 | (19.19) | 7.29 | 1.28 |
Total from investment operations | 8.08 | 17.86 | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.83) | (.74) | (.66) | (.42) | - |
Distributions from net realized gain | (.66) | - | (.02) | (2.44) | - |
Total distributions | (1.49) | (.74) | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.65 | $ 61.06 | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B, C, D | 13.27% | 40.66% | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.11% | 1.13% | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.11% | 1.13% | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.53% | 1.51% | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 160,526 | $ 162,370 | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .79 | .66 | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.05 | 16.95 | (19.12) | 7.29 | 1.18 |
Total from investment operations | 7.84 | 17.61 | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.65) | (.59) | (.60) | (.35) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.31) | (.59) | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 67.30 | $ 60.77 | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B, C, D | 12.93% | 40.24% | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.40% | 1.44% | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.40% | 1.44% | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | 1.24% | 1.21% | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 31,496 | $ 29,662 | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .46 | .37 | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | 6.98 | 16.82 | (19.01) | 7.27 | 1.18 |
Total from investment operations | 7.44 | 17.19 | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.32) | (.35) | (.42) | (.19) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (.98) | (.35) | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.83 | $ 60.37 | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B, C, D | 12.35% | 39.48% | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.91% | 1.97% | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .73% | .68% | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 20,033 | $ 21,099 | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .49 | .41 | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.00 | 16.80 | (19.00) | 7.28 | 1.18 |
Total from investment operations | 7.49 | 17.21 | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.41) | (.38) | (.44) | (.29) | - |
Distributions from net realized gain | (.66) | - | - | (2.44) | - |
Total distributions | (1.07) | (.38) | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | - K | - K | .01 | .01 | - K |
Net asset value, end of period | $ 66.71 | $ 60.29 | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B, C, D | 12.44% | 39.59% | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.86% | 1.90% | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.85% | 1.89% | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .79% | .75% | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,239 | $ 73,829 | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 57% | 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, | 2011 | 2010 | 2009 | 2008 F | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.14 | .96 | .88 | .71 | .56 |
Net realized and unrealized gain (loss) | 7.14 | 17.11 | (19.31) | 7.30 | 8.88 |
Total from investment operations | 8.28 | 18.07 | (18.43) | 8.01 | 9.44 |
Distributions from net investment income | (.98) | (.87) | (.67) | (.46) | (.32) |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | (3.18) |
Total distributions | (1.64) | (.87) | (.69) H | (2.90) | (3.50) |
Redemption fees added to paid in capital B | - G | - G | .01 | .01 | .01 |
Net asset value, end of period | $ 67.98 | $ 61.34 | $ 44.14 | $ 63.25 | $ 58.13 |
Total Return A | 13.55% | 40.96% | (29.23)% | 13.72% | 18.43% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .86% | .92% | .91% | .91% | 1.01% |
Expenses net of fee waivers, if any | .86% | .92% | .91% | .90% | .99% |
Expenses net of all reductions | .86% | .91% | .90% | .90% | .98% |
Net investment income (loss) | 1.78% | 1.73% | 1.55% | 1.12% | .99% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 877,548 | $ 946,455 | $ 657,263 | $ 655,224 | $ 374,930 |
Portfolio turnover rate D | 57% | 69% | 70% | 71% | 99% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C 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. D Amount does not include the portfolio activity of any underlying Fidelity Central Funds. E 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. F For the year ended February 29. G Amount represents less than $.01 per share. H 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, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.15 | .98 | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | 7.13 | 17.09 | (19.23) | 7.30 | 1.16 |
Total from investment operations | 8.28 | 18.07 | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (1.04) | (.88) | (.73) | (.51) | - |
Distributions from net realized gain | (.66) | - | (.03) | (2.44) | - |
Total distributions | (1.70) | (.88) | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | - J | - J | .01 | .01 | - J |
Net asset value, end of period | $ 67.84 | $ 61.26 | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B, C | 13.57% | 41.03% | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .87% | .86% | .91% | .85% | 1.00% A |
Expenses net of all reductions | .87% | .86% | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.77% | 1.78% | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 237,883 | $ 36,152 | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 57% | 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. EFees 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, 2011
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | |
Gross unrealized depreciation | |
Net unrealized appreciation (depreciation) on securities and other investments | |
Tax Cost |
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 | $ 3,273,198 |
Undistributed long-term capital gain | $ 9,389,077 |
Net unrealized appreciation (depreciation) | $ 191,937,229 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 20,981,143 | $ 15,962,478 |
Long-term Capital Gains | 10,883,290 | - |
Total | $ 31,864,433 | $ 15,962,478 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $758,599,862 and $731,559,150, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 397,107 | $ 750 |
Class T | .25% | .25% | 151,642 | 730 |
Class B | .75% | .25% | 206,719 | 155,566 |
Class C | .75% | .25% | 794,641 | 171,222 |
|
|
| $ 1,550,109 | $ 328,268 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 74,644 |
Class T | 11,773 |
Class B* | 44,031 |
Class C* | 9,882 |
| $ 140,330 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 384,629 | .24 |
Class T | 85,440 | .28 |
Class B | 61,736 | .30 |
Class C | 189,687 | .24 |
Consumer Staples | 2,187,260 | .24 |
Institutional Class | 331,395 | .26 |
| $ 3,240,147 |
|
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 $17,374 for the period.
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,935 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $242,084, including $4,962 from securities loaned to FCM.
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 $35,625 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 $58.
Annual Report
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 2,005,855 | $ 2,068,687 |
Class T | 304,100 | 279,551 |
Class B | 100,155 | 121,683 |
Class C | 513,058 | 461,837 |
Consumer Staples | 13,026,528 | 12,515,444 |
Institutional Class | 2,612,937 | 515,276 |
Total | $ 18,562,633 | $ 15,962,478 |
From net realized gain |
|
|
Class A | $ 1,585,279 | $ - |
Class T | 307,782 | - |
Class B | 204,642 | - |
Class C | 836,095 | - |
Consumer Staples | 8,597,123 | - |
Institutional Class | 1,770,879 | - |
Total | $ 13,301,800 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 610,485 | 1,132,943 | $ 39,028,355 | $ 59,482,737 |
Reinvestment of distributions | 47,297 | 31,495 | 3,150,891 | 1,903,559 |
Shares redeemed | (944,038) | (1,263,286) | (60,078,639) | (70,043,896) |
Net increase (decrease) | (286,256) | (98,848) | $ (17,899,393) | $ (8,657,600) |
Class T |
|
|
|
|
Shares sold | 91,776 | 173,895 | $ 5,882,190 | $ 9,112,154 |
Reinvestment of distributions | 8,541 | 4,329 | 566,923 | 262,823 |
Shares redeemed | (120,454) | (207,203) | (7,689,132) | (10,599,980) |
Net increase (decrease) | (20,137) | (28,979) | $ (1,240,019) | $ (1,225,003) |
Class B |
|
|
|
|
Shares sold | 35,654 | 104,786 | $ 2,191,455 | $ 5,439,880 |
Reinvestment of distributions | 3,610 | 1,610 | 238,429 | 97,230 |
Shares redeemed | (89,029) | (99,879) | (5,598,851) | (5,370,134) |
Net increase (decrease) | (49,765) | 6,517 | $ (3,168,967) | $ 166,976 |
Class C |
|
|
|
|
Shares sold | 340,893 | 378,183 | $ 21,482,594 | $ 19,816,576 |
Reinvestment of distributions | 14,479 | 5,180 | 954,487 | 312,378 |
Shares redeemed | (362,057) | (422,141) | (23,068,564) | (22,614,834) |
Net increase (decrease) | (6,685) | (38,778) | $ (631,483) | $ (2,485,880) |
Consumer Staples |
|
|
|
|
Shares sold | 4,055,609 | 6,969,074 | $ 260,108,965 | $ 390,940,582 |
Reinvestment of distributions | 309,170 | 198,030 | 20,671,323 | 11,983,104 |
Shares redeemed | (6,885,851) | (6,628,713) | (436,510,553) | (351,735,799) |
Net increase (decrease) | (2,521,072) | 538,391 | $ (155,730,265) | $ 51,187,887 |
Institutional Class |
|
|
|
|
Shares sold | 3,382,703 | 333,805 | $ 212,714,327 | $ 17,656,120 |
Reinvestment of distributions | 58,392 | 4,184 | 3,904,787 | 251,491 |
Shares redeemed | (524,454) | (449,527) | (34,216,900) | (23,804,557) |
Net increase (decrease) | 2,916,641 | (111,538) | $ 182,402,214 | $ (5,896,946) |
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
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 37.45% | 15.83% | 22.38% |
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 28, 2001. 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 Gold Fund
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor® Gold Fund: For the 12 months ending February 28, 2011, the fund's Institutional Class shares returned 37.45%, compared with the 36.78% gain of the S&P® Global BMI Gold Capped Index and the lower return of the broadly based S&P 500® Index. Our ability to diversify outside the gold space of the industry benchmark and into silver equities was the single largest contributor to relative performance, with Silver Wheaton's 175% return leading the way. Additional contributions came from our positions in gold companies that were acquired at premium prices during a period of heightened merger-and-acquisition activity. Names in this category included Lihir Gold, Fronteer Gold, Andean Resources and Red Back Mining. The next significant contribution came from underweightings in some underperforming gold companies, such as Newmont Mining, Goldcorp, Polyus Gold and Gammon Gold. However, toward the end of 2010, believing that the reasons for Goldcorp's underperformance were about to go away, we overweighted this stock. The last major contributor was our overweightings in some of the top-performing gold producers, Newcrest Mining and Eldorado Gold, and our out-of-benchmark investments in development and exploration names such as Avion Gold and Canaco Resources. Additionally, dollar weakness in relation to our foreign holdings buoyed performance. On the other hand, the largest detractors from relative performance were our underweightings in outperforming emerging-markets and exploration gold names such as SEMAFO, Gabriel Resources, Nevsun Resources and NovaGold Resources. These companies delivered strong performance, but our assessment of risk and reward suggested they did not warrant larger weightings in the fund. Another area of relative underperformance was our gold bullion position, which delivered an approximate 26% return but lagged the returns of gold equities, which tend to outperform bullion in a rising gold price environment. We continued to hold a minor position in bullion because its beta, liquidity and utility in equitizing cash are extremely helpful in portfolio allocation.
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, 2010 to February 28, 2011).
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 | 1.14% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,125.70 | $ 6.01 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.14 | $ 5.71 |
Class T | 1.42% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,124.00 | $ 7.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.75 | $ 7.10 |
Class B | 1.91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.40 | $ 10.05 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.32 | $ 9.54 |
Class C | 1.86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,121.50 | $ 9.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.57 | $ 9.30 |
Gold | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.00 | $ 4.64 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.50 | $ 4.38 |
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
Gold Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 12.2 | 10.0 |
Barrick Gold Corp. | 11.5 | 10.1 |
Newcrest Mining Ltd. | 9.6 | 10.0 |
AngloGold Ashanti Ltd. sponsored ADR | 6.8 | 6.3 |
Kinross Gold Corp. | 5.9 | 4.2 |
Newmont Mining Corp. | 5.0 | 8.1 |
Agnico-Eagle Mines Ltd. (Canada) | 3.8 | 5.3 |
Yamana Gold, Inc. | 3.5 | 2.7 |
Eldorado Gold Corp. | 3.2 | 3.9 |
Randgold Resources Ltd. sponsored ADR | 3.2 | 4.6 |
| 64.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Gold | 95.8% |
|
![]() | Precious Metals & Minerals | 2.6% |
|
![]() | Diversified Metals & Mining | 0.4% |
|
![]() | Steel | 0.1% |
|
![]() | Construction & Engineering | 0.1% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2010 | |||
![]() | Gold | 96.5% |
|
![]() | Precious Metals & Minerals | 2.2% |
|
![]() | Coal & Consumable Fuels | 0.6% |
|
![]() | Construction & Farm Machinery & Heavy Trucks | 0.2% |
|
![]() | Diversified Metals & Mining | 0.1% |
|
![]() | All Others* | 0.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
Australia - 12.6% | |||
METALS & MINING - 12.6% | |||
Diversified Metals & Mining - 0.1% | |||
Mineral Deposits Ltd. Australia (a) | 637,390 | $ 3,860,725 | |
Sandfire Resources NL (a) | 314,167 | 2,341,230 | |
| 6,201,955 | ||
Gold - 12.5% | |||
Catalpa Resources Ltd. (a)(d) | 1,443,833 | 2,286,806 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 5,326,900 | 10,262,977 | |
CGA Mining Ltd.: | |||
(Australia) (a) | 18,920 | 60,408 | |
(Canada) (a) | 110,000 | 346,564 | |
Intrepid Mines Ltd.: | |||
(Australia) (a)(d) | 8,769,767 | 19,144,065 | |
(Canada) (a) | 320,000 | 682,008 | |
Kingsgate Consolidated NL | 3,375,767 | 32,517,776 | |
Kula Gold Ltd. | 26,245 | 41,629 | |
Medusa Mining Ltd. | 3,127,885 | 22,570,596 | |
Newcrest Mining Ltd. | 11,682,094 | 451,560,440 | |
Perseus Mining Ltd.: | |||
(Australia) (a) | 4,884,308 | 14,714,500 | |
(Canada) (a) | 1,300,000 | 3,961,905 | |
Resolute Mining Ltd. (a)(d) | 3,986,661 | 5,358,385 | |
St Barbara Ltd. (a) | 5,729,676 | 11,765,708 | |
Troy Resources NL (a)(e) | 2,300,000 | 8,619,820 | |
| 583,893,587 | ||
TOTAL METALS & MINING | 590,095,542 | ||
Bailiwick of Jersey - 3.2% | |||
METALS & MINING - 3.2% | |||
Gold - 3.2% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,818,167 | 147,180,619 | |
Bermuda - 0.0% | |||
METALS & MINING - 0.0% | |||
Gold - 0.0% | |||
Continental Gold Ltd. (a) | 75,100 | 742,301 | |
Precious Metals & Minerals - 0.0% | |||
Aquarius Platinum Ltd. (United Kingdom) | 161,752 | 1,060,353 | |
TOTAL METALS & MINING | 1,802,654 | ||
Canada - 60.1% | |||
METALS & MINING - 60.1% | |||
Diversified Metals & Mining - 0.2% | |||
Clifton Star Resources, Inc. (a) | 25,000 | 117,632 | |
East Asia Minerals Corp. (a) | 5,000 | 29,241 | |
Galway Resources Ltd. (a) | 15,000 | 19,923 | |
Kimber Resources, Inc. (a) | 16,100 | 22,544 | |
Kimber Resources, Inc. (a)(e) | 5,832,000 | 8,166,301 | |
Sabina Gold & Silver Corp. (a) | 200,000 | 1,361,133 | |
| |||
Shares | Value | ||
Southern Arc Minerals, Inc. (a) | 30,000 | $ 53,745 | |
Valley High Ventures Ltd. (a) | 237,500 | 457,272 | |
| 10,227,791 | ||
Gold - 57.8% | |||
Agnico-Eagle Mines Ltd. (Canada) | 2,554,400 | 179,629,879 | |
Alacer Gold Corp. (a) | 2,409,063 | 23,166,691 | |
Alamos Gold, Inc. | 2,213,800 | 37,882,477 | |
Argonaut Gold, Inc. (a)(d) | 619,800 | 3,171,589 | |
Aurizon Mines Ltd. (a) | 2,664,600 | 19,012,281 | |
Avion Gold Corp. (a) | 5,020,000 | 8,631,557 | |
B2Gold Corp. (a) | 3,627,400 | 9,448,980 | |
Barrick Gold Corp. (d) | 10,177,319 | 537,341,487 | |
Brigus Gold Corp. (a) | 10,000 | 16,268 | |
Canaco Resources, Inc. (a) | 1,065,000 | 6,305,019 | |
Canaco Resources, Inc. (a)(e)(f) | 561,600 | 3,324,788 | |
Centerra Gold, Inc. | 2,166,400 | 41,666,257 | |
China Gold International Resources Corp. Ltd. (a) | 40,000 | 219,923 | |
Colossus Minerals, Inc. (a) | 961,100 | 8,252,843 | |
Corvus Gold, Inc. (a) | 138,350 | 103,985 | |
Detour Gold Corp. (a) | 543,000 | 17,677,900 | |
Detour Gold Corp. (a)(e) | 785,900 | 25,585,748 | |
Eldorado Gold Corp. (d) | 8,747,013 | 149,048,201 | |
European Goldfields Ltd. (a) | 2,004,600 | 25,964,343 | |
Exeter Resource Corp. (a) | 238,000 | 1,274,234 | |
Extorre Gold Mines Ltd. (a) | 453,000 | 2,374,023 | |
Franco-Nevada Corp. (d) | 1,943,400 | 66,150,635 | |
Fronteer Gold, Inc. (a) | 365,000 | 5,392,793 | |
Gabriel Resources Ltd. (a) | 310,000 | 2,572,561 | |
Gammon Gold, Inc. (a) | 2,362,500 | 20,943,243 | |
Goldcorp, Inc. | 11,936,900 | 570,390,248 | |
Golden Star Resources Ltd. (a)(d) | 3,055,769 | 9,658,904 | |
Gran Colombia Gold Corp. (a)(d) | 1,560,000 | 3,083,861 | |
Great Basin Gold Ltd. (a)(d) | 5,937,900 | 15,650,990 | |
Greystar Resources Ltd. (a) | 1,329,200 | 5,200,474 | |
Guyana Goldfields, Inc. (a) | 1,203,000 | 11,358,054 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 1,463,423 | |
IAMGOLD Corp. | 6,277,000 | 133,069,169 | |
International Minerals Corp.: | |||
(Canada) (a) | 152,100 | 1,168,253 | |
(Switzerland) (a) | 15,000 | 116,422 | |
International Tower Hill Mines Ltd. (a) | 341,700 | 3,187,441 | |
Jaguar Mining, Inc. (a)(d) | 884,700 | 4,709,291 | |
Keegan Resources, Inc. (a) | 30,000 | 229,189 | |
Kinross Gold Corp. | 17,439,491 | 276,518,056 | |
Kinross Gold Corp. warrants 9/17/14 (a) | 375,441 | 1,070,756 | |
Kirkland Lake Gold, Inc. (a) | 509,500 | 7,616,927 | |
Lake Shore Gold Corp. (a) | 2,380,000 | 9,875,315 | |
Levon Resources Ltd. (a) | 20,000 | 37,889 | |
Minefinders Corp. Ltd. (a)(d) | 918,000 | 10,671,012 | |
Nevsun Resources Ltd. (a) | 650,000 | 3,654,054 | |
New Gold, Inc. (a) | 6,561,800 | 63,236,497 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 195,987 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Northgate Minerals Corp. (a) | 4,089,900 | $ 11,664,374 | |
Novagold Resources, Inc. (a)(d) | 1,898,200 | 25,993,369 | |
OceanaGold Corp. (a) | 30,000 | 80,927 | |
Osisko Mining Corp. (a) | 1,932,000 | 26,655,135 | |
Osisko Mining Corp. (a)(e) | 3,000,000 | 41,389,961 | |
Premier Gold Mines Ltd. (a) | 1,101,800 | 7,725,362 | |
Primero Mining Corp. (a) | 492,800 | 2,004,180 | |
Queenston Mining, Inc. (a) | 45,000 | 273,359 | |
Rainy River Resources Ltd. (a) | 160,000 | 2,100,386 | |
Romarco Minerals, Inc. (a) | 1,840,000 | 4,470,939 | |
Rubicon Minerals Corp. (a) | 1,946,352 | 9,859,513 | |
San Gold Corp. (a) | 2,357,400 | 6,941,739 | |
Seabridge Gold, Inc. (a) | 636,105 | 21,214,103 | |
SEMAFO, Inc. (a) | 4,606,100 | 48,278,093 | |
Teranga Gold Corp. CDI unit | 1,678,197 | 4,585,373 | |
Timmins Gold Corp. (a) | 10,000 | 24,505 | |
Torex Gold Resources, Inc. (a)(d) | 330,000 | 710,116 | |
Yamana Gold, Inc. | 12,767,400 | 162,344,803 | |
| 2,703,636,154 | ||
Precious Metals & Minerals - 2.1% | |||
ATAC Resources Ltd. (a) | 37,200 | 279,215 | |
Dalradian Resources, Inc. (a) | 15,000 | 35,521 | |
First Majestic Silver Corp. (a) | 10,000 | 152,999 | |
Fortuna Mines, Inc. (a) | 40,000 | 203,861 | |
Orko Silver Corp. (a) | 346,000 | 840,731 | |
Pan American Silver Corp. | 949,187 | 37,113,217 | |
Pan American Silver Corp. warrants 12/7/14 (a) | 232,460 | 3,394,480 | |
Silver Standard Resources, Inc. (a) | 1,061,800 | 28,817,258 | |
Silver Wheaton Corp. (a) | 640,200 | 27,222,919 | |
Tahoe Resources, Inc. | 1,000 | 16,329 | |
| 98,076,530 | ||
TOTAL METALS & MINING | 2,811,940,475 | ||
Cayman Islands - 0.1% | |||
METALS & MINING - 0.1% | |||
Gold - 0.1% | |||
Real Gold Mining Ltd. (a)(d) | 2,925,000 | 4,416,795 | |
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zhaojin Mining Industry Co. Ltd. (H Shares) | 8,187,950 | 34,799,839 | |
Zijin Mining Group Co. Ltd. (H Shares) | 64,542,000 | 52,956,264 | |
| 87,756,103 | ||
| |||
Shares | Value | ||
Luxembourg - 0.1% | |||
METALS & MINING - 0.1% | |||
Steel - 0.1% | |||
Ternium SA sponsored ADR | 144,300 | $ 5,200,572 | |
Peru - 0.5% | |||
METALS & MINING - 0.5% | |||
Precious Metals & Minerals - 0.5% | |||
Compania de Minas Buenaventura SA sponsored ADR | 463,900 | 21,650,213 | |
Russia - 0.5% | |||
METALS & MINING - 0.5% | |||
Gold - 0.5% | |||
Polyus Gold OJSC sponsored ADR | 697,566 | 23,821,879 | |
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) (a) | 73,300 | 1,383,171 | |
TOTAL METALS & MINING | 25,205,050 | ||
South Africa - 11.2% | |||
METALS & MINING - 11.2% | |||
Gold - 11.2% | |||
AngloGold Ashanti Ltd. sponsored ADR (d) | 6,507,952 | 317,848,376 | |
Gold Fields Ltd. | 55,000 | 985,196 | |
Gold Fields Ltd. sponsored ADR | 7,581,026 | 135,776,176 | |
Harmony Gold Mining Co. Ltd. | 1,484,000 | 17,391,539 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (d) | 4,491,800 | 52,913,404 | |
| 524,914,691 | ||
Precious Metals & Minerals - 0.0% | |||
Anglo Platinum Ltd. | 5,000 | 486,176 | |
TOTAL METALS & MINING | 525,400,867 | ||
Switzerland - 0.1% | |||
CONSTRUCTION & ENGINEERING - 0.1% | |||
Construction & Engineering - 0.1% | |||
Foster Wheeler AG (a) | 132,618 | 4,795,467 | |
United Kingdom - 1.0% | |||
METALS & MINING - 1.0% | |||
Gold - 1.0% | |||
Petropavlovsk PLC | 2,770,929 | 48,835,446 | |
United States of America - 7.2% | |||
METALS & MINING - 7.2% | |||
Diversified Metals & Mining - 0.1% | |||
Walter Energy, Inc. | 40,000 | 4,840,400 | |
Gold - 7.1% | |||
Allied Nevada Gold Corp. (a) | 1,337,800 | 40,588,852 | |
Allied Nevada Gold Corp. (Canada) (a) | 20,000 | 608,288 | |
Newmont Mining Corp. | 4,221,850 | 233,341,650 | |
Common Stocks - continued | |||
Shares | Value | ||
United States of America - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Royal Gold, Inc. | 940,413 | $ 46,663,293 | |
US Gold Corp. (a)(d) | 1,310,100 | 9,511,326 | |
| 330,713,409 | ||
Precious Metals & Minerals - 0.0% | |||
Coeur d'Alene Mines Corp. (a) | 30,000 | 945,300 | |
Paramount Gold & Silver Corp. (a)(d) | 10,000 | 39,900 | |
| 985,200 | ||
TOTAL METALS & MINING | 336,539,009 | ||
TOTAL COMMON STOCKS (Cost $3,248,618,022) | 4,610,818,812 | ||
Commodities - 0.5% | |||
Troy |
| ||
Gold Bullion (a) | 18,500 | 26,116,450 | |
Money Market Funds - 13.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 40,583,120 | 40,583,120 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 586,930,925 | 586,930,925 | |
TOTAL MONEY MARKET FUNDS (Cost $627,514,045) | 627,514,045 | ||
TOTAL INVESTMENT PORTFOLIO - 112.4% (Cost $3,890,733,467) | 5,264,449,307 | ||
NET OTHER ASSETS (LIABILITIES) - (12.4)% | (582,662,256) | ||
NET ASSETS - 100% | $ 4,681,787,051 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(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 $88,746,028 or 1.9% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
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 | $ 91,930 |
Fidelity Securities Lending Cash Central Fund | 678,947 |
Total | $ 770,877 |
Consolidated Subsidiary |
| Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 207,130,454 | $ 24,953,280 | $ 237,367,750 | $ - | $ 26,107,166 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments: | ||||
Common Stocks | $ 4,610,818,812 | $ 4,018,239,956 | $ 592,578,856 | $ - |
Commodities | 26,116,450 | 26,116,450 | - | - |
Money Market Funds | 627,514,045 | 627,514,045 | - | - |
Total Investments: | $ 5,264,449,307 | $ 4,671,870,451 | $ 592,578,856 | $ - |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $569,079,718) - See accompanying schedule: Unaffiliated issuers (cost $3,248,618,022) | $ 4,610,818,812 |
|
Fidelity Central Funds (cost $627,514,045) | 627,514,045 |
|
Commodities (cost $14,601,400) | 26,116,450 |
|
Total Investments (cost $3,890,733,467) |
| $ 5,264,449,307 |
Cash | 3,427 | |
Receivable for investments sold | 16,094,242 | |
Receivable for fund shares sold | 11,759,060 | |
Dividends receivable | 1,436,278 | |
Distributions receivable from Fidelity Central Funds | 63,869 | |
Prepaid expenses | 7,789 | |
Other receivables | 31,365 | |
Total assets | 5,293,845,337 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,682,395 | |
Delayed delivery | 3,122,409 | |
Payable for fund shares redeemed | 8,771,625 | |
Accrued management fee | 2,088,782 | |
Distribution and service plan fees payable | 127,723 | |
Other affiliated payables | 1,143,284 | |
Other payables and accrued expenses | 191,143 | |
Collateral on securities loaned, at value | 586,930,925 | |
Total liabilities | 612,058,286 | |
|
|
|
Net Assets | $ 4,681,787,051 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,463,306,434 | |
Accumulated net investment loss | (1,236) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (155,217,968) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,373,699,821 | |
Net Assets | $ 4,681,787,051 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 50.92 | |
|
|
|
Maximum offering price per share (100/94.25 of $50.92) | $ 54.03 | |
Class T: | $ 50.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $50.68) | $ 52.52 | |
Class B: | $ 50.02 | |
|
|
|
Class C: | $ 49.81 | |
|
|
|
Gold: | $ 51.44 | |
|
|
|
Institutional Class: | $ 51.32 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 20,259,733 |
Interest |
| 215 |
Income from Fidelity Central Funds |
| 770,877 |
Total income |
| 21,030,825 |
|
|
|
Expenses | ||
Management fee | $ 23,221,155 | |
Transfer agent fees | 11,208,569 | |
Distribution and service plan fees | 1,316,746 | |
Accounting and security lending fees | 1,537,791 | |
Custodian fees and expenses | 482,729 | |
Independent trustees' compensation | 22,282 | |
Registration fees | 324,310 | |
Audit | 69,408 | |
Legal | 13,259 | |
Interest | 934 | |
Miscellaneous | 44,541 | |
Total expenses before reductions | 38,241,724 | |
Expense reductions | (843,975) | 37,397,749 |
Net investment income (loss) | (16,366,924) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 335,695,287 | |
Commodities | 65,240,750 |
|
Foreign currency transactions | 639,132 | |
Total net realized gain (loss) |
| 401,575,169 |
Change in net unrealized appreciation (depreciation) on: Investments | 839,874,132 | |
Assets and liabilities in foreign currencies | (9,727) | |
Commodities | (33,347,000) | |
Total change in net unrealized appreciation (depreciation) |
| 806,517,405 |
Net gain (loss) | 1,208,092,574 | |
Net increase (decrease) in net assets resulting from operations | $ 1,191,725,650 |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (16,366,924) | $ (11,767,758) |
Net realized gain (loss) | 401,575,169 | 141,739,537 |
Change in net unrealized appreciation (depreciation) | 806,517,405 | 582,559,218 |
Net increase (decrease) in net assets resulting from operations | 1,191,725,650 | 712,530,997 |
Distributions to shareholders from net realized gain | (403,524,767) | (56,010,412) |
Share transactions - net increase (decrease) | 849,828,502 | 418,234,847 |
Redemption fees | 423,645 | 514,829 |
Total increase (decrease) in net assets | 1,638,453,030 | 1,075,270,261 |
|
|
|
Net Assets | ||
Beginning of period | 3,043,334,021 | 1,968,063,760 |
End of period (including accumulated net investment loss of $1,236 and accumulated net investment loss of $919, respectively) | $ 4,681,787,051 | $ 3,043,334,021 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.30) | (.25) | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.28 | 11.00 | (15.44) | 15.00 | (.07) |
Total from investment operations | 14.98 | 10.75 | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.57) | (.71) | (.17) | (5.01) | - |
Total distributions | (4.57) | (.71) | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.92 | $ 40.50 | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B, C, D | 36.99% | 35.19% | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.16% | 1.21% | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.15% | 1.19% | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.14% | 1.17% | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.63)% | (.63)% | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 149,178 | $ 82,413 | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.43) | (.36) | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.21 | 10.96 | (15.42) | 15.05 | (.09) |
Total from investment operations | 14.78 | 10.60 | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.45) | (.63) | (.17) | (4.97) | - |
Total distributions | (4.45) | (.63) | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.68 | $ 40.34 | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B, C, D | 36.62% | 34.79% | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.51% | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.49% | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.42% | 1.47% | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.90)% | (.93)% | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,846 | $ 26,256 | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.66) | (.55) | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 15.02 | 10.84 | (15.34) | 14.95 | (.08) |
Total from investment operations | 14.36 | 10.29 | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | - | - | (.16) | - |
Distributions from net realized gain | (4.21) | (.51) | (.17) | (4.84) | - |
Total distributions | (4.21) | (.51) | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | - K | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 50.02 | $ 39.87 | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B, C, D | 35.97% | 34.12% | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.00% | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.92% | 1.98% | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.91% | 1.96% | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.39)% | (1.42)% | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,837 | $ 18,340 | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | (.64) | (.53) | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.98 | 10.80 | (15.30) | 14.91 | (.10) |
Total from investment operations | 14.34 | 10.27 | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | - | - | (.17) | - |
Distributions from net realized gain | (4.28) | (.53) | (.17) | (4.89) | - |
Total distributions | (4.28) | (.53) | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | - K | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 49.81 | $ 39.75 | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B, C, D | 36.01% | 34.15% | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.97% | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.88% | 1.95% | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.87% | 1.93% | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.35)% | (1.39)% | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 72,431 | $ 38,624 | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. IExpense 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. JFor the year ended February 29. KAmount represents less than $.01. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | (.16) | (.04) | (.02) | .22 F |
Net realized and unrealized gain (loss) | 15.43 | 11.10 | (15.51) | 15.05 | 5.49 |
Total from investment operations | 15.25 | 10.94 | (15.55) | 15.03 | 5.71 |
Distributions from net investment income | - | - | - | (.18) | (.02) |
Distributions from net realized gain | (4.67) | (.77) | (.17) | (5.03) | (5.10) |
Total distributions | (4.67) | (.77) | (.17) | (5.21) | (5.12) |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .01 | .04 |
Net asset value, end of period | $ 51.44 | $ 40.85 | $ 30.67 | $ 46.37 | $ 36.54 |
Total Return A, B | 37.35% | 35.52% | (33.59)% | 45.10% | 16.19% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | .98% | .89% | .85% | .90% |
Expenses net of fee waivers, if any | .90% | .96% | .87% | .85% | .90% |
Expenses net of all reductions | .89% | .94% | .86% | .81% | .87% |
Net investment income (loss) | (.37)% | (.40)% | (.13)% | (.05)% | .62% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,250,249 | $ 2,839,664 | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 |
Portfolio turnover rate E | 35% | 46% | 42% | 55% | 85% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment 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%. GExpense 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. HFor the year ended February 29. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.15) | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.41 | 11.08 | (15.49) | 15.03 | (.08) |
Total from investment operations | 15.26 | 10.93 | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | - | - | (.19) | - |
Distributions from net realized gain | (4.72) | (.82) | (.17) | (5.04) | - |
Total distributions | (4.72) | (.82) | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 51.32 | $ 40.77 | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B, C | 37.45% | 35.50% | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .85% | .95% | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .84% | .93% | .89% | .83% | .94% A |
Expenses net of all reductions | .83% | .91% | .86% | .79% | .91% A |
Net investment income (loss) | (.31)% | (.37)% | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 137,246 | $ 38,037 | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 35% | 46% | 42% | 55% | 85% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. HExpense 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. IFor 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, 2011
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Consolidated Subsidiary.
The Fund invests in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2011, the Fund held $26,107,166 in the Subsidiary, representing 0.6% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, is included at the end of the Fund's Consolidated 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 are generally 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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the 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 foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 1,108,022,042 |
Gross unrealized depreciation | (79,873,929) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 1,028,148,113 |
Tax Cost | $ 4,236,301,194 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 158,213,882 |
Undistributed long-term capital gains | $ 25,688,008 |
Net unrealized appreciation (depreciation) | $ 1,028,132,094 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 183,285,077 | $ 56,010,412 |
Long-term Capital Gains | 220,239,690 | - |
Total | $ 403,524,767 | $ 56,010,412 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. The Fund 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. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the 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 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. 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 $1,874,696,211 and $1,415,831,862, 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.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 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 $471,020 and is reflected in Expense reductions on the Consolidated Statement of Operations.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 299,324 | $ 12,201 |
Class T | .25% | .25% | 181,474 | 370 |
Class B | .75% | .25% | 241,245 | 181,088 |
Class C | .75% | .25% | 594,703 | 222,899 |
|
|
| $ 1,316,746 | $ 416,558 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 141,146 |
Class T | 20,875 |
Class B* | 49,877 |
Class C* | 19,315 |
| $ 231,213 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 334,693 | .28 |
Class T | 109,369 | .30 |
Class B | 70,450 | .29 |
Class C | 152,333 | .26 |
Gold | 10,351,630 | .28 |
Institutional Class | 190,094 | .22 |
| $ 11,208,569 |
|
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 $5,404 for the period.
Annual Report
7. Fees and Other Transactions with Affiliates - continued
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 |
Borrower | $ 15,940,400 | .42% | $ 934 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $14,493 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $678,947. During the period, there were no securities loaned to FCM.
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 $368,969 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 $3,986.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net realized gain |
|
|
Class A | $ 11,944,959 | $ 1,356,457 |
Class T | 3,497,337 | 386,094 |
Class B | 2,159,100 | 226,465 |
Class C | 5,735,528 | 480,176 |
Gold | 369,777,197 | 53,033,502 |
Institutional Class | 10,410,646 | 527,718 |
Total | $ 403,524,767 | $ 56,010,412 |
Annual Report
Notes to Consolidated Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,813,814 | 1,548,727 | $ 88,297,648 | $ 60,979,204 |
Reinvestment of distributions | 211,919 | 28,941 | 10,924,421 | 1,258,667 |
Shares redeemed | (1,131,112) | (828,099) | (54,494,300) | (32,946,669) |
Net increase (decrease) | 894,621 | 749,569 | $ 44,727,769 | $ 29,291,202 |
Class T |
|
|
|
|
Shares sold | 503,427 | 410,718 | $ 24,561,424 | $ 16,022,649 |
Reinvestment of distributions | 65,695 | 8,602 | 3,372,922 | 372,822 |
Shares redeemed | (315,455) | (271,824) | (15,070,272) | (10,198,558) |
Net increase (decrease) | 253,667 | 147,496 | $ 12,864,074 | $ 6,196,913 |
Class B |
|
|
|
|
Shares sold | 147,555 | 271,111 | $ 6,862,473 | $ 10,287,423 |
Reinvestment of distributions | 37,199 | 4,654 | 1,885,064 | 199,620 |
Shares redeemed | (108,197) | (95,719) | (5,152,463) | (3,721,090) |
Net increase (decrease) | 76,557 | 180,046 | $ 3,595,074 | $ 6,765,953 |
Class C |
|
|
|
|
Shares sold | 736,040 | 698,249 | $ 34,773,958 | $ 27,513,842 |
Reinvestment of distributions | 91,950 | 9,039 | 4,652,354 | 386,528 |
Shares redeemed | (345,478) | (320,512) | (16,458,498) | (12,323,085) |
Net increase (decrease) | 482,512 | 386,776 | $ 22,967,814 | $ 15,577,285 |
Gold |
|
|
|
|
Shares sold | 38,551,839 | 40,468,485 | $ 1,893,619,015 | $ 1,581,099,363 |
Reinvestment of distributions | 6,874,054 | 1,174,296 | 357,359,018 | 51,481,173 |
Shares redeemed | (32,315,161) | (33,470,388) | (1,572,262,287) | (1,303,757,681) |
Net increase (decrease) | 13,110,732 | 8,172,393 | $ 678,715,746 | $ 328,822,855 |
Institutional Class |
|
|
|
|
Shares sold | 2,014,694 | 933,259 | $ 99,860,479 | $ 39,237,749 |
Reinvestment of distributions | 184,813 | 10,089 | 9,641,424 | 441,486 |
Shares redeemed | (457,947) | (208,491) | (22,543,878) | (8,098,596) |
Net increase (decrease) | 1,741,560 | 734,857 | $ 86,958,025 | $ 31,580,639 |
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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 35.73% | 12.73% | 14.81% |
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 28, 2001. 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 Materials Fund
Management's Discussion of Fund Performance
Market Recap: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Institutional Class shares returned 35.73%, topping the S&P 500® and the 33.20% gain of the MSCI® U.S. IM Materials 25/50 Index. The specialty chemicals group had the largest positive impact on performance versus the MSCI index, entirely due to favorable stock selection. Fund performance also was lifted by an out-of-benchmark stake in coal and consumable fuels, as well as by solid picks in a number of other industries. An out-of-benchmark position in Netherlands-based LyondellBasell Industries was the fund's largest relative contributor. The company - a pure play on the industrial chemical ethylene - emerged from bankruptcy in April 2010, and in short order the stock embarked on an impressive rally, more than doubling from where I bought it. Ferro - a maker of coatings and paints to the construction, auto, appliance and electronics markets - also was a noteworthy contributor, returning almost 80% for the fund. I sold the stock to lock in profits. A third contributor in the specialty chemicals category was Innophos Holdings, which makes specialty-grade phosphate products for food, pharmaceutical and industrial markets. The stock surged higher in early February, when the company reported earnings that solidly beat estimates. Elsewhere, purchasing United States Steel during the period's second half was rewarding, and underweighting, and eventually selling, Vulcan Materials, a provider of crushed stone and other construction aggregates, also paid off in view of the stock's muted gain. Conversely, a modest cash position dampened the fund's gain in a strongly rising market. Out-of-index exposures to the construction/engineering and building products groups also held back performance, as did an underweighting in precious metals/minerals. At the stock level, not owning strong-performing steel producer Cliffs Natural Resources worked against the fund. Monsanto also hurt results, as growing competition for the company's popular Roundup® agricultural herbicide and its line of genetically modified seeds led the company to cut prices on some products, which ate into profits. Monsanto was the fund's biggest detractor in absolute terms and its second-largest detractor on a relative basis. Other detractors were Ecolab, which provides cleaning and sanitizing products and related items for hospitality, health care and government customers, and container maker Owens-Illinois, the latter of which I sold.
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, 2010 to February 28, 2011).
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 | $ 1,362.10 | $ 6.79 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.04 | $ 5.81 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,360.20 | $ 8.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.70 | $ 11.34 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,356.80 | $ 11.22 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Materials | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.10 | $ 5.10 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Institutional Class | .85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,364.20 | $ 4.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.58 | $ 4.26 |
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
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
Dow Chemical Co. | 7.8 | 8.0 |
E.I. du Pont de Nemours & Co. | 7.5 | 7.7 |
Freeport-McMoRan Copper & Gold, Inc. | 6.9 | 5.6 |
Monsanto Co. | 4.5 | 6.6 |
Praxair, Inc. | 4.4 | 6.1 |
Newmont Mining Corp. | 3.8 | 3.3 |
Air Products & Chemicals, Inc. | 3.5 | 4.0 |
United States Steel Corp. | 2.8 | 0.0 |
Alcoa, Inc. | 2.1 | 0.0 |
The Mosaic Co. | 2.1 | 2.7 |
| 45.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Chemicals | 53.4% |
|
![]() | Metals & Mining | 31.9% |
|
![]() | Containers & | 5.7% |
|
![]() | Construction Materials | 1.2% |
|
![]() | Food Products | 1.0% |
|
![]() | All Others* | 6.8% |
|
As of August 31, 2010 | |||
![]() | Chemicals | 57.9% |
|
![]() | Metals & Mining | 25.8% |
|
![]() | Containers & | 7.2% |
|
![]() | Construction Materials | 2.3% |
|
![]() | Paper & Forest Products | 1.1% |
|
![]() | All Others* | 5.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Materials Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
CHEMICALS - 53.4% | |||
Commodity Chemicals - 2.5% | |||
Arkema SA | 65,800 | $ 4,807,164 | |
Celanese Corp. Class A | 738,693 | 30,618,825 | |
Grasim Industries Ltd. | 48,407 | 2,527,047 | |
| 37,953,036 | ||
Diversified Chemicals - 22.6% | |||
Ashland, Inc. | 464,683 | 26,161,653 | |
BASF AG | 87,436 | 7,271,073 | |
Cabot Corp. | 527,633 | 22,825,404 | |
Dow Chemical Co. | 3,107,211 | 115,463,957 | |
E.I. du Pont de Nemours & Co. | 2,037,677 | 111,807,337 | |
FMC Corp. | 178,400 | 13,815,296 | |
Huntsman Corp. | 539,333 | 9,519,227 | |
Lanxess AG | 122,493 | 9,111,274 | |
PPG Industries, Inc. | 79,800 | 7,052,724 | |
Solutia, Inc. (a) | 564,936 | 13,112,165 | |
| 336,140,110 | ||
Fertilizers & Agricultural Chemicals - 9.0% | |||
CF Industries Holdings, Inc. | 145,854 | 20,606,253 | |
Intrepid Potash, Inc. (a) | 39,700 | 1,532,420 | |
Monsanto Co. | 933,933 | 67,140,443 | |
The Mosaic Co. | 357,820 | 30,718,847 | |
Uralkali JSC GDR (Reg. S) | 215,814 | 8,820,318 | |
Yara International ASA | 92,100 | 4,883,555 | |
| 133,701,836 | ||
Industrial Gases - 7.9% | |||
Air Products & Chemicals, Inc. | 568,557 | 52,307,244 | |
Praxair, Inc. | 659,831 | 65,574,005 | |
| 117,881,249 | ||
Specialty Chemicals - 11.4% | |||
Albemarle Corp. | 187,835 | 10,811,783 | |
Ecolab, Inc. | 513,770 | 24,989,773 | |
Innophos Holdings, Inc. | 545,936 | 23,382,439 | |
Kraton Performance Polymers, Inc. (a) | 355,100 | 12,179,930 | |
LyondellBasell Industries NV Class A (a) | 376,752 | 14,346,716 | |
OMNOVA Solutions, Inc. (a) | 468,541 | 3,298,529 | |
PolyOne Corp. (a) | 248,260 | 3,445,849 | |
Rockwood Holdings, Inc. (a) | 321,032 | 14,944,040 | |
Sherwin-Williams Co. | 329,437 | 27,053,366 | |
Symrise AG | 366,983 | 9,629,891 | |
Valspar Corp. | 288,942 | 10,985,575 | |
W.R. Grace & Co. (a) | 397,246 | 15,111,238 | |
| 170,179,129 | ||
TOTAL CHEMICALS | 795,855,360 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Environmental & Facility Services - 0.2% | |||
Swisher Hygiene, Inc. (a)(d) | 502,100 | 3,029,401 | |
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 0.4% | |||
Construction & Engineering - 0.4% | |||
Orascom Construction Industries SAE GDR | 190,800 | $ 6,525,360 | |
CONSTRUCTION MATERIALS - 1.2% | |||
Construction Materials - 1.2% | |||
HeidelbergCement AG | 233,726 | 16,362,550 | |
Prism Cement Ltd. | 592,401 | 671,383 | |
| 17,033,933 | ||
CONTAINERS & PACKAGING - 5.7% | |||
Metal & Glass Containers - 4.6% | |||
Ball Corp. | 652,818 | 23,566,730 | |
Crown Holdings, Inc. (a) | 574,640 | 22,112,147 | |
Greif, Inc. Class A | 199,320 | 12,888,031 | |
Silgan Holdings, Inc. | 246,400 | 8,988,672 | |
| 67,555,580 | ||
Paper Packaging - 1.1% | |||
Rock-Tenn Co. Class A (d) | 244,900 | 16,812,385 | |
TOTAL CONTAINERS & PACKAGING | 84,367,965 | ||
FOOD PRODUCTS - 1.0% | |||
Agricultural Products - 1.0% | |||
Archer Daniels Midland Co. | 406,728 | 15,122,147 | |
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
Pall Corp. | 94,100 | 5,115,276 | |
METALS & MINING - 31.9% | |||
Aluminum - 2.1% | |||
Alcoa, Inc. | 1,908,300 | 32,154,855 | |
Diversified Metals & Mining - 14.4% | |||
Anglo American PLC (United Kingdom) | 322,851 | 17,497,785 | |
BHP Billiton PLC | 268,800 | 10,656,389 | |
Compass Minerals International, Inc. | 99,510 | 9,301,200 | |
Freeport-McMoRan Copper & Gold, Inc. | 1,954,362 | 103,483,468 | |
Gujarat NRE Coke Ltd. | 1,276,100 | 1,199,559 | |
Gulf Resources, Inc. (a)(d) | 278,029 | 2,491,140 | |
HudBay Minerals, Inc. | 608,400 | 10,554,996 | |
Ivanhoe Mines Ltd. (a) | 254,200 | 7,202,661 | |
Kazakhmys PLC | 211,900 | 4,974,834 | |
MacArthur Coal Ltd. | 584,412 | 7,068,264 | |
Mongolian Mining Corp. | 3,312,000 | 4,201,664 | |
Teck Resources Ltd. Class B (sub. vtg.) | 186,600 | 10,326,641 | |
Walter Energy, Inc. | 216,135 | 26,154,496 | |
| 215,113,097 | ||
Gold - 7.0% | |||
AngloGold Ashanti Ltd. sponsored ADR | 258,295 | 12,615,128 | |
Centamin Egypt Ltd. (United Kingdom) (a) | 2,503,700 | 4,823,709 | |
Newcrest Mining Ltd. | 279,895 | 10,819,080 | |
Newmont Mining Corp. | 1,029,533 | 56,902,289 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Randgold Resources Ltd. sponsored ADR | 94,100 | $ 7,617,395 | |
Yamana Gold, Inc. | 890,200 | 11,319,403 | |
| 104,097,004 | ||
Precious Metals & Minerals - 0.4% | |||
Pan American Silver Corp. | 140,500 | 5,493,551 | |
Steel - 8.0% | |||
Allegheny Technologies, Inc. (d) | 185,500 | 12,443,340 | |
Carpenter Technology Corp. | 485,471 | 20,185,884 | |
Commercial Metals Co. | 258,987 | 4,317,313 | |
Jindal Steel & Power Ltd. | 222,643 | 3,235,246 | |
Reliance Steel & Aluminum Co. | 474,508 | 26,254,528 | |
Ternium SA sponsored ADR | 137,745 | 4,964,330 | |
United States Steel Corp. (d) | 719,035 | 41,337,322 | |
Vale SA sponsored ADR | 179,550 | 6,145,997 | |
| 118,883,960 | ||
TOTAL METALS & MINING | 475,742,467 | ||
OIL, GAS & CONSUMABLE FUELS - 1.0% | |||
Coal & Consumable Fuels - 1.0% | |||
Paladin Energy Ltd. (a) | 671,007 | 3,405,900 | |
PT Bumi Resources Tbk | 34,153,500 | 11,614,820 | |
| 15,020,720 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.7% | |||
Specialized REITs - 0.7% | |||
Weyerhaeuser Co. | 438,585 | 10,705,860 | |
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 0.2% | |||
Trading Companies & Distributors - 0.2% | |||
Brenntag AG | 30,900 | $ 3,230,132 | |
TOTAL COMMON STOCKS (Cost $1,132,830,983) | 1,431,748,621 | ||
Money Market Funds - 7.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.19% (b) | 56,769,086 | 56,769,086 | |
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 59,743,976 | 59,743,976 | |
TOTAL MONEY MARKET FUNDS (Cost $116,513,062) | 116,513,062 | ||
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $1,249,344,045) | 1,548,261,683 | ||
NET OTHER ASSETS (LIABILITIES) - (3.9)% | (57,998,548) | ||
NET ASSETS - 100% | $ 1,490,263,135 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 57,689 |
Fidelity Securities Lending Cash Central Fund | 60,638 |
Total | $ 118,327 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 1,431,748,621 | $ 1,397,271,941 | $ 34,476,680 | $ - |
Money Market Funds | 116,513,062 | 116,513,062 | - | - |
Total Investments in Securities: | $ 1,548,261,683 | $ 1,513,785,003 | $ 34,476,680 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 83.5% |
Germany | 3.1% |
Canada | 3.1% |
United Kingdom | 2.2% |
Australia | 1.7% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 5.4% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $18,182,003 of which $17,489,907, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, respectively. |
A capital loss carryforward of approximately $4,359,948 was acquired from Paper and Forest Products Portfolio, of which $3,667,852, $611,309 and $80,787 will expire in fiscal 2017, 2018 and 2019, 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
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $58,657,243) - See accompanying schedule: Unaffiliated issuers (cost $1,132,830,983) | $ 1,431,748,621 |
|
Fidelity Central Funds (cost $116,513,062) | 116,513,062 |
|
Total Investments (cost $1,249,344,045) |
| $ 1,548,261,683 |
Cash | 1,525,870 | |
Foreign currency held at value (cost $48,163) | 48,097 | |
Receivable for investments sold | 7,446,525 | |
Receivable for fund shares sold | 15,282,091 | |
Dividends receivable | 1,460,733 | |
Distributions receivable from Fidelity Central Funds | 26,829 | |
Prepaid expenses | 1,447 | |
Other receivables | 26,632 | |
Total assets | 1,574,079,907 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 17,278,185 | |
Payable for fund shares redeemed | 5,679,245 | |
Accrued management fee | 669,790 | |
Distribution and service plan fees payable | 82,399 | |
Other affiliated payables | 288,780 | |
Other payables and accrued expenses | 74,397 | |
Collateral on securities loaned, at value | 59,743,976 | |
Total liabilities | 83,816,772 | |
|
|
|
Net Assets | $ 1,490,263,135 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,213,090,370 | |
Distributions in excess of net investment income | (22,442) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (21,722,153) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 298,917,360 | |
Net Assets | $ 1,490,263,135 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 69.96 | |
|
|
|
Maximum offering price per share (100/94.25 of $69.96) | $ 74.23 | |
Class T: | $ 69.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $69.68) | $ 72.21 | |
Class B: | $ 68.95 | |
|
|
|
Class C: | $ 68.78 | |
|
|
|
Materials: | $ 70.11 | |
|
|
|
Institutional Class: | $ 70.05 |
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, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,034,557 |
Special dividends |
| 12,590,176 |
Interest |
| 42 |
Income from Fidelity Central Funds |
| 118,327 |
Total income |
| 26,743,102 |
|
|
|
Expenses | ||
Management fee | $ 5,076,388 | |
Transfer agent fees | 2,252,029 | |
Distribution and service plan fees | 648,252 | |
Accounting and security lending fees | 309,212 | |
Custodian fees and expenses | 61,955 | |
Independent trustees' compensation | 4,648 | |
Registration fees | 201,055 | |
Audit | 44,669 | |
Legal | 2,812 | |
Interest | 956 | |
Tax expense | 144 |
|
Miscellaneous | 8,289 | |
Total expenses before reductions | 8,610,409 | |
Expense reductions | (94,170) | 8,516,239 |
Net investment income (loss) | 18,226,863 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 5,324,733 | |
Foreign currency transactions | (73,855) | |
Total net realized gain (loss) |
| 5,250,878 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 249,899,172 | |
Assets and liabilities in foreign currencies | 1,275 | |
Total change in net unrealized appreciation (depreciation) |
| 249,900,447 |
Net gain (loss) | 255,151,325 | |
Net increase (decrease) in net assets resulting from operations | $ 273,378,188 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 18,226,863 | $ 3,695,665 |
Net realized gain (loss) | 5,250,878 | 54,954,095 |
Change in net unrealized appreciation (depreciation) | 249,900,447 | 118,179,943 |
Net increase (decrease) in net assets resulting from operations | 273,378,188 | 176,829,703 |
Distributions to shareholders from net investment income | (18,392,042) | (4,024,717) |
Distributions to shareholders from net realized gain | (379,797) | - |
Total distributions | (18,771,839) | (4,024,717) |
Share transactions - net increase (decrease) | 520,343,234 | 390,197,683 |
Redemption fees | 97,765 | 93,068 |
Total increase (decrease) in net assets | 775,047,348 | 563,095,737 |
|
|
|
Net Assets | ||
Beginning of period | 715,215,787 | 152,120,050 |
End of period (including distributions in excess of net investment income of $22,442 and undistributed net investment income of $21,306, respectively) | $ 1,490,263,135 | $ 715,215,787 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | 1.08 H | .30 I | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | 17.40 | 24.90 | (29.46) | 8.05 | 3.93 |
Total from investment operations | 18.48 | 25.20 | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (1.06) | (.32) | (.12) | (.32) | - |
Distributions from net realized gain | (.01) | - | - | (2.21) | - |
Total distributions | (1.07) | (.32) | (.12) | (2.53) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.96 | $ 52.54 | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B, C, D | 35.33% | 91.25% | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.16% | 1.23% | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.16% | 1.23% | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.15% | 1.22% | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | 1.81% H | .65% I | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 124,160 | $ 52,352 | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .41%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.53 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .90 H | .16 I | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | 17.34 | 24.81 | (29.32) | 8.00 | 3.87 |
Total from investment operations | 18.24 | 24.97 | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.92) | (.19) | (.03) | (.21) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.92) | (.19) | (.03) | (2.42) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 69.68 | $ 52.35 | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B, C, D | 34.98% | 90.70% | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.44% | 1.52% | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.44% | 1.52% | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.43% | 1.51% | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | 1.54% H | .35% I | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 25,570 | $ 14,712 | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .14%. IInvestment 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%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.42 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .60 H | (.07) I | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | 17.13 | 24.61 | (29.13) | 7.98 | 3.84 |
Total from investment operations | 17.73 | 24.54 | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | (.65) | (.04) | - | (.04) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.65) | (.04) | - | (2.25) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.95 | $ 51.86 | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.79% | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.02% | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.93% | 2.02% | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.01% | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | 1.04% H | (.15)% I | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 13,507 | $ 9,538 | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.25 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, | 2011 | 2010 | 2009 | 2008 M | 2007 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .61 H | (.06) I | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | 17.09 | 24.57 | (29.07) | 7.97 | 3.81 |
Total from investment operations | 17.70 | 24.51 | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | (.72) | (.04) | - | (.12) | - |
Distributions from net realized gain | - | - | - | (2.21) | - |
Total distributions | (.72) | (.04) | - | (2.33) N | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 68.78 | $ 51.79 | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B, C, D | 34.29% | 89.82% | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F, K |
|
|
|
|
|
Expenses before reductions | 1.93% | 2.01% | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.93% | 2.01% | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | 1.04% H | (.13)% I | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,525 | $ 20,469 | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 87% | 104% L | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FFees 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. IInvestment 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)%. JFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. KExpense 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. LThe portfolio turnover rate does not include the assets acquired in the merger. MFor the year ended February 29. NTotal distributions of $2.33 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, | 2011 | 2010 | 2009 | 2008 J | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.25 F | .43 G | .38 | .64 | .42 |
Net realized and unrealized gain (loss) | 17.43 | 24.91 | (29.54) | 8.01 | 9.36 |
Total from investment operations | 18.68 | 25.34 | (29.16) | 8.65 | 9.78 |
Distributions from net investment income | (1.16) | (.40) | (.20) | (.36) | (.48) |
Distributions from net realized gain | (.03) | - | - | (2.21) | (4.79) |
Total distributions | (1.19) | (.40) | (.20) | (2.57) K | (5.27) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .06 |
Net asset value, end of period | $ 70.11 | $ 52.61 | $ 27.66 | $ 57.01 | $ 50.92 |
Total Return A, B | 35.70% | 91.77% | (51.15)% | 17.10% | 22.29% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .88% | .96% | .90% | .91% | 1.01% |
Expenses net of fee waivers, if any | .88% | .96% | .90% | .90% | .98% |
Expenses net of all reductions | .87% | .94% | .90% | .89% | .96% |
Net investment income (loss) | 2.10% F | .92% G | .78% | 1.14% | .87% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,195,371 | $ 604,475 | $ 127,551 | $ 353,185 | $ 230,147 |
Portfolio turnover rate E | 87% | 104% I | 117% | 77% | 185% |
ATotal returns would have been lower had certain expenses not been reduced during the periods shown. BTotal returns do not include the effect of the former sales charges. CCalculated based on average shares outstanding during the period. DFees 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. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .70%. GInvestment 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%. HExpense 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. IThe portfolio turnover rate does not include the assets acquired in the merger. JFor the year ended February 29. KTotal distributions of $2.57 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, | 2011 | 2010 | 2009 | 2008 L | 2007 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | 1.28 G | .46 H | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | 17.40 | 24.89 | (29.53) | 8.00 | 3.92 |
Total from investment operations | 18.68 | 25.35 | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (1.19) | (.44) | (.20) | (.36) | - |
Distributions from net realized gain | (.03) | - | - | (2.21) | - |
Total distributions | (1.22) | (.44) | (.20) | (2.56) M | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 70.05 | $ 52.58 | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B, C | 35.73% | 91.79% | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E, J |
|
|
|
|
|
Expenses before reductions | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .86% | .94% | .90% | .89% | 1.06% A |
Expenses net of all reductions | .85% | .93% | .90% | .89% | 1.04% A |
Net investment income (loss) | 2.11% G | .94% H | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 85,130 | $ 13,670 | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 87% | 104% K | 117% | 77% | 185% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EFees 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. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GInvestment income per share reflects a special dividend which amounted to $.83 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .72%. HInvestment 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%. IFor the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. JExpense 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. KThe portfolio turnover rate does not include the assets acquired in the merger. LFor the year ended February 29. MTotal distributions of $2.56 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, 2011
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 310,846,676 |
Gross unrealized depreciation | (15,469,188) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 295,377,488 |
Tax Cost | $ 1,252,884,195 |
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:
Capital loss carryforward | $ (18,182,003) |
Net unrealized appreciation (depreciation) | $ 295,377,210 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 18,771,839 | $ 4,024,717 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,261,371,136 and $778,483,528, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 180,708 | $ 8,693 |
Class T | .25% | .25% | 89,160 | 331 |
Class B | .75% | .25% | 112,358 | 84,410 |
Class C | .75% | .25% | 266,026 | 108,067 |
|
|
| $ 648,252 | $ 201,501 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 135,495 |
Class T | 13,835 |
Class B* | 20,335 |
Class C* | 9,166 |
| $ 178,831 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 200,549 | .28 |
Class T | 53,555 | .30 |
Class B | 33,293 | .30 |
Class C | 76,639 | .29 |
Materials | 1,816,001 | .24 |
Institutional Class | 71,992 | .23 |
| $ 2,252,029 |
|
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 $13,777 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 | $ 6,741,091 | .46% | $ 956 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $3,014 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $60,638. During the period, there were no securities loaned to FCM.
Annual Report
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 $94,109 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.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 1,422,379 | $ 238,202 |
Class T | 289,521 | 47,220 |
Class B | 122,322 | 5,848 |
Class C | 341,974 | 12,908 |
Materials | 15,509,343 | 3,662,178 |
Institutional Class | 706,503 | 58,361 |
Total | $ 18,392,042 | $ 4,024,717 |
From net realized gain |
|
|
Class A | $ 10,674 | $ - |
Materials | 358,147 | - |
Institutional Class | 10,976 | - |
Total | $ 379,797 | $ - |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 1,281,666 | 858,136 | $ 79,405,808 | $ 40,135,680 |
Reinvestment of distributions | 18,751 | 4,377 | 1,225,248 | 220,619 |
Shares redeemed | (522,145) | (256,610) | (29,567,388) | (11,780,339) |
Net increase (decrease) | 778,272 | 605,903 | $ 51,063,668 | $ 28,575,960 |
Class T |
|
|
|
|
Shares sold | 162,727 | 167,992 | $ 9,996,553 | $ 7,326,294 |
Reinvestment of distributions | 4,298 | 941 | 280,166 | 45,756 |
Shares redeemed | (81,055) | (67,330) | (4,620,393) | (3,005,643) |
Net increase (decrease) | 85,970 | 101,603 | $ 5,656,326 | $ 4,366,407 |
Class B |
|
|
|
|
Shares sold | 78,978 | 131,820 | $ 4,548,346 | $ 5,954,562 |
Reinvestment of distributions | 1,536 | 103 | 99,242 | 4,824 |
Shares redeemed | (68,559) | (43,087) | (3,840,777) | (1,785,370) |
Net increase (decrease) | 11,955 | 88,836 | $ 806,811 | $ 4,174,016 |
Class C |
|
|
|
|
Shares sold | 420,386 | 299,617 | $ 26,286,596 | $ 13,304,163 |
Reinvestment of distributions | 4,421 | 234 | 284,977 | 10,972 |
Shares redeemed | (143,652) | (106,334) | (7,964,201) | (4,538,206) |
Net increase (decrease) | 281,155 | 193,517 | $ 18,607,372 | $ 8,776,929 |
Materials |
|
|
|
|
Shares sold | 11,993,105 | 11,253,841 | $ 750,476,205 | $ 539,188,177 |
Issued in exchange for shares of Paper and Forest Products Portfolio | - | 337,332 | - | 13,304,373 |
Reinvestment of distributions | 229,147 | 68,039 | 14,963,249 | 3,440,550 |
Shares redeemed | (6,662,930) | (4,780,310) | (384,640,831) | (223,285,260) |
Net increase (decrease) | 5,559,322 | 6,878,902 | $ 380,798,623 | $ 332,647,840 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions - continued
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Institutional Class |
|
|
|
|
Shares sold | 1,219,205 | 269,782 | $ 77,607,131 | $ 13,383,120 |
Reinvestment of distributions | 8,764 | 839 | 572,066 | 43,347 |
Shares redeemed | (272,695) | (36,606) | (14,768,763) | (1,769,936) |
Net increase (decrease) | 955,274 | 234,015 | $ 63,410,434 | $ 11,656,531 |
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 the Select 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' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $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, 2011 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 27.27% | 3.85% | 1.26% |
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 28, 2001. 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: Steady economic growth, encouraging monetary policy, improving credit-market conditions, an uptick in merger-and-acquisition activity and better-than-expected corporate earnings propelled U.S. stock markets forward during the 12-month period ending February 28, 2011. Uncertainty over the global effects of the debt crisis in Europe and China's attempt to rein in its economy plagued equities during the spring, but markets reacted positively to the Federal Reserve's second round of stimulative quantitative easing and the Congressional midterm elections in November, followed in December by the extension of Bush-era tax policies. For the full year, the S&P 500® Index advanced 22.57%, with all but one of the 10 major sectors tracked by MSCI U.S. Investable Market classifications delivering a double-digit gain. While cyclically oriented sectors benefited from an overall improving economy, less economically sensitive sectors fell short of the broad market. Energy and materials stocks performed best, while the health care and consumer staples groups struggled the most.
Comments from Kristina Salen, Portfolio Manager of Fidelity Advisor® Telecommunications Fund: During the year, the fund's Institutional Class shares advanced 27.27%, falling short of the 30.04% gain of the MSCI® U.S. IM Telecommunications Services 25/50 Index, but handily outpacing the broadly based S&P 500®. Relative to the MSCI Index, underweighting benchmark heavyweight Verizon Communications hurt the most, as the stock was lifted amid speculation the company would begin carrying Apple's iPhone® mobile digital device. Disappointing stock picks in wireless telecom services also proved detrimental, including a position in Clearwire, a provider of wireless high-speed Internet service. Elsewhere in wireless, an overweighting in pre-paid wireless provider Leap Wireless International detracted, as did a stake in Netherlands-based VimpleCom. Underweighting Vonage Holdings, a provider of phone service over the Web using Voice over Internet Protocol (VoIP), hurt. On the flip side, underweighting integrated telecom giant AT&T was the biggest relative contributor. The stock underperformed on reports the company may lose exclusivity with the iPhone, which represented a good deal of its business. The fund also was aided by out-of-benchmark exposure to the high-growth cable and satellite industry. Specifically, I focused on video-related stocks in this area that I believed would perform well, including Germany-listed Kabel Deutschland Holding, U.K.-based Virgin Media and Comcast. Some of the stocks I've mentioned in this report were out-of-index holdings and some 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, 2010 to February 28, 2011).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,192.40 | $ 6.52 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,190.70 | $ 7.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.94% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.20 | $ 10.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.17 | $ 9.69 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,188.10 | $ 10.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Telecommunications | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.30 | $ 4.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,194.20 | $ 4.90 |
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
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2011 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 10.5 | 8.6 |
American Tower Corp. Class A | 7.1 | 7.5 |
Verizon Communications, Inc. | 7.0 | 15.0 |
Qwest Communications International, Inc. | 6.5 | 5.8 |
Crown Castle International Corp. | 5.8 | 6.3 |
Sprint Nextel Corp. | 4.3 | 5.4 |
NII Holdings, Inc. | 4.0 | 3.3 |
CenturyLink, Inc. | 4.0 | 4.8 |
SBA Communications Corp.Class A | 3.9 | 3.9 |
tw telecom, inc. | 3.7 | 2.7 |
| 56.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2011 | |||
![]() | Diversified Telecommunication Services | 47.8% |
|
![]() | Wireless Telecommunication Services | 36.2% |
|
![]() | Media | 10.2% |
|
![]() | Internet Software & Services | 2.3% |
|
![]() | Software | 2.0% |
|
![]() | All Others* | 1.5% |
|
As of August 31, 2010 | |||
![]() | Diversified Telecommunication Services | 46.2% |
|
![]() | Wireless Telecommunication Services | 39.6% |
|
![]() | Media | 9.5% |
|
![]() | Internet Software & Services | 1.5% |
|
![]() | Software | 0.9% |
|
![]() | All Others* | 2.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Telecommunications Portfolio
Investments February 28, 2011
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.6% | |||
Diversified Support Services - 0.6% | |||
Blue Label Telecoms Ltd. | 2,829,100 | $ 2,316,103 | |
COMMUNICATIONS EQUIPMENT - 0.5% | |||
Communications Equipment - 0.5% | |||
Aruba Networks, Inc. (a) | 392 | 11,936 | |
F5 Networks, Inc. (a) | 40 | 4,720 | |
Juniper Networks, Inc. (a) | 44,947 | 1,977,668 | |
Nortel Networks Corp. (a) | 8,071 | 0 | |
Polycom, Inc. (a) | 40 | 1,912 | |
Sandvine Corp. (U.K.) (a) | 3,200 | 10,543 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 7,704 | |
| 2,014,483 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
NetApp, Inc. (a) | 20 | 1,033 | |
Synaptics, Inc. (a) | 450 | 13,275 | |
| 14,308 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 47.8% | |||
Alternative Carriers - 12.3% | |||
AboveNet, Inc. | 113,300 | 7,352,037 | |
Cable & Wireless Worldwide PLC | 5 | 6 | |
Cogent Communications Group, Inc. (a) | 251,017 | 3,699,991 | |
Global Crossing Ltd. (a) | 302,086 | 4,757,855 | |
Iliad Group SA | 44,410 | 4,973,956 | |
Level 3 Communications, Inc. (a)(d) | 1,835,376 | 2,569,526 | |
PAETEC Holding Corp. (a) | 73,600 | 279,680 | |
tw telecom, inc. (a) | 739,957 | 13,763,200 | |
Vonage Holdings Corp. (a) | 1,782,800 | 7,879,976 | |
| 45,276,227 | ||
Integrated Telecommunication Services - 35.5% | |||
AT&T, Inc. | 1,366,919 | 38,793,161 | |
BT Group PLC | 5,351 | 15,896 | |
Cable & Wireless PLC | 5 | 4 | |
Cbeyond, Inc. (a) | 177,698 | 2,484,218 | |
CenturyLink, Inc. (d) | 352,890 | 14,532,010 | |
China Unicom (Hong Kong) Ltd. sponsored ADR (d) | 342,100 | 5,709,649 | |
Cincinnati Bell, Inc. New (a) | 225,000 | 594,000 | |
Deutsche Telekom AG | 763 | 10,261 | |
FairPoint Communications, Inc. (a) | 34,149 | 0 | |
Frontier Communications Corp. | 12,732 | 108,095 | |
Hellenic Telecommunications Organization SA | 163 | 1,676 | |
Qwest Communications International, Inc. | 3,513,189 | 23,959,949 | |
Telecom Italia SpA sponsored ADR | 226 | 3,526 | |
Telenor ASA sponsored ADR | 125,100 | 6,237,486 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 699,041 | $ 25,808,594 | |
Windstream Corp. | 963,015 | 12,076,208 | |
| 130,334,733 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 175,610,960 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 40 | 1,966 | |
INTERNET SOFTWARE & SERVICES - 2.3% | |||
Internet Software & Services - 2.3% | |||
Akamai Technologies, Inc. (a) | 35,700 | 1,339,821 | |
Google, Inc. Class A (a) | 3,000 | 1,840,200 | |
Rackspace Hosting, Inc. (a)(d) | 90,700 | 3,347,737 | |
SAVVIS, Inc. (a) | 99 | 3,217 | |
Support.com, Inc. (a) | 326,000 | 1,819,080 | |
| 8,350,055 | ||
MEDIA - 10.2% | |||
Broadcasting - 0.0% | |||
Ten Network Holdings Ltd. | 5 | 7 | |
Cable & Satellite - 10.2% | |||
Comcast Corp. Class A | 408,100 | 10,512,656 | |
DIRECTV (a) | 9 | 414 | |
Dish TV India Ltd. (a) | 5,888 | 7,629 | |
Kabel Deutschland Holding AG | 165,600 | 9,022,285 | |
Liberty Global, Inc. Class A (a)(d) | 98,400 | 4,142,640 | |
Naspers Ltd. Class N | 36,200 | 2,079,453 | |
Time Warner Cable, Inc. | 51,172 | 3,693,595 | |
Virgin Media, Inc. | 290,600 | 7,915,944 | |
| 37,374,616 | ||
Movies & Entertainment - 0.0% | |||
Madison Square Garden, Inc. Class A (a) | 525 | 14,994 | |
TOTAL MEDIA | 37,389,617 | ||
SOFTWARE - 2.0% | |||
Application Software - 2.0% | |||
AsiaInfo Holdings, Inc. (a)(d) | 170,800 | 3,475,780 | |
Gameloft (a) | 583,902 | 3,601,858 | |
Nuance Communications, Inc. (a) | 800 | 14,928 | |
Synchronoss Technologies, Inc. (a) | 5,003 | 171,403 | |
| 7,263,969 | ||
Home Entertainment Software - 0.0% | |||
Glu Mobile, Inc. (a) | 3 | 14 | |
TOTAL SOFTWARE | 7,263,983 | ||
WIRELESS TELECOMMUNICATION SERVICES - 36.2% | |||
Wireless Telecommunication Services - 36.2% | |||
America Movil SAB de CV Series L sponsored ADR | 300 | 17,226 | |
American Tower Corp. Class A (a) | 484,800 | 26,159,808 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Axiata Group Bhd (a) | 3,095,100 | $ 4,951,348 | |
Clearwire Corp. Class A (a)(d) | 1,476,236 | 7,425,467 | |
Crown Castle International Corp. (a) | 502,383 | 21,175,443 | |
ICO Global Communications Holdings Ltd. Class A (a) | 3,059,577 | 7,006,431 | |
Idea Cellular Ltd. (a) | 3,710 | 4,717 | |
Leap Wireless International, Inc. (a) | 371,258 | 4,536,773 | |
MetroPCS Communications, Inc. (a) | 659,406 | 9,495,446 | |
MTN Group Ltd. | 25 | 441 | |
NII Holdings, Inc. (a) | 358,100 | 14,667,776 | |
NTELOS Holdings Corp. | 632 | 12,273 | |
PT Indosat Tbk | 3,305,600 | 1,892,334 | |
SBA Communications Corp. Class A (a) | 336,282 | 14,154,109 | |
Sprint Nextel Corp. (a) | 3,616,150 | 15,802,576 | |
Telephone & Data Systems, Inc. | 15,255 | 513,331 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 55,900 | 2,164,448 | |
Turkcell Iletisim Hizmet AS | 162,000 | 911,697 | |
Vivo Participacoes SA sponsored ADR | 59,325 | 2,183,753 | |
| 133,075,397 | ||
TOTAL COMMON STOCKS (Cost $346,800,462) | 366,036,872 | ||
Money Market Funds - 7.4% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 0.21% (b)(c) | 27,411,975 | $ 27,411,975 | |
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $374,212,437) | 393,448,847 | ||
NET OTHER ASSETS (LIABILITIES) - (7.0)% | (25,841,113) | ||
NET ASSETS - 100% | $ 367,607,734 |
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. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,718 |
Fidelity Securities Lending Cash Central Fund | 217,589 |
Total | $ 231,307 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2011, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used 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 | $ 366,036,872 | $ 365,109,272 | $ 927,600 | $ - |
Money Market Funds | 27,411,975 | 27,411,975 | - | - |
Total Investments in Securities: | $ 393,448,847 | $ 392,521,247 | $ 927,600 | $ - |
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) | (905) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfers in to Level 3 | 905 |
Transfers out of Level 3 | - |
Ending Balance | $ - |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2011 | $ (905) |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. 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 | 86.0% |
Germany | 2.5% |
France | 2.4% |
Norway | 1.7% |
Hong Kong | 1.6% |
Malaysia | 1.3% |
Bermuda | 1.3% |
South Africa | 1.2% |
Brazil | 1.2% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
Income Tax Information |
At February 28, 2011, the Fund had a capital loss carryforward of approximately $76,308,957 of which $11,764,473, $52,002,796 and $12,541,688 will expire in fiscal 2012, 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
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2011 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,618,806) - See accompanying schedule: Unaffiliated issuers (cost $346,800,462) | $ 366,036,872 |
|
Fidelity Central Funds (cost $27,411,975) | 27,411,975 |
|
Total Investments (cost $374,212,437) |
| $ 393,448,847 |
Receivable for investments sold | 11,306,725 | |
Receivable for fund shares sold | 397,208 | |
Dividends receivable | 59,363 | |
Distributions receivable from Fidelity Central Funds | 14,970 | |
Prepaid expenses | 679 | |
Other receivables | 26,419 | |
Total assets | 405,254,211 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 115,353 | |
Payable for investments purchased | 9,565,852 | |
Payable for fund shares redeemed | 235,627 | |
Accrued management fee | 177,334 | |
Distribution and service plan fees payable | 5,186 | |
Other affiliated payables | 95,722 | |
Other payables and accrued expenses | 39,428 | |
Collateral on securities loaned, at value | 27,411,975 | |
Total liabilities | 37,646,477 | |
|
|
|
Net Assets | $ 367,607,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 431,017,434 | |
Undistributed net investment income | 260,753 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (82,905,063) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 19,234,610 | |
Net Assets | $ 367,607,734 |
Statement of Assets and Liabilities - continued
| February 28, 2011 | |
|
|
|
Calculation of Maximum Offering Price | $ 46.93 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.93) | $ 49.79 | |
Class T: | $ 46.81 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.81) | $ 48.51 | |
Class B: | $ 46.93 | |
|
|
|
Class C: | $ 46.89 | |
|
|
|
Telecommunications: | $ 47.07 | |
|
|
|
Institutional Class: | $ 47.02 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2011 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 8,724,568 |
Interest |
| 210 |
Income from Fidelity Central Funds |
| 231,307 |
Total income |
| 8,956,085 |
|
|
|
Expenses | ||
Management fee | $ 1,983,895 | |
Transfer agent fees | 968,784 | |
Distribution and service plan fees | 54,207 | |
Accounting and security lending fees | 142,914 | |
Custodian fees and expenses | 37,525 | |
Independent trustees' compensation | 2,020 | |
Registration fees | 80,175 | |
Audit | 45,986 | |
Legal | 5,440 | |
Interest | 1,085 | |
Miscellaneous | 4,129 | |
Total expenses before reductions | 3,326,160 | |
Expense reductions | (60,818) | 3,265,342 |
Net investment income (loss) | 5,690,743 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 23,993,138 | |
Foreign currency transactions | 1,042 | |
Total net realized gain (loss) |
| 23,994,180 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 56,962,770 | |
Assets and liabilities in foreign currencies | 10,023 | |
Total change in net unrealized appreciation (depreciation) |
| 56,972,793 |
Net gain (loss) | 80,966,973 | |
Net increase (decrease) in net assets resulting from operations | $ 86,657,716 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,690,743 | $ 5,996,295 |
Net realized gain (loss) | 23,994,180 | 5,413,597 |
Change in net unrealized appreciation (depreciation) | 56,972,793 | 79,572,437 |
Net increase (decrease) in net assets resulting from operations | 86,657,716 | 90,982,329 |
Distributions to shareholders from net investment income | (7,366,695) | (2,355,415) |
Distributions to shareholders from net realized gain | - | (402,567) |
Total distributions | (7,366,695) | (2,757,982) |
Share transactions - net increase (decrease) | (685,685) | 989,027 |
Redemption fees | 11,018 | 12,272 |
Total increase (decrease) in net assets | 78,616,354 | 89,225,646 |
|
|
|
Net Assets | ||
Beginning of period | 288,991,380 | 199,765,734 |
End of period (including undistributed net investment income of $260,753 and undistributed net investment income of $1,935,664, respectively) | $ 367,607,734 | $ 288,991,380 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .57 | .67 | .22 | .26 | - K |
Net realized and unrealized gain (loss) | 9.49 | 10.55 | (15.60) | (8.08) | 3.15 |
Total from investment operations | 10.06 | 11.22 | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.77) | (.19) | (.35) N | (.51) | - |
Distributions from net realized gain | - | (.05) | (.18) N | - | - |
Total distributions | (.77) | (.24) M | (.52) L | (.51) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.64 | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B, C, D | 26.87% | 42.07% | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.26% | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.18% | 1.24% | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | 1.35% | 1.89% | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 4,305 | $ 3,343 | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .45 | .57 | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | 9.47 | 10.54 | (15.56) | (8.07) | 3.14 |
Total from investment operations | 9.92 | 11.11 | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.66) | (.22) | (.24) N | (.42) | - |
Distributions from net realized gain | - | (.03) | (.13) N | - | - |
Total distributions | (.66) | (.24) M | (.37) L | (.42) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.81 | $ 37.55 | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B, C, D | 26.54% | 41.64% | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.48% | 1.55% | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.46% | 1.53% | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | 1.06% | 1.60% | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,882 | $ 2,051 | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .25 | .40 | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | 9.48 | 10.54 | (15.49) | (8.04) | 3.11 |
Total from investment operations | 9.73 | 10.94 | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.40) | (.04) | (.11) N | (.20) | - |
Distributions from net realized gain | - | (.01) | (.06) N | - | - |
Total distributions | (.40) | (.05) M | (.17) L | (.20) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.93 | $ 37.60 | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B, C, D | 25.96% | 40.97% | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.01% | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.93% | 2.00% | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | .60% | 1.13% | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 706 | $ 641 | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
Years ended February 28, | 2011 | 2010 | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) E | .26 | .41 | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | 9.46 | 10.56 | (15.50) | (8.03) | 3.14 |
Total from investment operations | 9.72 | 10.97 | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.44) | (.10) | (.07) N | (.22) | - |
Distributions from net realized gain | - | (.02) | (.05) N | - | - |
Total distributions | (.44) | (.12) M | (.11) L | (.22) | - |
Redemption fees added to paid in capital E, K | - | - | - | - | - |
Net asset value, end of period | $ 46.89 | $ 37.61 | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B, C, D | 25.95% | 41.00% | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
|
|
|
Expenses before reductions | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.94% | 2.01% | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.92% | 2.00% | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | .61% | 1.13% | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,035 | $ 2,151 | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 72% | 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 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. N The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2011 | 2010 | 2009 | 2008 H | 2007 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .69 | .76 | .30 | .43 | .61 F |
Net realized and unrealized gain (loss) | 9.52 | 10.59 | (15.65) | (8.12) | 8.85 |
Total from investment operations | 10.21 | 11.35 | (15.35) | (7.69) | 9.46 |
Distributions from net investment income | (.87) | (.31) | (.41) L | (.52) | (.53) |
Distributions from net realized gain | - | (.05) | (.20) L | - | - |
Total distributions | (.87) | (.36) K | (.61) J | (.52) | (.53) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 47.07 | $ 37.73 | $ 26.74 | $ 42.70 | $ 50.91 |
Total Return A, B | 27.24% | 42.43% | (36.00)% | (15.30)% | 22.69% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .92% | .99% | .97% | .91% | .99% |
Expenses net of fee waivers, if any | .92% | .99% | .97% | .90% | .97% |
Expenses net of all reductions | .91% | .98% | .96% | .90% | .97% |
Net investment income (loss) | 1.62% | 2.15% | .85% | .79% | 1.34% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 354,938 | $ 279,704 | $ 196,231 | $ 334,565 | $ 624,427 |
Portfolio turnover rate E | 72% | 90% | 168% | 134% | 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 $.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 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. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
Years ended February 28, | 2011 | 2010 | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | .71 | .84 | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | 9.50 | 10.55 | (15.67) | (8.09) | 3.01 |
Total from investment operations | 10.21 | 11.39 | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.88) | (.38) | (.40) M | (.62) | - |
Distributions from net realized gain | - | (.05) | (.20) M | - | - |
Total distributions | (.88) | (.43) L | (.59) K | (.62) | - |
Redemption fees added to paid in capital D, J | - | - | - | - | - |
Net asset value, end of period | $ 47.02 | $ 37.69 | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B, C | 27.27% | 42.59% | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | .91% | .86% | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .86% | .91% | .83% | .98% A |
Expenses net of all reductions | .89% | .84% | .90% | .83% | .97% A |
Net investment income (loss) | 1.64% | 2.29% | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,743 | $ 1,101 | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 72% | 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 Total distributions of $.43 per share is comprised of distributions from net investment income of $.379 and distributions from net realized gain of $.057 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2011
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases by existing shareholders. 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 may 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
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 market or security specific events. The frequency with which these procedures are used cannot be predicted and they 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, 2011, 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 are generally 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
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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. Utilizing these techniques may result in transfers between Level 1 and Level 2. 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 Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year the Fund intends to qualify as a regulated investment company, including 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, 2011, 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 declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 55,735,629 |
Gross unrealized depreciation | (43,095,325) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 12,640,304 |
Tax Cost | $ 380,808,543 |
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 | $ 260,995 |
Capital loss carryforward | $ (76,308,957) |
Net unrealized appreciation (depreciation) | $ 12,638,504 |
The tax character of distributions paid was as follows:
| February 28, 2011 | February 28, 2010 |
Ordinary Income | $ 7,366,695 | $ 2,757,982 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $256,842,819 and $247,000,001, 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 Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of 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, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 9,195 | $ 586 |
Class T | .25% | .25% | 12,588 | 15 |
Class B | .75% | .25% | 6,770 | 5,078 |
Class C | .75% | .25% | 25,654 | 9,305 |
|
|
| $ 54,207 | $ 14,984 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% for certain purchases of Class A shares (1.00% to .50% prior to July 12, 2010) and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 5,026 |
Class T | 1,778 |
Class B* | 2,024 |
Class C* | 255 |
| $ 9,083 |
* 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, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 10,916 | .30 |
Class T | 8,246 | .33 |
Class B | 2,000 | .30 |
Class C | 7,300 | .29 |
Telecommunications | 934,079 | .27 |
Institutional Class | 6,243 | .26 |
| $ 968,784 |
|
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 $9,209 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 | $ 8,032,250 | .41% | $ 1,085 |
6. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $3.75 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 $1,283 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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 rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $217,589. During the period, there were no securities loaned to FCM.
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 $60,818 for the period.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2011 | 2010 |
From net investment income |
|
|
Class A | $ 67,506 | $ 15,094 |
Class T | 39,660 | 11,817 |
Class B | 6,185 | 821 |
Class C | 26,169 | 5,697 |
Telecommunications | 7,180,244 | 2,311,098 |
Institutional Class | 46,931 | 10,888 |
Total | $ 7,366,695 | $ 2,355,415 |
From net realized gain |
|
|
Class A | $ - | $ 4,245 |
Class T | - | 827 |
Class B | - | 139 |
Class C | - | 504 |
Telecommunications | - | 396,621 |
Institutional Class | - | 231 |
Total | $ - | $ 402,567 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Years ended February 28, | 2011 | 2010 | 2011 | 2010 |
Class A |
|
|
|
|
Shares sold | 40,645 | 88,778 | $ 1,741,332 | $ 3,085,616 |
Reinvestment of distributions | 1,359 | 476 | 59,381 | 17,722 |
Shares redeemed | (39,099) | (79,650) | (1,642,347) | (2,900,645) |
Net increase (decrease) | 2,905 | 9,604 | $ 158,366 | $ 202,693 |
Class T |
|
|
|
|
Shares sold | 23,206 | 45,905 | $ 981,887 | $ 1,589,430 |
Reinvestment of distributions | 894 | 314 | 39,051 | 12,167 |
Shares redeemed | (17,166) | (14,845) | (731,684) | (532,433) |
Net increase (decrease) | 6,934 | 31,374 | $ 289,254 | $ 1,069,164 |
Class B |
|
|
|
|
Shares sold | 3,985 | 15,431 | $ 164,934 | $ 522,557 |
Reinvestment of distributions | 125 | 22 | 5,371 | 836 |
Shares redeemed | (6,122) | (11,987) | (254,241) | (408,765) |
Net increase (decrease) | (2,012) | 3,466 | $ (83,936) | $ 114,628 |
Class C |
|
|
|
|
Shares sold | 29,965 | 62,598 | $ 1,283,190 | $ 2,159,620 |
Reinvestment of distributions | 433 | 129 | 18,769 | 5,000 |
Shares redeemed | (22,865) | (19,418) | (981,215) | (702,765) |
Net increase (decrease) | 7,533 | 43,309 | $ 320,744 | $ 1,461,855 |
Telecommunications |
|
|
|
|
Shares sold | 3,169,647 | 3,331,732 | $ 131,656,721 | $ 111,276,252 |
Reinvestment of distributions | 156,783 | 68,653 | 6,893,743 | 2,606,513 |
Shares redeemed | (3,199,430) | (3,325,834) | (139,972,066) | (116,676,048) |
Net increase (decrease) | 127,000 | 74,551 | $ (1,421,602) | $ (2,793,283) |
Institutional Class |
|
|
|
|
Shares sold | 131,873 | 35,372 | $ 5,646,597 | $ 1,243,451 |
Reinvestment of distributions | 800 | 37 | 36,161 | 1,435 |
Shares redeemed | (124,838) | (8,744) | (5,631,269) | (310,916) |
Net increase (decrease) | 7,835 | 26,665 | $ 51,489 | $ 933,970 |
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
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 28, 2011, 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, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2011
Annual Report
Trustees and Officers
The Trustees, Members 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 219 funds advised by FMR or an affiliate. Mr. Curvey oversees 409 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 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members 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. James C. Curvey is an interested person (as defined in the 1940 Act) and currently serves as Acting Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. 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 1-877-208-0098.
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+ | |
James C. Curvey (75) | |
| Year of Election or Appointment: 2007 Mr. Curvey is Trustee and Acting Chairman of the Board of Trustees of certain Trusts. Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of Fidelity Investments Money Management, Inc. (2009-present), Director of Fidelity Research & Analysis Co. (2009-present) and Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2007-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. Previously, Mr. Curvey was the Vice Chairman (2006-2007) and Director (2000-2007) of FMR Corp. |
Ronald P. O'Hanley (54) | |
| Year of Election or Appointment: 2011 Mr. O'Hanley is President of Fidelity Asset Management and Corporate Services and a member of Fidelity's Executive Committee (2010-present). Previously, Mr. O'Hanley served as President and Chief Executive Officer of BNY Mellon Asset Management (2007-2010). Mr. O'Hanley also served as Vice Chairman of Bank New York Mellon Corp. and a member of that firm's Executive Committee. Prior to the 2007 merger of The Bank of New York and Mellon Financial Corporation, he was Vice Chairman of Mellon Financial Corporation and President and Chief Executive Officer of Mellon Asset Management. He joined Mellon in February 1997. Mr. O'Hanley currently serves as Chairman of the Boston Public Library Foundation Board of Directors and sits on the Board of Directors of Beth Israel Deaconess Medical Center, the Board of Trustees of the Marine Biological Laboratory and the Advisory Board of the Maxwell School of Citizenship and Public Administration at Syracuse University. Mr. O'Hanley also chairs the Council on Asset Management for the Financial Services Roundtable and is a member of the Board of Directors of Institutional Investor's U.S. Institute. |
* 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 (62) | |
| 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). Mr. Dirks is a member of the Independent Directors Council (IDC) Governing Council (2010-Present) and Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (57) | |
| 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 Dave & Buster's, Inc. (restaurant and entertainment complexes, 2010-present), The Hillman Companies, Inc. (hardware wholesalers, 2010-present), 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 (67) | |
| 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 currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is also a member of the Board of Directors of the Philharmonic Center for the Arts in Naples, Florida (1999-present); a member of the Board of Trustees of Fairfield University (2005-present); and a member of the Council on Foreign Relations (1994-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (66) | |
| 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 Group plc. (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 (66) | |
| 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 (71) | |
| 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 Chairman of Univar (global distributor of commodity and specialty chemicals, 2010-present), 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, LLC (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 (61) | |
| 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 (60) | |
| 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). 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 member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information 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.
Advisory Board Members and Executive Officers:
Correspondence intended for each executive officer, Edward C. Johnson 3d, and Peter S. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (80) | |
| Year of Election or Appointment: 2011 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Formerly 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; 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). |
Peter S. Lynch (67) | |
| 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 (41) | |
| 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 (46) | |
| Year of Election or Appointment: 2009 Vice President of certain Equity Funds and Vice President of Sector Funds. Mr. Hogan also serves as President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Christopher S. Bartel (39) | |
| 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 (43) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as Secretary and CLO of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present); 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 (42) | |
| 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 (56) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent also serves as AML Officer of The North Carolina Capital Management Trust: Cash and Term Portfolio (2008-present) and 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 (52) | |
| 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 (63) | |
| 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 (49) | |
| 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 (49) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. |
Adrien E. Deberghes (43) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes also serves as Assistant Treasurer of other Fidelity funds (2010-present) and 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). |
Stephanie J. Dorsey (41) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of Fidelity's Equity and High Income Funds. Ms. Dorsey also serves as Deputy Treasurer of other Fidelity funds (2008-present) and is an employee of Fidelity Investments (2008-present). Previously, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
John R. Hebble (52) | |
| 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. |
Gary W. Ryan (52) | |
| 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). |
Jonathan Davis (42) | |
| Year of Election or Appointment: 2010 Assistant Treasurer of the Fidelity funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
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 | 04/18/11 | 04/15/11 | $0.175 | $0.465 |
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/18/11 | 04/15/11 | $0.000 | $2.035 |
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/18/11 | 04/15/11 | $0.000 | $0.000 |
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/18/11 | 04/15/11 | $0.032 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 2011, or, if subsequently determined to be different, the net capital gain of such year.
Fund | |
Consumer Staples Portfolio | $20,272,367 |
Gold Portfolio | $245,927,697 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Fund | April | December |
Consumer Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | 0% | 2% |
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 | December |
Consumers Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | 4% | 9% |
Materials Portfolio |
|
|
Institutional Class | 100% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
Annual Report
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 |
|
|
|
Institutional Class | 04/12/2010 | $0.023 | $0.0023 |
| 12/13/2010 | $0.101 | $0.0085 |
The fund will notify shareholders in January 2012 of amounts for use in preparing 2011 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.
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-0411
1.845768.104
Item 2. Code of Ethics
As of the end of the period, February 28, 2011, 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 Finance Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care 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, 2011 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $32,000 | $- | $2,700 | $2,100 |
Automotive Portfolio | $32,000 | $- | $2,700 | $2,100 |
Banking Portfolio | $33,000 | $- | $2,700 | $2,300 |
Biotechnology Portfolio | $34,000 | $- | $2,700 | $2,600 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $2,700 | $2,300 |
Chemicals Portfolio | $32,000 | $- | $2,700 | $2,300 |
Communications Equipment Portfolio | $33,000 | $- | $2,700 | $2,200 |
Computers Portfolio | $33,000 | $- | $2,700 | $2,300 |
Construction and Housing Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Discretionary Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Finance Portfolio | $32,000 | $- | $2,700 | $2,100 |
Consumer Staples Portfolio | $39,000 | $- | $2,700 | $2,800 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,700 | $2,400 |
Electronics Portfolio | $34,000 | $- | $2,700 | $2,600 |
Energy Portfolio | $35,000 | $- | $2,900 | $3,200 |
Energy Service Portfolio | $34,000 | $- | $2,700 | $2,800 |
Environment and Alternative Energy Portfolio | $32,000 | $- | $2,700 | $2,000 |
Financial Services Portfolio | $33,000 | $- | $2,700 | $2,300 |
Gold Portfolio | $59,000 | $- | $6,400 | $4,400 |
Health Care Portfolio | $34,000 | $- | $2,700 | $3,000 |
Industrial Equipment Portfolio | $36,000 | $- | $2,700 | $2,100 |
Industrials Portfolio | $33,000 | $- | $2,700 | $2,200 |
Insurance Portfolio | $32,000 | $- | $2,700 | $2,100 |
IT Services Portfolio | $32,000 | $- | $2,700 | $2,100 |
Leisure Portfolio | $33,000 | $- | $2,700 | $2,200 |
Materials Portfolio | $38,000 | $- | $2,700 | $2,500 |
Medical Delivery Portfolio | $33,000 | $- | $2,700 | $2,300 |
Medical Equipment and Systems Portfolio | $34,000 | $- | $2,700 | $2,800 |
Multimedia Portfolio | $32,000 | $- | $2,700 | $2,100 |
Natural Gas Portfolio | $33,000 | $- | $2,700 | $2,600 |
Natural Resources Portfolio | $34,000 | $- | $2,700 | $2,800 |
Pharmaceuticals Portfolio | $32,000 | $- | $2,700 | $2,200 |
Retailing Portfolio | $32,000 | $- | $2,700 | $2,100 |
Software and Computer Services Portfolio | $34,000 | $- | $2,700 | $2,600 |
Technology Portfolio | $35,000 | $- | $2,700 | $3,300 |
Telecommunications Portfolio | $37,000 | $- | $2,700 | $2,200 |
Transportation Portfolio | $33,000 | $- | $2,700 | $2,200 |
Utilities Portfolio | $32,000 | $- | $2,700 | $2,200 |
Wireless Portfolio | $32,000 | $- | $2,700 | $2,200 |
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 Finance Portfolio | $32,000 | $- | $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 |
Environment and Alternative Energy 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 |
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 |
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A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity 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, 2011A | February 28, 2010A |
Audit-Related Fees | $2,550,000 | $2,250,000 |
Tax Fees | $- | $- |
All Other Fees | $510,000 | $- |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the 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, 2011 A | February 28, 2010 A |
PwC | $5,155,000 | $4,465,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its 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, 2011 |
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 |
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Date: | April 27, 2011 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
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Date: | April 27, 2011 |