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)
Eric D. Roiter, 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 29 |
Date of reporting period: | February 29, 2008 |
Item 1. Reports to Stockholders
Fidelity®
Select Portfolios®
Consumer Discretionary Sector
Select Automotive Portfolio
Select Construction and Housing Portfolio
Select Consumer Discretionary Portfolio
Select Leisure Portfolio
Select Multimedia Portfolio
Select Retailing Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 3 |
|
Shareholder Expense Example | 4 |
|
Fund Updates* |
|
|
Consumer Discretionary Sector |
|
|
Automotive |
| |
Construction and Housing |
| |
Consumer Discretionary |
| |
Leisure |
| |
Multimedia |
| |
Retailing |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
* Fund updates for each Select Portfolio include: Performance, Managements Discussion of fund performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Automotive Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 848.10 | $ 5.28 |
Hypothetical A | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Construction and Housing Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 869.00 | $ 4.46 |
Hypothetical A | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Consumer Discretionary Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 851.10 | $ 5.06 |
Hypothetical A | $ 1,000.00 | $ 1,019.39 | $ 5.52 |
Leisure Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 904.60 | $ 4.26 |
Hypothetical A | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Multimedia Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 866.10 | $ 4.55 |
Hypothetical A | $ 1,000.00 | $ 1,019.99 | $ 4.92 |
Retailing Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 802.70 | $ 4.48 |
Hypothetical A | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Automotive Portfolio | 1.15% |
Construction and Housing Portfolio | .96% |
Consumer Discretionary Portfolio | 1.10% |
Leisure Portfolio | .90% |
Multimedia Portfolio | .98% |
Retailing Portfolio | 1.00% |
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Automotive Portfolio | -12.11% | 10.79% | 3.38% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Automotive Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) Index performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Lee Miles, Portfolio Manager of Select Automotive Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund fell 12.11%, outperforming the 15.72% loss of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Automobiles & Components Index, but trailing the return of the S&P 500® index. Amid a difficult market environment for cyclical stocks generally and automotive stocks in particular, the fund's performance relative to the MSCI index benefited from underweighted positions in Harley-Davidson, General Motors and Ford. These stocks carry substantial weightings in the benchmark, and all three underperformed during the period due to weaker U.S. sales of automobiles and motorcycles. The fund also was helped by out-of-benchmark investments in two non-U.S. automobile manufacturers: Germany's Daimler and France's Renault. Daimler's stock performed well as the firm sold its stake in Chrysler and initiated a huge share buyback program. Renault's stock outperformed the index thanks to its high dividend and a strong euro versus the U.S. dollar, which boosted the stock's return in dollar terms. With respect to currency movements, the fund's foreign holdings benefited overall from a weaker dollar. The primary detractor from performance was the fund's structurally underweighted position in Johnson Controls, Inc. (JCI), which was largely dictated by the diversification requirements governing the portfolio. JCI was the fund's largest holding and it outperformed the benchmark as a result of continued robust earnings growth. Out-of-benchmark positions in Japanese automakers Honda, Nissan and Toyota also dampened returns. Despite solid worldwide sales, these stocks underperformed due to a strong Japanese yen versus the U.S. dollar, disappointing sales in Japan and general macroeconomic concerns.
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
Select Automotive Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Johnson Controls, Inc. | 20.7 | 18.6 |
Ford Motor Co. | 8.8 | 10.1 |
General Motors Corp. | 8.8 | 13.1 |
Harley-Davidson, Inc. | 8.6 | 9.0 |
The Goodyear Tire & Rubber Co. | 4.8 | 4.7 |
Autoliv, Inc. | 4.8 | 4.8 |
BorgWarner, Inc. | 4.6 | 4.8 |
Gentex Corp. | 4.5 | 3.5 |
WABCO Holdings, Inc. | 3.1 | 2.6 |
Renault SA | 2.8 | 2.8 |
| 71.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Auto Components | 57.4% |
|
 | Automobiles | 38.1% |
|
 | Electrical Equipment | 1.9% |
|
 | Household Durables | 0.3% |
|
 | Machinery | 0.2% |
|
 | All Others* | 2.1% |
|
| |||
As of August 31, 2007 | |||
| Auto Components | 52.9% |
|
| Automobiles | 45.0% |
|
| Electrical Equipment | 0.4% |
|
| Metals & Mining | 0.4% |
|
| Electronic Equipment & Instruments | 0.0% |
|
| All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Automotive Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
AUTO COMPONENTS - 57.4% | |||
Auto Parts & Equipment - 50.2% | |||
Aftermarket Technology Corp. (a) | 7,900 | $ 148,125 | |
American Axle & Manufacturing Holdings, Inc. | 25,896 | 509,633 | |
ArvinMeritor, Inc. (d) | 16,400 | 185,156 | |
Autoliv, Inc. | 24,700 | 1,232,530 | |
Bharat Forge Ltd. | 158 | 1,130 | |
BorgWarner, Inc. | 27,700 | 1,194,147 | |
Drew Industries, Inc. (a) | 4,900 | 132,104 | |
Exide Technologies (a) | 23,100 | 236,082 | |
Gentex Corp. | 72,100 | 1,162,252 | |
Hyundai Mobis | 740 | 56,802 | |
Johnson Controls, Inc. | 162,870 | 5,351,910 | |
Lear Corp. (a) | 20,900 | 576,422 | |
Modine Manufacturing Co. | 8,400 | 104,832 | |
Raser Technologies, Inc. (a)(d) | 8,100 | 70,875 | |
Sauer-Danfoss, Inc. | 1,900 | 40,394 | |
Spartan Motors, Inc. | 7,200 | 58,536 | |
Superior Industries International, Inc. | 4,300 | 74,648 | |
Tenneco, Inc. (a) | 14,500 | 366,125 | |
TRW Automotive Holdings Corp. (a) | 21,500 | 474,720 | |
Visteon Corp. (a) | 54,800 | 191,800 | |
WABCO Holdings, Inc. | 19,200 | 802,176 | |
| 12,970,399 | ||
Tires & Rubber - 7.2% | |||
Continental AG | 1,300 | 127,376 | |
Cooper Tire & Rubber Co. | 22,500 | 406,575 | |
Michelin SA (Compagnie Generale des Etablissements) Series B | 800 | 78,784 | |
The Goodyear Tire & Rubber Co. (a) | 46,100 | 1,249,310 | |
| 1,862,045 | ||
TOTAL AUTO COMPONENTS | 14,832,444 | ||
AUTOMOBILES - 38.1% | |||
Automobile Manufacturers - 29.5% | |||
Bayerische Motoren Werke AG (BMW) | 2,900 | 158,943 | |
Daimler AG | 5,900 | 490,821 | |
Fiat SpA | 30,200 | 637,662 | |
Fleetwood Enterprises, Inc. (a)(d) | 16,400 | 69,864 | |
Ford Motor Co. (a) | 349,400 | 2,281,582 | |
General Motors Corp. (d) | 97,000 | 2,258,160 | |
Honda Motor Co. Ltd. sponsored ADR | 2,100 | 64,260 | |
Maruti Suzuki India Ltd. | 76 | 1,629 | |
Monaco Coach Corp. (d) | 12,700 | 124,206 | |
Nissan Motor Co. Ltd. sponsored ADR | 4,900 | 88,200 | |
Renault SA | 6,800 | 726,484 | |
Thor Industries, Inc. (d) | 10,300 | 313,944 | |
| |||
Shares | Value | ||
Toyota Motor Corp. sponsored ADR | 2,000 | $ 217,100 | |
Winnebago Industries, Inc. (d) | 9,300 | 186,651 | |
| 7,619,506 | ||
Motorcycle Manufacturers - 8.6% | |||
Bajaj Auto Ltd. | 5 | 282 | |
Harley-Davidson, Inc. (d) | 59,800 | 2,222,168 | |
| 2,222,450 | ||
TOTAL AUTOMOBILES | 9,841,956 | ||
ELECTRICAL EQUIPMENT - 1.9% | |||
Electrical Components & Equipment - 1.9% | |||
Ener1, Inc. (a)(e) | 500,000 | 387,000 | |
Ener1, Inc. warrants 5/20/08 (a) | 450,000 | 98,928 | |
| 485,928 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.0% | |||
Electronic Equipment & Instruments - 0.0% | |||
Iteris, Inc. (a) | 400 | 1,080 | |
HOUSEHOLD DURABLES - 0.3% | |||
Consumer Electronics - 0.3% | |||
Harman International Industries, Inc. | 1,900 | 78,280 | |
MACHINERY - 0.2% | |||
Construction & Farm Machinery & Heavy Trucks - 0.2% | |||
Cummins, Inc. | 1,200 | 60,456 | |
ROAD & RAIL - 0.2% | |||
Trucking - 0.2% | |||
Hertz Global Holdings, Inc. (a) | 3,400 | 40,562 | |
TOTAL COMMON STOCKS (Cost $33,872,038) | 25,340,706 | ||
Money Market Funds - 15.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 450,277 | 450,277 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 3,488,250 | 3,488,250 | |
TOTAL MONEY MARKET FUNDS (Cost $3,938,527) | 3,938,527 | ||
TOTAL INVESTMENT PORTFOLIO - 113.4% (Cost $37,810,565) | 29,279,233 | ||
NET OTHER ASSETS - (13.4)% | (3,456,449) | ||
NET ASSETS - 100% | $ 25,822,784 | ||
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. |
(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 $387,000 or 1.5% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Ener1, Inc. | 11/20/07 | $ 250,000 |
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 | $ 32,011 |
Fidelity Securities Lending Cash Central Fund | 31,791 |
Total | $ 63,802 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 89.8% |
France | 3.1% |
Germany | 3.0% |
Italy | 2.5% |
Japan | 1.4% |
Others (individually less than 1%) | 0.2% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $4,434,630 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $3,240,026) - See accompanying schedule: Unaffiliated issuers (cost $33,872,038) | $ 25,340,706 |
|
Fidelity Central Funds (cost $3,938,527) | 3,938,527 |
|
Total Investments (cost $37,810,565) |
| $ 29,279,233 |
Receivable for investments sold | 39,802 | |
Receivable for fund shares sold | 33,538 | |
Dividends receivable | 45,629 | |
Distributions receivable from Fidelity Central Funds | 3,355 | |
Prepaid expenses | 140 | |
Receivable from investment adviser for expense reductions | 808 | |
Other receivables | 4,610 | |
Total assets | 29,407,115 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 37,510 | |
Payable for fund shares redeemed | 7,574 | |
Accrued management fee | 11,652 | |
Other affiliated payables | 7,389 | |
Other payables and accrued expenses | 31,956 | |
Collateral on securities loaned, at value | 3,488,250 | |
Total liabilities | 3,584,331 | |
|
|
|
Net Assets | $ 25,822,784 | |
Net Assets consist of: |
| |
Paid in capital | $ 40,524,280 | |
Undistributed net investment income | 53,329 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,223,920) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (8,530,905) | |
Net Assets, for 754,328 shares outstanding | $ 25,822,784 | |
Net Asset Value, offering price and redemption price per share ($25,822,784 ÷ 754,328 shares) | $ 34.23 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 590,531 |
Interest |
| 69 |
Income from Fidelity Central Funds (including $31,791 from security lending) |
| 63,802 |
Total income |
| 654,402 |
|
|
|
Expenses | ||
Management fee | $ 229,481 | |
Transfer agent fees | 117,163 | |
Accounting and security lending fees | 17,778 | |
Custodian fees and expenses | 43,098 | |
Independent trustees' compensation | 160 | |
Registration fees | 25,815 | |
Audit | 56,971 | |
Legal | 331 | |
Miscellaneous | 1,915 | |
Total expenses before reductions | 492,712 | |
Expense reductions | (19,019) | 473,693 |
Net investment income (loss) | 180,709 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(3,780)) | (2,456,857) | |
Foreign currency transactions | (1,128) | |
Total net realized gain (loss) |
| (2,457,985) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $3,805) | (8,070,806) | |
Assets and liabilities in foreign currencies | 566 | |
Total change in net unrealized appreciation (depreciation) |
| (8,070,240) |
Net gain (loss) | (10,528,225) | |
Net increase (decrease) in net assets resulting from operations | $ (10,347,516) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Automotive Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 180,709 | $ 41,738 |
Net realized gain (loss) | (2,457,985) | 1,903,917 |
Change in net unrealized appreciation (depreciation) | (8,070,240) | (392,923) |
Net increase (decrease) in net assets resulting from operations | (10,347,516) | 1,552,732 |
Distributions to shareholders from net investment income | (127,140) | (88,153) |
Distributions to shareholders from net realized gain | (1,085,579) | - |
Total distributions | (1,212,719) | (88,153) |
Share transactions | 94,968,201 | 93,868,957 |
Reinvestment of distributions | 1,178,198 | 84,064 |
Cost of shares redeemed | (106,496,383) | (63,095,640) |
Net increase (decrease) in net assets resulting from share transactions | (10,349,984) | 30,857,381 |
Redemption fees | 25,460 | 24,628 |
Total increase (decrease) in net assets | (21,884,759) | 32,346,588 |
|
|
|
Net Assets | ||
Beginning of period | 47,707,543 | 15,360,955 |
End of period (including undistributed net investment income of $53,329 and accumulated net investment loss of $240, respectively) | $ 25,822,784 | $ 47,707,543 |
Other Information Shares | ||
Sold | 2,141,928 | 2,423,941 |
Issued in reinvestment of distributions | 31,562 | 2,232 |
Redeemed | (2,604,749) | (1,687,796) |
Net increase (decrease) | (431,259) | 738,377 |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.24 | $ 34.35 | $ 34.10 | $ 32.36 | $ 21.27 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .18 | .06 | .06 | (.11) | (.22) |
Net realized and unrealized gain (loss) | (4.98) | 5.85 | .21 | 1.81 | 11.29 |
Total from investment operations | (4.80) | 5.91 | .27 | 1.70 | 11.07 |
Distributions from net investment income | (.13) | (.06) | (.07) | - | - |
Distributions from net realized gain | (1.11) | - | - | - | - |
Total distributions | (1.24) | (.06) | (.07) | - | - |
Redemption fees added to paid in capital C | .03 | .04 | .05 | .04 | .02 |
Net asset value, end of period | $ 34.23 | $ 40.24 | $ 34.35 | $ 34.10 | $ 32.36 |
Total Return A,B | (12.11)% | 17.33% | .94% | 5.38% | 52.14% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.19% | 1.58% | 1.59% | 1.64% | 1.78% |
Expenses net of fee waivers, if any | 1.15% | 1.22% | 1.25% | 1.58% | 1.78% |
Expenses net of all reductions | 1.15% | 1.21% | 1.19% | 1.56% | 1.77% |
Net investment income (loss) | .44% | .16% | .17% | (.34)% | (.77)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 25,823 | $ 47,708 | $ 15,361 | $ 16,954 | $ 21,438 |
Portfolio turnover rate E | 258% | 256% | 206% | 188% | 125% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Construction and Housing Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Construction and Housing Portfolio | -18.11% | 14.39% | 7.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Construction and Housing Portfolio on February 28, 1998. 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
Select Construction and Housing Portfolio
Management's Discussion of Fund Performance
Comments from Daniel Kelley, Portfolio Manager of Select Construction and Housing Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund returned -18.11% during a year that was extremely challenging for housing-related stocks. Thanks to favorable industry positioning and some productive stock picking, however, the fund outpaced the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Construction & Housing Custom Index, which fell 21.70%, although it came up short of the S&P 500®. Maintaining a sizable overweighting in the construction/engineering industry helped versus the MSCI index, as this segment benefited from the ongoing build-out of global infrastructure for most of the period. Top contributors in this space included Fluor and Netherlands-based Chicago Bridge & Iron. Good stock picks in real estate management and development also helped, especially among overseas companies such as Brazil's MRV Engenharia and China Overseas Land & Investment, whose challenges in residential and commercial real estate were less imposing than those faced by their U.S. counterparts. I sold China Overseas Land to lock in profits. Holding lower-than-index stakes in some of the major U.S. home improvement retailers was helpful, as was underweighting construction materials and avoiding certain building products suppliers. Homebuilders topped the list of detractors, making up five of the 10 worst performers and including such stocks as Centex, KB Home and Standard Pacific, the last of which 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
Select Construction and Housing Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Lowe's Companies, Inc. | 15.7 | 12.3 |
Home Depot, Inc. | 14.7 | 24.8 |
Vulcan Materials Co. | 3.8 | 1.9 |
KBR, Inc. | 3.6 | 2.6 |
KB Home | 3.1 | 2.5 |
Equity Residential (SBI) | 2.9 | 1.8 |
Pulte Homes, Inc. | 2.8 | 0.9 |
Fluor Corp. | 2.8 | 5.7 |
CB Richard Ellis Group, Inc. | 2.5 | 3.2 |
Centex Corp. | 2.5 | 2.6 |
| 54.4 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Specialty Retail | 31.9% |
|
| Construction & Engineering | 18.8% |
|
| Household Durables | 17.9% |
|
| Real Estate Investment Trusts | 14.9% |
|
| Real Estate Management & Development | 7.1% |
|
| All Others* | 9.4% |
|
| |||
As of August 31, 2007 | |||
| Specialty Retail | 39.2% |
|
| Construction & Engineering | 22.3% |
|
| Household Durables | 11.5% |
|
| Real Estate Investment Trusts | 10.4% |
|
| Building Products | 6.4% |
|
| All Others* | 10.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Construction and Housing Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
BUILDING PRODUCTS - 2.8% | |||
Building Products - 2.8% | |||
Masco Corp. | 98,600 | $ 1,842,834 | |
NCI Building Systems, Inc. (a) | 6,200 | 188,108 | |
Trane, Inc. | 6,700 | 301,835 | |
Universal Forest Products, Inc. | 2,500 | 69,450 | |
| 2,402,227 | ||
CONSTRUCTION & ENGINEERING - 18.8% | |||
Construction & Engineering - 18.8% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 35,600 | 1,656,112 | |
EMCOR Group, Inc. (a) | 19,700 | 474,573 | |
Fluor Corp. | 16,800 | 2,339,400 | |
Foster Wheeler Ltd. (a) | 21,800 | 1,426,810 | |
Granite Construction, Inc. | 30,500 | 920,795 | |
Great Lakes Dredge & Dock Corp. | 19,000 | 116,090 | |
Jacobs Engineering Group, Inc. (a) | 20,900 | 1,678,061 | |
KBR, Inc. (a) | 91,000 | 3,033,030 | |
Perini Corp. (a) | 16,200 | 607,176 | |
Quanta Services, Inc. (a) | 35,775 | 854,307 | |
Shaw Group, Inc. (a) | 16,600 | 1,068,708 | |
URS Corp. (a) | 43,771 | 1,763,096 | |
| 15,938,158 | ||
CONSTRUCTION MATERIALS - 4.5% | |||
Construction Materials - 4.5% | |||
Martin Marietta Materials, Inc. (d) | 5,200 | 559,520 | |
Vulcan Materials Co. | 46,600 | 3,266,660 | |
| 3,826,180 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.8% | |||
Health Care Facilities - 0.8% | |||
Brookdale Senior Living, Inc. (d) | 25,000 | 652,250 | |
HOUSEHOLD DURABLES - 17.9% | |||
Homebuilding - 17.9% | |||
Beazer Homes USA, Inc. (d) | 11,800 | 83,780 | |
Centex Corp. | 93,800 | 2,081,422 | |
Champion Enterprises, Inc. (a)(d) | 89,600 | 795,648 | |
D.R. Horton, Inc. (d) | 142,466 | 1,998,798 | |
KB Home (d) | 110,200 | 2,637,086 | |
Lennar Corp. Class A (d) | 77,600 | 1,444,136 | |
M.D.C. Holdings, Inc. | 12,000 | 502,560 | |
Meritage Homes Corp. (a)(d) | 20,900 | 316,426 | |
Pulte Homes, Inc. | 178,500 | 2,416,890 | |
Ryland Group, Inc. (d) | 53,600 | 1,516,344 | |
Toll Brothers, Inc. (a)(d) | 64,500 | 1,368,045 | |
| 15,161,135 | ||
REAL ESTATE INVESTMENT TRUSTS - 14.9% | |||
Residential REITs - 12.9% | |||
Apartment Investment & Management Co. Class A | 58,507 | 2,015,566 | |
AvalonBay Communities, Inc. | 10,000 | 924,300 | |
| |||
Shares | Value | ||
BRE Properties, Inc. | 8,200 | $ 353,092 | |
Camden Property Trust (SBI) | 21,300 | 1,011,537 | |
Equity Residential (SBI) | 64,800 | 2,474,064 | |
Home Properties, Inc. (d) | 43,100 | 1,983,462 | |
Post Properties, Inc. | 19,200 | 807,552 | |
UDR, Inc. | 60,696 | 1,356,556 | |
| 10,926,129 | ||
Retail REITs - 2.0% | |||
CBL & Associates Properties, Inc. | 8,400 | 196,140 | |
Developers Diversified Realty Corp. | 5,000 | 192,800 | |
General Growth Properties, Inc. | 36,900 | 1,302,939 | |
| 1,691,879 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 12,618,008 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 7.1% | |||
Real Estate Management & Development - 7.1% | |||
CB Richard Ellis Group, Inc. | 106,400 | 2,134,384 | |
Forest City Enterprises, Inc. Class A | 6,600 | 231,990 | |
Forestar Real Estate Group, Inc. (a) | 9,000 | 219,420 | |
MRV Engenharia e Participacoes SA | 77,400 | 1,817,630 | |
The St. Joe Co. (d) | 41,000 | 1,576,450 | |
| 5,979,874 | ||
SPECIALTY RETAIL - 31.9% | |||
Home Improvement Retail - 31.9% | |||
Home Depot, Inc. (d) | 469,700 | 12,470,535 | |
Lowe's Companies, Inc. | 555,400 | 13,312,938 | |
Sherwin-Williams Co. | 24,000 | 1,242,720 | |
| 27,026,193 | ||
TOTAL COMMON STOCKS (Cost $89,286,656) | 83,604,025 | ||
Money Market Funds - 30.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 1,300,986 | 1,300,986 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 24,683,975 | 24,683,975 | |
TOTAL MONEY MARKET FUNDS (Cost $25,984,961) | 25,984,961 | ||
TOTAL INVESTMENT PORTFOLIO - 129.4% (Cost $115,271,617) | 109,588,986 | ||
NET OTHER ASSETS - (29.4)% | (24,903,802) | ||
NET ASSETS - 100% | $ 84,685,184 | ||
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. |
(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 | $ 54,696 |
Fidelity Securities Lending Cash Central Fund | 110,052 |
Total | $ 164,748 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $22,942,584) - See accompanying schedule: Unaffiliated issuers (cost $89,286,656) | $ 83,604,025 |
|
Fidelity Central Funds (cost $25,984,961) | 25,984,961 |
|
Total Investments (cost $115,271,617) |
| $ 109,588,986 |
Receivable for investments sold | 277,628 | |
Receivable for fund shares sold | 572,134 | |
Dividends receivable | 34,951 | |
Distributions receivable from Fidelity Central Funds | 17,201 | |
Prepaid expenses | 946 | |
Other receivables | 1,021 | |
Total assets | 110,492,867 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 692,302 | |
Payable for fund shares redeemed | 339,896 | |
Accrued management fee | 39,364 | |
Other affiliated payables | 20,228 | |
Other payables and accrued expenses | 31,918 | |
Collateral on securities loaned, at value | 24,683,975 | |
Total liabilities | 25,807,683 | |
|
|
|
Net Assets | $ 84,685,184 | |
Net Assets consist of: |
| |
Paid in capital | $ 83,849,083 | |
Undistributed net investment income | 401,942 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,117,475 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (5,683,316) | |
Net Assets, for 2,551,830 shares outstanding | $ 84,685,184 | |
Net Asset Value, offering price and redemption price per share ($84,685,184 ÷ 2,551,830 shares) | $ 33.19 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,524,210 |
Interest |
| 4,018 |
Income from Fidelity Central Funds (including $110,052 from security lending) |
| 164,748 |
Total income |
| 1,692,976 |
|
|
|
Expenses | ||
Management fee | $ 589,386 | |
Transfer agent fees | 316,334 | |
Accounting and security lending fees | 45,453 | |
Custodian fees and expenses | 18,044 | |
Independent trustees' compensation | 408 | |
Registration fees | 20,683 | |
Audit | 37,047 | |
Legal | 874 | |
Miscellaneous | 8,646 | |
Total expenses before reductions | 1,036,875 | |
Expense reductions | (6,017) | 1,030,858 |
Net investment income (loss) | 662,118 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 14,425,550 | |
Foreign currency transactions | 7,157 | |
Total net realized gain (loss) |
| 14,432,707 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (35,262,441) | |
Assets and liabilities in foreign currencies | (685) | |
Total change in net unrealized appreciation (depreciation) |
| (35,263,126) |
Net gain (loss) | (20,830,419) | |
Net increase (decrease) in net assets resulting from operations | $ (20,168,301) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Construction and Housing Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 662,118 | $ 733,941 |
Net realized gain (loss) | 14,432,707 | 21,759,841 |
Change in net unrealized appreciation (depreciation) | (35,263,126) | (21,412,222) |
Net increase (decrease) in net assets resulting from operations | (20,168,301) | 1,081,560 |
Distributions to shareholders from net investment income | (364,617) | (164,323) |
Distributions to shareholders from net realized gain | (9,440,593) | (21,267,651) |
Total distributions | (9,805,210) | (21,431,974) |
Share transactions | 41,496,610 | 79,173,304 |
Reinvestment of distributions | 9,445,864 | 20,689,569 |
Cost of shares redeemed | (100,279,148) | (159,966,113) |
Net increase (decrease) in net assets resulting from share transactions | (49,336,674) | (60,103,240) |
Redemption fees | 14,707 | 31,212 |
Total increase (decrease) in net assets | (79,295,478) | (80,422,442) |
|
|
|
Net Assets | ||
Beginning of period | 163,980,662 | 244,403,104 |
End of period (including undistributed net investment income of $401,942 and undistributed net investment income of $566,263, respectively) | $ 84,685,184 | $ 163,980,662 |
Other Information Shares | ||
Sold | 1,081,943 | 1,680,588 |
Issued in reinvestment of distributions | 272,523 | 451,499 |
Redeemed | (2,368,762) | (3,511,759) |
Net increase (decrease) | (1,014,296) | (1,379,672) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 45.98 | $ 49.42 | $ 45.82 | $ 36.04 | $ 22.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .26 | .19 | - I | .02 | (.05) F |
Net realized and unrealized gain (loss) | (8.49) | 2.28 | 3.99 | 10.78 | 13.52 |
Total from investment operations | (8.23) | 2.47 | 3.99 | 10.80 | 13.47 |
Distributions from net investment income | (.16) | (.05) | (.01) | - | - |
Distributions from net realized gain | (4.41) | (5.87) | (.42) | (1.06) | - |
Total distributions | (4.57) | (5.92) | (.43) | (1.06) | - |
Redemption fees added to paid in capital C | .01 | .01 | .04 | .04 | .02 |
Net asset value, end of period | $ 33.19 | $ 45.98 | $ 49.42 | $ 45.82 | $ 36.04 |
Total Return A,B | (18.11)% | 5.41% | 8.98% | 30.28% | 59.82% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .98% | 1.02% | 1.05% | 1.09% | 1.37% |
Expenses net of fee waivers, if any | .98% | 1.02% | 1.05% | 1.09% | 1.37% |
Expenses net of all reductions | .97% | 1.02% | 1.01% | 1.08% | 1.35% |
Net investment income (loss) | .63% | .41% | -% | .04% | (.15)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 84,685 | $ 163,981 | $ 244,403 | $ 239,205 | $ 97,338 |
Portfolio turnover rate E | 102% | 54% | 154% | 119% | 71% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.05 per share. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Discretionary Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Consumer Discretionary Portfolio | -16.15% | 7.23% | 2.59% |
Prior to October 1, 2006, Consumer Discretionary 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 Select Consumer Discretionary Portfolio on February 28, 1998. 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
Select Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Comments from John Harris, Portfolio Manager of Select Consumer Discretionary Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund returned -16.15%, outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Discretionary Index, which declined 18.31%, but lagging the S&P 500®. Due largely to the subprime mortgage crisis and the slowdown in the housing sector, this was a tough period for consumer discretionary stocks in general - as evidenced by the negative returns of both the MSCI index and the fund. But amid the carnage in consumer-related stocks, our research analysts uncovered a number of stocks that outperformed the overall sector. Effective security selection in some hard-hit industries, including restaurants as well as casinos/gaming, was the primary driver of our modest outperformance of the MSCI index. A single out-of-index holding, Costco Wholesale, was the most significant contributor to results in the hypermarkets and super centers category. I felt the discount warehouse chain would tend to gain market share as consumers became more price conscious, and indeed its profit margins and earnings improved during the period. Our holdings in McDonald's appreciated as the fast-food chain took market share from competitors and benefited from currency exchange rates on income from European operations. Shares in footwear maker Deckers Outdoor performed well as the firm expanded the market for its UGG brand. Our out-of-index position in Internet search engine Google also did well, as did convenience store operator Susser Holdings, another fund position not included in the MSCI index. I sold Google before period end to take some profits. On the negative side, results were hurt by stock selection and a relative underweighting in Internet retail, the benchmark's best-performing industry during the period. Stock selection in department stores, combined with an overweighting in that industry early in the period, also detracted from results. Macy's - known as Federated Department Stores prior to June 2007 - and JCPenney were the key detractors in that area. R.H. Donnelley, a publisher of print and online phone directories, suffered greater sales declines than I had anticipated. Early in the period, footwear maker Skechers failed to ramp up distribution fast enough to meet strong demand. By the time its distribution issues were resolved later in the period, however, demand had slowed along with the economy, and I lost faith in the stock. By period end, I had sold out of Skechers, JCPenney, Macy's and R.H. Donnelley.
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
Select Consumer Discretionary Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Target Corp. | 6.1 | 6.1 |
Time Warner, Inc. | 5.9 | 6.0 |
McDonald's Corp. | 5.4 | 5.2 |
Lowe's Companies, Inc. | 4.1 | 3.3 |
Home Depot, Inc. | 3.9 | 7.1 |
Comcast Corp. Class A | 3.5 | 4.3 |
The Walt Disney Co. | 3.4 | 1.9 |
Staples, Inc. | 3.0 | 3.2 |
Regal Entertainment Group | 2.8 | 2.4 |
News Corp. Class A | 2.7 | 2.8 |
| 40.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Media | 29.5% |
|
| Specialty Retail | 23.0% |
|
| Hotels, Restaurants & Leisure | 15.8% |
|
| Multiline Retail | 8.0% |
|
| Food & Staples Retailing | 4.8% |
|
| All Others* | 18.9% |
|
| |||
As of August 31, 2007 | |||
| Media | 27.2% |
|
| Specialty Retail | 25.4% |
|
| Hotels, Restaurants & Leisure | 13.0% |
|
| Multiline Retail | 12.3% |
|
| Textiles, Apparel & Luxury Goods | 6.2% |
|
| All Others* | 15.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Discretionary Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
AUTO COMPONENTS - 2.7% | |||
Auto Parts & Equipment - 2.7% | |||
Johnson Controls, Inc. | 19,600 | $ 644,056 | |
AUTOMOBILES - 1.1% | |||
Automobile Manufacturers - 0.5% | |||
Toyota Motor Corp. sponsored ADR | 1,100 | 119,405 | |
Motorcycle Manufacturers - 0.6% | |||
Harley-Davidson, Inc. | 4,000 | 148,640 | |
TOTAL AUTOMOBILES | 268,045 | ||
DISTRIBUTORS - 0.5% | |||
Distributors - 0.5% | |||
Li & Fung Ltd. | 36,000 | 130,945 | |
DIVERSIFIED CONSUMER SERVICES - 2.7% | |||
Education Services - 2.3% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 6,500 | 398,970 | |
Princeton Review, Inc. (a) | 4,714 | 39,126 | |
Strayer Education, Inc. | 700 | 108,990 | |
| 547,086 | ||
Specialized Consumer Services - 0.4% | |||
Sotheby's Class A (ltd. vtg.) | 2,900 | 97,788 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 644,874 | ||
FOOD & STAPLES RETAILING - 4.8% | |||
Drug Retail - 2.4% | |||
CVS Caremark Corp. | 14,200 | 573,396 | |
Food Distributors - 0.5% | |||
Sysco Corp. | 4,500 | 126,270 | |
Food Retail - 0.9% | |||
Susser Holdings Corp. (a) | 9,567 | 231,713 | |
Hypermarkets & Super Centers - 1.0% | |||
Costco Wholesale Corp. | 3,800 | 235,296 | |
TOTAL FOOD & STAPLES RETAILING | 1,166,675 | ||
HOTELS, RESTAURANTS & LEISURE - 15.8% | |||
Casinos & Gaming - 5.3% | |||
International Game Technology | 13,600 | 614,040 | |
Las Vegas Sands Corp. (a) | 5,600 | 466,480 | |
Wynn Resorts Ltd. | 2,100 | 211,470 | |
| 1,291,990 | ||
Hotels, Resorts & Cruise Lines - 3.0% | |||
Carnival Corp. unit | 10,600 | 417,110 | |
Royal Caribbean Cruises Ltd. | 8,900 | 311,589 | |
| 728,699 | ||
Restaurants - 7.5% | |||
Burger King Holdings, Inc. | 2,500 | 64,150 | |
Darden Restaurants, Inc. | 2,300 | 70,909 | |
McDonald's Corp. | 24,100 | 1,304,051 | |
| |||
Shares | Value | ||
Sonic Corp. (a) | 6,700 | $ 142,911 | |
Starbucks Corp. (a) | 12,700 | 228,219 | |
| 1,810,240 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 3,830,929 | ||
HOUSEHOLD DURABLES - 1.0% | |||
Household Appliances - 1.0% | |||
The Stanley Works | 1,200 | 58,248 | |
Whirlpool Corp. | 2,200 | 185,614 | |
| 243,862 | ||
INTERNET & CATALOG RETAIL - 2.8% | |||
Catalog Retail - 0.9% | |||
Liberty Media Corp. - Interactive | 15,400 | 221,144 | |
Internet Retail - 1.9% | |||
Amazon.com, Inc. (a) | 5,400 | 348,138 | |
Blue Nile, Inc. (a)(d) | 2,700 | 119,232 | |
| 467,370 | ||
TOTAL INTERNET & CATALOG RETAIL | 688,514 | ||
INTERNET SOFTWARE & SERVICES - 0.4% | |||
Internet Software & Services - 0.4% | |||
LoopNet, Inc. (a) | 9,000 | 107,730 | |
LEISURE EQUIPMENT & PRODUCTS - 1.4% | |||
Leisure Products - 1.4% | |||
Mattel, Inc. | 12,900 | 249,228 | |
Polaris Industries, Inc. | 2,100 | 80,178 | |
| 329,406 | ||
MEDIA - 29.5% | |||
Advertising - 3.8% | |||
Lamar Advertising Co. Class A | 3,100 | 118,141 | |
National CineMedia, Inc. | 9,515 | 205,048 | |
Omnicom Group, Inc. | 13,700 | 611,979 | |
| 935,168 | ||
Broadcasting & Cable TV - 8.0% | |||
Clear Channel Communications, Inc. | 6,100 | 195,200 | |
Comcast Corp. Class A | 43,950 | 858,783 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 16,000 | 352,000 | |
The DIRECTV Group, Inc. (a) | 17,700 | 443,385 | |
Time Warner Cable, Inc. (a) | 3,300 | 90,090 | |
| 1,939,458 | ||
Movies & Entertainment - 15.7% | |||
Cinemark Holdings, Inc. | 3,900 | 56,316 | |
Live Nation, Inc. (a) | 9,666 | 114,735 | |
News Corp.: | |||
Class A | 35,900 | 660,919 | |
Class B | 2,900 | 55,419 | |
Regal Entertainment Group Class A | 34,200 | 674,766 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Movies & Entertainment - continued | |||
The Walt Disney Co. | 25,500 | $ 826,455 | |
Time Warner, Inc. | 91,400 | 1,426,754 | |
| 3,815,364 | ||
Publishing - 2.0% | |||
McGraw-Hill Companies, Inc. | 11,700 | 478,881 | |
TOTAL MEDIA | 7,168,871 | ||
MULTILINE RETAIL - 8.0% | |||
Department Stores - 1.9% | |||
Kohl's Corp. (a) | 4,700 | 208,868 | |
Nordstrom, Inc. (d) | 6,700 | 248,101 | |
| 456,969 | ||
General Merchandise Stores - 6.1% | |||
Target Corp. | 28,400 | 1,494,123 | |
TOTAL MULTILINE RETAIL | 1,951,092 | ||
PERSONAL PRODUCTS - 0.6% | |||
Personal Products - 0.6% | |||
Bare Escentuals, Inc. (a)(d) | 5,600 | 153,328 | |
SPECIALTY RETAIL - 23.0% | |||
Apparel Retail - 4.9% | |||
Abercrombie & Fitch Co. Class A | 3,100 | 240,343 | |
Citi Trends, Inc. (a) | 5,500 | 79,805 | |
Ross Stores, Inc. | 7,200 | 200,520 | |
TJX Companies, Inc. (d) | 9,600 | 307,200 | |
Tween Brands, Inc. (a) | 7,000 | 207,200 | |
Urban Outfitters, Inc. (a) | 4,200 | 120,876 | |
Zumiez, Inc. (a)(d) | 1,900 | 33,402 | |
| 1,189,346 | ||
Automotive Retail - 1.3% | |||
Advance Auto Parts, Inc. | 9,600 | 321,984 | |
Computer & Electronics Retail - 0.6% | |||
Gamestop Corp. Class A (a) | 3,600 | 152,496 | |
Home Improvement Retail - 9.0% | |||
Home Depot, Inc. | 35,850 | 951,818 | |
Lowe's Companies, Inc. | 41,400 | 992,358 | |
Sherwin-Williams Co. | 4,400 | 227,832 | |
| 2,172,008 | ||
Homefurnishing Retail - 1.2% | |||
Williams-Sonoma, Inc. (d) | 12,700 | 296,672 | |
Specialty Stores - 6.0% | |||
Jo-Ann Stores, Inc. (a) | 5,195 | 85,718 | |
| |||
Shares | Value | ||
PetSmart, Inc. (d) | 22,200 | $ 477,966 | |
Staples, Inc. (d) | 32,850 | 730,913 | |
Tiffany & Co., Inc. | 4,500 | 169,380 | |
| 1,463,977 | ||
TOTAL SPECIALTY RETAIL | 5,596,483 | ||
TEXTILES, APPAREL & LUXURY GOODS - 4.7% | |||
Apparel, Accessories & Luxury Goods - 2.9% | |||
Burberry Group PLC | 10,784 | 89,549 | |
Coach, Inc. (a) | 14,200 | 430,544 | |
G-III Apparel Group Ltd. (a) | 7,859 | 102,874 | |
Hanesbrands, Inc. (a) | 1,800 | 52,380 | |
Lululemon Athletica, Inc. | 400 | 10,760 | |
Polo Ralph Lauren Corp. Class A | 200 | 12,438 | |
| 698,545 | ||
Footwear - 1.8% | |||
Deckers Outdoor Corp. (a) | 1,453 | 160,760 | |
Iconix Brand Group, Inc. (a) | 13,400 | 278,452 | |
| 439,212 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 1,137,757 | ||
TOTAL COMMON STOCKS (Cost $25,706,461) | 24,062,567 | ||
Money Market Funds - 10.9% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 283,314 | 283,314 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 2,352,850 | 2,352,850 | |
TOTAL MONEY MARKET FUNDS (Cost $2,636,164) | 2,636,164 | ||
TOTAL INVESTMENT PORTFOLIO - 109.9% (Cost $28,342,625) | 26,698,731 | ||
NET OTHER ASSETS - (9.9)% | (2,401,325) | ||
NET ASSETS - 100% | $ 24,297,406 | ||
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. |
(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 | $ 13,645 |
Fidelity Securities Lending Cash Central Fund | 9,021 |
Total | $ 22,666 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $405,712 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $2,215,257) - See accompanying schedule: Unaffiliated issuers (cost $25,706,461) | $ 24,062,567 |
|
Fidelity Central Funds (cost $2,636,164) | 2,636,164 |
|
Total Investments (cost $28,342,625) |
| $ 26,698,731 |
Receivable for investments sold | 23,444 | |
Receivable for fund shares sold | 83,592 | |
Dividends receivable | 32,068 | |
Distributions receivable from Fidelity Central Funds | 2,029 | |
Prepaid expenses | 78 | |
Other receivables | 40 | |
Total assets | 26,839,982 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 30,582 | |
Payable for investments purchased | 68,856 | |
Payable for fund shares redeemed | 42,649 | |
Accrued management fee | 11,567 | |
Other affiliated payables | 6,746 | |
Other payables and accrued expenses | 29,326 | |
Collateral on securities loaned, at value | 2,352,850 | |
Total liabilities | 2,542,576 | |
|
|
|
Net Assets | $ 24,297,406 | |
Net Assets consist of: |
| |
Paid in capital | $ 25,473,607 | |
Undistributed net investment income | 1,957 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 465,496 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (1,643,654) | |
Net Assets, for 1,233,577 shares outstanding | $ 24,297,406 | |
Net Asset Value, offering price and redemption price per share ($24,297,406 ÷ 1,233,577 shares) | $ 19.70 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 361,328 |
Interest |
| 376 |
Income from Fidelity Central Funds (including $9,021 from security lending) |
| 22,666 |
Total income |
| 384,370 |
|
|
|
Expenses | ||
Management fee | $ 185,751 | |
Transfer agent fees | 100,136 | |
Accounting and security lending fees | 13,323 | |
Custodian fees and expenses | 13,964 | |
Independent trustees' compensation | 127 | |
Registration fees | 20,086 | |
Audit | 35,985 | |
Legal | 264 | |
Miscellaneous | 5,334 | |
Total expenses before reductions | 374,970 | |
Expense reductions | (1,690) | 373,280 |
Net investment income (loss) | 11,090 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,705,203 | |
Foreign currency transactions | 167 | |
Total net realized gain (loss) |
| 2,705,370 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (7,480,966) | |
Assets and liabilities in foreign currencies | 271 | |
Total change in net unrealized appreciation (depreciation) |
| (7,480,695) |
Net gain (loss) | (4,775,325) | |
Net increase (decrease) in net assets resulting from operations | $ (4,764,235) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Discretionary Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 11,090 | $ 221,852 |
Net realized gain (loss) | 2,705,370 | 7,176,007 |
Change in net unrealized appreciation (depreciation) | (7,480,695) | (599,675) |
Net increase (decrease) in net assets resulting from operations | (4,764,235) | 6,798,184 |
Distributions to shareholders from net investment income | (92,720) | - |
Distributions to shareholders from net realized gain | (4,074,749) | (3,663,932) |
Total distributions | (4,167,469) | (3,663,932) |
Share transactions | 17,128,934 | 51,885,622 |
Reinvestment of distributions | 4,040,997 | 3,436,406 |
Cost of shares redeemed | (28,195,911) | (67,905,287) |
Net increase (decrease) in net assets resulting from share transactions | (7,025,980) | (12,583,259) |
Redemption fees | 5,785 | 16,285 |
Total increase (decrease) in net assets | (15,951,899) | (9,432,722) |
|
|
|
Net Assets | ||
Beginning of period | 40,249,305 | 49,682,027 |
End of period (including undistributed net investment income of $1,957 and undistributed net investment income of $221,170, respectively) | $ 24,297,406 | $ 40,249,305 |
Other Information Shares | ||
Sold | 690,579 | 1,940,857 |
Issued in reinvestment of distributions | 171,597 | 130,336 |
Redeemed | (1,127,796) | (2,502,120) |
Net increase (decrease) | (265,620) | (430,927) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 26.85 | $ 25.74 | $ 24.23 | $ 24.21 | $ 18.39 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | .11 F | (.03) | (.07) | (.09) |
Net realized and unrealized gain (loss) | (3.95) | 3.15 | 1.80 | 1.05 | 6.28 |
Total from investment operations | (3.94) | 3.26 | 1.77 | .98 | 6.19 |
Distributions from net investment income | (.06) | - | - | - | - |
Distributions from net realized gain | (3.15) | (2.16) | (.26) | (.97) | (.38) |
Total distributions | (3.21) | (2.16) | (.26) | (.97) | (.38) |
Redemption fees added to paid in capital C | - I | .01 | - I | .01 | .01 |
Net asset value, end of period | $ 19.70 | $ 26.85 | $ 25.74 | $ 24.23 | $ 24.21 |
Total Return A,B | (16.15)% | 12.99% | 7.31% | 4.18% | 33.82% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.12% | 1.14% | 1.15% | 1.23% | 1.59% |
Expenses net of fee waivers, if any | 1.12% | 1.14% | 1.15% | 1.22% | 1.59% |
Expenses net of all reductions | 1.12% | 1.13% | 1.13% | 1.19% | 1.54% |
Net investment income (loss) | .03% | .43% F | (.11)% | (.31)% | (.39)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 24,297 | $ 40,249 | $ 49,682 | $ 39,748 | $ 35,573 |
Portfolio turnover rate E | 108% | 244% | 71% | 112% | 138% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.12 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.03)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Leisure Portfolio | -7.09% | 14.15% | 6.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Leisure Portfolio on February 28, 1998. 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
Select Leisure Portfolio
Management's Discussion of Fund Performance
Comments from Peter Dixon, who became Portfolio Manager of Select Leisure Portfolio on March 3, 2008, after the period covered by this report.
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund lost 7.09% during the 12-month period, trailing the S&P 500® and slightly underperforming the 6.94% drop of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Services Index. The fund slightly lagged its MSCI benchmark as strong stock selection was largely offset by poor market allocation. More specifically, stock picking was positive in the restaurant, education services, casinos and gaming, and home entertainment software industries. However, those gains were countered by weaker results in leisure products, hotels, resorts and cruise lines, and Internet retail stocks. The fund suffered from a poorly timed purchase of educational services company DeVry, an underweighted position in Chipotle Mexican Grill; and overweighted positions in Starwood Hotels & Resorts, which lost time share revenue, and Ruth's Chris Steak House, an upscale restaurant company that had declining sales. However, these losses were largely offset by an underweighting in coffee retailer Starbucks, which experienced growing pains and higher costs; an overweighting in education provider Apollo Group, which had strong results; avoiding Brinker International, a restaurant company; and an underweighting in hotel firm Marriott International. The latter two companies both were hurt by a drop in consumer spending during the period. Several stocks I've mentioned were no longer held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Leisure Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 18.4 | 18.4 |
International Game Technology | 6.4 | 4.8 |
Yum! Brands, Inc. | 6.2 | 6.0 |
Carnival Corp. unit | 6.0 | 5.4 |
Starwood Hotels & Resorts Worldwide, Inc. | 5.9 | 6.8 |
Las Vegas Sands Corp. | 4.9 | 3.0 |
Apollo Group, Inc. Class A (non-vtg.) | 4.6 | 4.4 |
Royal Caribbean Cruises Ltd. | 4.2 | 2.4 |
Polaris Industries, Inc. | 3.3 | 0.9 |
Starbucks Corp. | 3.1 | 6.1 |
| 63.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Hotels, Restaurants & Leisure | 72.9% |
|
| Diversified Consumer Services | 12.9% |
|
| Leisure Equipment & Products | 6.1% |
|
| Media | 2.7% |
|
| Software | 1.9% |
|
| All Others* | 3.5% |
|
| |||
As of August 31, 2007 | |||
| Hotels, Restaurants & Leisure | 81.9% |
|
| Diversified Consumer Services | 11.9% |
|
| Leisure Equipment & Products | 2.6% |
|
| Media | 1.2% |
|
| Chemicals | 1.0% |
|
| All Others* | 1.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Leisure Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
CHEMICALS - 0.8% | |||
Specialty Chemicals - 0.8% | |||
Ecolab, Inc. | 33,300 | $ 1,558,107 | |
DIVERSIFIED CONSUMER SERVICES - 12.9% | |||
Education Services - 8.6% | |||
Apollo Group, Inc. Class A (non-vtg.) (a)(d) | 158,300 | 9,716,454 | |
Capella Education Co. (a) | 13,300 | 701,043 | |
DeVry, Inc. | 139,400 | 6,125,236 | |
ITT Educational Services, Inc. (a) | 100 | 5,522 | |
Strayer Education, Inc. | 9,600 | 1,494,720 | |
| 18,042,975 | ||
Specialized Consumer Services - 4.3% | |||
H&R Block, Inc. (d) | 181,800 | 3,390,570 | |
Jackson Hewitt Tax Service, Inc. | 97,600 | 2,042,768 | |
Sotheby's Class A (ltd. vtg.) | 40,100 | 1,352,172 | |
Weight Watchers International, Inc. | 50,200 | 2,359,400 | |
| 9,144,910 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 27,187,885 | ||
FOOD & STAPLES RETAILING - 1.0% | |||
Food Distributors - 1.0% | |||
Sysco Corp. | 72,900 | 2,045,574 | |
HOTELS, RESTAURANTS & LEISURE - 72.9% | |||
Casinos & Gaming - 17.1% | |||
Bally Technologies, Inc. (a)(d) | 33,900 | 1,285,149 | |
Boyd Gaming Corp. (d) | 173,200 | 3,652,788 | |
International Game Technology | 297,800 | 13,445,670 | |
Las Vegas Sands Corp. (a)(d) | 124,900 | 10,404,170 | |
MGM Mirage, Inc. (a) | 33,947 | 2,090,796 | |
Penn National Gaming, Inc. (a) | 52,300 | 2,396,909 | |
Pinnacle Entertainment, Inc. (a) | 46,700 | 731,322 | |
Wynn Resorts Ltd. | 19,900 | 2,003,930 | |
| 36,010,734 | ||
Hotels, Resorts & Cruise Lines - 20.2% | |||
Accor SA | 57,300 | 4,069,546 | |
Carnival Corp. unit | 318,300 | 12,525,105 | |
Gaylord Entertainment Co. (a) | 23,400 | 704,106 | |
Home Inns & Hotels Management, Inc. ADR (a) | 20,100 | 546,318 | |
Marriott International, Inc. Class A | 72,200 | 2,462,020 | |
Morgans Hotel Group Co. (a) | 37,100 | 569,114 | |
Royal Caribbean Cruises Ltd. | 252,400 | 8,836,524 | |
Starwood Hotels & Resorts Worldwide, Inc. | 264,300 | 12,509,319 | |
Wyndham Worldwide Corp. | 9,300 | 206,181 | |
| 42,428,233 | ||
Leisure Facilities - 3.1% | |||
Life Time Fitness, Inc. (a)(d) | 104,000 | 3,022,240 | |
| |||
Shares | Value | ||
Speedway Motorsports, Inc. | 30,300 | $ 884,760 | |
Vail Resorts, Inc. (a)(d) | 59,400 | 2,687,850 | |
| 6,594,850 | ||
Restaurants - 32.5% | |||
Darden Restaurants, Inc. | 99,000 | 3,052,170 | |
IHOP Corp. (d) | 10,300 | 471,534 | |
Jack in the Box, Inc. (a) | 137,600 | 3,614,752 | |
McCormick & Schmick's Seafood Restaurants (a) | 8 | 87 | |
McDonald's Corp. (d) | 713,700 | 38,618,306 | |
Sonic Corp. (a) | 48,500 | 1,034,505 | |
Starbucks Corp. (a)(d) | 360,400 | 6,476,388 | |
Tim Hortons, Inc. | 14,400 | 506,448 | |
Wendy's International, Inc. | 64,200 | 1,558,776 | |
Yum! Brands, Inc. | 377,300 | 12,997,985 | |
| 68,330,951 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 153,364,768 | ||
INTERNET & CATALOG RETAIL - 0.4% | |||
Internet Retail - 0.4% | |||
NutriSystem, Inc. (a)(d) | 62,600 | 895,806 | |
LEISURE EQUIPMENT & PRODUCTS - 6.1% | |||
Leisure Products - 6.1% | |||
Brunswick Corp. | 81,700 | 1,330,893 | |
MarineMax, Inc. (a)(d) | 110,800 | 1,360,624 | |
Mattel, Inc. | 169,400 | 3,272,808 | |
Polaris Industries, Inc. (d) | 182,200 | 6,956,396 | |
| 12,920,721 | ||
MEDIA - 2.7% | |||
Movies & Entertainment - 2.7% | |||
Regal Entertainment Group Class A (d) | 233,700 | 4,610,901 | |
Sports Properties Acquisition Corp. unit | 108,100 | 1,070,190 | |
| 5,681,091 | ||
SOFTWARE - 1.9% | |||
Home Entertainment Software - 1.9% | |||
Activision, Inc. (a) | 144,500 | 3,937,625 | |
TOTAL COMMON STOCKS (Cost $204,359,769) | 207,591,577 | ||
Money Market Funds - 20.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 2,647,806 | $ 2,647,806 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 40,366,150 | 40,366,150 | |
TOTAL MONEY MARKET FUNDS (Cost $43,013,956) | 43,013,956 | ||
TOTAL INVESTMENT PORTFOLIO - 119.1% (Cost $247,373,725) | 250,605,533 | ||
NET OTHER ASSETS - (19.1)% | (40,181,875) | ||
NET ASSETS - 100% | $ 210,423,658 | ||
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. |
(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 | $ 209,623 |
Fidelity Securities Lending Cash Central Fund | 149,939 |
Total | $ 359,562 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 87.6% |
Panama | 6.0% |
Liberia | 4.2% |
France | 1.9% |
Others (individually less than 1%) | 0.3% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $38,318,364) - See accompanying schedule: Unaffiliated issuers (cost $204,359,769) | $ 207,591,577 |
|
Fidelity Central Funds (cost $43,013,956) | 43,013,956 |
|
Total Investments (cost $247,373,725) |
| $ 250,605,533 |
Receivable for fund shares sold | 89,410 | |
Dividends receivable | 425,840 | |
Distributions receivable from Fidelity Central Funds | 50,042 | |
Prepaid expenses | 666 | |
Other receivables | 88 | |
Total assets | 251,171,579 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 184,205 | |
Accrued management fee | 103,122 | |
Other affiliated payables | 59,791 | |
Other payables and accrued expenses | 34,653 | |
Collateral on securities loaned, at value | 40,366,150 | |
Total liabilities | 40,747,921 | |
|
|
|
Net Assets | $ 210,423,658 | |
Net Assets consist of: |
| |
Paid in capital | $ 205,878,183 | |
Undistributed net investment income | 542,997 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 770,670 | |
Net unrealized appreciation (depreciation) on investments | 3,231,808 | |
Net Assets, for 3,048,333 shares outstanding | $ 210,423,658 | |
Net Asset Value, offering price and redemption price per share ($210,423,658 ÷ 3,048,333 shares) | $ 69.03 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,995,888 |
Interest |
| 2,428 |
Income from Fidelity Central Funds (including $149,939 from security lending) |
| 359,562 |
Total income |
| 4,357,878 |
|
|
|
Expenses | ||
Management fee | $ 1,374,656 | |
Transfer agent fees | 680,568 | |
Accounting and security lending fees | 100,961 | |
Custodian fees and expenses | 11,450 | |
Independent trustees' compensation | 936 | |
Registration fees | 28,893 | |
Audit | 37,368 | |
Legal | 1,828 | |
Miscellaneous | 10,695 | |
Total expenses before reductions | 2,247,355 | |
Expense reductions | (6,730) | 2,240,625 |
Net investment income (loss) | 2,117,253 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 9,371,122 | |
Foreign currency transactions | (8,461) | |
Total net realized gain (loss) |
| 9,362,661 |
Change in net unrealized appreciation (depreciation) on investment securities | (26,974,478) | |
Net gain (loss) | (17,611,817) | |
Net increase (decrease) in net assets resulting from operations | $ (15,494,564) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Leisure Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,117,253 | $ 714,816 |
Net realized gain (loss) | 9,362,661 | 36,741,362 |
Change in net unrealized appreciation (depreciation) | (26,974,478) | (8,521,362) |
Net increase (decrease) in net assets resulting from operations | (15,494,564) | 28,934,816 |
Distributions to shareholders from net investment income | (1,643,447) | (339,735) |
Distributions to shareholders from net realized gain | (15,189,403) | (33,272,820) |
Total distributions | (16,832,850) | (33,612,555) |
Share transactions | 58,157,500 | 150,928,886 |
Reinvestment of distributions | 15,968,498 | 31,437,000 |
Cost of shares redeemed | (89,724,085) | (124,672,281) |
Net increase (decrease) in net assets resulting from share transactions | (15,598,087) | 57,693,605 |
Redemption fees | 8,856 | 34,238 |
Total increase (decrease) in net assets | (47,916,645) | 53,050,104 |
|
|
|
Net Assets | ||
Beginning of period | 258,340,303 | 205,290,199 |
End of period (including undistributed net investment income of $542,997 and undistributed net investment income of $379,397, respectively) | $ 210,423,658 | $ 258,340,303 |
Other Information Shares | ||
Sold | 727,886 | 1,841,696 |
Issued in reinvestment of distributions | 202,679 | 391,327 |
Redeemed | (1,127,342) | (1,533,791) |
Net increase (decrease) | (196,777) | 699,232 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 79.61 | $ 80.64 | $ 75.07 | $ 74.40 | $ 48.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .69 | .25 F | (.28) | (.20) | (.24) |
Net realized and unrealized gain (loss) | (5.73) | 10.52 | 8.83 | 5.55 | 26.03 |
Total from investment operations | (5.04) | 10.77 | 8.55 | 5.35 | 25.79 |
Distributions from net investment income | (.55) | (.12) | - | - | - |
Distributions from net realized gain | (4.99) | (11.69) | (2.98) | (4.70) | - |
Total distributions | (5.54) | (11.81) | (2.98) | (4.70) | - |
Redemption fees added to paid in capital C | - I | .01 | - I | .02 | .01 |
Net asset value, end of period | $ 69.03 | $ 79.61 | $ 80.64 | $ 75.07 | $ 74.40 |
Total Return A,B | (7.09)% | 13.61% | 11.67% | 7.43% | 53.09% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .91% | .96% | .99% | 1.01% | 1.15% |
Expenses net of fee waivers, if any | .91% | .96% | .99% | 1.01% | 1.15% |
Expenses net of all reductions | .91% | .94% | .94% | .96% | 1.09% |
Net investment income (loss) | .86% | .31% F | (.37)% | (.28)% | (.38)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 210,424 | $ 258,340 | $ 205,290 | $ 206,406 | $ 204,354 |
Portfolio turnover rate E | 74% | 179% | 107% | 117% | 156% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .20%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Multimedia Portfolio | -13.88% | 10.32% | 6.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Multimedia Portfolio on February 28, 1998. 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
Select Multimedia Portfolio
Management's Discussion of Fund Performance
Comments from Kristina Salen, Portfolio Manager of Select Multimedia Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund was down 13.88%, outperforming the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Media Index, which lost 17.38%, but significantly lagging the S&P 500®. The two key themes I'm pursuing in this fund - the transition to digital media and, to a lesser extent, international exposure - were less affected by the U.S. consumer's problems and helped the fund to outperform the MSCI index. In many cases, I've pursued these themes through out-of-index stocks that offer more "pure" exposure to digital media than some of the large media conglomerates in the benchmark. That approach worked out well during the period for holdings in the computer hardware, Internet software and home entertainment software industries - media-related areas that are not represented in the MSCI index - and a quartet of out-of-index stocks were among the top relative contributors. Apple computers, iPods and iPhones are some of the most popular distribution tools for digital content, and product innovation drove strong sales at Apple and a soaring stock price. Similarly, the runaway success of its Wii video game system led to strong stock performance by Nintendo during the period. However, I sold both Apple and Japan-based Nintendo because I thought those great results could lead to tough comparisons in future periods. Our Google stock was up modestly while much of the market lost ground. In my view, Google is the strongest player of the next generation, or "Web 2.0," Internet companies - firms with Web-based applications that can be accessed anywhere online, rather than depending on the user to come to a specific site or "portal." Results also were aided by the strong performance of our holdings in RRSat Global Communications Network, an Israeli firm that provides global media distribution via satellite. On the negative side, stock selection in movies and entertainment and in catalog retail hurt relative performance. I avoided cable operator Comcast for much of the period but began to buy it when the stock fell to what I felt was an attractive valuation. Performance suffered, however, when the stock continued to decline. Walt Disney Co.'s theme park revenue has historically fallen off in tough economic times, so I underweighted the stock. Park revenue held up during the period, however, and Disney's shares performed better than I expected. R.H. Donnelley, a publisher of print and online phone directories, was purchased in anticipation of an increase in its stock dividend. However, our shares plunged after it became clear that the planned increase would not happen.
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
Select Multimedia Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Time Warner, Inc. | 14.0 | 15.8 |
The Walt Disney Co. | 10.7 | 8.6 |
News Corp. Class A | 9.9 | 9.8 |
Comcast Corp. Class A | 7.7 | 14.8 |
Viacom, Inc. Class B (non-vtg.) | 4.7 | 5.0 |
The DIRECTV Group, Inc. | 4.6 | 0.0 |
Liberty Media Corp. - Capital Series A | 4.2 | 0.0 |
Omnicom Group, Inc. | 4.1 | 3.4 |
Clear Channel Communications, Inc. | 4.1 | 3.1 |
CBS Corp. Class B | 2.1 | 3.5 |
| 66.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Media | 86.0% |
|
| Internet Software & Services | 3.0% |
|
| Hotels, Restaurants & Leisure | 0.9% |
|
| Commercial Services & Supplies | 0.4% |
|
| Communications Equipment | 0.4% |
|
| All Others* | 9.3% |
|
| |||
As of August 31, 2007 | |||
| Media | 86.8% |
|
| Internet Software & Services | 8.0% |
|
| Computers & Peripherals | 1.8% |
|
| Internet & Catalog Retail | 0.8% |
|
| Software | 0.7% |
|
| All Others* | 1.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Multimedia Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 91.4% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.4% | |||
Human Resource & Employment Services - 0.4% | |||
Monster Worldwide, Inc. (a) | 8,700 | $ 231,333 | |
COMMUNICATIONS EQUIPMENT - 0.4% | |||
Communications Equipment - 0.4% | |||
Juniper Networks, Inc. (a) | 9,700 | 260,154 | |
HOTELS, RESTAURANTS & LEISURE - 0.9% | |||
Casinos & Gaming - 0.9% | |||
Las Vegas Sands Corp. (a) | 6,900 | 574,770 | |
INTERNET & CATALOG RETAIL - 0.3% | |||
Catalog Retail - 0.3% | |||
Liberty Media Corp. - Interactive | 11,400 | 163,704 | |
INTERNET SOFTWARE & SERVICES - 3.0% | |||
Internet Software & Services - 3.0% | |||
Akamai Technologies, Inc. (a) | 12,000 | 421,920 | |
Dice Holdings, Inc. | 40,300 | 292,981 | |
Google, Inc. Class A (sub. vtg.) (a) | 2,050 | 965,919 | |
Omniture, Inc. (a) | 6,900 | 158,562 | |
| 1,839,382 | ||
MEDIA - 86.0% | |||
Advertising - 7.9% | |||
Interpublic Group of Companies, Inc. (a) | 100,500 | 866,310 | |
Lamar Advertising Co. Class A | 27,000 | 1,028,970 | |
National CineMedia, Inc. | 20,200 | 435,310 | |
Omnicom Group, Inc. | 57,500 | 2,568,525 | |
| 4,899,115 | ||
Broadcasting & Cable TV - 33.3% | |||
CBS Corp. Class B | 57,200 | 1,305,304 | |
Central European Media Enterprises Ltd. Class A (a) | 4,400 | 404,448 | |
Citadel Broadcasting Corp. | 8 | 9 | |
Clear Channel Communications, Inc. | 79,300 | 2,537,600 | |
Comcast Corp.: | |||
Class A (d) | 244,250 | 4,772,645 | |
Class A (special) (non-vtg.) | 61,500 | 1,190,025 | |
Discovery Holding Co. Class A (a) | 100 | 2,257 | |
DISH Network Corp. Class A (a) | 21,800 | 646,370 | |
E.W. Scripps Co. Class A | 21,300 | 889,701 | |
Entercom Communications Corp. Class A | 15,900 | 177,603 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 27,900 | 613,800 | |
Liberty Global, Inc. Class A (a) | 22,775 | 856,340 | |
Liberty Media Corp. - Capital | 22,700 | 2,635,697 | |
RRSat Global Communications Network Ltd. (a) | 14,600 | 282,510 | |
Sinclair Broadcast Group, Inc. Class A | 63,000 | 581,490 | |
The DIRECTV Group, Inc. (a) | 115,200 | 2,885,760 | |
| |||
Shares | Value | ||
Time Warner Cable, Inc. (a) | 18,400 | $ 502,320 | |
XM Satellite Radio Holdings, Inc. | 36,600 | 431,880 | |
| 20,715,759 | ||
Movies & Entertainment - 43.0% | |||
Cinemark Holdings, Inc. (d) | 22,500 | 324,900 | |
Cinemax India Ltd. | 56,743 | 141,521 | |
DreamWorks Animation SKG, Inc. | 17,400 | 441,612 | |
Lions Gate Entertainment Corp. (a) | 42,700 | 401,807 | |
Live Nation, Inc. (a) | 29,409 | 349,085 | |
Marvel Entertainment, Inc. (a)(d) | 17,600 | 442,640 | |
News Corp. Class A | 332,182 | 6,115,471 | |
Regal Entertainment Group Class A | 10,300 | 203,219 | |
The Walt Disney Co. (d) | 205,800 | 6,669,978 | |
Time Warner, Inc. (d) | 558,000 | 8,710,379 | |
Viacom, Inc. Class B (non-vtg.) (a) | 73,500 | 2,921,625 | |
| 26,722,237 | ||
Publishing - 1.8% | |||
Gannett Co., Inc. | 100 | 3,015 | |
Gemstar-TV Guide International, Inc. (a) | 8 | 38 | |
McGraw-Hill Companies, Inc. | 23,100 | 945,483 | |
R.H. Donnelley Corp. (a) | 200 | 1,418 | |
The New York Times Co. Class A (d) | 9,700 | 180,711 | |
| 1,130,665 | ||
TOTAL MEDIA | 53,467,776 | ||
SOFTWARE - 0.4% | |||
Home Entertainment Software - 0.4% | |||
Electronic Arts, Inc. (a) | 5,200 | 245,908 | |
TOTAL COMMON STOCKS (Cost $55,186,811) | 56,783,027 | ||
Money Market Funds - 31.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 5,587,474 | 5,587,474 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 13,675,375 | 13,675,375 | |
TOTAL MONEY MARKET FUNDS (Cost $19,262,849) | 19,262,849 | ||
TOTAL INVESTMENT PORTFOLIO - 122.4% (Cost $74,449,660) | 76,045,876 | ||
NET OTHER ASSETS - (22.4)% | (13,904,424) | ||
NET ASSETS - 100% | $ 62,141,452 | ||
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. |
(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 | $ 79,303 |
Fidelity Securities Lending Cash Central Fund | 29,740 |
Total | $ 109,043 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,068,161) - See accompanying schedule: Unaffiliated issuers (cost $55,186,811) | $ 56,783,027 |
|
Fidelity Central Funds (cost $19,262,849) | 19,262,849 |
|
Total Investments (cost $74,449,660) |
| $ 76,045,876 |
Receivable for investments sold | 86,500 | |
Receivable for fund shares sold | 36,773 | |
Dividends receivable | 54,544 | |
Distributions receivable from Fidelity Central Funds | 16,830 | |
Prepaid expenses | 196 | |
Total assets | 76,240,719 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 317,659 | |
Payable for fund shares redeemed | 34,060 | |
Accrued management fee | 27,491 | |
Other affiliated payables | 15,258 | |
Other payables and accrued expenses | 29,424 | |
Collateral on securities loaned, at value | 13,675,375 | |
Total liabilities | 14,099,267 | |
|
|
|
Net Assets | $ 62,141,452 | |
Net Assets consist of: |
| |
Paid in capital | $ 57,472,140 | |
Undistributed net investment income | 8,513 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,064,568 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,596,231 | |
Net Assets, for 1,760,193 shares outstanding | $ 62,141,452 | |
Net Asset Value, offering price and redemption price per share ($62,141,452 ÷ 1,760,193 shares) | $ 35.30 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 617,509 |
Interest |
| 18 |
Income from Fidelity Central Funds (including $29,740 from security lending) |
| 109,043 |
Total income |
| 726,570 |
|
|
|
Expenses | ||
Management fee | $ 405,018 | |
Transfer agent fees | 208,598 | |
Accounting and security lending fees | 29,793 | |
Custodian fees and expenses | 10,126 | |
Independent trustees' compensation | 288 | |
Registration fees | 25,213 | |
Audit | 37,155 | |
Legal | 974 | |
Miscellaneous | 3,432 | |
Total expenses before reductions | 720,597 | |
Expense reductions | (2,587) | 718,010 |
Net investment income (loss) | 8,560 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 7,107,700 | |
Foreign currency transactions | 3,665 | |
Total net realized gain (loss) |
| 7,111,365 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (17,201,923) | |
Assets and liabilities in foreign currencies | 639 | |
Total change in net unrealized appreciation (depreciation) |
| (17,201,284) |
Net gain (loss) | (10,089,919) | |
Net increase (decrease) in net assets resulting from operations | $ (10,081,359) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 8,560 | $ (159,828) |
Net realized gain (loss) | 7,111,365 | 16,985,095 |
Change in net unrealized appreciation (depreciation) | (17,201,284) | (1,152,747) |
Net increase (decrease) in net assets resulting from operations | (10,081,359) | 15,672,520 |
Distributions to shareholders from net realized gain | (9,951,014) | (13,553,788) |
Share transactions | 36,431,773 | 153,985,180 |
Reinvestment of distributions | 9,517,533 | 12,972,279 |
Cost of shares redeemed | (54,588,877) | (158,997,983) |
Net increase (decrease) in net assets resulting from share transactions | (8,639,571) | 7,959,476 |
Redemption fees | 7,037 | 12,848 |
Total increase (decrease) in net assets | (28,664,907) | 10,091,056 |
|
|
|
Net Assets | ||
Beginning of period | 90,806,359 | 80,715,303 |
End of period (including undistributed net investment income of $8,513 and accumulated net investment loss of $49, respectively) | $ 62,141,452 | $ 90,806,359 |
Other Information Shares | ||
Sold | 853,857 | 3,267,373 |
Issued in reinvestment of distributions | 225,807 | 276,911 |
Redeemed | (1,238,899) | (3,330,188) |
Net increase (decrease) | (159,235) | 214,096 |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 47.31 | $ 47.33 | $ 43.55 | $ 44.83 | $ 32.10 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | (.07) | (.12) | (.18) | (.31) |
Net realized and unrealized gain (loss) | (5.79) | 6.27 | 4.70 | .19 | 16.49 |
Total from investment operations | (5.78) | 6.20 | 4.58 | .01 | 16.18 |
Distributions from net realized gain | (6.23) | (6.23) | (.80) | (1.30) | (3.47) |
Redemption fees added to paid in capital C | - H | .01 | - H | .01 | .02 |
Net asset value, end of period | $ 35.30 | $ 47.31 | $ 47.33 | $ 43.55 | $ 44.83 |
Total Return A,B | (13.88)% | 13.73% | 10.48% | .01% | 50.99% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .99% | 1.04% | 1.07% | 1.07% | 1.17% |
Expenses net of fee waivers, if any | .99% | 1.04% | 1.07% | 1.07% | 1.17% |
Expenses net of all reductions | .98% | 1.04% | 1.04% | 1.03% | 1.09% |
Net investment income (loss) | .01% | (.16)% | (.27)% | (.42)% | (.75)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 62,141 | $ 90,806 | $ 80,715 | $ 125,615 | $ 163,826 |
Portfolio turnover rate E | 68% | 179% | 48% | 88% | 208% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Retailing Portfolio | -21.43% | 11.41% | 4.12% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Retailing Portfolio on February 28, 1998. 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
Select Retailing Portfolio
Management's Discussion of Fund Performance
Comments from Evan Hornbuckle, Portfolio Manager of Select Retailing Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund was down 21.43%, outperforming the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Retailing Index, which lost 23.90%, but significantly lagging the S&P 500®. I look for three main criteria in selecting investments for the fund: strong businesses selling at attractive valuations; firms that have a competitive advantage; and, given the current economic slowdown, companies whose products are less discretionary and thus harder for consumers to stop buying. Those themes drove the fund's outperformance, particularly in footwear and drug retail, two retail-related areas that were not included in the MSCI index. Relative results also were helped by stock selection in specialty stores. Our shares in Deckers Outdoor soared as sales of its UGG footwear continued to beat Wall Street's expectations. Drug store chain CVS Caremark was a solid contributor that exemplified all three of my major criteria: I bought it at an attractive valuation; the products it sells are less discretionary than many other retail items; and its purchase of pharmacy benefits manager Caremark Rx could give it a competitive advantage over other drug store chains in the future. I owned theatre chain Regal Entertainment Group, another strong relative contributor, because movie ticket sales have historically been less sensitive to a slowing economy and because Regal has been paying a comparatively large stock dividend that can cushion the effect of a falling market. None of the stocks just mentioned were components of the MSCI index. In the specialty stores area, overweighting office supply giant Staples helped relative results as the firm continued to dominate its competitors. On the negative side, I missed most of the strong performance in Internet retail, the best-performing area of the index during the period. Positioning in department stores and in computer and electronics retail also hurt results. I increased our position in Internet jewelry retailer Blue Nile in the belief that sales of engagement rings, the largest part of Blue Nile's business, would be rather recession-proof, and its low-price advantage would help it continue to achieve large market share gains. Sales growth came to a halt early in 2008, however, and our shares declined. Elsewhere in Internet retail, I underweighted Amazon.com and missed a large part of its surge during the period. Underweighting electronics retailer Best Buy also hurt results, as the stock did better than I expected.
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
Select Retailing Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Staples, Inc. | 11.2 | 6.6 |
Deckers Outdoor Corp. | 9.3 | 3.0 |
Home Depot, Inc. | 7.4 | 14.2 |
Amazon.com, Inc. | 4.7 | 3.5 |
Target Corp. | 4.7 | 9.9 |
OfficeMax, Inc. | 3.9 | 1.6 |
Lowe's Companies, Inc. | 3.5 | 5.1 |
Blue Nile, Inc. | 3.4 | 1.9 |
TJX Companies, Inc. | 3.4 | 2.5 |
CVS Caremark Corp. | 2.4 | 1.0 |
| 53.9 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Specialty Retail | 53.0% |
|
| Multiline Retail | 12.2% |
|
| Internet & Catalog Retail | 11.6% |
|
| Textiles, Apparel & Luxury Goods | 9.3% |
|
| Food & Staples Retailing | 4.9% |
|
| All Others* | 9.0% |
|
| |||
As of August 31, 2007 | |||
| Specialty Retail | 54.2% |
|
| Multiline Retail | 25.2% |
|
| Internet & Catalog Retail | 9.8% |
|
| Textiles, Apparel & Luxury Goods | 4.7% |
|
| Media | 3.5% |
|
| All Others* | 2.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Retailing Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
DISTRIBUTORS - 1.7% | |||
Distributors - 1.7% | |||
Core-Mark Holding Co., Inc. (a) | 900 | $ 23,913 | |
Genuine Parts Co. | 18,800 | 775,500 | |
| 799,413 | ||
FOOD & STAPLES RETAILING - 4.9% | |||
Drug Retail - 2.4% | |||
CVS Caremark Corp. | 28,600 | 1,154,868 | |
Hypermarkets & Super Centers - 2.5% | |||
Costco Wholesale Corp. | 11,500 | 712,080 | |
Wal-Mart Stores, Inc. | 10,000 | 495,900 | |
| 1,207,980 | ||
TOTAL FOOD & STAPLES RETAILING | 2,362,848 | ||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Leisure Facilities - 0.2% | |||
Life Time Fitness, Inc. (a) | 3,800 | 110,428 | |
INTERNET & CATALOG RETAIL - 11.6% | |||
Catalog Retail - 2.2% | |||
Liberty Media Corp. - Interactive | 74,100 | 1,064,076 | |
Internet Retail - 9.4% | |||
Amazon.com, Inc. (a) | 35,000 | 2,256,450 | |
Blue Nile, Inc. (a)(d) | 36,900 | 1,629,504 | |
IAC/InterActiveCorp (a) | 21,200 | 421,880 | |
Netflix, Inc. (a)(d) | 5,800 | 183,164 | |
| 4,490,998 | ||
TOTAL INTERNET & CATALOG RETAIL | 5,555,074 | ||
INTERNET SOFTWARE & SERVICES - 1.5% | |||
Internet Software & Services - 1.5% | |||
eBay, Inc. (a) | 27,600 | 727,536 | |
MEDIA - 3.1% | |||
Movies & Entertainment - 3.1% | |||
Live Nation, Inc. (a) | 33,700 | 400,019 | |
Regal Entertainment Group Class A (d) | 55,400 | 1,093,042 | |
| 1,493,061 | ||
METALS & MINING - 1.1% | |||
Precious Metals & Minerals - 1.1% | |||
Harry Winston Diamond Corp. | 20,300 | 531,198 | |
MULTILINE RETAIL - 12.2% | |||
Department Stores - 6.2% | |||
JCPenney Co., Inc. | 19,600 | 905,716 | |
Kohl's Corp. (a) | 19,200 | 853,248 | |
Macy's, Inc. | 21,400 | 528,152 | |
| |||
Shares | Value | ||
Nordstrom, Inc. | 15,900 | $ 588,777 | |
Saks, Inc. (a) | 7,600 | 118,256 | |
| 2,994,149 | ||
General Merchandise Stores - 6.0% | |||
Dollar Tree Stores, Inc. (a) | 11,300 | 303,179 | |
Family Dollar Stores, Inc. | 16,300 | 312,145 | |
Target Corp. | 42,800 | 2,251,708 | |
| 2,867,032 | ||
TOTAL MULTILINE RETAIL | 5,861,181 | ||
SPECIALTY RETAIL - 53.0% | |||
Apparel Retail - 9.8% | |||
Abercrombie & Fitch Co. Class A | 10,600 | 821,818 | |
AnnTaylor Stores Corp. (a) | 8,000 | 192,160 | |
Charming Shoppes, Inc. (a) | 21,500 | 118,465 | |
Citi Trends, Inc. (a) | 11,100 | 161,061 | |
Collective Brands, Inc. (a) | 7,400 | 116,698 | |
Gymboree Corp. (a) | 3,900 | 154,401 | |
Jos. A. Bank Clothiers, Inc. (a)(d) | 2,100 | 47,838 | |
Pacific Sunwear of California, Inc. (a) | 9,300 | 103,788 | |
Ross Stores, Inc. | 25,700 | 715,745 | |
Talbots, Inc. (d) | 13,900 | 113,702 | |
The Men's Wearhouse, Inc. | 11,200 | 258,048 | |
TJX Companies, Inc. (d) | 50,400 | 1,612,800 | |
Tween Brands, Inc. (a) | 7,600 | 224,960 | |
Zumiez, Inc. (a) | 5,400 | 94,932 | |
| 4,736,416 | ||
Automotive Retail - 6.2% | |||
Advance Auto Parts, Inc. | 33,400 | 1,120,236 | |
AutoZone, Inc. (a) | 7,500 | 863,100 | |
CarMax, Inc. (a)(d) | 26,900 | 493,884 | |
CSK Auto Corp. (a) | 100 | 907 | |
Lithia Motors, Inc. Class A (sub. vtg.) | 1,500 | 15,420 | |
O'Reilly Automotive, Inc. (a) | 17,900 | 482,584 | |
| 2,976,131 | ||
Computer & Electronics Retail - 4.7% | |||
Best Buy Co., Inc. | 14,800 | 636,548 | |
Gamestop Corp. Class A (a) | 16,200 | 686,232 | |
hhgregg, Inc. | 79,700 | 919,738 | |
| 2,242,518 | ||
Home Improvement Retail - 13.7% | |||
Home Depot, Inc. (d) | 134,200 | 3,563,010 | |
Lowe's Companies, Inc. | 69,800 | 1,673,106 | |
Lumber Liquidators, Inc. | 34,600 | 316,590 | |
Sherwin-Williams Co. | 19,900 | 1,030,422 | |
| 6,583,128 | ||
Homefurnishing Retail - 0.6% | |||
Aaron Rents, Inc. | 6,900 | 135,378 | |
Rent-A-Center, Inc. (a) | 9,700 | 166,355 | |
| 301,733 | ||
Common Stocks - continued | |||
Shares | Value | ||
SPECIALTY RETAIL - CONTINUED | |||
Specialty Stores - 18.0% | |||
A.C. Moore Arts & Crafts, Inc. (a) | 16,500 | $ 141,405 | |
Barnes & Noble, Inc. | 6,300 | 177,156 | |
Jo-Ann Stores, Inc. (a) | 46,000 | 759,000 | |
OfficeMax, Inc. (d) | 88,400 | 1,880,268 | |
Staples, Inc. (d) | 241,800 | 5,380,050 | |
Tiffany & Co., Inc. | 8,200 | 308,648 | |
| 8,646,527 | ||
TOTAL SPECIALTY RETAIL | 25,486,453 | ||
TEXTILES, APPAREL & LUXURY GOODS - 9.3% | |||
Footwear - 9.3% | |||
Deckers Outdoor Corp. (a) | 40,300 | 4,458,792 | |
TOTAL COMMON STOCKS (Cost $49,805,161) | 47,385,984 | ||
Money Market Funds - 26.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 170,957 | $ 170,957 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 12,534,725 | 12,534,725 | |
TOTAL MONEY MARKET FUNDS (Cost $12,705,682) | 12,705,682 | ||
TOTAL INVESTMENT PORTFOLIO - 125.1% (Cost $62,510,843) | 60,091,666 | ||
NET OTHER ASSETS - (25.1)% | (12,053,616) | ||
NET ASSETS - 100% | $ 48,038,050 | ||
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. |
(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 | $ 23,654 |
Fidelity Securities Lending Cash Central Fund | 82,300 |
Total | $ 105,954 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $2,272,922 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,793,614) - See accompanying schedule: Unaffiliated issuers (cost $49,805,161) | $ 47,385,984 |
|
Fidelity Central Funds (cost $12,705,682) | 12,705,682 |
|
Total Investments (cost $62,510,843) |
| $ 60,091,666 |
Cash | 517,210 | |
Receivable for investments sold | 1,047,304 | |
Receivable for fund shares sold | 112,096 | |
Dividends receivable | 22,603 | |
Distributions receivable from Fidelity Central Funds | 17,124 | |
Prepaid expenses | 154 | |
Other receivables | 557 | |
Total assets | 61,808,714 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,026,510 | |
Payable for fund shares redeemed | 142,290 | |
Accrued management fee | 23,680 | |
Other affiliated payables | 14,060 | |
Other payables and accrued expenses | 29,399 | |
Collateral on securities loaned, at value | 12,534,725 | |
Total liabilities | 13,770,664 | |
|
|
|
Net Assets | $ 48,038,050 | |
Net Assets consist of: |
| |
Paid in capital | $ 51,466,205 | |
Accumulated net investment loss | (304) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,008,674) | |
Net unrealized appreciation (depreciation) on investments | (2,419,177) | |
Net Assets, for 1,313,661 shares outstanding | $ 48,038,050 | |
Net Asset Value, offering price and redemption price per share ($48,038,050 ÷ 1,313,661 shares) | $ 36.57 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 549,239 |
Interest |
| 1,224 |
Income from Fidelity Central Funds (including $82,300 from security lending) |
| 105,954 |
Total income |
| 656,417 |
|
|
|
Expenses | ||
Management fee | $ 369,135 | |
Transfer agent fees | 197,174 | |
Accounting and security lending fees | 28,343 | |
Custodian fees and expenses | 11,154 | |
Independent trustees' compensation | 227 | |
Registration fees | 28,727 | |
Audit | 36,868 | |
Legal | 529 | |
Miscellaneous | 2,838 | |
Total expenses before reductions | 674,995 | |
Expense reductions | (2,208) | 672,787 |
Net investment income (loss) | (16,370) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,107,467 | |
Foreign currency transactions | (495) | |
Total net realized gain (loss) |
| 6,106,972 |
Change in net unrealized appreciation (depreciation) on investment securities | (19,430,381) | |
Net gain (loss) | (13,323,409) | |
Net increase (decrease) in net assets resulting from operations | $ (13,339,779) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Retailing Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (16,370) | $ 470,545 |
Net realized gain (loss) | 6,106,972 | 7,938,899 |
Change in net unrealized appreciation (depreciation) | (19,430,381) | 3,818,862 |
Net increase (decrease) in net assets resulting from operations | (13,339,779) | 12,228,306 |
Distributions to shareholders from net investment income | (352,022) | - |
Distributions to shareholders from net realized gain | (10,059,043) | (5,786,015) |
Total distributions | (10,411,065) | (5,786,015) |
Share transactions | 38,803,095 | 125,590,066 |
Reinvestment of distributions | 9,647,189 | 5,539,472 |
Cost of shares redeemed | (60,520,827) | (120,775,927) |
Net increase (decrease) in net assets resulting from share transactions | (12,070,543) | 10,353,611 |
Redemption fees | 16,684 | 37,760 |
Total increase (decrease) in net assets | (35,804,703) | 16,833,662 |
|
|
|
Net Assets | ||
Beginning of period | 83,842,753 | 67,009,091 |
End of period (including accumulated net investment loss of $304 and undistributed net investment income of $470,109, respectively) | $ 48,038,050 | $ 83,842,753 |
Other Information Shares | ||
Sold | 788,545 | 2,368,259 |
Issued in reinvestment of distributions | 213,788 | 105,399 |
Redeemed | (1,213,769) | (2,268,109) |
Net increase (decrease) | (211,436) | 205,549 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 54.98 | $ 50.78 | $ 50.89 | $ 47.39 | $ 30.72 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) | .30 F | (.10) | (.01) | (.19) |
Net realized and unrealized gain (loss) | (10.59) | 7.46 | 6.24 | 4.00 | 16.83 |
Total from investment operations | (10.60) | 7.76 | 6.14 | 3.99 | 16.64 |
Distributions from net investment income | (.22) | - | - | (.01) | - |
Distributions from net realized gain | (7.60) | (3.58) | (6.29) | (.50) | - |
Total distributions | (7.82) | (3.58) | (6.29) | (.51) | - |
Redemption fees added to paid in capital C | .01 | .02 | .04 | .02 | .03 |
Net asset value, end of period | $ 36.57 | $ 54.98 | $ 50.78 | $ 50.89 | $ 47.39 |
Total Return A,B | (21.43)% | 15.79% | 12.77% | 8.47% | 54.26% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.02% | 1.06% | 1.06% | 1.08% | 1.31% |
Expenses net of fee waivers, if any | 1.02% | 1.06% | 1.06% | 1.08% | 1.31% |
Expenses net of all reductions | 1.02% | 1.06% | 1.04% | 1.03% | 1.28% |
Net investment income (loss) | (.02)% | .58% F | (.20)% | (.02)% | (.46)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 48,038 | $ 83,843 | $ 67,009 | $ 105,346 | $ 87,086 |
Portfolio turnover rate E | 260% | 202% | 114% | 94% | 85% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects special dividends which amounted to $.37 per share. Excluding these special dividends, the ratio of net investment income (loss) to average net assets would have been (.13)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions 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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
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. As a result of a change in the estimate of the return of capital component of dividend income realized in the year ended February 28, 2007, Select Retailing Portfolio's dividend income has been reduced $65,880 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of the Fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Funds will claim 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. Certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on the Funds' 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 capital gains, foreign currency transactions, certain foreign taxes, deferred trustees compensation, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for Federal | Unrealized | Unrealized | Net Unrealized |
Automotive Portfolio | $ 39,919,853 | $ 290,081 | $ (10,930,701) | $ (10,640,620) |
Construction and Housing Portfolio | 116,367,000 | 8,962,406 | (15,740,420) | (6,778,014) |
Consumer Discretionary Portfolio | 28,430,727 | 1,568,919 | (3,300,915) | (1,731,996) |
Leisure Portfolio | 248,762,571 | 26,811,682 | (24,968,720) | 1,842,962 |
Multimedia Portfolio | 74,647,953 | 6,288,312 | (4,890,389) | 1,397,923 |
Retailing Portfolio | 65,158,645 | 2,202,899 | (7,269,878) | (5,066,979) |
| Undistributed | Undistributed |
Construction and Housing Portfolio | $ 125,208 | $ 2,246,612 |
Consumer Discretionary Portfolio | 11,191 | - |
Leisure Portfolio | 432,009 | 591,638 |
Multimedia Portfolio | 3,230 | 1,234,797 |
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 29, 2008 | Ordinary | Long-term Capital Gains | Total |
Automotive Portfolio | $ 1,066,020 | $ 146,700 | $ 1,212,720 |
Construction and Housing Portfolio | 364,617 | 9,440,593 | 9,805,210 |
Consumer Discretionary Portfolio | 613,515 | 3,553,954 | 4,167,469 |
Leisure Portfolio | 7,963,826 | 8,869,024 | 16,832,850 |
Multimedia Portfolio | - | 9,951,014 | 9,951,014 |
Retailing Portfolio | 624,016 | 9,787,049 | 10,411,065 |
February 28, 2007 | Ordinary | Long-term Capital Gains | Total |
Automotive Portfolio | $ 88,153 | $ - | $ 88,153 |
Construction and Housing Portfolio | 164,323 | 21,267,651 | 21,431,974 |
Consumer Discretionary Portfolio | 338,288 | 3,325,645 | 3,663,933 |
Leisure Portfolio | 1,925,823 | 31,686,731 | 33,612,554 |
Multimedia Portfolio | 934,772 | 12,619,015 | 13,553,787 |
Retailing Portfolio | - | 5,786,015 | 5,786,015 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 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 ($) | Sales ($) |
Automotive Portfolio | 105,923,437 | 116,948,222 |
Construction and Housing Portfolio | 108,809,956 | 154,559,867 |
Consumer Discretionary Portfolio | 35,547,662 | 46,687,163 |
Leisure Portfolio | 179,461,773 | 207,622,375 |
Multimedia Portfolio | 48,661,839 | 69,948,724 |
Retailing Portfolio | 172,734,008 | 195,618,719 |
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 |
Automotive Portfolio | .30% | .26% | .55% |
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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Automotive Portfolio | .28% |
Construction and Housing Portfolio | .30% |
Consumer Discretionary Portfolio | .30% |
Leisure Portfolio | .28% |
Multimedia Portfolio | .29% |
Retailing Portfolio | .30% |
Accounting and Security Lending Fees. FSC 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 | $ 6,374 |
Construction and Housing Portfolio | 1,800 |
Consumer Discretionary Portfolio | 1,004 |
Leisure Portfolio | 471 |
Multimedia Portfolio | 1,864 |
Retailing Portfolio | 883 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
| Amount |
Automotive Portfolio | $ 94 |
Construction and Housing Portfolio | 268 |
Consumer Discretionary Portfolio | 81 |
Leisure Portfolio | 581 |
Multimedia Portfolio | 197 |
Retailing Portfolio | 163 |
During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
FMR voluntarily agreed to reimburse Funds to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, including commitment fees, are excluded from this reimbursement.
The following Funds were in reimbursement during the period:
| Expense | Reimbursement |
Automotive Portfolio | 1.15% | $ 16,354 |
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 and transfer agent, 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 | Transfer Agent |
|
|
|
|
Automotive Portfolio | $ 2,403 | $ - | $ 251 |
Construction and Housing Portfolio | 2,972 | - | 3,012 |
Consumer Discretionary Portfolio | 329 | - | 1,348 |
Leisure Portfolio | 3,313 | 460 | 2,903 |
Multimedia Portfolio | 389 | - | 2,168 |
Retailing Portfolio | 1,413 | - | 764 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Annual Report
Notes to Financial Statements - continued
10. Other - continued
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
Automotive Portfolio | $ 8,884 |
Construction and Housing Portfolio | 23,482 |
Consumer Discretionary Portfolio | 8,028 |
Leisure Portfolio | 48,020 |
Multimedia Portfolio | 49,336 |
Retailing Portfolio | 21,567 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
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 Porfolio, Multimedia Portfolio, 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 position of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Porfolio, Multimedia Portfolio, Retailing Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002- |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Automotive Portfolio, Select Construction & Housing Portfolio, Select Consumer Discretionary Portfolio, Select Leisure Portfolio, Select Multimedia Portfolio, and Select Retailing Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Construction and Housing Portfolio | 04/14/08 | 04/11/08 | $0.05 | $0.85 |
Select Consumer Discretionary Portfolio | 04/14/08 | 04/11/08 | - | $0.01 |
Select Leisure Portfolio | 04/14/08 | 04/11/08 | $0.07 | $0.28 |
Select Multimedia Portfolio | 04/14/08 | 04/11/08 | - | $0.86 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Automotive Portfolio | $146,575 |
Select Construction and Housing Portfolio | $14,510,377 |
Select Consumer Discretionary Portfolio | $1,656,919 |
Select Leisure Portfolio | $7,880,615 |
Select Multimedia Portfolio | $5,511,576 |
Select Retailing Portfolio | $8,890,551 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Automotive Portfolio | - | 30% |
Select Construction and Housing Portfolio | 100% | 100% |
Select Consumer Discretionary Portfolio | 99% | 51% |
Select Leisure Portfolio | 1% | 92% |
Select Multimedia Portfolio | 100% | - |
Select Retailing Portfolio | 100% | - |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2007 | December 2007 |
Select Automotive Portfolio | - | 37% |
Select Construction and Housing Portfolio | 100% | 100% |
Select Consumer Discretionary Portfolio | 99% | 62% |
Select Leisure Portfolio | 6% | 100% |
Select Multimedia Portfolio | 100% | - |
Select Retailing Portfolio | 100% | - |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
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1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
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(U.K.) Inc.
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(U.K. Limited)
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Fidelity Distributors Corporation
Boston, MA
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Corporate Headquarters
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Fidelity®
Select Portfolios®
Consumer Staples Sector
Select Consumer Staples Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders | |
Consumer Staples | 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 |
| |
Proxy Voting Results |
|
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Select Consumer Staples Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total 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 29, 2008 | Past 1 | Past 5 | Past 10 |
Consumer Staples | 13.72% | 16.09% | 7.77% |
Prior to October 1, 2006, Select 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, a class of the fund, on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Select Consumer Staples Portfolio
Management's Discussion of Fund Performance
Comments from Robert Lee, Portfolio Manager of Select Consumer Staples Portfolio
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, Consumer Staples returned 13.72%, significantly outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Staples Index, which rose 7.22%, as well as the S&P 500®. I'm pursuing three general themes in this fund: companies with exposure to faster-growth parts of the world; companies that benefit from consumers "trading up" to higher-quality brands; and companies whose stocks are attractively valued - i.e., selling at below-average prices for what I believe is above-average growth potential. Relative to the MSCI index, these themes played out particularly well for our holdings in packaged food companies, brewers, soft drink firms and tobacco companies. Our stake in Swiss food conglomerate Nestle benefited from all three of the portfolio's major themes: Profits were buoyed by strong sales in emerging markets; I bought the stock at an attractive valuation; and many of Nestle's brands benefit from strong consumer loyalty that makes them less exposed to price competition. British American Tobacco (BAT) was a similar story, purchased at an attractive valuation and propelled by robust sales growth in emerging markets. Strong performance by our holdings in Belgium-based InBev, one of the world's largest brewers, and Souza Cruz, the largest cigarette maker in Brazil, also was driven by increasing sales in emerging markets. Our shares in Coca-Cola Hellenic, a dominant soft drink distributor in southern and eastern Europe, appreciated sharply. I invested in Numico, a Dutch maker of infant and clinical nutrition products, when its shares dipped to an attractive price, and I sold our position at a healthy profit when another firm later made a buyout offer for Numico. None of the stocks just mentioned were components of the MSCI index. Since I have been focusing the fund on companies that conduct business in many international markets, the continued deterioration in the value of the U.S. dollar versus other currencies increased the value of those businesses as measured in U.S. dollars, which benefited relative performance as well. On the negative side, relative performance was hurt by holdings in related areas that were outside our consumer staples benchmark, notably restaurants and food technology. Key individual detractors included food technology firm Senomyx and Norway-headquartered Marine Harvest ASA, the world's largest fish farmer, whose shares declined when some of its farms were hit by disease. Brewer SABMiller detracted from results as well. SABMiller, Marine Harvest and Senomyx were not components of the sector benchmark. Underweighting tobacco conglomerate Altria, a large index component, hurt relative performance as its stock moved higher. I had underweighted Altria in favor of BAT and its subsidiary Souza Cruz, which I felt were better opportunities in tobacco, and they more than offset the drag from being underweighted in Altria.
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
Select Consumer Staples Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,037.60 | $ 5.93 |
HypotheticalA | $ 1,000.00 | $ 1,019.05 | $ 5.87 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,036.00 | $ 7.34 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,033.60 | $ 9.81 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,033.80 | $ 9.56 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Consumer Staples |
|
|
|
Actual | $ 1,000.00 | $ 1,039.00 | $ 4.51 |
HypotheticalA | $ 1,000.00 | $ 1,020.44 | $ 4.47 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,039.30 | $ 4.21 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.17% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.89% |
Consumer Staples | .89% |
Institutional Class | .83% |
Annual Report
Select Consumer Staples Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.5 | 16.3 |
The Coca-Cola Co. | 9.7 | 8.8 |
PepsiCo, Inc. | 7.8 | 7.8 |
CVS Caremark Corp. | 5.9 | 5.5 |
Nestle SA sponsored ADR | 5.0 | 4.1 |
Altria Group, Inc. | 4.1 | 4.4 |
British American Tobacco PLC sponsored ADR | 3.6 | 4.4 |
Colgate-Palmolive Co. | 3.4 | 4.0 |
Avon Products, Inc. | 3.0 | 1.9 |
Wal-Mart Stores, Inc. | 3.0 | 4.8 |
| 61.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Beverages | 31.0% |
|
| Household Products | 19.7% |
|
| Food & Staples Retailing | 17.4% |
|
| Food Products | 15.9% |
|
| Tobacco | 9.5% |
|
| All Others* | 6.5% |
|
|
As of August 31, 2007 | |||
| Beverages | 26.4% |
|
| Household Products | 20.8% |
|
| Food & Staples Retailing | 20.4% |
|
| Food Products | 14.2% |
|
| Tobacco | 11.3% |
|
| All Others * | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Staples Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
BEVERAGES - 31.0% | |||
Brewers - 6.5% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 172,759 | $ 1,939,204 | |
Boston Beer Co., Inc. Class A (a) | 100 | 3,566 | |
Carlsberg AS Series B | 15,000 | 1,864,119 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 100 | 8,148 | |
Grupo Modelo SA de CV Series C | 100 | 453 | |
Heineken NV (Bearer) | 173,600 | 9,790,155 | |
InBev SA | 124,200 | 11,224,232 | |
Molson Coors Brewing Co. Class B | 297,180 | 16,035,833 | |
SABMiller plc | 277,550 | 5,814,673 | |
| 46,680,383 | ||
Distillers & Vintners - 4.2% | |||
Brown-Forman Corp. Class B (non-vtg.) | 27,900 | 1,779,183 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 285,800 | 5,490,218 | |
Diageo PLC sponsored ADR | 129,000 | 10,590,900 | |
Pernod Ricard SA | 102,800 | 10,873,780 | |
Remy Cointreau SA | 29,000 | 1,821,817 | |
| 30,555,898 | ||
Soft Drinks - 20.3% | |||
Coca-Cola Amatil Ltd. | 208,000 | 1,846,198 | |
Coca-Cola Femsa SA de CV sponsored ADR | 110,600 | 5,799,864 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 119,100 | 5,191,569 | |
Coca-Cola Icecek AS | 182,000 | 1,789,431 | |
Cott Corp. (a) | 275,000 | 628,779 | |
Fomento Economico Mexicano SA de CV sponsored ADR | 118,000 | 4,720,000 | |
Hansen Natural Corp. (a) | 100 | 4,150 | |
Jones Soda Co. (a) | 1,000 | 5,330 | |
PepsiCo, Inc. | 810,000 | 56,343,600 | |
The Coca-Cola Co. | 1,194,100 | 69,807,086 | |
| 146,136,007 | ||
TOTAL BEVERAGES | 223,372,288 | ||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Senomyx, Inc. (a) | 201,300 | 1,368,840 | |
FOOD & STAPLES RETAILING - 17.4% | |||
Drug Retail - 8.5% | |||
CVS Caremark Corp. | 1,048,300 | 42,330,354 | |
Rite Aid Corp. (a)(d) | 463,400 | 1,237,278 | |
Walgreen Co. | 491,900 | 17,959,269 | |
| 61,526,901 | ||
| |||
Shares | Value | ||
Food Distributors - 1.6% | |||
Sysco Corp. | 355,400 | $ 9,972,524 | |
United Natural Foods, Inc. (a) | 72,900 | 1,233,468 | |
| 11,205,992 | ||
Food Retail - 4.3% | |||
Kroger Co. | 773,200 | 18,750,100 | |
Safeway, Inc. | 332,800 | 9,564,672 | |
SUPERVALU, Inc. | 106,500 | 2,795,625 | |
Tesco PLC | 100 | 790 | |
The Great Atlantic & Pacific Tea Co. (a) | 100 | 2,708 | |
| 31,113,895 | ||
Hypermarkets & Super Centers - 3.0% | |||
Wal-Mart Stores, Inc. (d) | 428,400 | 21,244,356 | |
TOTAL FOOD & STAPLES RETAILING | 125,091,144 | ||
FOOD PRODUCTS - 15.9% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. (d) | 309,100 | 13,940,410 | |
Bunge Ltd. | 65,100 | 7,215,684 | |
Corn Products International, Inc. | 39,700 | 1,457,387 | |
Nutreco Holding NV | 14,900 | 1,059,861 | |
| 23,673,342 | ||
Packaged Foods & Meats - 12.6% | |||
BioMar Holding AS | 13,800 | 508,433 | |
Cadbury Schweppes PLC sponsored ADR | 105,200 | 4,718,220 | |
Campbell Soup Co. | 45,000 | 1,453,050 | |
Chiquita Brands International, Inc. (a) | 54,500 | 1,115,615 | |
Dean Foods Co. | 65,800 | 1,416,016 | |
Groupe Danone | 101,200 | 7,767,100 | |
Hershey Co. | 100 | 3,708 | |
Industrias Bachoco SA de CV sponsored ADR | 100 | 2,930 | |
Kellogg Co. | 60,400 | 3,063,488 | |
Koninklijke Wessanen NV | 100 | 1,338 | |
Kraft Foods, Inc. Class A | 357,000 | 11,127,690 | |
Lindt & Spruengli AG | 59 | 2,096,917 | |
Marine Harvest ASA (a)(d) | 3,626,000 | 2,147,914 | |
Nestle SA sponsored ADR | 302,800 | 36,033,200 | |
Smithfield Foods, Inc. (a) | 100 | 2,755 | |
Tootsie Roll Industries, Inc. | 1 | 24 | |
TreeHouse Foods, Inc. (a) | 100 | 2,217 | |
Tyson Foods, Inc. Class A | 54,900 | 791,109 | |
Unilever NV (NY Shares) | 531,200 | 16,520,320 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR | 16,000 | 1,684,160 | |
| 90,456,204 | ||
TOTAL FOOD PRODUCTS | 114,129,546 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Panera Bread Co. Class A (a) | 100 | $ 3,737 | |
Starbucks Corp. (a) | 100 | 1,797 | |
| 5,534 | ||
HOUSEHOLD DURABLES - 0.0% | |||
Housewares & Specialties - 0.0% | |||
Tupperware Brands Corp. | 100 | 3,648 | |
HOUSEHOLD PRODUCTS - 19.7% | |||
Household Products - 19.7% | |||
Central Garden & Pet Co. | 1,000 | 4,930 | |
Colgate-Palmolive Co. | 325,800 | 24,790,122 | |
Kimberly-Clark Corp. | 85,600 | 5,579,408 | |
Procter & Gamble Co. | 1,689,897 | 111,837,383 | |
Pz Cussons PLC Class L | 100 | 351 | |
| 142,212,194 | ||
PERSONAL PRODUCTS - 3.9% | |||
Personal Products - 3.9% | |||
Avon Products, Inc. | 575,500 | 21,903,530 | |
Bare Escentuals, Inc. (a)(d) | 63,205 | 1,730,553 | |
Estee Lauder Companies, Inc. Class A | 42,000 | 1,788,360 | |
Herbalife Ltd. | 41,900 | 1,752,677 | |
Physicians Formula Holdings, Inc. (a) | 134,900 | 1,063,012 | |
| 28,238,132 | ||
PHARMACEUTICALS - 0.5% | |||
Pharmaceuticals - 0.5% | |||
Johnson & Johnson | 58,600 | 3,630,856 | |
TOBACCO - 9.5% | |||
Tobacco - 9.5% | |||
Altria Group, Inc. | 408,000 | 29,841,120 | |
| |||
Shares | Value | ||
British American Tobacco PLC sponsored ADR | 345,100 | $ 26,020,540 | |
Japan Tobacco, Inc. | 407 | 2,055,940 | |
KT&G Corp. | 41,000 | 3,382,763 | |
Loews Corp. - Carolina Group | 24,200 | 1,822,018 | |
Souza Cruz Industria Comerico | 181,800 | 5,315,194 | |
| 68,437,575 | ||
TOTAL COMMON STOCKS (Cost $646,297,183) | 706,489,757 | ||
Money Market Funds - 7.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 17,895,644 | 17,895,644 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,579,650 | 34,579,650 | |
TOTAL MONEY MARKET FUNDS (Cost $52,475,294) | 52,475,294 | ||
TOTAL INVESTMENT PORTFOLIO - 105.4% (Cost $698,772,477) | 758,965,051 | ||
NET OTHER ASSETS - (5.4)% | (38,587,793) | ||
NET ASSETS - 100% | $ 720,377,258 | ||
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. |
(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 | $ 620,233 |
Fidelity Securities Lending Cash Central Fund | 275,887 |
Total | $ 896,120 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 73.2% |
United Kingdom | 6.6% |
Switzerland | 5.3% |
Netherlands | 3.9% |
France | 2.8% |
Belgium | 1.5% |
Mexico | 1.5% |
Bermuda | 1.0% |
Others (individually less than 1%) | 4.2% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $32,445,761) - See accompanying schedule: Unaffiliated issuers (cost $646,297,183) | $ 706,489,757 |
|
Fidelity Central Funds (cost $52,475,294) | 52,475,294 |
|
Total Investments (cost $698,772,477) |
| $ 758,965,051 |
Receivable for investments sold | 6,723,906 | |
Receivable for fund shares sold | 3,206,800 | |
Dividends receivable | 514,558 | |
Distributions receivable from Fidelity Central Funds | 85,349 | |
Prepaid expenses | 1,386 | |
Other receivables | 3,365 | |
Total assets | 769,500,415 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 12,957,359 | |
Payable for fund shares redeemed | 1,007,196 | |
Accrued management fee | 326,546 | |
Distribution fees payable | 26,363 | |
Other affiliated payables | 161,746 | |
Other payables and accrued expenses | 64,297 | |
Collateral on securities loaned, at value | 34,579,650 | |
Total liabilities | 49,123,157 | |
|
|
|
Net Assets | $ 720,377,258 | |
Net Assets consist of: |
| |
Paid in capital | $ 659,839,070 | |
Undistributed net investment income | 1,685,304 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,342,192) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 60,195,076 | |
Net Assets | $ 720,377,258 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 63.13 | |
|
|
|
Maximum offering price per share (100/94.25 of $63.13) | $ 66.98 | |
Class T: | $ 62.93 | |
|
|
|
Maximum offering price per share (100/96.50 of $62.93) | $ 65.21 | |
Class B: | $ 62.69 | |
|
|
|
Class C: | $ 62.61 | |
|
|
|
Consumer Staples: | $ 63.25 | |
|
|
|
Institutional Class: | $ 63.22 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 9,388,271 |
Interest |
| 23,896 |
Income from Fidelity Central Funds |
| 896,120 |
Total income |
| 10,308,287 |
|
|
|
Expenses | ||
Management fee | $ 2,861,176 | |
Transfer agent fees | 1,298,752 | |
Distribution fees | 124,810 | |
Accounting and security lending fees | 197,163 | |
Custodian fees and expenses | 102,237 | |
Independent trustees' compensation | 1,896 | |
Registration fees | 127,212 | |
Audit | 42,064 | |
Legal | 2,244 | |
Miscellaneous | 23,088 | |
Total expenses before reductions | 4,780,642 | |
Expense reductions | (67,555) | 4,713,087 |
Net investment income (loss) | 5,595,200 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,797,471 | |
Foreign currency transactions | (16,225) | |
Total net realized gain (loss) |
| 16,781,246 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,841,625 | |
Assets and liabilities in foreign currencies | 2,450 | |
Total change in net unrealized appreciation (depreciation) |
| 23,844,075 |
Net gain (loss) | 40,625,321 | |
Net increase (decrease) in net assets resulting from operations | $ 46,220,521 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,595,200 | $ 2,292,472 |
Net realized gain (loss) | 16,781,246 | 23,009,399 |
Change in net unrealized appreciation (depreciation) | 23,844,075 | 13,327,382 |
Net increase (decrease) in net assets resulting from operations | 46,220,521 | 38,629,253 |
Distributions to shareholders from net investment income | (4,297,338) | (1,582,908) |
Distributions to shareholders from net realized gain | (21,936,184) | (15,661,672) |
Total distributions | (26,233,522) | (17,244,580) |
Share transactions - net increase (decrease) | 323,338,123 | 230,543,294 |
Redemption fees | 70,107 | 47,547 |
Total increase (decrease) in net assets | 343,395,229 | 251,975,514 |
|
|
|
Net Assets | ||
Beginning of period | 376,982,029 | 125,006,515 |
End of period (including undistributed net investment income of $1,685,304 and undistributed net investment income | $ 720,377,258 | $ 376,982,029 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.28 |
Total from investment operations | 7.82 | 1.27 |
Distributions from net investment income | (.42) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.86) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 63.13 | $ 58.16 |
Total Return B,C,D | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.29% A |
Expenses net of all reductions | 1.19% | 1.28% A |
Net investment income (loss) | .83% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 23,796 | $ 986 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.18 |
Total from investment operations | 7.65 | 1.17 |
Distributions from net investment income | (.35) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.79) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.93 | $ 58.06 |
Total Return B,C,D | 13.11% | 2.06% |
Ratios to Average Net AssetsF,I |
|
|
Expenses before reductions | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.60% A |
Net investment income (loss) | .56% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,298 | $ 529 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | (.07) |
Net realized and unrealized gain (loss) | 7.27 | 1.18 |
Total from investment operations | 7.31 | 1.11 |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.63) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.69 | $ 58.00 |
Total Return B,C,D | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 2.09% A |
Net investment income (loss) | .06% | (.59)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,884 | $ 226 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.28 | 1.18 |
Total from investment operations | 7.34 | 1.10 |
Distributions from net investment income | (.29) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.73) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.61 | $ 57.99 |
Total Return B,C,D | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 2.14% A |
Expenses net of all reductions | 1.92% | 2.14% A |
Net investment income (loss) | .09% | (.66)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 19,791 | $ 178 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Consumer Staples
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 | $ 35.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .71 | .56 | .50 | .29 | .22 |
Net realized and unrealized gain (loss) | 7.30 | 8.88 | 3.25 | 4.90 | 10.80 |
Total from investment operations | 8.01 | 9.44 | 3.75 | 5.19 | 11.02 |
Distributions from net investment income | (.46) | (.32) | (.44) | (.29) | (.24) |
Distributions from net realized gain | (2.44) | (3.18) | (2.56) | - | - |
Total distributions | (2.90) | (3.50) | (3.00) | (.29) | (.24) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Total Return A,B | 13.72% | 18.43% | 7.50% | 11.24% | 30.94% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.04% | 1.06% | 1.27% |
Expenses net of fee waivers, if any | .90% | .99% | 1.04% | 1.06% | 1.27% |
Expenses net of all reductions | .90% | .98% | 1.03% | 1.05% | 1.25% |
Net investment income (loss) | 1.12% | .99% | .97% | .61% | .55% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 | $ 104,436 |
Portfolio turnover rate E | 71% | 99% | 75% | 86% | 62% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .74 | .07 |
Net realized and unrealized gain (loss) | 7.30 | 1.16 |
Total from investment operations | 8.04 | 1.23 |
Distributions from net investment income | (.51) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.95) | - |
Redemption fees added to paid in capital D | .01 | - J |
Net asset value, end of period | $ 63.22 | $ 58.12 |
Total Return B,C | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
Expenses before reductions | .85% | 1.00% A |
Expenses net of fee waivers, if any | .85% | 1.00% A |
Expenses net of all reductions | .84% | 1.00% A |
Net investment income (loss) | 1.17% | .57% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,384 | $ 132 |
Portfolio turnover rate F | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 76,807,189 |
|
Unrealized depreciation | (19,342,868) |
|
Net unrealized appreciation (depreciation) | 57,464,321 |
|
Undistributed ordinary income | 416,885 |
|
|
|
|
Cost for federal income tax purposes | $ 701,500,730 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 15,086,000 | $ 1,582,908 |
Long-term Capital Gains | 11,147,522 | 15,661,672 |
Total | $ 26,233,522 | $ 17,244,580 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $662,284,483 and $360,615,711, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,277 | $ 2,025 |
Class T | .25% | .25% | 26,470 | 558 |
Class B | .75% | .25% | 19,856 | 15,168 |
Class C | .75% | .25% | 61,207 | 34,937 |
|
|
| $ 124,810 | $ 52,688 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 54,636 |
Class T | 8,439 |
Class B* | 2,863 |
Class C* | 1,508 |
| 67,446 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Consumer Staples shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,257 | .28 |
Class T | 15,907 | .30 |
Class B | 5,775 | .29 |
Class C | 15,235 | .25 |
Consumer Staples | 1,237,519 | .25 |
Institutional Class | 5,059 | .19 |
| $ 1,298,752 |
|
Accounting and Security Lending Fees. FSC maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,807 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,126 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $275,887.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Consumer Staples operating expenses. During the period, this reimbursement reduced the class' expenses by $40,354.
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 $19,534 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $3,122. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Class A | $ 5 |
|
Consumer Staples | 4,466 |
|
| $ 4,471 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 29, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 54,271 | $ - |
Class T | 42,873 | - |
Class B | 7,270 | - |
Class C | 46,840 | - |
Consumer Staples | 4,124,954 | 1,582,908 |
Institutional Class | 21,130 | - |
Total | $ 4,297,338 | $ 1,582,908 |
From net realized gain |
|
|
Class A | $ 279,894 | $ - |
Class T | 271,554 | - |
Class B | 90,489 | - |
Class C | 308,038 | - |
Consumer Staples | 20,893,023 | 15,661,672 |
Institutional Class | 93,186 | - |
Total | $ 21,936,184 | $ 15,661,672 |
A Distributions for Class A, Class T, Class B, Class C, and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Year ended February 29, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 394,208 | 17,300 | $ 25,121,582 | $ 1,017,780 |
Reinvestment of distributions | 4,833 | - | 319,149 | - |
Shares redeemed | (39,053) | (340) | (2,497,211) | (20,214) |
Net increase (decrease) | 359,988 | 16,960 | $ 22,943,520 | $ 997,566 |
Class T |
|
|
|
|
Shares sold | 195,158 | 9,119 | $ 12,251,985 | $ 531,803 |
Reinvestment of distributions | 4,490 | - | 296,489 | - |
Shares redeemed | (108,690) | - | (6,862,659) | - |
Net increase (decrease) | 90,958 | 9,119 | $ 5,685,815 | $ 531,803 |
Class B |
|
|
|
|
Shares sold | 76,823 | 3,902 | $ 4,855,507 | $ 225,744 |
Reinvestment of distributions | 1,410 | - | 92,490 | - |
Shares redeemed | (4,224) | - | (268,236) | - |
Net increase (decrease) | 74,009 | 3,902 | $ 4,679,761 | $ 225,744 |
Class C |
|
|
|
|
Shares sold | 328,900 | 3,073 | $ 21,121,099 | $ 177,350 |
Reinvestment of distributions | 4,849 | - | 319,529 | - |
Shares redeemed | (20,712) | - | (1,307,625) | - |
Net increase (decrease) | 313,037 | 3,073 | $ 20,133,003 | $ 177,350 |
Consumer Staples |
|
|
|
|
Shares sold | 8,600,962 | 6,369,570 | $ 555,032,219 | $ 359,958,201 |
Reinvestment of distributions | 360,932 | 292,584 | 23,544,138 | 16,482,463 |
Shares redeemed | (5,052,205) | (2,608,360) | (318,954,187) | (147,956,526) |
Net increase (decrease) | 3,909,689 | 4,053,794 | $ 259,622,170 | $ 228,484,138 |
Institutional Class |
|
|
|
|
Shares sold | 204,550 | 4,028 | $ 13,014,809 | $ 230,500 |
Reinvestment of distributions | 995 | - | 65,503 | - |
Shares redeemed | (43,560) | (1,758) | (2,806,458) | (103,807) |
Net increase (decrease) | 161,985 | 2,270 | $ 10,273,854 | $ 126,693 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
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 29, 2008, 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2008
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, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Consumer Staples Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Consumer Staples Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Consumer Staples Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Consumer Staples Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Consumer Staples Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Consumer Staples Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Consumer Staples Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Consumer Staples Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Consumer Staples Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Consumer Staples Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Consumer Staples Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Consumer Staples Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Consumer Staples Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
The Board of Trustees of Select Consumer Staples Portfolio voted to pay on April 14, 2008, to shareholders of record at the opening of business on April 11, 2008, a distribution of $.025 per share derived from capital gains realized from sales of portfolio securities and a dividend of $.009 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 29, 2008, $8,761,249, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
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General Correspondence
Fidelity Investments
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(letter_graphic)For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
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Selling shares
Fidelity Investments
P.O. Box 770001
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Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
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Merrimack, NH 03054-0500
Annual Report
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405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
Novi, MI
Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
1800 Crocker Road
Westlake, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
10 Memorial Boulevard
Providence, RI
Tennessee
3018 Peoples Street
Johnson City, TN
7628 West Farmington Blvd.
Germantown, TN
2035 Mallory Lane
Franklin, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
1701 Lake Robbins Drive
The Woodlands, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
10500 NE 8th Street
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
16020 West Bluemound Road
Brookfield, WI
Annual Report
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
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Fidelity®
Select Portfolios®
Financials Sector
Select Banking Portfolio
Select Brokerage and Investment Management Portfolio
Select Financial Services Portfolio
Select Home Finance Portfolio
Select Insurance Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Financials Sector |
|
|
Banking |
| |
Brokerage and Investment Management |
| |
Financial Services |
| |
Home Finance |
| |
Insurance |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Banking Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 761.70 | $ 3.99 |
HypotheticalA | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Brokerage and Investment Management Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 952.20 | $ 4.27 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Financial Services Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 803.30 | $ 4.04 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Home Finance Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 675.00 | $ 3.87 |
HypotheticalA | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
Insurance Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 838.80 | $ 4.30 |
HypotheticalA | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Banking Portfolio | .91% |
Brokerage and Investment Management Portfolio | .88% |
Financial Services Portfolio | .90% |
Home Finance Portfolio | .93% |
Insurance Portfolio | .94% |
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Banking Portfolio | -27.30% | 3.94% | 2.28% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Banking Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard and Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Ramona Persaud, Portfolio Manager of Select Banking Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months that ended February 29, 2008, the fund returned -27.30%, handily outperforming the -33.58% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Banks Index but lagging the S&P 500®. Relative to the MSCI index, the fund benefited from a considerable underweighting in thrifts/mortgage finance - along with good stock picking there - as well as from strong stock selection and an overweighting in diversified banks. An out-of-benchmark stake in asset management and custody banks also was helpful, as was keeping some of the fund in cash. Stock selection in regional banks helped further, but was offset by underweighting that group. Top contributions came from significantly underweighting two index components: thrift/mortgage finance company Washington Mutual and National City, a regional bank located in Cleveland. Fund holdings that outperformed included out-of-benchmark stakes in Brazilian bank Unibanco and mortgage real estate investment trust (REIT) Annaly Capital Management. Among the detractors were an underweighting in Minneapolis-based diversified bank U.S. Bancorp, a position in mortgage insurance provider Radian Group and an out-of-index stake in financial services provider Citigroup.
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
Select Banking Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 14.2 | 18.0 |
Wachovia Corp. | 7.2 | 11.7 |
U.S. Bancorp, Delaware | 6.0 | 6.4 |
PNC Financial Services Group, Inc. | 4.3 | 3.4 |
SunTrust Banks, Inc. | 3.9 | 2.9 |
Freddie Mac | 3.5 | 3.2 |
BB&T Corp. | 3.3 | 1.2 |
Fannie Mae | 3.2 | 6.8 |
Hudson City Bancorp, Inc. | 2.1 | 1.4 |
Fifth Third Bancorp | 1.8 | 0.7 |
| 49.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Commercial Banks | 69.3% |
|
| Thrifts & Mortgage Finance | 16.3% |
|
| Diversified Financial Services | 4.1% |
|
| Capital Markets | 3.6% |
|
| Real Estate Investment Trusts | 1.2% |
|
| All Others* | 5.5% |
|
| |||
As of August 31, 2007 | |||
| Commercial Banks | 67.1% |
|
| Thrifts & Mortgage Finance | 16.3% |
|
| Diversified Financial Services | 2.4% |
|
| Capital Markets | 2.3% |
|
| Insurance | 1.6% |
|
| All Others* | 10.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Banking Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
CAPITAL MARKETS - 3.6% | |||
Asset Management & Custody Banks - 3.0% | |||
Ares Capital Corp. | 11,102 | $ 142,328 | |
Bank of New York Mellon Corp. | 49,803 | 2,184,858 | |
Franklin Resources, Inc. | 16,100 | 1,519,357 | |
Legg Mason, Inc. | 4,700 | 310,388 | |
Northern Trust Corp. | 29,500 | 1,995,085 | |
State Street Corp. | 22,673 | 1,780,964 | |
T. Rowe Price Group, Inc. | 15,600 | 788,268 | |
| 8,721,248 | ||
Diversified Capital Markets - 0.0% | |||
Investec PLC | 26,800 | 194,791 | |
Investment Banking & Brokerage - 0.6% | |||
Goldman Sachs Group, Inc. | 2,500 | 424,075 | |
Lehman Brothers Holdings, Inc. | 11,100 | 565,989 | |
Macquarie Group Ltd. | 6,582 | 328,708 | |
MF Global Ltd. | 24,100 | 422,955 | |
| 1,741,727 | ||
TOTAL CAPITAL MARKETS | 10,657,766 | ||
COMMERCIAL BANKS - 69.3% | |||
Diversified Banks - 30.1% | |||
Banco do Brasil SA | 68,000 | 1,130,658 | |
Bank Hapoalim BM (Reg.) | 81,000 | 357,342 | |
Bank of Cyprus Public Co. Ltd. | 22,021 | 266,327 | |
Bank of Montreal | 2,100 | 106,062 | |
Bank of Piraeus | 11,850 | 352,675 | |
Commonwealth Bank of Australia | 8,075 | 312,695 | |
EFG Eurobank Ergasias SA | 12,480 | 359,472 | |
ICICI Bank Ltd. | 7,087 | 189,333 | |
Intesa Sanpaolo SpA | 33,340 | 223,906 | |
National Bank of Greece SA | 5,300 | 287,142 | |
Raiffeisen International Bank Holding AG | 3,000 | 384,376 | |
Societe Generale Series A | 1,800 | 192,580 | |
Sumitomo Trust & Banking Co. Ltd. | 37,000 | 249,243 | |
U.S. Bancorp, Delaware (d) | 549,600 | 17,598,192 | |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 22,400 | 3,037,888 | |
UniCredit SpA | 36,300 | 266,917 | |
Union Bank of India | 67,088 | 319,721 | |
Wachovia Corp. | 689,592 | 21,115,307 | |
Wells Fargo & Co. (d) | 1,423,756 | 41,616,385 | |
| 88,366,221 | ||
Regional Banks - 39.2% | |||
Associated Banc-Corp. | 101,920 | 2,539,846 | |
Bank of Hawaii Corp. | 73,600 | 3,534,272 | |
Banner Corp. | 15,900 | 344,394 | |
BB&T Corp. (d) | 307,542 | 9,573,782 | |
BOK Financial Corp. | 31,300 | 1,618,836 | |
Boston Private Financial Holdings, Inc. (d) | 48,900 | 673,353 | |
| |||
Shares | Value | ||
Capitol Bancorp Ltd. (d) | 54,500 | $ 1,014,790 | |
Cascade Bancorp (d) | 45,150 | 458,724 | |
Cathay General Bancorp | 24,200 | 530,464 | |
Center Financial Corp., California | 63,100 | 613,963 | |
Central Pacific Financial Corp. | 31,300 | 578,737 | |
City Bank Lynnwood, Washington | 23,500 | 433,340 | |
City National Corp. | 37,000 | 1,896,250 | |
CoBiz, Inc. | 26,500 | 325,685 | |
Colonial Bancgroup, Inc. (d) | 122,800 | 1,483,424 | |
Columbia Banking Systems, Inc. | 48,300 | 1,115,247 | |
Commerce Bancorp, Inc. | 106,300 | 4,016,014 | |
Commerce Bancshares, Inc. | 47,200 | 1,965,880 | |
Community Bancorp (a) | 6,000 | 73,800 | |
Cullen/Frost Bankers, Inc. | 46,900 | 2,397,528 | |
CVB Financial Corp. (d) | 244,100 | 2,243,279 | |
East West Bancorp, Inc. | 33,000 | 620,730 | |
Fifth Third Bancorp | 232,900 | 5,333,410 | |
First Community Bancorp, California | 67,200 | 1,915,200 | |
First Midwest Bancorp, Inc., Delaware (d) | 31,000 | 807,550 | |
First State Bancorp. | 29,300 | 348,084 | |
Frontier Financial Corp., Washington (d) | 119,950 | 1,796,851 | |
Fulton Financial Corp. | 90,100 | 1,047,863 | |
Glacier Bancorp, Inc. (d) | 61,100 | 1,050,309 | |
Hanmi Financial Corp. | 35,800 | 273,154 | |
M&T Bank Corp. | 49,800 | 4,087,584 | |
Marshall & Ilsley Corp. (d) | 111,500 | 2,586,800 | |
MB Financial, Inc. (d) | 17,600 | 506,352 | |
Metrocorp Bancshares, Inc. | 8,200 | 110,618 | |
National City Corp. | 139,100 | 2,206,126 | |
Pacific Continental Corp. | 65,130 | 873,393 | |
PNC Financial Services Group, Inc. | 203,500 | 12,501,005 | |
PrivateBancorp, Inc. (d) | 33,100 | 995,979 | |
Prosperity Bancshares, Inc. | 38,000 | 1,003,200 | |
Regions Financial Corp. | 69,271 | 1,468,545 | |
Renasant Corp. | 37,300 | 785,538 | |
Seacoast Banking Corp., Florida (d) | 39,200 | 392,000 | |
Signature Bank, New York (a) | 29,400 | 779,100 | |
Sterling Bancshares, Inc. | 56,450 | 525,550 | |
Sterling Financial Corp., Washington | 78,900 | 1,174,821 | |
SunTrust Banks, Inc. (d) | 199,448 | 11,593,912 | |
SVB Financial Group (a) | 32,200 | 1,458,660 | |
TCF Financial Corp. | 68,300 | 1,271,063 | |
Texas Capital Bancshares, Inc. (a) | 26,500 | 396,440 | |
Tokyo Tomin Bank Ltd. | 36,100 | 808,053 | |
Trico Bancshares | 24,500 | 413,315 | |
UCBH Holdings, Inc. | 82,400 | 930,296 | |
UMB Financial Corp. | 70,600 | 2,702,568 | |
Umpqua Holdings Corp. (d) | 66,500 | 942,305 | |
UnionBanCal Corp. | 53,600 | 2,496,152 | |
Valley National Bancorp (d) | 75,944 | 1,418,634 | |
West Coast Bancorp, Oregon | 13,300 | 199,500 | |
Westamerica Bancorp. (d) | 62,400 | 2,953,392 | |
Western Alliance Bancorp. (a)(d) | 73,900 | 885,322 | |
Whitney Holding Corp. | 33,500 | 804,335 | |
Common Stocks - continued | |||
Shares | Value | ||
COMMERCIAL BANKS - CONTINUED | |||
Regional Banks - continued | |||
Wintrust Financial Corp. | 43,800 | $ 1,478,250 | |
Zions Bancorp (d) | 77,801 | 3,714,998 | |
| 115,088,565 | ||
TOTAL COMMERCIAL BANKS | 203,454,786 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.1% | |||
Diversified Commercial & Professional Services - 0.1% | |||
CoStar Group, Inc. (a) | 4,400 | 182,688 | |
CONSUMER FINANCE - 0.1% | |||
Consumer Finance - 0.1% | |||
American Express Co. | 6,700 | 283,410 | |
DIVERSIFIED FINANCIAL SERVICES - 4.1% | |||
Other Diversifed Financial Services - 2.9% | |||
African Bank Investments Ltd. | 49,400 | 194,642 | |
Babcock & Brown Ltd. | 19,582 | 306,748 | |
Bank of America Corp. | 66,669 | 2,649,426 | |
Bank of Georgia unit (a) | 7,400 | 199,430 | |
Citigroup, Inc. | 87,500 | 2,074,625 | |
FirstRand Ltd. | 86,800 | 205,454 | |
JPMorgan Chase & Co. | 70,826 | 2,879,077 | |
Kotak Mahindra Bank Ltd. sponsored GDR (e) | 10,032 | 201,054 | |
| 8,710,456 | ||
Specialized Finance - 1.2% | |||
ASX Ltd. | 7,796 | 299,738 | |
Bolsa de Mercadorias & Futuros - | 42,800 | 463,406 | |
Bovespa Holding SA | 24,000 | 382,346 | |
Deutsche Boerse AG | 4,500 | 713,204 | |
Hong Kong Exchanges & Clearing Ltd. | 8,000 | 151,978 | |
JSE Ltd. | 36,200 | 335,164 | |
MarketAxess Holdings, Inc. (a) | 47,300 | 443,201 | |
MSCI, Inc. Class A | 7,400 | 220,002 | |
Singapore Exchange Ltd. | 75,000 | 436,461 | |
| 3,445,500 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 12,155,956 | ||
INSURANCE - 0.7% | |||
Insurance Brokers - 0.1% | |||
Willis Group Holdings Ltd. | 10,400 | 341,640 | |
Property & Casualty Insurance - 0.1% | |||
Aspen Insurance Holdings Ltd. | 14,000 | 405,160 | |
Reinsurance - 0.5% | |||
Endurance Specialty Holdings Ltd. | 10,000 | 393,000 | |
| |||
Shares | Value | ||
IPC Holdings Ltd. | 19,900 | $ 539,688 | |
Platinum Underwriters Holdings Ltd. | 15,300 | 527,850 | |
| 1,460,538 | ||
TOTAL INSURANCE | 2,207,338 | ||
INTERNET SOFTWARE & SERVICES - 0.2% | |||
Internet Software & Services - 0.2% | |||
DealerTrack Holdings, Inc. (a) | 24,600 | 503,562 | |
IT SERVICES - 0.4% | |||
Data Processing & Outsourced Services - 0.4% | |||
Computershare Ltd. | 38,658 | 301,942 | |
CyberSource Corp. (a) | 15,376 | 224,643 | |
Fiserv, Inc. (a) | 2,600 | 136,812 | |
Mastercard, Inc. Class A | 1,500 | 285,000 | |
Wright Express Corp. (a) | 6,500 | 188,110 | |
| 1,136,507 | ||
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
Dolan Media Co. | 4,000 | 89,240 | |
REAL ESTATE INVESTMENT TRUSTS - 1.2% | |||
Mortgage REITs - 1.2% | |||
Annaly Capital Management, Inc. | 163,600 | 3,384,884 | |
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
Jack Henry & Associates, Inc. | 4,500 | 105,885 | |
THRIFTS & MORTGAGE FINANCE - 16.3% | |||
Thrifts & Mortgage Finance - 16.3% | |||
Astoria Financial Corp. | 35,700 | 934,269 | |
Bank Mutual Corp. | 113,200 | 1,216,900 | |
BankUnited Financial Corp. Class A (d) | 116,087 | 566,505 | |
Beverly Hills Bancorp, Inc. | 24,700 | 122,265 | |
Countrywide Financial Corp. | 515,484 | 3,252,704 | |
Downey Financial Corp. (d) | 45,200 | 1,183,788 | |
Encore Bancshares, Inc. | 6,400 | 117,696 | |
Fannie Mae (d) | 336,700 | 9,309,755 | |
FirstFed Financial Corp. (a)(d) | 34,900 | 1,090,625 | |
Franklin Bank Corp. (a) | 39,700 | 152,448 | |
Freddie Mac | 406,500 | 10,235,670 | |
Hudson City Bancorp, Inc. | 381,900 | 6,060,753 | |
New York Community Bancorp, Inc. (d) | 248,400 | 4,056,372 | |
People's United Financial, Inc. | 120,590 | 2,033,147 | |
Radian Group, Inc. (d) | 57,800 | 411,536 | |
Riverview Bancorp, Inc. | 86,300 | 923,410 | |
Washington Federal, Inc. | 177,900 | 4,038,330 | |
Washington Mutual, Inc. | 148,300 | 2,194,840 | |
| 47,901,013 | ||
TOTAL COMMON STOCKS (Cost $313,724,961) | 282,063,035 | ||
Money Market Funds - 34.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 11,339,881 | $ 11,339,881 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 89,798,030 | 89,798,030 | |
TOTAL MONEY MARKET FUNDS (Cost $101,137,911) | 101,137,911 | ||
TOTAL INVESTMENT PORTFOLIO - 130.4% (Cost $414,862,872) | 383,200,946 | ||
NET OTHER ASSETS - (30.4)% | (89,434,413) | ||
NET ASSETS - 100% | $ 293,766,533 | ||
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. |
(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 $201,054 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 | $ 742,134 |
Fidelity Securities Lending Cash Central Fund | 210,252 |
Total | $ 952,386 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $84,486,523) - See accompanying schedule: Unaffiliated issuers (cost $313,724,961) | $ 282,063,035 |
|
Fidelity Central Funds (cost $101,137,911) | 101,137,911 |
|
Total Investments (cost $414,862,872) |
| $ 383,200,946 |
Receivable for investments sold | 2,465,521 | |
Receivable for fund shares sold | 554,819 | |
Dividends receivable | 1,313,453 | |
Distributions receivable from Fidelity Central Funds | 123,973 | |
Prepaid expenses | 719 | |
Other receivables | 1,982 | |
Total assets | 387,661,413 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,192,232 | |
Payable for fund shares redeemed | 1,644,228 | |
Accrued management fee | 145,556 | |
Other affiliated payables | 71,916 | |
Other payables and accrued expenses | 42,918 | |
Collateral on securities loaned, at value | 89,798,030 | |
Total liabilities | 93,894,880 | |
|
|
|
Net Assets | $ 293,766,533 | |
Net Assets consist of: |
| |
Paid in capital | $ 327,174,509 | |
Undistributed net investment income | 3,006,863 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,753,449) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (31,661,390) | |
Net Assets, for 13,208,910 shares outstanding | $ 293,766,533 | |
Net Asset Value, offering price and redemption price per share ($293,766,533 ÷ 13,208,910 shares) | $ 22.24 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 9,803,380 |
Interest |
| 985 |
Income from Fidelity Central Funds (including $210,252 from security lending) |
| 952,386 |
Total income |
| 10,756,751 |
|
|
|
Expenses | ||
Management fee | $ 1,643,288 | |
Transfer agent fees | 760,243 | |
Accounting and security lending fees | 120,547 | |
Custodian fees and expenses | 53,364 | |
Independent trustees' compensation | 953 | |
Registration fees | 37,123 | |
Audit | 39,947 | |
Legal | 1,913 | |
Miscellaneous | 17,764 | |
Total expenses before reductions | 2,675,142 | |
Expense reductions | (16,391) | 2,658,751 |
Net investment income (loss) | 8,098,000 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $52,491) | 5,066,187 | |
Investment not meeting investment restrictions | (445) | |
Foreign currency transactions | (14,618) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 445 | |
Total net realized gain (loss) |
| 5,051,569 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $25,739) | (101,444,079) | |
Assets and liabilities in foreign currencies | 466 | |
Total change in net unrealized appreciation (depreciation) |
| (101,443,613) |
Net gain (loss) | (96,392,044) | |
Net increase (decrease) in net assets resulting from operations | $ (88,294,044) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Banking Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 8,098,000 | $ 8,067,325 |
Net realized gain (loss) | 5,051,569 | 65,410,202 |
Change in net unrealized appreciation (depreciation) | (101,443,613) | (43,368,605) |
Net increase (decrease) in net assets resulting from operations | (88,294,044) | 30,108,922 |
Distributions to shareholders from net investment income | (6,219,747) | (6,850,404) |
Distributions to shareholders from net realized gain | (18,434,254) | (51,988,884) |
Total distributions | (24,654,001) | (58,839,288) |
Share transactions | 182,824,699 | 139,550,400 |
Reinvestment of distributions | 23,290,627 | 55,233,195 |
Cost of shares redeemed | (148,714,165) | (183,848,844) |
Net increase (decrease) in net assets resulting from share transactions | 57,401,161 | 10,934,751 |
Redemption fees | 42,503 | 57,667 |
Total increase (decrease) in net assets | (55,504,381) | (17,737,948) |
|
|
|
Net Assets | ||
Beginning of period | 349,270,914 | 367,008,862 |
End of period (including undistributed net investment income of $3,006,863 and undistributed net investment income of $2,602,015, respectively) | $ 293,766,533 | $ 349,270,914 |
Other Information Shares | ||
Sold | 6,977,204 | 3,797,777 |
Issued in reinvestment of distributions | 864,300 | 1,648,055 |
Redeemed | (5,053,208) | (5,022,905) |
Net increase (decrease) | 2,788,296 | 422,927 |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 33.52 | $ 36.71 | $ 37.98 | $ 40.80 | $ 29.86 |
Income from Investment Operations |
|
|
|
| |
Net investment income (loss) C | .81 | .78 | .76 | .67 | .52 |
Net realized and unrealized gain (loss) | (9.57) | 2.12 | 1.82 | .54 | 11.36 |
Total from investment operations | (8.76) | 2.90 | 2.58 | 1.21 | 11.88 |
Distributions from net investment income | (.64) | (.71) | (.62) | (.57) | (.48) |
Distributions from net realized gain | (1.88) | (5.39) | (3.23) | (3.46) | (.46) |
Total distributions | (2.52) | (6.10) | (3.85) | (4.03) | (.94) |
Redemption fees added to paid in capital C | - H | .01 | -H | -H | -H |
Net asset value, end of period | $ 22.24 | $ 33.52 | $ 36.71 | $ 37.98 | $ 40.80 |
Total Return A, B | (27.30)% | 8.23% | 7.22% | 2.68% | 40.08% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | .91% | .93% | .94% | .95% | 1.08% |
Expenses net of fee waivers, if any | .91% | .93% | .94% | .95% | 1.08% |
Expenses net of all reductions | .90% | .91% | .92% | .94% | 1.07% |
Net investment income (loss) | 2.75% | 2.15% | 2.04% | 1.70% | 1.46% |
Supplemental Data |
|
|
|
| |
Net assets, end of period (000 omitted) | $ 293,767 | $ 349,271 | $ 367,009 | $ 475,509 | $ 489,376 |
Portfolio turnover rate E | 86% | 112% | 70% | 51% | 28% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Brokerage and Investment Management Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Brokerage and Investment Management Portfolio | -11.16% | 18.73% | 10.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Brokerage and Investment Management Portfolio on February 28, 1998. 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
Select Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Comments from Benjamin Hesse, Portfolio Manager of Select Brokerage and Investment Management Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
Select Brokerage and Investment Management declined 11.16% for the year, a disappointing result in absolute terms but solidly ahead of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Capital Markets Index, which fell 17.09%. The S&P 500® finished with a more modest decline for the year. The credit freeze had a severe chilling effect on the investment banking/brokerage segment of the fund, with broker/dealers having exposure to illiquid mortgage-related assets forced to write down the value of those assets and taking big hits in their share prices as a result. Conversely, the relative strength of private banks, exchanges and other specialized finance firms, whose earnings tended to be driven more by wealth management and market volatility, was a more productive trend in the market. The fund's underweighting in the investment banking/brokerage segment, coupled with avoiding many of the worst-performing stocks in that area, helped versus the MSCI index, as did good stock selection in out-of-index industries such as data processing/outsourced services and specialized finance. Among the biggest contributions versus the index came from underweightings in investment banks Merrill Lynch and Morgan Stanley, as well as owning solid out-of-index stakes in Julius Baer, a Swiss private bank, and Fiserv, a provider of outsourced transaction processing services for banks. Results were held back by an underweighting in asset management and custody banks and by not owning big enough stakes in some of the group's best performers, among them Bank of New York Mellon and Northern Trust. An out-of-index position in hedge fund Fortress Investment Group also hurt.
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
Select Brokerage and Investment Management Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Fiserv, Inc. | 5.9 | 2.5 |
Lehman Brothers Holdings, Inc. | 5.8 | 1.3 |
Julius Baer Holding AG | 5.7 | 4.6 |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 5.3 | 0.0 |
GLG Partners, Inc. | 5.1 | 0.0 |
Fortress Investment Group LLC | 5.0 | 0.2 |
EFG International | 4.7 | 4.4 |
Greenhill & Co., Inc. | 4.7 | 4.9 |
Merrill Lynch & Co., Inc. | 4.5 | 4.5 |
Bursa Malaysia Bhd | 3.5 | 0.0 |
| 50.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Capital Markets | 62.9% |
|
| IT Services | 9.3% |
|
| Insurance | 5.9% |
|
| Diversified Financial Services | 5.2% |
|
| Real Estate Investment Trusts | 1.2% |
|
| All Others* | 15.5% |
|
| |||
As of August 31, 2007 | |||
| Capital Markets | 79.2% |
|
| IT Services | 5.8% |
|
| Commercial Banks | 2.1% |
|
| Consumer Finance | 0.8% |
|
| Commercial Services & Supplies | 0.2% |
|
| All Others* | 11.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Brokerage and Investment Management Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 86.5% | |||
Shares | Value | ||
CAPITAL MARKETS - 62.9% | |||
Asset Management & Custody Banks - 41.8% | |||
A.F.P. Provida SA sponsored ADR | 42,700 | $ 1,560,685 | |
Affiliated Managers Group, Inc. (a) | 1,000 | 96,350 | |
AllianceBernstein Holding LP | 1,200 | 74,460 | |
American Capital Strategies Ltd. (d) | 20,000 | 725,800 | |
Ameriprise Financial, Inc. | 900 | 45,576 | |
Ashmore Group plc | 1,293,900 | 6,769,440 | |
Bank of New York Mellon Corp. | 401,675 | 17,621,482 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 8,279 | 37,134,058 | |
BlueBay Asset Management | 2,466,600 | 14,663,640 | |
EFG International | 982,395 | 33,008,290 | |
Fortress Investment Group LLC (d) | 2,494,500 | 34,923,000 | |
Franklin Resources, Inc. | 195,819 | 18,479,439 | |
GLG Partners, Inc. (a)(d) | 2,727,000 | 35,478,270 | |
Gluskin Sheff + Associates, Inc. | 68,500 | 1,468,777 | |
Janus Capital Group, Inc. | 699,200 | 16,934,624 | |
Julius Baer Holding AG | 538,124 | 39,733,731 | |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 104,600 | 1,542,850 | |
Legg Mason, Inc. | 948 | 62,606 | |
Man Group plc | 497,000 | 5,422,090 | |
Northern Trust Corp. | 1,700 | 114,971 | |
Och-Ziff Capital Management Group LLC Class A | 57,000 | 1,318,980 | |
State Street Corp. | 205,266 | 16,123,644 | |
T. Rowe Price Group, Inc. | 134,200 | 6,781,126 | |
Vontobel Holdings AG | 70,259 | 2,484,632 | |
| 292,568,521 | ||
Diversified Capital Markets - 0.1% | |||
Credit Suisse Group sponsored ADR | 3,500 | 171,220 | |
UBS AG (NY Shares) | 5,700 | 184,338 | |
| 355,558 | ||
Investment Banking & Brokerage - 21.0% | |||
Charles Schwab Corp. | 325,400 | 6,381,094 | |
Cowen Group, Inc. (a) | 3,400 | 25,500 | |
E*TRADE Financial Corp. (a) | 100 | 427 | |
Evercore Partners, Inc. Class A | 557,537 | 10,950,027 | |
GFI Group, Inc. (a) | 7,400 | 566,470 | |
Goldman Sachs Group, Inc. | 12,500 | 2,120,375 | |
Greenhill & Co., Inc. (d) | 502,300 | 32,654,523 | |
Jefferies Group, Inc. | 139,900 | 2,483,225 | |
Lazard Ltd. Class A | 181,700 | 6,939,123 | |
Lehman Brothers Holdings, Inc. (d) | 790,400 | 40,302,496 | |
Merrill Lynch & Co., Inc. | 638,750 | 31,656,450 | |
MF Global Ltd. | 124,500 | 2,184,975 | |
Morgan Stanley | 70,600 | 2,973,672 | |
Nomura Holdings, Inc. sponsored ADR | 290,800 | 4,553,928 | |
optionsXpress Holdings, Inc. | 124,393 | 2,880,942 | |
TD Ameritrade Holding Corp. (a) | 649 | 11,877 | |
| |||
Shares | Value | ||
Thomas Weisel Partners Group, Inc. (a) | 6,685 | $ 58,828 | |
TradeStation Group, Inc. (a) | 2,113 | 20,285 | |
| 146,764,217 | ||
TOTAL CAPITAL MARKETS | 439,688,296 | ||
COMMERCIAL BANKS - 0.8% | |||
Diversified Banks - 0.8% | |||
Barclays PLC | 8,200 | 77,019 | |
BBVA Banco Frances SA sponsored ADR | 19,400 | 144,530 | |
Industrial & Commercial Bank of China | 756,000 | 524,485 | |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 31,800 | 4,312,716 | |
Wells Fargo & Co. | 33,000 | 964,590 | |
| 6,023,340 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Diversified Commercial & Professional Services - 0.3% | |||
Equifax, Inc. | 53,900 | 1,844,458 | |
DIVERSIFIED FINANCIAL SERVICES - 5.2% | |||
Other Diversifed Financial Services - 0.0% | |||
Citigroup, Inc. | 11,700 | 277,407 | |
Specialized Finance - 5.2% | |||
Bovespa Holding SA | 30,000 | 477,933 | |
Bursa Malaysia Bhd | 6,941,700 | 24,327,239 | |
Climate Exchange PLC (a) | 5,700 | 142,900 | |
Deutsche Boerse AG | 54,200 | 8,590,144 | |
IntercontinentalExchange, Inc. (a) | 10,412 | 1,356,684 | |
JSE Ltd. | 140,900 | 1,304,548 | |
NYMEX Holdings, Inc. | 600 | 59,274 | |
| 36,258,722 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 36,536,129 | ||
INSURANCE - 5.9% | |||
Life & Health Insurance - 0.2% | |||
Principal Financial Group, Inc. | 25,900 | 1,430,457 | |
Property & Casualty Insurance - 5.7% | |||
Fidelity National Financial, Inc. Class A | 801,900 | 14,121,459 | |
LandAmerica Financial Group, Inc. | 297,529 | 10,955,018 | |
Stewart Information Services Corp. | 46,600 | 1,387,282 | |
The First American Corp. | 380,000 | 13,235,400 | |
| 39,699,159 | ||
TOTAL INSURANCE | 41,129,616 | ||
INTERNET SOFTWARE & SERVICES - 0.9% | |||
Internet Software & Services - 0.9% | |||
Online Resources Corp. (a) | 616,800 | 6,316,032 | |
IT SERVICES - 9.3% | |||
Data Processing & Outsourced Services - 9.3% | |||
CyberSource Corp. (a) | 420,000 | 6,136,200 | |
Fiserv, Inc. (a) | 784,835 | 41,298,016 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - CONTINUED | |||
Data Processing & Outsourced Services - continued | |||
MasterCard, Inc. Class A | 1,200 | $ 228,000 | |
VeriFone Holdings, Inc. (a)(d) | 831,900 | 17,178,735 | |
| 64,840,951 | ||
REAL ESTATE INVESTMENT TRUSTS - 1.2% | |||
Mortgage REITs - 1.2% | |||
Annaly Capital Management, Inc. | 398,000 | 8,234,620 | |
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
EPIQ Systems, Inc. (a) | 5,300 | 72,080 | |
TOTAL COMMON STOCKS (Cost $600,316,433) | 604,685,522 | ||
Money Market Funds - 24.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 89,927,614 | 89,927,614 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 83,604,575 | 83,604,575 | |
TOTAL MONEY MARKET FUNDS (Cost $173,532,189) | 173,532,189 | ||
TOTAL INVESTMENT PORTFOLIO - 111.3% (Cost $773,848,622) | 778,217,711 | ||
NET OTHER ASSETS - (11.3)% | (79,012,429) | ||
NET ASSETS - 100% | $ 699,205,282 | ||
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. |
(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 $1,542,850 or 0.2% 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 | $ 1,345,549 |
Fidelity Securities Lending Cash Central Fund | 2,003,522 |
Total | $ 3,349,071 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 71.7% |
Switzerland | 16.2% |
United Kingdom | 4.1% |
Malaysia | 3.5% |
Bermuda | 1.3% |
Germany | 1.2% |
Others (individually less than 1%) | 2.0% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $79,488,931) - See accompanying schedule: Unaffiliated issuers (cost $600,316,433) | $ 604,685,522 |
|
Fidelity Central Funds (cost $173,532,189) | 173,532,189 |
|
Total Investments (cost $773,848,622) |
| $ 778,217,711 |
Receivable for investments sold | 12,539,711 | |
Receivable for fund shares sold | 1,419,106 | |
Dividends receivable | 696,921 | |
Distributions receivable from Fidelity Central Funds | 360,358 | |
Prepaid expenses | 2,262 | |
Other receivables | 160,242 | |
Total assets | 793,396,311 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 8,591,312 | |
Payable for fund shares redeemed | 1,428,597 | |
Accrued management fee | 329,679 | |
Other affiliated payables | 178,804 | |
Other payables and accrued expenses | 58,062 | |
Collateral on securities loaned, at value | 83,604,575 | |
Total liabilities | 94,191,029 | |
|
|
|
Net Assets | $ 699,205,282 | |
Net Assets consist of: |
| |
Paid in capital | $ 653,760,853 | |
Undistributed net investment income | 4,499,655 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 36,556,169 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 4,388,605 | |
Net Assets, for 11,739,619 shares outstanding | $ 699,205,282 | |
Net Asset Value, offering price and redemption price per share ($699,205,282 ÷ 11,739,619 shares) | $ 59.56 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 15,914,125 |
Special dividends |
| 2,354,300 |
Interest |
| 4,861 |
Income from Fidelity Central Funds (including $2,003,522 from security lending) |
| 3,349,071 |
Total income |
| 21,622,357 |
|
|
|
Expenses | ||
Management fee | $ 5,269,397 | |
Transfer agent fees | 2,415,416 | |
Accounting and security lending fees | 346,172 | |
Custodian fees and expenses | 85,078 | |
Independent trustees' compensation | 3,619 | |
Registration fees | 71,204 | |
Audit | 56,052 | |
Legal | 6,920 | |
Interest | 8,355 | |
Miscellaneous | 36,838 | |
Total expenses before reductions | 8,299,051 | |
Expense reductions | (70,023) | 8,229,028 |
Net investment income (loss) | 13,393,329 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 75,653,590 | |
Investment not meeting investment restrictions | (1,939) | |
Foreign currency transactions | 1,810 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,939 | |
Total net realized gain (loss) |
| 75,655,400 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (172,050,605) | |
Assets and liabilities in foreign currencies | 21,464 | |
Total change in net unrealized appreciation (depreciation) |
| (172,029,141) |
Net gain (loss) | (96,373,741) | |
Net increase (decrease) in net assets resulting from operations | $ (82,980,412) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 13,393,329 | $ 9,151,698 |
Net realized gain (loss) | 75,655,400 | 154,391,238 |
Change in net unrealized appreciation (depreciation) | (172,029,141) | (77,210,723) |
Net increase (decrease) in net assets resulting from operations | (82,980,412) | 86,332,213 |
Distributions to shareholders from net investment income | (10,291,038) | (9,257,191) |
Distributions to shareholders from net realized gain | (73,490,990) | (134,546,271) |
Total distributions | (83,782,028) | (143,803,462) |
Share transactions | 350,352,763 | 1,025,478,285 |
Reinvestment of distributions | 80,380,962 | 137,702,286 |
Cost of shares redeemed | (817,428,086) | (1,099,716,887) |
Net increase (decrease) in net assets resulting from share transactions | (386,694,361) | 63,463,684 |
Redemption fees | 97,331 | 274,372 |
Total increase (decrease) in net assets | (553,359,470) | 6,266,807 |
|
|
|
Net Assets | ||
Beginning of period | 1,252,564,752 | 1,246,297,945 |
End of period (including undistributed net investment income of $4,499,655 and undistributed net investment income of $4,700,292, respectively) | $ 699,205,282 | $ 1,252,564,752 |
Other Information | ||
Sold | 5,029,057 | 13,617,953 |
Issued in reinvestment of distributions | 1,163,923 | 1,869,952 |
Redeemed | (11,450,351) | (14,864,176) |
Net increase (decrease) | (5,257,371) | 623,729 |
Financial Highlights
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
| |
Net asset value, beginning of period | $ 73.69 | $ 76.12 | $ 54.95 | $ 54.13 | $ 33.22 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.01 | .61 | .98 G | .20 | .17 |
Net realized and unrealized gain (loss) | (8.50) | 6.18 | 23.81 | .85 | 20.88 |
Total from investment operations | (7.49) | 6.79 | 24.79 | 1.05 | 21.05 |
Distributions from net investment income | (.87) | (.59) | (.19) | (.24) | (.16) |
Distributions from net realized gain | (5.78) | (8.65) | (3.45) | - | - |
Total distributions | (6.65) | (9.24) | (3.64) | (.24) | (.16) |
Redemption fees added to paid in capitalC | .01 | .02 | .02 | .01 | .02 |
Net asset value, end of period | $ 59.56 | $ 73.69 | $ 76.12 | $ 54.95 | $ 54.13 |
Total Return A, B | (11.16)% | 9.27% | 45.77% | 1.96% | 63.56% |
Ratios to Average Net Assets D, H |
|
|
|
| |
Expenses before reductions | .88% | .90% | .95% | .98% | 1.12% |
Expenses net of fee waivers, if any | .88% | .90% | .95% | .98% | 1.12% |
Expenses net of all reductions | .87% | .89% | .89% | .94% | 1.10% |
Net investment income (loss) | 1.41% F | .82% | 1.51% G | .40% | .39% |
Supplemental Data |
|
|
|
| |
Net assets, end of period (000 omitted) | $ 699,205 | $ 1,252,565 | $ 1,246,298 | $ 415,237 | $ 460,574 |
Portfolio turnover rate E | 84% | 124% | 112% | 98% | 64% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.18 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.15%. G Investment income per share reflects special dividend which amounted to $.58 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .63%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Financial Services Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Financial Services Portfolio | -23.05% | 7.79% | 4.39% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Financial Services Portfolio on February 28, 1998. 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
Select Financial Services Portfolio
Management's Discussion of Fund Performance
Comments from Richard Manuel, who became sole Portfolio Manager of Select Financial Services Portfolio on January 11, 2008
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the year ending February 29, 2008, the fund returned -23.05%, versus -24.66% for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Financials Index. Both the fund and MSCI index lagged the S&P 500® by a wide margin, as growing delinquencies in the subprime mortgage market triggered credit and liquidity concerns that severely pressured the sector. Relative to the MSCI index, industry positioning was positive, led by an overweighting in reinsurance. Standouts included reinsurers Platinum Underwriters and Endurance Specialty, which benefited from better-than-expected industry pricing and a mild hurricane season. Endurance was sold from the fund before period end. Other top contributors to performance included State Street Corp., an asset management and custody company, whose climb was fueled by growth in its global core trust/custody business and favorable prospects from a 2007 acquisition. ACE Ltd., a property and casualty insurer, benefited from its overseas exposure and lower-than-expected loss claims. In addition, an underweighting in Citigroup, the world's largest financial company, helped as subprime mortgage woes depressed the stock. The biggest losses versus the MSCI index came from the thrifts and mortgage finance industry, where the fund had an overweighting and weak stock selection. Detractors included Countrywide Financial, a leading mortgage originator, and Freddie Mac, a large government-sponsored mortgage lender. Elsewhere, MBIA, a bond insurer with subprime mortgage exposure, fell sharply. An underweighting in index constituent Berkshire Hathaway, a property and casualty insurer with an array of other financial services, also proved costly, as the stock rallied nicely.
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
Select Financial Services Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
American International Group, Inc. | 6.3 | 5.4 |
JPMorgan Chase & Co. | 5.6 | 5.3 |
Bank of America Corp. | 5.1 | 5.5 |
Citigroup, Inc. | 4.6 | 5.2 |
Wells Fargo & Co. | 4.5 | 5.4 |
ACE Ltd. | 3.1 | 3.5 |
Everest Re Group Ltd. | 2.4 | 0.7 |
Bank of New York Mellon Corp. | 2.3 | 1.2 |
MetLife, Inc. | 2.3 | 2.6 |
State Street Corp. | 2.3 | 2.2 |
| 38.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Insurance | 28.1% |
|
| Capital Markets | 18.6% |
|
| Diversified Financial Services | 18.2% |
|
| Commercial Banks | 12.3% |
|
| Real Estate Investment Trusts | 5.8% |
|
| All Others* | 17.0% |
|
| |||
As of August 31, 2007 | |||
| Insurance | 31.5% |
|
| Diversified Financial Services | 18.6% |
|
| Capital Markets | 16.2% |
|
| Commercial Banks | 13.2% |
|
| Thrifts & Mortgage Finance | 9.6% |
|
| All Others* | 10.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Financial Services Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 93.1% | |||
Shares | Value | ||
CAPITAL MARKETS - 18.6% | |||
Asset Management & Custody Banks - 9.8% | |||
Bank of New York Mellon Corp. | 203,700 | $ 8,936,319 | |
EFG International | 77,180 | 2,593,234 | |
Fortress Investment Group LLC (d) | 65,300 | 914,200 | |
Franklin Resources, Inc. | 54,100 | 5,105,417 | |
GLG Partners, Inc. (a) | 95,500 | 1,242,455 | |
Janus Capital Group, Inc. | 84,500 | 2,046,590 | |
Julius Baer Holding AG | 29,135 | 2,151,256 | |
KKR Private Equity Investors, LP | 40,300 | 594,425 | |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 47,000 | 693,250 | |
Legg Mason, Inc. | 14,500 | 957,580 | |
State Street Corp. | 110,325 | 8,666,029 | |
T. Rowe Price Group, Inc. | 45,100 | 2,278,903 | |
The Blackstone Group LP | 68,200 | 1,125,300 | |
| 37,304,958 | ||
Diversified Capital Markets - 0.4% | |||
UBS AG (NY Shares) | 52,600 | 1,701,084 | |
Investment Banking & Brokerage - 8.4% | |||
Bear Stearns Companies, Inc. | 47,600 | 3,801,336 | |
Charles Schwab Corp. | 246,100 | 4,826,021 | |
Goldman Sachs Group, Inc. | 32,800 | 5,563,864 | |
Lazard Ltd. Class A | 32,700 | 1,248,813 | |
Lehman Brothers Holdings, Inc. | 147,100 | 7,500,629 | |
Merrill Lynch & Co., Inc. | 127,900 | 6,338,724 | |
MF Global Ltd. | 25,800 | 452,790 | |
Morgan Stanley | 52,800 | 2,223,936 | |
| 31,956,113 | ||
TOTAL CAPITAL MARKETS | 70,962,155 | ||
COMMERCIAL BANKS - 12.3% | |||
Diversified Banks - 9.0% | |||
ICICI Bank Ltd. sponsored ADR | 17,100 | 886,464 | |
U.S. Bancorp, Delaware | 246,400 | 7,889,728 | |
Wachovia Corp. | 268,068 | 8,208,242 | |
Wells Fargo & Co. (d) | 594,200 | 17,368,466 | |
| 34,352,900 | ||
Regional Banks - 3.3% | |||
Associated Banc-Corp. | 125,100 | 3,117,492 | |
Cathay General Bancorp | 260 | 5,699 | |
Colonial Bancgroup, Inc. (d) | 75,100 | 907,208 | |
KeyCorp | 56,300 | 1,241,415 | |
PNC Financial Services Group, Inc. | 118,300 | 7,267,169 | |
Wintrust Financial Corp. | 3,633 | 122,614 | |
| 12,661,597 | ||
TOTAL COMMERCIAL BANKS | 47,014,497 | ||
CONSUMER FINANCE - 3.7% | |||
Consumer Finance - 3.7% | |||
American Express Co. (d) | 114,800 | 4,856,040 | |
| |||
Shares | Value | ||
Capital One Financial Corp. (d) | 122,000 | $ 5,615,660 | |
Discover Financial Services | 146,550 | 2,211,440 | |
Dollar Financial Corp. (a) | 67,979 | 1,527,488 | |
| 14,210,628 | ||
DIVERSIFIED FINANCIAL SERVICES - 18.2% | |||
Other Diversifed Financial Services - 15.3% | |||
Bank of America Corp. | 486,531 | 19,334,742 | |
Citigroup, Inc. | 746,934 | 17,709,805 | |
JPMorgan Chase & Co. | 527,645 | 21,448,769 | |
| 58,493,316 | ||
Specialized Finance - 2.9% | |||
CME Group, Inc. | 11,000 | 5,646,300 | |
Deutsche Boerse AG | 24,700 | 3,914,697 | |
JSE Ltd. | 44,100 | 408,308 | |
MarketAxess Holdings, Inc. (a) | 134,500 | 1,260,265 | |
| 11,229,570 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 69,722,886 | ||
INSURANCE - 28.1% | |||
Insurance Brokers - 0.6% | |||
National Financial Partners Corp. (d) | 55,100 | 1,309,727 | |
Willis Group Holdings Ltd. | 30,060 | 987,471 | |
| 2,297,198 | ||
Life & Health Insurance - 6.9% | |||
AFLAC, Inc. | 103,200 | 6,440,712 | |
MetLife, Inc. (d) | 151,700 | 8,838,042 | |
Principal Financial Group, Inc. (d) | 88,800 | 4,904,424 | |
Prudential Financial, Inc. | 84,700 | 6,180,559 | |
| 26,363,737 | ||
Multi-Line Insurance - 8.2% | |||
American International Group, Inc. | 514,951 | 24,130,602 | |
Assurant, Inc. | 36,500 | 2,283,075 | |
Hartford Financial Services Group, Inc. | 69,100 | 4,830,090 | |
| 31,243,767 | ||
Property & Casualty Insurance - 7.3% | |||
ACE Ltd. | 211,500 | 11,894,760 | |
AMBAC Financial Group, Inc. | 20,000 | 222,800 | |
Argo Group International Holdings, Ltd. (a) | 55,317 | 2,069,962 | |
Aspen Insurance Holdings Ltd. | 72,000 | 2,083,680 | |
Axis Capital Holdings Ltd. | 32,700 | 1,205,649 | |
Berkshire Hathaway, Inc. Class A (a) | 14 | 1,960,000 | |
LandAmerica Financial Group, Inc. (d) | 21,900 | 806,358 | |
MBIA, Inc. | 55,200 | 715,944 | |
The First American Corp. | 31,500 | 1,097,145 | |
The Travelers Companies, Inc. | 50,000 | 2,320,500 | |
United America Indemnity Ltd. | 105,000 | 1,969,800 | |
XL Capital Ltd. Class A | 48,700 | 1,756,122 | |
| 28,102,720 | ||
Common Stocks - continued | |||
Shares | Value | ||
INSURANCE - CONTINUED | |||
Reinsurance - 5.1% | |||
Everest Re Group Ltd. | 94,600 | $ 9,164,848 | |
IPC Holdings Ltd. | 52,579 | 1,425,942 | |
Max Capital Group Ltd. | 93,285 | 2,587,726 | |
Montpelier Re Holdings Ltd. | 27,400 | 435,934 | |
Platinum Underwriters Holdings Ltd. | 94,288 | 3,252,936 | |
RenaissanceRe Holdings Ltd. | 47,800 | 2,624,220 | |
| 19,491,606 | ||
TOTAL INSURANCE | 107,499,028 | ||
REAL ESTATE INVESTMENT TRUSTS - 5.8% | |||
Mortgage REITs - 1.6% | |||
Annaly Capital Management, Inc. | 221,100 | 4,574,559 | |
Chimera Investment Corp. | 97,400 | 1,613,918 | |
| 6,188,477 | ||
Residential REITs - 1.3% | |||
Equity Lifestyle Properties, Inc. | 59,600 | 2,722,528 | |
UDR, Inc. | 96,600 | 2,159,010 | |
| 4,881,538 | ||
Retail REITs - 2.9% | |||
CBL & Associates Properties, Inc. | 35,160 | 820,986 | |
Developers Diversified Realty Corp. | 108,300 | 4,176,048 | |
General Growth Properties, Inc. | 107,800 | 3,806,418 | |
Simon Property Group, Inc. | 29,900 | 2,505,620 | |
| 11,309,072 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 22,379,087 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.2% | |||
Real Estate Management & Development - 1.2% | |||
Mitsubishi Estate Co. Ltd. | 181,000 | 4,411,058 | |
THRIFTS & MORTGAGE FINANCE - 5.2% | |||
Thrifts & Mortgage Finance - 5.2% | |||
BankUnited Financial Corp. Class A (d) | 55,400 | 270,352 | |
Countrywide Financial Corp. | 219,902 | 1,387,582 | |
Fannie Mae | 213,000 | 5,889,450 | |
| |||
Shares | Value | ||
FirstFed Financial Corp. (a)(d) | 30,300 | $ 946,875 | |
Freddie Mac | 216,100 | 5,441,398 | |
Hudson City Bancorp, Inc. | 225,211 | 3,574,099 | |
IndyMac Bancorp, Inc. | 51,400 | 316,110 | |
Radian Group, Inc. (d) | 72,300 | 514,776 | |
Washington Mutual, Inc. | 110,500 | 1,635,400 | |
| 19,976,042 | ||
TOTAL COMMON STOCKS (Cost $344,916,746) | 356,175,381 | ||
Money Market Funds - 16.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 26,333,602 | 26,333,602 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 36,086,251 | 36,086,251 | |
TOTAL MONEY MARKET FUNDS (Cost $62,419,853) | 62,419,853 | ||
TOTAL INVESTMENT PORTFOLIO - 109.4% (Cost $407,336,599) | 418,595,234 | ||
NET OTHER ASSETS - (9.4)% | (36,126,980) | ||
NET ASSETS - 100% | $ 382,468,254 | ||
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. |
(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 $693,250 or 0.2% 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 | $ 333,723 |
Fidelity Securities Lending Cash Central Fund | 144,313 |
Total | $ 478,036 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 84.7% |
Bermuda | 7.1% |
Cayman Islands | 3.6% |
Switzerland | 1.7% |
Japan | 1.2% |
Germany | 1.0% |
Others (individually less than 1%) | 0.7% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $4,760,847 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $33,807,083) - See accompanying schedule: Unaffiliated issuers (cost $344,916,746) | $ 356,175,381 |
|
Fidelity Central Funds (cost $62,419,853) | 62,419,853 |
|
Total Investments (cost $407,336,599) |
| $ 418,595,234 |
Receivable for investments sold | 311,441 | |
Receivable for fund shares sold | 1,045,655 | |
Dividends receivable | 615,100 | |
Distributions receivable from Fidelity Central Funds | 110,595 | |
Prepaid expenses | 1,191 | |
Other receivables | 324 | |
Total assets | 420,679,540 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 30,615 | |
Payable for investments purchased | 571,659 | |
Payable for fund shares redeemed | 1,190,413 | |
Accrued management fee | 185,411 | |
Other affiliated payables | 107,449 | |
Other payables and accrued expenses | 39,488 | |
Collateral on securities loaned, at value | 36,086,251 | |
Total liabilities | 38,211,286 | |
|
|
|
Net Assets | $ 382,468,254 | |
Net Assets consist of: |
| |
Paid in capital | $ 372,136,209 | |
Undistributed net investment income | 2,449,089 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,376,346) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 11,259,302 | |
Net Assets, for 4,536,223 shares outstanding | $ 382,468,254 | |
Net Asset Value, offering price and redemption price per share ($382,468,254 ÷ 4,536,223 shares) | $ 84.31 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 10,970,169 |
Interest |
| 33 |
Income from Fidelity Central Funds (including $144,313 from security lending) |
| 478,036 |
Total income |
| 11,448,238 |
|
|
|
Expenses | ||
Management fee | $ 2,582,809 | |
Transfer agent fees | 1,255,766 | |
Accounting and security lending fees | 182,005 | |
Custodian fees and expenses | 30,989 | |
Independent trustees' compensation | 1,654 | |
Registration fees | 37,293 | |
Audit | 48,957 | |
Legal | 3,188 | |
Miscellaneous | 20,871 | |
Total expenses before reductions | 4,163,532 | |
Expense reductions | (15,825) | 4,147,707 |
Net investment income (loss) | 7,300,531 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 15,080,070 | |
Foreign currency transactions | 30,699 | |
Total net realized gain (loss) |
| 15,110,769 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (129,892,382) | |
Assets and liabilities in foreign currencies | 382 | |
Total change in net unrealized appreciation (depreciation) |
| (129,892,000) |
Net gain (loss) | (114,781,231) | |
Net increase (decrease) in net assets resulting from operations | $ (107,480,700) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 7,300,531 | $ 6,679,039 |
Net realized gain (loss) | 15,110,769 | 51,345,654 |
Change in net unrealized appreciation (depreciation) | (129,892,000) | (8,075,152) |
Net increase (decrease) in net assets resulting from operations | (107,480,700) | 49,949,541 |
Distributions to shareholders from net investment income | (5,871,170) | (5,509,123) |
Distributions to shareholders from net realized gain | (22,490,248) | (55,761,519) |
Total distributions | (28,361,418) | (61,270,642) |
Share transactions | 194,700,129 | 178,601,633 |
Reinvestment of distributions | 27,116,864 | 58,356,068 |
Cost of shares redeemed | (245,141,588) | (174,338,840) |
Net increase (decrease) in net assets resulting from share transactions | (23,324,595) | 62,618,861 |
Redemption fees | 58,975 | 39,370 |
Total increase (decrease) in net assets | (159,107,738) | 51,337,130 |
|
|
|
Net Assets | ||
Beginning of period | 541,575,992 | 490,238,862 |
End of period (including undistributed net investment income of $2,449,089 and undistributed net investment income of $2,225,926, respectively) | $ 382,468,254 | $ 541,575,992 |
Other Information Shares | ||
Sold | 1,894,611 | 1,484,101 |
Issued in reinvestment of distributions | 271,439 | 501,082 |
Redeemed | (2,245,495) | (1,454,591) |
Net increase (decrease) | (79,445) | 530,592 |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
| |
Net asset value, beginning of period | $ 117.33 | $ 120.01 | $ 114.70 | $ 121.09 | $ 84.14 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.73 | 1.56 | 1.41 | 1.11 | .96 |
Net realized and unrealized gain (loss) | (27.77) | 10.14 | 13.73 | 2.75 | 36.92 |
Total from investment operations | (26.04) | 11.70 | 15.14 | 3.86 | 37.88 |
Distributions from net investment income | (1.45) | (1.29) | (1.34) | (.89) | (.94) |
Distributions from net realized gain | (5.54) | (13.10) | (8.50) | (9.37) | - |
Total distributions | (6.99) | (14.39) | (9.84) | (10.26) | (.94) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 84.31 | $ 117.33 | $ 120.01 | $ 114.70 | $ 121.09 |
Total Return A,B | (23.05)% | 10.14% | 14.51% | 3.29% | 45.17% |
Ratios to Average Net Assets D, F |
|
|
|
| |
Expenses before reductions | .90% | .93% | .97% | .97% | 1.09% |
Expenses net of fee waivers, if any | .90% | .93% | .97% | .97% | 1.09% |
Expenses net of all reductions | .89% | .92% | .95% | .94% | 1.07% |
Net investment income (loss) | 1.57% | 1.31% | 1.26% | .96% | .92% |
Supplemental Data |
|
|
|
| |
Net assets, end of period (000 omitted) | $ 382,468 | $ 541,576 | $ 490,239 | $ 487,073 | $ 555,577 |
Portfolio turnover rate E | 53% | 55% | 47% | 101% | 51% |
A Total 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Home Finance Portfolio | -42.37% | -1.51% | -0.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Home Finance Portfolio on February 28, 1998. 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
Select Home Finance Portfolio
Management's Discussion of Fund Performance
Comments from Richard Manuel, Portfolio Manager of Select Home Finance Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund returned -42.37%, versus -53.06% for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Thrifts & Mortgage Finance Index. Both the fund and MSCI index lagged the S&P 500® by a wide margin. Growing delinquencies in the subprime mortgage market triggered credit-quality concerns that soon led to a liquidity crunch, as mortgage originators struggled to find buyers for their loans. The fund benefited from stock selection outside of the thrifts and mortgage finance industry. Stocks that helped the fund outpace the MSCI index included Annaly Capital Management, a mortgage real estate investment trust (REIT) that takes almost no credit risk, and Wells Fargo, a diversified bank that benefited from its high mortgage underwriting standards and lack of liquidity issues. Both stocks were out-of-index holdings. An underweighting in Washington Mutual, a large thrift with significant subprime mortgage exposure, also aided relative returns, as the stock fell sharply. Among the biggest detractors was Radian Group, a mortgage bond insurer that took a hard hit as claims increased. Countrywide Financial, a well-known mortgage originator with subprime exposure, also suffered a steep downturn as mounting credit and liquidity concerns led it to the brink of bankruptcy.
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
Select Home Finance Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Fannie Mae | 9.8 | 16.6 |
Freddie Mac | 9.2 | 6.6 |
Countrywide Financial Corp. | 5.4 | 8.0 |
Annaly Capital Management, Inc. | 5.2 | 4.4 |
Hudson City Bancorp, Inc. | 5.0 | 5.5 |
New York Community Bancorp, Inc. | 4.5 | 2.8 |
Chimera Investment Corp. | 4.2 | 0.0 |
Washington Mutual, Inc. | 4.0 | 6.0 |
People's United Financial, Inc. | 3.8 | 2.7 |
Wells Fargo & Co. | 3.7 | 5.5 |
| 54.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Thrifts & Mortgage Finance | 63.1% |
|
| Real Estate Investment Trusts | 9.4% |
|
| Commercial Banks | 8.2% |
|
| Insurance | 3.8% |
|
| Diversified Financial Services | 3.1% |
|
| All Others* | 12.4% |
|
| |||
As of August 31, 2007 | |||
| Thrifts & Mortgage Finance | 70.0% |
|
| Commercial Banks | 14.5% |
|
| Real Estate Investment Trusts | 4.4% |
|
| Diversified Financial Services | 3.7% |
|
| Consumer Finance | 3.2% |
|
| All Others* | 4.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Home Finance Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 93.5% | |||
Shares | Value | ||
CAPITAL MARKETS - 2.5% | |||
Asset Management & Custody Banks - 2.5% | |||
EFG International | 31,690 | $ 1,064,778 | |
State Street Corp. | 35,452 | 2,784,755 | |
| 3,849,533 | ||
COMMERCIAL BANKS - 8.2% | |||
Diversified Banks - 4.9% | |||
HDFC Bank Ltd. sponsored ADR (d) | 10,300 | 1,123,833 | |
ICICI Bank Ltd. sponsored ADR | 15,400 | 798,336 | |
Wells Fargo & Co. | 189,100 | 5,527,393 | |
| 7,449,562 | ||
Regional Banks - 3.3% | |||
Center Financial Corp., California | 16,788 | 163,347 | |
Colonial Bancgroup, Inc. | 12,300 | 148,584 | |
EuroBancshares, Inc. (a) | 31,908 | 208,359 | |
National City Corp. | 398 | 6,312 | |
PNC Financial Services Group, Inc. | 15,500 | 952,165 | |
Prosperity Bancshares, Inc. (d) | 27,700 | 731,280 | |
Sterling Financial Corp., Washington | 93,000 | 1,384,770 | |
Webster Financial Corp. | 48,300 | 1,350,951 | |
| 4,945,768 | ||
TOTAL COMMERCIAL BANKS | 12,395,330 | ||
CONSUMER FINANCE - 2.7% | |||
Consumer Finance - 2.7% | |||
American Express Co. | 30,000 | 1,269,000 | |
Capital One Financial Corp. (d) | 59,902 | 2,757,289 | |
| 4,026,289 | ||
DIVERSIFIED FINANCIAL SERVICES - 3.1% | |||
Other Diversifed Financial Services - 3.1% | |||
Bank of America Corp. | 54,500 | 2,165,830 | |
Citigroup, Inc. | 45,300 | 1,074,063 | |
JPMorgan Chase & Co. | 34,400 | 1,398,360 | |
| 4,638,253 | ||
INSURANCE - 3.8% | |||
Property & Casualty Insurance - 3.7% | |||
AMBAC Financial Group, Inc. | 7,500 | 83,550 | |
Argo Group International Holdings, Ltd. (a) | 39,940 | 1,494,555 | |
Fidelity National Financial, Inc. Class A | 64,600 | 1,137,606 | |
Stewart Information Services Corp. | 13,300 | 395,941 | |
The First American Corp. | 72,800 | 2,535,624 | |
| 5,647,276 | ||
| |||
Shares | Value | ||
Reinsurance - 0.1% | |||
RenaissanceRe Holdings Ltd. | 1,003 | $ 55,065 | |
TOTAL INSURANCE | 5,702,341 | ||
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
Move, Inc. (a) | 95,590 | 239,931 | |
IT SERVICES - 0.6% | |||
Data Processing & Outsourced Services - 0.6% | |||
Fidelity National Information Services, Inc. | 20,632 | 856,022 | |
REAL ESTATE INVESTMENT TRUSTS - 9.4% | |||
Mortgage REITs - 9.4% | |||
Annaly Capital Management, Inc. (d) | 379,200 | 7,845,648 | |
Chimera Investment Corp. | 384,900 | 6,377,793 | |
| 14,223,441 | ||
THRIFTS & MORTGAGE FINANCE - 63.1% | |||
Thrifts & Mortgage Finance - 63.1% | |||
Astoria Financial Corp. | 202,000 | 5,286,340 | |
Bank Mutual Corp. | 163,900 | 1,761,925 | |
BankUnited Financial Corp. Class A (d) | 97,400 | 475,312 | |
Beverly Hills Bancorp, Inc. | 50,000 | 247,500 | |
Brookline Bancorp, Inc., Delaware | 62,300 | 598,703 | |
Countrywide Financial Corp. | 1,298,800 | 8,195,428 | |
Dime Community Bancshares, Inc. | 30,500 | 464,210 | |
Downey Financial Corp. (d) | 9,400 | 246,186 | |
Fannie Mae | 535,000 | 14,792,750 | |
First Niagara Financial Group, Inc. | 108,100 | 1,234,502 | |
FirstFed Financial Corp. (a)(d) | 105,600 | 3,300,000 | |
Flagstar Bancorp, Inc. (d) | 70,900 | 507,644 | |
Freddie Mac (d) | 553,800 | 13,944,684 | |
Hudson City Bancorp, Inc. | 476,800 | 7,566,816 | |
IndyMac Bancorp, Inc. (d) | 462,900 | 2,846,835 | |
MGIC Investment Corp. (d) | 115,600 | 1,712,036 | |
New York Community Bancorp, Inc. (d) | 420,037 | 6,859,204 | |
NewAlliance Bancshares, Inc. (d) | 124,700 | 1,419,086 | |
People's United Financial, Inc. | 342,480 | 5,774,213 | |
PFF Bancorp, Inc. (d) | 22,800 | 193,116 | |
Provident Financial Services, Inc. | 62,500 | 749,375 | |
Radian Group, Inc. (d) | 165,300 | 1,176,936 | |
Sovereign Bancorp, Inc. | 363,943 | 4,014,291 | |
The PMI Group, Inc. | 96,057 | 698,334 | |
Triad Guaranty, Inc. (a)(d) | 21,600 | 127,008 | |
Trustco Bank Corp., New York (d) | 76,800 | 664,320 | |
Washington Federal, Inc. | 174,012 | 3,950,072 | |
Washington Mutual, Inc. (d) | 409,300 | 6,057,640 | |
Westfield Financial, Inc. | 58,500 | 586,170 | |
| 95,450,636 | ||
TOTAL COMMON STOCKS (Cost $201,415,601) | 141,381,776 | ||
Money Market Funds - 33.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 12,926,980 | $ 12,926,980 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 37,240,092 | 37,240,092 | |
TOTAL MONEY MARKET FUNDS (Cost $50,167,072) | 50,167,072 | ||
TOTAL INVESTMENT PORTFOLIO - 126.7% (Cost $251,582,673) | 191,548,848 | ||
NET OTHER ASSETS - (26.7)% | (40,346,610) | ||
NET ASSETS - 100% | $ 151,202,238 | ||
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. |
(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 | $ 233,334 |
Fidelity Securities Lending Cash Central Fund | 430,338 |
Total | $ 663,672 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Home Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $35,209,145) - See accompanying schedule: Unaffiliated issuers (cost $201,415,601) | $ 141,381,776 |
|
Fidelity Central Funds (cost $50,167,072) | 50,167,072 |
|
Total Investments (cost $251,582,673) |
| $ 191,548,848 |
Receivable for fund shares sold | 517,784 | |
Dividends receivable | 175,859 | |
Distributions receivable from Fidelity Central Funds | 134,054 | |
Prepaid expenses | 469 | |
Other receivables | 24,393 | |
Total assets | 192,401,407 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 24,505 | |
Payable for investments purchased | 3,331,685 | |
Payable for fund shares redeemed | 453,659 | |
Accrued management fee | 75,545 | |
Other affiliated payables | 42,259 | |
Other payables and accrued expenses | 31,424 | |
Collateral on securities loaned, at value | 37,240,092 | |
Total liabilities | 41,199,169 | |
|
|
|
Net Assets | $ 151,202,238 | |
Net Assets consist of: |
| |
Paid in capital | $ 212,031,905 | |
Undistributed net investment income | 1,237,232 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,033,119) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (60,033,780) | |
Net Assets, for 5,853,224 shares outstanding | $ 151,202,238 | |
Net Asset Value, offering price and redemption price per share ($151,202,238 ÷ 5,853,224 shares) | $ 25.83 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 5,535,986 |
Interest |
| 38 |
Income from Fidelity Central Funds (including $430,338 from security lending) |
| 663,672 |
Total income |
| 6,199,696 |
|
|
|
Expenses | ||
Management fee | $ 1,102,605 | |
Transfer agent fees | 556,821 | |
Accounting and security lending fees | 84,585 | |
Custodian fees and expenses | 10,494 | |
Independent trustees' compensation | 463 | |
Registration fees | 27,142 | |
Audit | 36,654 | |
Legal | 1,841 | |
Miscellaneous | 13,072 | |
Total expenses before reductions | 1,833,677 | |
Expense reductions | (3,933) | 1,829,744 |
Net investment income (loss) | 4,369,952 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,160,589 | |
Investment not meeting investment restrictions | (103) | |
Foreign currency transactions | (402) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 103 | |
Total net realized gain (loss) |
| 4,160,187 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (105,461,944) | |
Assets and liabilities in foreign currencies | 45 | |
Total change in net unrealized appreciation (depreciation) |
| (105,461,899) |
Net gain (loss) | (101,301,712) | |
Net increase (decrease) in net assets resulting from operations | $ (96,931,760) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Home Finance Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,369,952 | $ 4,292,612 |
Net realized gain (loss) | 4,160,187 | 38,216,841 |
Change in net unrealized appreciation (depreciation) | (105,461,899) | (23,566,971) |
Net increase (decrease) in net assets resulting from operations | (96,931,760) | 18,942,482 |
Distributions to shareholders from net investment income | (3,929,528) | (4,052,900) |
Distributions to shareholders from net realized gain | (9,278,294) | (32,100,974) |
Total distributions | (13,207,822) | (36,153,874) |
Share transactions | 88,078,685 | 45,152,786 |
Reinvestment of distributions | 12,680,584 | 34,666,757 |
Cost of shares redeemed | (96,312,765) | (97,876,938) |
Net increase (decrease) in net assets resulting from share transactions | 4,446,504 | (18,057,395) |
Redemption fees | 22,704 | 17,147 |
Total increase (decrease) in net assets | (105,670,374) | (35,251,640) |
Net Assets | ||
Beginning of period | 256,872,612 | 292,124,252 |
End of period (including undistributed net investment income of $1,237,232 and undistributed net investment income of $1,248,552, respectively) | $ 151,202,238 | $ 256,872,612 |
Other Information Shares | ||
Sold | 2,739,630 | 867,552 |
Issued in reinvestment of distributions | 372,402 | 693,890 |
Redeemed | (2,566,429) | (1,889,744) |
Net increase (decrease) | 545,603 | (328,302) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 48.40 | $ 51.83 | $ 59.12 | $ 68.76 | $ 47.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .86 | .81 | 1.32 F | .54 | .61 |
Net realized and unrealized gain (loss) | (20.77) | 3.01 | (.77) | (.54) | 22.67 |
Total from investment operations | (19.91) | 3.82 | .55 | - | 23.28 |
Distributions from net investment income | (.80) | (.80) | (.99) | (.56) | (.41) |
Distributions from net realized gain | (1.86) | (6.45) | (6.85) | (9.09) | (1.72) |
Total distributions | (2.66) | (7.25) | (7.84) | (9.65) | (2.13) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | .01 |
Net asset value, end of period | $ 25.83 | $ 48.40 | $ 51.83 | $ 59.12 | $ 68.76 |
Total Return A, B | (42.37)% | 7.10% | .99% | (.46)% | 49.39% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .93% | .93% | .97% | .97% | 1.11% |
Expenses net of fee waivers, if any | .93% | .93% | .97% | .97% | 1.11% |
Expenses net of all reductions | .92% | .93% | .94% | .96% | 1.10% |
Net investment income (loss) | 2.21% | 1.55% | 2.36% F | .83% | 1.05% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 151,202 | $ 256,873 | $ 292,124 | $ 396,088 | $ 449,060 |
Portfolio turnover rate E | 36% | 52% | 76% | 37% | 38% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.54 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.40%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Insurance Portfolio | -16.04% | 10.18% | 8.12% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Insurance Portfolio on February 28, 1998. 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
Select Insurance Portfolio
Management's Discussion of Fund Performance
Comments from Stephen Hermsdorf, Portfolio Manager of Select Insurance Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, Select Insurance Portfolio produced a total return of -16.04%, trailing the S&P 500® and the 13.58% decline in the Morgan Stanley InternationalSM (MSCI®) US Investable Markets Insurance Index. In a very difficult period for insurance stocks, the fund's performance relative to the MSCI index was significantly hurt by its overweighted positions in two bond insurers during the second half of the year. AMBAC Financial Group and MBIA, the two largest bond insurance companies in the United States, suffered significant losses as problems surfaced in the mortgage-backed securities and collateralized debt obligations they had insured. American International Group (AIG), the fund's largest holding on average, also underperformed because of problems in several areas, including its investment portfolio, its mortgage insurance operations and its business providing insurance for complex financial transactions. In addition, while I moved to an overweighting in diversified financials corporation Berkshire Hathaway late in the period, my earlier underweighted position held back results when the company outperformed. Helping results was my emphasis on property-and-casualty reinsurance companies such as Endurance Specialty Holdings, Axis Capital Holdings, Platinum Underwriters and Everest Re Group, as all produced solid, positive results. The Axis holding was sold before the end of the period.
Note to shareholders: Brian Wilhelm will become manager of the fund on May 1, 2008, replacing Stephen Hermsdorf.
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
Select Insurance Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
American International Group, Inc. | 19.5 | 22.6 |
MetLife, Inc. | 7.6 | 7.2 |
Berkshire Hathaway, Inc. Class A | 6.2 | 0.5 |
ACE Ltd. | 4.9 | 5.6 |
Hartford Financial Services Group, Inc. | 4.8 | 4.8 |
Principal Financial Group, Inc. | 4.2 | 3.8 |
Prudential Financial, Inc. | 4.1 | 4.7 |
Everest Re Group Ltd. | 3.7 | 3.2 |
AFLAC, Inc. | 3.5 | 2.7 |
Loews Corp. | 2.3 | 2.7 |
| 60.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Insurance | 98.1% |
|
| Thrifts & Mortgage Finance | 0.6% |
|
| Capital Markets | 0.4% |
|
| Real Estate Investment Trusts | 0.2% |
|
| Building Products | 0.1% |
|
| All Others* | 0.6% |
|
| |||
As of August 31, 2007 | |||
| Insurance | 97.9% |
|
| Capital Markets | 0.8% |
|
| Building Products | 0.4% |
|
| Diversified Financial Services | 0.0% |
|
| Software | 0.0% |
|
| All Others* | 0.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Insurance Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.1% | |||
Building Products - 0.1% | |||
PGT, Inc. (a) | 62,900 | $ 213,860 | |
CAPITAL MARKETS - 0.4% | |||
Asset Management & Custody Banks - 0.4% | |||
Ameriprise Financial, Inc. | 13,000 | 658,320 | |
DIVERSIFIED FINANCIAL SERVICES - 0.1% | |||
Other Diversifed Financial Services - 0.1% | |||
Maiden Holdings Ltd. (e) | 9,200 | 73,600 | |
INSURANCE - 98.1% | |||
Insurance Brokers - 2.9% | |||
Aon Corp. | 100 | 4,161 | |
CNinsure, Inc. ADR | 400 | 5,080 | |
National Financial Partners Corp. (d) | 91,600 | 2,177,332 | |
Willis Group Holdings Ltd. | 71,400 | 2,345,490 | |
| 4,532,063 | ||
Life & Health Insurance - 22.4% | |||
AFLAC, Inc. | 86,400 | 5,392,224 | |
Lincoln National Corp. (d) | 64,130 | 3,277,684 | |
MetLife, Inc. (d) | 200,500 | 11,681,130 | |
Principal Financial Group, Inc. (d) | 117,100 | 6,467,433 | |
Protective Life Corp. | 9,700 | 374,323 | |
Prudential Financial, Inc. | 86,200 | 6,290,014 | |
Sony Financial Holdings, Inc. | 264 | 1,054,577 | |
| 34,537,385 | ||
Multi-Line Insurance - 29.4% | |||
American International Group, Inc. (d) | 642,000 | 30,084,117 | |
Assurant, Inc. | 40,300 | 2,520,765 | |
AXA SA sponsored ADR | 14,700 | 494,802 | |
Genworth Financial, Inc. Class A (non-vtg.) | 60,000 | 1,390,800 | |
Hartford Financial Services Group, Inc. | 104,600 | 7,311,540 | |
Loews Corp. | 82,700 | 3,460,168 | |
| 45,262,192 | ||
Property & Casualty Insurance - 29.1% | |||
21st Century Holding Co. (d) | 10,600 | 138,436 | |
ACE Ltd. | 133,649 | 7,516,420 | |
Admiral Group PLC | 112,300 | 2,245,890 | |
Alleghany Corp. | 1,072 | 386,992 | |
AMBAC Financial Group, Inc. (d) | 237,850 | 2,649,649 | |
American Safety Insurance Group Ltd. (a) | 92,570 | 1,772,716 | |
Argo Group International Holdings, Ltd. (a) | 70,268 | 2,629,429 | |
| |||
Shares | Value | ||
Aspen Insurance Holdings Ltd. | 48,700 | $ 1,409,378 | |
Assured Guaranty Ltd. | 45,500 | 1,167,075 | |
Berkshire Hathaway, Inc.: | |||
Class A (a) | 68 | 9,520,000 | |
Class B (a) | 520 | 2,430,740 | |
Catlin Group Ltd. | 102,000 | 766,131 | |
Fidelity National Financial, Inc. Class A | 93,000 | 1,637,730 | |
First Mercury Financial Corp. (a) | 44,500 | 732,025 | |
Infinity Property & Casualty Corp. | 7,700 | 309,309 | |
LandAmerica Financial Group, Inc. (d) | 9,400 | 346,108 | |
MBIA, Inc. (d) | 181,800 | 2,357,946 | |
Samsung Fire & Marine Insurance Co. Ltd. | 2,030 | 401,275 | |
Security Capital Assurance Ltd. | 178,800 | 271,776 | |
Specialty Underwriters' Alliance, Inc. (a) | 59,600 | 299,192 | |
The Chubb Corp. (d) | 24,658 | 1,255,092 | |
The Travelers Companies, Inc. | 100 | 4,641 | |
United America Indemnity Ltd. Class A (a) | 110,091 | 2,065,307 | |
W.R. Berkley Corp. | 11,901 | 342,630 | |
XL Capital Ltd. Class A | 61,000 | 2,199,660 | |
| 44,855,547 | ||
Reinsurance - 14.3% | |||
Endurance Specialty Holdings Ltd. | 71,100 | 2,794,230 | |
Everest Re Group Ltd. | 58,800 | 5,696,544 | |
IPC Holdings Ltd. | 75,100 | 2,036,712 | |
Max Capital Group Ltd. | 27,100 | 751,754 | |
Montpelier Re Holdings Ltd. | 140,500 | 2,235,355 | |
Muenchener Rueckversicherungs-Gesellschaft AG (Reg.) | 3,900 | 687,257 | |
PartnerRe Ltd. | 35,300 | 2,714,217 | |
Platinum Underwriters Holdings Ltd. | 97,525 | 3,364,613 | |
RenaissanceRe Holdings Ltd. | 31,195 | 1,712,606 | |
| 21,993,288 | ||
TOTAL INSURANCE | 151,180,475 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.2% | |||
Mortgage REITs - 0.2% | |||
MFA Mortgage Investments, Inc. | 38,300 | 366,148 | |
THRIFTS & MORTGAGE FINANCE - 0.6% | |||
Thrifts & Mortgage Finance - 0.6% | |||
MGIC Investment Corp. | 13,539 | 200,513 | |
Radian Group, Inc. (d) | 91,200 | 649,344 | |
| 849,857 | ||
TOTAL COMMON STOCKS (Cost $147,911,608) | 153,342,260 | ||
Money Market Funds - 22.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 634,462 | $ 634,462 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,203,363 | 34,203,363 | |
TOTAL MONEY MARKET FUNDS (Cost $34,837,825) | 34,837,825 | ||
TOTAL INVESTMENT PORTFOLIO - 122.1% (Cost $182,749,433) | 188,180,085 | ||
NET OTHER ASSETS - (22.1)% | (34,117,418) | ||
NET ASSETS - 100% | $ 154,062,667 | ||
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. |
(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 $73,600 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 | $ 64,443 |
Fidelity Securities Lending Cash Central Fund | 132,579 |
Total | $ 197,022 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 69.9% |
Bermuda | 20.7% |
Cayman Islands | 6.2% |
United Kingdom | 1.5% |
Others (individually less than 1%) | 1.7% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $31,813,695) - See accompanying schedule: Unaffiliated issuers (cost $147,911,608) | $ 153,342,260 |
|
Fidelity Central Funds (cost $34,837,825) | 34,837,825 |
|
Total Investments (cost $182,749,433) |
| $ 188,180,085 |
Receivable for fund shares sold | 174,157 | |
Dividends receivable | 200,757 | |
Distributions receivable from Fidelity Central Funds | 43,506 | |
Prepaid expenses | 527 | |
Other receivables | 803 | |
Total assets | 188,599,835 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 18,828 | |
Payable for fund shares redeemed | 159,501 | |
Accrued management fee | 74,418 | |
Other affiliated payables | 47,818 | |
Other payables and accrued expenses | 33,240 | |
Collateral on securities loaned, at value | 34,203,363 | |
Total liabilities | 34,537,168 | |
|
|
|
Net Assets | $ 154,062,667 | |
Net Assets consist of: |
| |
Paid in capital | $ 143,265,171 | |
Undistributed net investment income | 647,773 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,717,655 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 5,432,068 | |
Net Assets, for 2,852,204 shares outstanding | $ 154,062,667 | |
Net Asset Value, offering price and redemption price per share ($154,062,667 ÷ 2,852,204 shares) | $ 54.02 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 3,276,922 |
Interest |
| 9 |
Income from Fidelity Central Funds (including $132,579 from security lending) |
| 197,022 |
Total income |
| 3,473,953 |
|
|
|
Expenses | ||
Management fee | $ 1,223,492 | |
Transfer agent fees | 622,205 | |
Accounting and security lending fees | 91,025 | |
Custodian fees and expenses | 22,997 | |
Independent trustees' compensation | 823 | |
Registration fees | 28,945 | |
Audit | 37,358 | |
Legal | 1,331 | |
Interest | 1,575 | |
Miscellaneous | 9,051 | |
Total expenses before reductions | 2,038,802 | |
Expense reductions | (4,484) | 2,034,318 |
Net investment income (loss) | 1,439,635 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 17,517,446 | |
Foreign currency transactions | 1,877 | |
Total net realized gain (loss) |
| 17,519,323 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (48,920,824) | |
Assets and liabilities in foreign currencies | 1,272 | |
Total change in net unrealized appreciation (depreciation) |
| (48,919,552) |
Net gain (loss) | (31,400,229) | |
Net increase (decrease) in net assets resulting from operations | $ (29,960,594) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 1,439,635 | $ 1,303,301 |
Net realized gain (loss) | 17,519,323 | 16,084,361 |
Change in net unrealized appreciation (depreciation) | (48,919,552) | (2,361,032) |
Net increase (decrease) in net assets resulting from operations | (29,960,594) | 15,026,630 |
Distributions to shareholders from net investment income | (810,406) | (1,139,050) |
Distributions to shareholders from net realized gain | (12,234,053) | (13,198,155) |
Total distributions | (13,044,459) | (14,337,205) |
Share transactions | 90,768,987 | 142,013,492 |
Reinvestment of distributions | 12,497,777 | 13,737,229 |
Cost of shares redeemed | (150,458,399) | (121,134,580) |
Net increase (decrease) in net assets resulting from share transactions | (47,191,635) | 34,616,141 |
Redemption fees | 8,334 | 18,394 |
Total increase (decrease) in net assets | (90,188,354) | 35,323,960 |
|
|
|
Net Assets | ||
Beginning of period | 244,251,021 | 208,927,061 |
End of period (including undistributed net investment income of $647,773 and undistributed net investment income of $326,407, respectively) | $ 154,062,667 | $ 244,251,021 |
Other Information Shares | ||
Sold | 1,306,014 | 2,025,862 |
Issued in reinvestment of distributions | 201,317 | 197,602 |
Redeemed | (2,175,432) | (1,743,525) |
Net increase (decrease) | (668,101) | 479,939 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.38 | $ 68.72 | $ 62.15 | $ 59.67 | $ 41.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .45 | .44 | .70 F | .23 | .08 |
Net realized and unrealized gain (loss) | (10.95) | 5.25 | 7.71 | 2.92 | 19.88 |
Total from investment operations | (10.50) | 5.69 | 8.41 | 3.15 | 19.96 |
Distributions from net investment income | (.30) | (.40) | (.60) | (.10) | (.08) |
Distributions from net realized gain | (4.56) | (4.64) | (1.26) | (.59) | (1.29) |
Total distributions | (4.86) | (5.04) | (1.86) | (.69) | (1.37) |
Redemption fees added to paid in capital C | - I | .01 | .02 | .02 | .02 |
Net asset value, end of period | $ 54.02 | $ 69.38 | $ 68.72 | $ 62.15 | $ 59.67 |
Total Return A, B | (16.04)% | 8.33% | 13.68% | 5.35% | 49.04% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .93% | .98% | 1.03% | 1.05% | 1.24% |
Expenses net of fee waivers, if any | .93% | .98% | 1.03% | 1.05% | 1.24% |
Expenses net of all reductions | .93% | .98% | 1.02% | 1.04% | 1.23% |
Net investment income (loss) | .65% | .64% | 1.08% F | .39% | .16% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 154,063 | $ 244,251 | $ 208,927 | $ 173,377 | $ 151,875 |
Portfolio turnover rate E | 60% | 58% | 44% | 50% | 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 $.38 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .50%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio, and Insurance Portfolio (the Funds) are funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds are non-diversified with the exception of Home Finance, Financial Services, and Banking. 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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds will claim 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. For the Brokerage and Investment Management Portfolio and the Financial Services Portfolio, certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on the funds' 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 capital gains, foreign currency transactions, certain foreign taxes, partnerships, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for | Unrealized | Unrealized | Net Unrealized |
Banking Portfolio | $ 419,897,190 | $ 30,193,768 | $ (66,890,012) | $ (36,696,244) |
Brokerage and Investment Management Portfolio | 789,163,001 | 48,115,713 | (59,061,003) | (10,945,290) |
Financial Services Portfolio | 410,711,408 | 65,110,201 | (57,226,375) | 7,883,826 |
Home Finance Portfolio | 254,123,399 | 18,034,437 | (80,608,988) | (62,574,551) |
Insurance Portfolio | 183,429,794 | 29,087,453 | (24,337,162) | 4,750,291 |
| Undistributed | Undistributed |
Banking Portfolio | $ 1,203,628 | $ 717,118 |
Brokerage and Investment Management Portfolio | 2,526,158 | 29,131,336 |
Financial Services Portfolio | 303,872 | 590,448 |
Home Finance Portfolio | 663,861 | 272,273 |
Insurance Portfolio | 1,907 | 15,898 |
The tax character of distributions paid was as follows:
February 29, 2008 |
|
|
|
| Ordinary | Long-term | Total |
Banking Portfolio | $ 6,219,747 | $ 18,434,254 | $ 24,654,001 |
Brokerage and Investment Management Portfolio | 10,752,444 | 73,029,584 | 83,782,028 |
Financial Services Portfolio | 6,669,625 | 21,691,793 | 28,361,418 |
Home Finance Portfolio | 3,929,528 | 9,278,294 | 13,207,822 |
Insurance Portfolio | 810,406 | 12,234,053 | 13,044,459 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows: - continued
February 28, 2007 |
|
|
|
| Ordinary | Long-term | Total |
Banking Portfolio | $ 6,850,404 | $ 51,988,884 | $ 58,839,288 |
Brokerage and Investment Management Portfolio | 55,153,012 | 88,650,450 | 143,803,462 |
Financial Services Portfolio | 6,374,392 | 54,896,250 | 61,270,642 |
Home Finance Portfolio | 4,052,900 | 32,100,974 | 36,153,874 |
Insurance Portfolio | 1,139,050 | 13,198,155 | 14,337,205 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 | 283,116,378 | 242,873,689 |
Brokerage and Investment Management Portfolio | 775,108,997 | 1,312,914,087 |
Financial Services Portfolio | 242,961,066 | 303,738,672 |
Home Finance Portfolio | 70,895,563 | 76,173,879 |
Insurance Portfolio | 129,827,245 | 189,180,396 |
Banking Portfolio, Brokerage and Investment Management Portfolio and Home Finance Portfolio realized a loss on the sale of an investment not meeting the investment restrictions of each Fund. The loss was fully reimbursed by the Funds' investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Banking Portfolio | .30% | .26% | .56% |
Brokerage and Investment Management Portfolio | .30% | .26% | .56% |
Financial Services Portfolio | .30% | .26% | .56% |
Home Finance Portfolio | .30% | .26% | .56% |
Insurance Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Funds' transfer agent. For the period, the 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% |
|
Financial Services Portfolio | .27% |
|
Home Finance Portfolio | .28% |
|
Insurance Portfolio | .28% |
|
Accounting and Security Lending Fees. FSC 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 | $ 2,670 |
Brokerage and Investment Management Portfolio | 2,782 |
Financial Services Portfolio | 2,847 |
Home Finance Portfolio | 1,107 |
Insurance Portfolio | 1,598 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average | Weighted | Interest |
Brokerage and Investment Management Portfolio | Borrower | $ 6,941,250 | 5.42% | $ 8,355 |
Insurance Portfolio | Borrower | 5,645,000 | 5.02% | 1,575 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Banking Portfolio | $ 717 |
Brokerage and Investment Management Portfolio | 2,335 |
Financial Services Portfolio | 1,114 |
Home Finance Portfolio | 490 |
Insurance Portfolio | 513 |
During the period, there were no borrowings on this line of credit.
Annual Report
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian and transfer agent, 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 | Transfer |
|
|
|
|
Banking Portfolio | $ 12,353 | $ 430 | $ 3,520 |
Brokerage and Investment Management Portfolio | 59,321 | - | 10,422 |
Financial Services Portfolio | 2,670 | - | 13,027 |
Home Finance Portfolio | 79 | 321 | 3,471 |
Insurance Portfolio | 3,050 | - | 1,386 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
Banking Portfolio | $ 41,561 |
Brokerage and Investment Management Portfolio | 57,367 |
Financial Services Portfolio | 87,239 |
Home Finance Portfolio | 53,452 |
Insurance Portfolio | 23,060 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio and Insurance Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, the results of each of their operations for each of the years then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Name, Age; Principal Occupation | |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Banking Portfolio, Select Brokerage & Investment Management Portfolio, Select Financial Services Portfolio, Select Home Finance Portfolio, and Select Insurance Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Banking Portfolio | 04/14/08 | 04/11/08 | $0.09 | $0.05 |
Select Brokerage and Investment Management Portfolio | 04/14/08 | 04/11/08 | $0.22 | $2.51 |
Select Financial Services Portfolio | 04/14/08 | 04/11/08 | $0.06 | $0.13 |
Select Home Finance Portfolio | 04/14/08 | 04/11/08 | $0.11 | $0.05 |
Select Insurance Portfolio | 04/14/08 | 04/11/08 | $0.00 | $0.01 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Banking Portfolio | $ 11,460,331 |
Select Brokerage and Investment Management Portfolio | $ 80,886,426 |
Select Financial Services Portfolio | $ 22,394,598 |
Select Home Finance Portfolio | $ 4,357,517 |
Select Insurance Portfolio | $ 17,456,679 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Banking Portfolio | 100% | 100% |
Select Brokerage and Investment Management Portfolio | 61% | 100% |
Select Financial Services Portfolio | 100% | 100% |
Select Home Finance Portfolio | 100% | 100% |
Select 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 2007 | December 2007 |
Select Banking Portfolio | 100% | 100% |
Select Brokerage and Investment Management Portfolio | 61% | 100% |
Select Financial Services Portfolio | 100% | 100% |
Select Home Finance Portfolio | 100% | 100% |
Select Insurance Portfolio | 100% | 100% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
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www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
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Annual Report
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Annual Report
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Fidelity®
Select Portfolios®
Health Care Sector
Select Biotechnology Portfolio
Select Health Care Portfolio
Select Medical Delivery Portfolio
Select Medical Equipment and Systems Portfolio
Select Pharmaceuticals Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Health Care Sector |
|
|
Biotechnology |
| |
Health Care |
| |
Medical Delivery |
| |
Medical Equipment and Systems |
| |
Pharmaceuticals |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Biotechnology Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 946.30 | $ 4.26 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Health Care Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 959.50 | $ 4.09 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
Medical Delivery Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 938.70 | $ 4.39 |
HypotheticalA | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Medical Equipment and Systems Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 1,037.10 | $ 4.41 |
HypotheticalA | $ 1,000.00 | $ 1,020.54 | $ 4.37 |
Pharmaceuticals Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 951.80 | $ 4.56 |
HypotheticalA | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Biotechnology Portfolio | .88% |
Health Care Portfolio | .84% |
Medical Delivery Portfolio | .91% |
Medical Equipment and Systems Portfolio | .87% |
Pharmaceuticals Portfolio | .94% |
Annual Report
Select Biotechnology Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Biotechnology Portfolio | -2.03% | 10.25% | 7.60% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Biotechnology Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Select Biotechnology Portfolio
Management's Discussion of Fund Performance
Comments from Rajiv Kaul, Portfolio Manager of Select Biotechnology Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -2.03%, trailing the -1.32% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Biotechnology Index but beating the S&P 500®. Versus the MSCI index, the fund's positioning in biotechnology detracted from performance. Leading our list of detractors was Gilead Sciences, a strong-performing major index component that hurt our results because I underweighted it. Underweighting another index component, MedImmune, further detracted from performance, as the company was bought by AstraZeneca during the period, sending its stock sharply higher. Meanwhile, the stock of Vanda Pharmaceuticals, an out-of-index holding, faltered despite the company's decision to raise its fiscal 2007 earnings guidance in November. Underweighting major index component Genzyme also proved to be a mistake. In October, the company raised its fiscal 2008 earnings guidance and issued an encouraging longer-term profit forecast through 2011. Lastly, the fund was hurt by Vertex Pharmaceuticals, whose stock suffered from concerns about increased competition for its lead drug, Telaprevir, a treatment for hepatitis C. Conversely, solid picks in pharmaceuticals and in health care equipment boosted our results. The fund's top contributor was Alexion Pharmaceuticals. Strong sales of Soliris, a treatment for a rare blood disorder, helped the company narrow its second-quarter loss compared with the prior-year period and triggered a sharp run-up in the stock at the end of July. Underweighting Amgen, the largest component of the MSCI index, also boosted performance. Another contributor was our out-of-index position in Auxilium Pharmaceuticals. Underweighting major index component Genentech, the fund's largest holding at period end, helped 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
Select Biotechnology Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Genentech, Inc. | 13.5 | 5.4 |
Amgen, Inc. | 10.4 | 19.5 |
Gilead Sciences, Inc. | 7.6 | 2.5 |
Celgene Corp. | 5.4 | 6.4 |
Biogen Idec, Inc. | 5.1 | 8.1 |
Cephalon, Inc. | 4.4 | 4.9 |
Alexion Pharmaceuticals, Inc. | 4.2 | 5.1 |
BioMarin Pharmaceutical, Inc. | 4.0 | 0.0 |
United Therapeutics Corp. | 3.6 | 0.8 |
Elan Corp. PLC sponsored ADR | 3.4 | 2.5 |
| 61.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Biotechnology | 82.8% |
|
| Pharmaceuticals | 12.9% |
|
| Health Care Equipment & Supplies | 1.6% |
|
| Life Sciences Tools & Services | 1.3% |
|
| Health Care Providers & Services | 0.2% |
|
| All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
| ||
As of August 31, 2007 |
| Biotechnology | 84.3% |
|
| Pharmaceuticals | 10.1% |
|
| Life Sciences Tools & Services | 3.1% |
|
| Health Care Equipment & Supplies | 2.4% |
|
| Health Care Providers & Services | 0.2% |
|
| All Others | (0.1)%† |
|
† Short-term investments and net other assets are not included in the pie chart. |
Annual Report
Select Biotechnology Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
BIOTECHNOLOGY - 82.5% | |||
Biotechnology - 82.5% | |||
Acadia Pharmaceuticals, Inc. (a)(d) | 714,188 | $ 7,084,745 | |
Acorda Therapeutics, Inc. (a) | 99,946 | 2,042,896 | |
Affymax, Inc. (a) | 170,396 | 3,280,123 | |
Alexion Pharmaceuticals, Inc. (a)(d) | 749,700 | 45,439,317 | |
Alkermes, Inc. (a) | 491,719 | 6,362,844 | |
Alnylam Pharmaceuticals, Inc. (a)(d) | 178,700 | 5,075,080 | |
Amgen, Inc. (a) | 2,478,845 | 112,837,024 | |
Amylin Pharmaceuticals, Inc. (a)(d) | 708,292 | 18,748,489 | |
Antigenics, Inc. unit (a)(f) | 1,548,000 | 5,789,882 | |
Arena Pharmaceuticals, Inc. (a)(d) | 177,400 | 1,202,772 | |
Biogen Idec, Inc. (a) | 951,465 | 55,527,497 | |
BioMarin Pharmaceutical, Inc. (a)(d) | 1,131,611 | 43,046,482 | |
Celgene Corp. (a) | 1,049,999 | 59,188,444 | |
Cephalon, Inc. (a)(d) | 802,840 | 48,443,366 | |
Cepheid, Inc. (a) | 202,300 | 5,599,664 | |
Cougar Biotechnology, Inc. (a) | 313,400 | 8,339,574 | |
Cubist Pharmaceuticals, Inc. (a) | 214,885 | 3,910,907 | |
Dendreon Corp. (a)(d) | 262,600 | 1,386,528 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 126,100 | 1,083,199 | |
Genentech, Inc. (a)(d) | 1,946,539 | 147,450,333 | |
Genzyme Corp. (a) | 401,870 | 28,500,620 | |
Gilead Sciences, Inc. (a)(d) | 1,743,278 | 82,491,915 | |
GTx, Inc. (a)(d) | 226,816 | 3,712,978 | |
Halozyme Therapeutics, Inc. (a)(d) | 122,590 | 674,245 | |
Human Genome Sciences, Inc. (a)(d) | 455,853 | 2,694,091 | |
ImClone Systems, Inc. (a) | 205,600 | 9,254,056 | |
Incyte Corp. (a)(d) | 721,605 | 7,151,106 | |
Indevus Pharmaceuticals, Inc. (a) | 534,343 | 2,650,341 | |
Isis Pharmaceuticals, Inc. (a)(d) | 592,810 | 8,536,464 | |
LifeCell Corp. (a)(d) | 74,000 | 2,985,900 | |
Ligand Pharmaceuticals, Inc. Class B (d) | 210,300 | 712,917 | |
MannKind Corp. (a)(d) | 362,792 | 2,564,939 | |
Martek Biosciences (a)(d) | 91,400 | 2,619,524 | |
Medarex, Inc. (a)(d) | 171,056 | 1,590,821 | |
Millennium Pharmaceuticals, Inc. (a) | 1,313,981 | 18,382,594 | |
Myriad Genetics, Inc. (a)(d) | 209,499 | 7,755,653 | |
Neurochem, Inc. (a)(d) | 30,300 | 47,726 | |
Omrix Biopharmaceuticals, Inc. (a) | 43,600 | 1,052,940 | |
ONYX Pharmaceuticals, Inc. (a)(d) | 323,706 | 8,843,648 | |
OREXIGEN Therapeutics, Inc. | 242,874 | 3,145,218 | |
OSI Pharmaceuticals, Inc. (a)(d) | 264,800 | 9,519,560 | |
PDL BioPharma, Inc. (a)(d) | 726,700 | 11,612,666 | |
Poniard Pharmaceuticals, Inc. (a)(d) | 186,800 | 765,880 | |
Progenics Pharmaceuticals, Inc. (a)(d) | 109,200 | 1,670,760 | |
Regeneron Pharmaceuticals, Inc. (a) | 385,208 | 7,615,562 | |
Rigel Pharmaceuticals, Inc. (a)(d) | 227,365 | 4,506,374 | |
| |||
Shares | Value | ||
Sangamo Biosciences, Inc. (a) | 279,302 | $ 3,267,833 | |
Savient Pharmaceuticals, Inc. (a)(d) | 305,495 | 6,928,627 | |
Theratechnologies, Inc. (a) | 133,100 | 1,107,758 | |
Theravance, Inc. (a)(d) | 204,535 | 3,364,601 | |
United Therapeutics Corp. (a)(d) | 459,297 | 38,659,028 | |
Vanda Pharmaceuticals, Inc. (a)(e) | 1,376,584 | 6,277,223 | |
Vertex Pharmaceuticals, Inc. (a)(d) | 1,295,200 | 22,666,000 | |
Zymogenetics, Inc. (a)(d) | 278,105 | 2,778,269 | |
| 897,947,003 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 1.6% | |||
Health Care Equipment - 1.6% | |||
Alsius Corp. (a) | 328,800 | 1,121,208 | |
Clinical Data, Inc. (a)(d) | 147,654 | 3,009,189 | |
Quidel Corp. (a) | 776,100 | 12,751,323 | |
TomoTherapy, Inc. | 4,900 | 64,533 | |
| 16,946,253 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.2% | |||
Health Care Services - 0.2% | |||
Oracle Healthcare Acquisition Corp. unit (a) | 241,200 | 1,840,356 | |
LIFE SCIENCES TOOLS & SERVICES - 1.3% | |||
Life Sciences Tools & Services - 1.3% | |||
AMAG Pharmaceuticals, Inc. (a) | 79,000 | 3,457,830 | |
Applera Corp. - Celera Genomics Group (a) | 306,200 | 4,243,932 | |
Exelixis, Inc. (a) | 863,500 | 5,509,130 | |
Medivation, Inc. (a)(d) | 32,736 | 524,103 | |
| 13,734,995 | ||
PHARMACEUTICALS - 12.9% | |||
Pharmaceuticals - 12.9% | |||
Akorn, Inc. (a)(d) | 2,829,695 | 17,996,860 | |
Auxilium Pharmaceuticals, Inc. (a) | 1,083,104 | 34,702,652 | |
Biodel, Inc. (d)(e) | 1,500,084 | 20,986,175 | |
Catalyst Pharmaceutical Partners, Inc. (a) | 518,959 | 1,946,096 | |
Elan Corp. PLC sponsored ADR (a)(d) | 1,616,400 | 36,805,428 | |
Jazz Pharmaceuticals, Inc. (d) | 150,700 | 1,802,372 | |
Sepracor, Inc. (a)(d) | 254,700 | 5,468,409 | |
ULURU, Inc. (a) | 47,700 | 124,497 | |
XenoPort, Inc. (a) | 408,119 | 20,883,449 | |
| 140,715,938 | ||
TOTAL COMMON STOCKS (Cost $1,122,698,079) | 1,071,184,545 | ||
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 - 10.7% | |||
Shares | Value | ||
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 116,810,260 | $ 116,810,260 | |
TOTAL INVESTMENT PORTFOLIO - 109.5% (Cost $1,246,232,477) | 1,191,410,863 |
NET OTHER ASSETS - (9.5)% | (103,407,398) | ||
NET ASSETS - 100% | $ 1,088,003,465 | ||
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. |
(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 $9,205,940 or 0.8% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. unit | 1/9/08 | $ 4,644,000 |
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 | $ 85,385 |
Fidelity Securities Lending Cash Central Fund | 1,125,354 |
Total | $ 1,210,739 |
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, |
Biodel, Inc. | $ - | $ 32,412,651 | $ 4,100,271 | $ - | $ 20,986,175 |
Catalyst Pharmaceutical Partners, Inc. | - | 1,648,919 | 551,504 | - | - |
Vanda Pharmaceuticals, Inc. | 9,257,542 | 22,291,423 | 8,507,804 | - | 6,277,223 |
Total | $ 9,257,542 | $ 56,352,993 | $ 13,159,579 | $ - | $ 27,263,398 |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $237,503,787 all of which will expire on February 28, 2011. The fund also had a Post-October loss deferral of approximately $46,827,417. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $112,832,606) - See accompanying schedule: Unaffiliated issuers (cost $1,078,330,951) | $ 1,047,337,205 |
|
Fidelity Central Funds (cost $116,810,260) | 116,810,260 |
|
Other affiliated issuers (cost $51,091,266) | 27,263,398 |
|
Total Investments (cost $1,246,232,477) |
| $ 1,191,410,863 |
Receivable for investments sold | 74,000,488 | |
Receivable for fund shares sold | 363,147 | |
Distributions receivable from Fidelity Central Funds | 94,977 | |
Prepaid expenses | 3,423 | |
Other receivables | 743 | |
Total assets | 1,265,873,641 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 992,947 | |
Payable for investments purchased | 56,999,135 | |
Payable for fund shares redeemed | 2,180,400 | |
Accrued management fee | 520,007 | |
Other affiliated payables | 304,224 | |
Other payables and accrued expenses | 63,203 | |
Collateral on securities loaned, at value | 116,810,260 | |
Total liabilities | 177,870,176 | |
|
|
|
Net Assets | $ 1,088,003,465 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,438,185,871 | |
Accumulated net investment loss | (2,899) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (295,357,893) | |
Net unrealized appreciation (depreciation) on investments | (54,821,614) | |
Net Assets, for 17,383,515 shares outstanding | $ 1,088,003,465 | |
Net Asset Value, offering price and redemption price per share ($1,088,003,465 ÷ 17,383,515 shares) | $ 62.59 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Interest |
| $ 34,381 |
Income from Fidelity Central Funds (including $1,125,354 from security lending) |
| 1,210,739 |
Total income |
| 1,245,120 |
|
|
|
Expenses | ||
Management fee | $ 7,082,105 | |
Transfer agent fees | 3,531,044 | |
Accounting and security lending fees | 446,651 | |
Custodian fees and expenses | 51,029 | |
Independent trustees' compensation | 4,841 | |
Registration fees | 35,406 | |
Audit | 40,616 | |
Legal | 9,352 | |
Interest | 24,664 | |
Miscellaneous | 60,128 | |
Total expenses before reductions | 11,285,836 | |
Expense reductions | (24,534) | 11,261,302 |
Net investment income (loss) | (10,016,182) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 100,302,745 | |
Other affiliated issuers | (2,542,984) |
|
Foreign currency transactions | 6,934 | |
Total net realized gain (loss) |
| 97,766,695 |
Change in net unrealized appreciation (depreciation) on investment securities | (101,727,359) | |
Net gain (loss) | (3,960,664) | |
Net increase (decrease) in net assets resulting from operations | $ (13,976,846) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Biotechnology Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (10,016,182) | $ (11,600,686) |
Net realized gain (loss) | 97,766,695 | 271,570,605 |
Change in net unrealized appreciation (depreciation) | (101,727,359) | (381,725,710) |
Net increase (decrease) in net assets resulting from operations | (13,976,846) | (121,755,791) |
Share transactions | 146,235,436 | 337,912,705 |
Cost of shares redeemed | (413,597,621) | (658,547,986) |
Net increase (decrease) in net assets resulting from share transactions | (267,362,185) | (320,635,281) |
Redemption fees | 33,065 | 208,171 |
Total increase (decrease) in net assets | (281,305,966) | (442,182,901) |
|
|
|
Net Assets | ||
Beginning of period | 1,369,309,431 | 1,811,492,332 |
End of period (including accumulated net investment loss of $2,899 and accumulated net investment loss of | $ 1,088,003,465 | $ 1,369,309,431 |
Other Information Shares | ||
Sold | 2,180,917 | 5,248,435 |
Redeemed | (6,231,096) | (10,431,851) |
Net increase (decrease) | (4,050,179) | (5,183,416) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 63.89 | $ 68.06 | $ 49.04 | $ 55.39 | $ 38.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.53) | (.47) | (.48) | (.52) | (.43) |
Net realized and unrealized gain (loss) | (.77) | (3.71) | 19.49 | (5.84) | 17.39 |
Total from investment operations | (1.30) | (4.18) | 19.01 | (6.36) | 16.96 |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 62.59 | $ 63.89 | $ 68.06 | $ 49.04 | $ 55.39 |
Total Return A,B | (2.03)% | (6.13)% | 38.78% | (11.46)% | 44.17% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .89% | .93% | .97% | .99% | 1.17% |
Expenses net of fee waivers, if any | .89% | .93% | .97% | .99% | 1.17% |
Expenses net of all reductions | .89% | .92% | .93% | .98% | 1.15% |
Net investment income (loss) | (.79)% | (.75)% | (.83)% | (.94)% | (.88)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,088,003 | $ 1,369,309 | $ 1,811,492 | $ 1,487,400 | $ 1,948,574 |
Portfolio turnover rate E | 143% | 70% | 63% | 19% | 50% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Health Care Portfolio | 0.72% | 10.08% | 6.31% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Health Care Portfolio on February 28, 1998. 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
Select Health Care Portfolio
Management's Discussion of Fund Performance
Comments from Matthew Sabel, Portfolio Manager of Select Health Care Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months that ended February 29, 2008, the fund returned 0.72%, outperforming the -1.05% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Index and the S&P 500®. Strong security selection and an underweighting in pharmaceuticals contributed to the fund's outperformance of the MSCI index, as did successful stock selection in health care equipment. Overweighting life science tools and services along with good security selection in health care distributors and managed health care further buoyed results. Favorable currency movements provided an additional boost to the fund's relative return due to the fund's foreign investments. Less-favorable security selection in health care services along with unsuccessful stock selection and an overweighting in health care supplies dampened performance. Top contributors included pharmacy benefit manager Express Scripts; an underweighting of pharmaceutical company Wyeth; medical supply company Becton, Dickinson & Company; managed health care provider Humana; and an out-of-benchmark position in Australian biotechnology firm CSL Limited. Health care supplier Inverness Medical Innovations, health care facilities operator Brookdale Senior Living, health care services provider Nighthawk Radiology Holdings and an underweighting in pharmaceutical giant and major index component Johnson & Johnson were among the main detractors from the fund's performance relative to 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
Select Health Care Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Merck & Co., Inc. | 5.7 | 7.7 |
Wyeth | 4.8 | 2.9 |
UnitedHealth Group, Inc. | 4.7 | 4.4 |
Abbott Laboratories | 4.1 | 0.7 |
Thermo Fisher Scientific, Inc. | 3.1 | 1.7 |
Allergan, Inc. | 2.9 | 2.5 |
Schering-Plough Corp. | 2.6 | 4.2 |
Humana, Inc. | 2.4 | 1.6 |
Bristol-Myers Squibb Co. | 2.4 | 3.3 |
Waters Corp. | 2.4 | 0.9 |
| 35.1 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Pharmaceuticals | 26.7% |
|
| Health Care Providers | 21.2% |
|
| Health Care Equipment & Supplies | 20.4% |
|
| Biotechnology | 13.5% |
|
| Life Sciences Tools | 11.5% |
|
| All Others* | 6.7% |
|
| |||
As of August 31, 2007 | |||
| Pharmaceuticals | 34.4% |
|
| Health Care Providers | 20.5% |
|
| Health Care Equipment & Supplies | 14.6% |
|
| Biotechnology | 11.2% |
|
| Life Sciences Tools | 8.2% |
|
| All Others* | 11.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Health Care Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 13.5% | |||
Biotechnology - 13.5% | |||
Acadia Pharmaceuticals, Inc. (a) | 156,100 | $ 1,548,512 | |
Acorda Therapeutics, Inc. (a) | 57,700 | 1,179,388 | |
Alexion Pharmaceuticals, Inc. (a) | 55,864 | 3,385,917 | |
Alnylam Pharmaceuticals, Inc. (a) | 346,800 | 9,849,120 | |
Amgen, Inc. (a) | 747,900 | 34,044,408 | |
Amylin Pharmaceuticals, Inc. (a) | 144,600 | 3,827,562 | |
Biogen Idec, Inc. (a) | 475,262 | 27,736,290 | |
BioMarin Pharmaceutical, Inc. (a) | 398,400 | 15,155,136 | |
Cephalon, Inc. (a) | 68,700 | 4,145,358 | |
Cepheid, Inc. (a) | 75,400 | 2,087,072 | |
Cougar Biotechnology, Inc. (a) | 42,207 | 1,123,128 | |
CSL Ltd. | 537,091 | 18,013,729 | |
CytRx Corp. (a)(d) | 626,180 | 1,127,124 | |
deCODE genetics, Inc. (a) | 753,527 | 2,215,369 | |
Genentech, Inc. (a) | 477,300 | 36,155,475 | |
Genmab AS (a) | 17,200 | 1,008,904 | |
Genzyme Corp. (a) | 396,632 | 28,129,141 | |
Gilead Sciences, Inc. (a)(d) | 714,380 | 33,804,462 | |
Grifols SA | 72,153 | 1,650,126 | |
GTx, Inc. (a) | 201,800 | 3,303,466 | |
Idera Pharmaceuticals, Inc. (a)(d) | 28,800 | 294,336 | |
ImClone Systems, Inc. (a) | 170,400 | 7,669,704 | |
Indevus Pharmaceuticals, Inc. (a) | 185,100 | 918,096 | |
Isis Pharmaceuticals, Inc. (a) | 102,439 | 1,475,122 | |
MannKind Corp. (a) | 94,214 | 666,093 | |
Millennium Pharmaceuticals, Inc. (a) | 360,000 | 5,036,400 | |
Molecular Insight Pharmaceuticals, Inc. (d) | 243,600 | 1,744,176 | |
Myriad Genetics, Inc. (a) | 46,200 | 1,710,324 | |
ONYX Pharmaceuticals, Inc. (a) | 75,600 | 2,065,392 | |
Orchid Cellmark, Inc. (a) | 146,078 | 670,498 | |
PDL BioPharma, Inc. (a) | 22,100 | 353,158 | |
Pharmion Corp. (a) | 1,644 | 117,694 | |
Progenics Pharmaceuticals, Inc. (a)(d) | 129,900 | 1,987,470 | |
Theravance, Inc. (a) | 161,700 | 2,659,965 | |
Third Wave Technologies, Inc. (a) | 114,700 | 914,159 | |
Vertex Pharmaceuticals, Inc. (a) | 237,457 | 4,155,498 | |
Zymogenetics, Inc. (a)(d) | 56,100 | 560,439 | |
| 262,488,211 | ||
CHEMICALS - 1.1% | |||
Diversified Chemicals - 0.8% | |||
Bayer AG | 27,500 | 2,098,250 | |
Bayer AG sponsored ADR | 177,916 | 13,574,991 | |
| 15,673,241 | ||
Fertilizers & Agricultural Chemicals - 0.3% | |||
Agrium, Inc. | 29,000 | 2,146,598 | |
| |||
Shares | Value | ||
Monsanto Co. | 18,251 | $ 2,111,276 | |
The Mosaic Co. (a) | 23,600 | 2,626,680 | |
| 6,884,554 | ||
TOTAL CHEMICALS | 22,557,795 | ||
DIVERSIFIED CONSUMER SERVICES - 0.1% | |||
Specialized Consumer Services - 0.1% | |||
Service Corp. International | 178,700 | 1,929,960 | |
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Other Diversifed Financial Services - 0.2% | |||
MBF Healthcare Acquisition Corp. unit | 396,800 | 3,138,688 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% | |||
Electronic Equipment & Instruments - 0.1% | |||
Mettler-Toledo International, Inc. (a) | 20,300 | 1,983,310 | |
FOOD & STAPLES RETAILING - 1.0% | |||
Drug Retail - 1.0% | |||
A&D Pharma Holdings NV (Reg. S) unit | 43,200 | 786,931 | |
China Nepstar Chain Drugstore Ltd. ADR | 55,300 | 608,300 | |
CVS Caremark Corp. | 434,986 | 17,564,735 | |
| 18,959,966 | ||
FOOD PRODUCTS - 0.5% | |||
Agricultural Products - 0.5% | |||
Bunge Ltd. | 89,761 | 9,949,109 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 20.4% | |||
Health Care Equipment - 16.4% | |||
American Medical Systems Holdings, Inc. (a) | 557,500 | 8,133,925 | |
Aspect Medical Systems, Inc. (a)(d) | 727,535 | 9,072,361 | |
Baxter International, Inc. | 784,600 | 46,307,092 | |
Beckman Coulter, Inc. | 36,400 | 2,457,000 | |
Becton, Dickinson & Co. | 456,759 | 41,300,149 | |
Boston Scientific Corp. (a) | 858,800 | 10,812,292 | |
C.R. Bard, Inc. | 181,158 | 17,171,967 | |
China Medical Technologies, Inc. sponsored ADR (d) | 21,600 | 993,600 | |
Covidien Ltd. | 756,303 | 32,362,205 | |
Electro-Optical Sciences, Inc. (a) | 916,900 | 4,281,923 | |
Electro-Optical Sciences, Inc. warrants 8/2/12 (a)(f) | 50,450 | 89,604 | |
Gen-Probe, Inc. (a) | 69,300 | 3,313,233 | |
Golden Meditech Co. Ltd. | 17,884,000 | 6,403,905 | |
Hillenbrand Industries, Inc. | 57,600 | 3,022,272 | |
I-Flow Corp. (a) | 550,024 | 7,749,838 | |
IDEXX Laboratories, Inc. (a) | 18,200 | 1,009,554 | |
Integra LifeSciences Holdings Corp. (a) | 159,039 | 6,590,576 | |
Intuitive Surgical, Inc. (a) | 13,500 | 3,805,920 | |
Kinetic Concepts, Inc. (a) | 8,700 | 447,093 | |
Medtronic, Inc. | 727,861 | 35,927,219 | |
Mentor Corp. | 34,600 | 1,026,236 | |
Meridian Bioscience, Inc. | 54,800 | 1,877,996 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE EQUIPMENT & SUPPLIES - CONTINUED | |||
Health Care Equipment - continued | |||
Mindray Medical International Ltd. sponsored ADR | 270,500 | $ 9,927,350 | |
NeuroMetrix, Inc. (a)(d) | 29,928 | 72,725 | |
Orthofix International NV (a) | 55,900 | 2,238,795 | |
Quidel Corp. (a) | 60,632 | 996,184 | |
Smith & Nephew PLC | 540,200 | 7,063,655 | |
Smith & Nephew PLC sponsored ADR | 192,500 | 12,585,650 | |
St. Jude Medical, Inc. (a) | 453,000 | 19,469,940 | |
Stryker Corp. | 326,300 | 21,245,393 | |
Symmetry Medical, Inc. (a) | 129,585 | 2,306,613 | |
ThermoGenesis Corp. (a) | 376,000 | 624,160 | |
| 320,686,425 | ||
Health Care Supplies - 4.0% | |||
Alcon, Inc. | 136,811 | 19,800,656 | |
Haemonetics Corp. (a) | 17,300 | 1,005,130 | |
Immucor, Inc. (a) | 182,509 | 5,438,768 | |
InfuSystems Holdings, Inc. (a)(e) | 1,424,500 | 5,014,240 | |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 262,700 | 72,243 | |
Inverness Medical Innovations, Inc. (a) | 1,472,223 | 42,915,300 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 2,204,000 | 3,385,109 | |
| 77,631,446 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 398,317,871 | ||
HEALTH CARE PROVIDERS & SERVICES - 21.2% | |||
Health Care Distributors & Services - 4.0% | |||
Celesio AG | 2,900 | 166,403 | |
Henry Schein, Inc. (a) | 171,426 | 10,254,703 | |
McKesson Corp. | 714,700 | 41,995,772 | |
Profarma Distribuidora de Produtos Farmaceuticos SA (a) | 1,489,300 | 26,362,403 | |
| 78,779,281 | ||
Health Care Facilities - 1.9% | |||
Acibadem Saglik Hizmetleri AS | 987,660 | 6,959,341 | |
Apollo Hospitals Enterprise Ltd. | 333,733 | 4,090,316 | |
Brookdale Senior Living, Inc. (d) | 167,076 | 4,359,013 | |
CVS Group plc | 600 | 3,058 | |
Emeritus Corp. (a) | 420,847 | 9,317,553 | |
LifePoint Hospitals, Inc. (a) | 98,832 | 2,476,730 | |
Sun Healthcare Group, Inc. (a) | 353,994 | 5,217,872 | |
Universal Health Services, Inc. Class B | 31,900 | 1,704,098 | |
VCA Antech, Inc. (a) | 92,400 | 2,966,964 | |
| 37,094,945 | ||
Health Care Services - 4.8% | |||
athenahealth, Inc. (d) | 1,600 | 52,032 | |
Diagnosticos da America SA | 1,020,600 | 19,270,238 | |
Emergency Medical Services Corp. | 100 | 2,473 | |
Express Scripts, Inc. (a) | 478,451 | 28,276,454 | |
| |||
Shares | Value | ||
Genoptix, Inc. | 59,100 | $ 1,517,097 | |
Health Grades, Inc. (a) | 1,124,047 | 6,137,297 | |
Healthways, Inc. (a) | 39,800 | 1,367,130 | |
HMS Holdings Corp. (a) | 119,500 | 3,269,520 | |
Laboratory Corp. of America Holdings (a) | 48,200 | 3,726,342 | |
Medco Health Solutions, Inc. (a) | 264,800 | 11,733,288 | |
Nighthawk Radiology Holdings, Inc. (a) | 1,240,902 | 14,171,101 | |
Omnicare, Inc. | 100,487 | 2,108,217 | |
Rural/Metro Corp. (a) | 394,049 | 1,063,932 | |
Virtual Radiologic Corp. | 13,800 | 239,844 | |
| 92,934,965 | ||
Managed Health Care - 10.5% | |||
Aetna, Inc. | 41,000 | 2,033,600 | |
Health Net, Inc. (a) | 459,900 | 20,208,006 | |
Humana, Inc. (a) | 692,956 | 47,349,683 | |
Medial Saude SA (a) | 1,248,800 | 15,252,632 | |
UnitedHealth Group, Inc. | 1,953,820 | 90,813,554 | |
Universal American Financial Corp. (a) | 1,094,411 | 18,801,981 | |
Wellcare Health Plans, Inc. (a) | 64,600 | 3,084,004 | |
WellPoint, Inc. (a) | 86,000 | 6,026,880 | |
| 203,570,340 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 412,379,531 | ||
HEALTH CARE TECHNOLOGY - 1.3% | |||
Health Care Technology - 1.3% | |||
Allscripts Healthcare Solutions, Inc. (a)(d) | 200,048 | 2,134,512 | |
Cerner Corp. (a) | 94,897 | 4,123,275 | |
Eclipsys Corp. (a) | 553,954 | 11,826,918 | |
HLTH Corp. (a)(d) | 609,250 | 7,213,520 | |
MedAssets, Inc. | 57,700 | 1,047,832 | |
| 26,346,057 | ||
INDUSTRIAL CONGLOMERATES - 0.1% | |||
Industrial Conglomerates - 0.1% | |||
Max India Ltd. (a) | 289,920 | 1,428,230 | |
INTERNET SOFTWARE & SERVICES - 0.2% | |||
Internet Software & Services - 0.2% | |||
WebMD Health Corp. Class A (a)(d) | 161,089 | 4,487,940 | |
LIFE SCIENCES TOOLS & SERVICES - 11.5% | |||
Life Sciences Tools & Services - 11.5% | |||
Affymetrix, Inc. (a) | 303,800 | 5,826,884 | |
AMAG Pharmaceuticals, Inc. (a) | 177,542 | 7,771,013 | |
Applera Corp. - Applied Biosystems Group | 288,600 | 9,728,706 | |
Bruker BioSciences Corp. (a) | 1,017,355 | 13,907,243 | |
Charles River Laboratories International, Inc. (a) | 53,100 | 3,110,598 | |
Covance, Inc. (a) | 43,100 | 3,638,071 | |
Dishman Pharmaceuticals and | 438,360 | 3,204,119 | |
Divi's Laboratories Ltd. (a) | 44,240 | 1,495,805 | |
Common Stocks - continued | |||
Shares | Value | ||
LIFE SCIENCES TOOLS & SERVICES - CONTINUED | |||
Life Sciences Tools & Services - continued | |||
Exelixis, Inc. (a) | 239,621 | $ 1,528,782 | |
Illumina, Inc. (a) | 139,388 | 10,093,085 | |
Invitrogen Corp. (a) | 115,164 | 9,730,206 | |
Lonza Group AG | 21,640 | 2,851,374 | |
Millipore Corp. (a) | 67,830 | 4,741,317 | |
MonoGen, Inc. (a) | 500 | 594 | |
PAREXEL International Corp. (a) | 23,000 | 1,263,850 | |
PerkinElmer, Inc. | 779,391 | 19,344,485 | |
Pharmaceutical Product | 119,500 | 5,385,865 | |
QIAGEN NV (a) | 478,400 | 10,520,016 | |
Techne Corp. (a) | 31,765 | 2,172,408 | |
Thermo Fisher Scientific, Inc. (a) | 1,075,616 | 60,159,203 | |
Waters Corp. (a) | 783,700 | 46,716,357 | |
Wuxi Pharmatech Cayman, Inc. Sponsored ADR (d) | 18,500 | 444,000 | |
| 223,633,981 | ||
MACHINERY - 0.4% | |||
Industrial Machinery - 0.4% | |||
Pall Corp. | 215,200 | 8,472,424 | |
PHARMACEUTICALS - 26.7% | |||
Pharmaceuticals - 26.7% | |||
Abbott Laboratories | 1,483,117 | 79,420,915 | |
Alembic Ltd. | 154,607 | 209,129 | |
Allergan, Inc. | 954,461 | 56,532,725 | |
Alpharma, Inc. Class A (a) | 79,200 | 1,994,256 | |
Barr Pharmaceuticals, Inc. (a) | 112,100 | 5,285,515 | |
Biodel, Inc. | 25,559 | 357,570 | |
BioForm Medical, Inc. | 27,169 | 153,505 | |
BioMimetic Therapeutics, Inc. (a) | 383,543 | 5,269,881 | |
BMP Sunstone Corp. (a) | 100,770 | 869,645 | |
Bristol-Myers Squibb Co. | 2,077,800 | 46,979,058 | |
China Shineway Pharmaceutical | 5,759,000 | 3,739,815 | |
Eczacibasi ILAC Sanayi TAS (a) | 250,000 | 934,043 | |
Elan Corp. PLC sponsored ADR (a) | 20,800 | 473,616 | |
Jazz Pharmaceuticals, Inc. | 103,348 | 1,236,042 | |
Johnson & Johnson | 173,900 | 10,774,844 | |
Merck & Co., Inc. | 2,518,843 | 111,584,748 | |
Nexmed, Inc. (a) | 2,236,374 | 3,421,652 | |
Novo Nordisk AS Series B | 174,800 | 11,951,076 | |
Perrigo Co. | 129,600 | 4,331,232 | |
Schering-Plough Corp. | 2,355,600 | 51,116,520 | |
Shire PLC sponsored ADR | 292,800 | 17,111,232 | |
Simcere Pharmaceutical Group sponsored ADR | 86,600 | 906,702 | |
Sirtris Pharmaceuticals, Inc. | 64,220 | 766,787 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 147,400 | 7,232,918 | |
ULURU, Inc. (a) | 77,500 | 202,275 | |
| |||
Shares | Value | ||
Wyeth | 2,150,648 | $ 93,811,266 | |
XenoPort, Inc. (a) | 57,337 | 2,933,934 | |
| 519,600,901 | ||
SOFTWARE - 0.1% | |||
Application Software - 0.1% | |||
Nuance Communications, Inc. (a)(d) | 111,900 | 1,840,755 | |
Systems Software - 0.0% | |||
Quality Systems, Inc. | 9,066 | 295,370 | |
TOTAL SOFTWARE | 2,136,125 | ||
WATER UTILITIES - 0.6% | |||
Water Utilities - 0.6% | |||
Companhia de Saneamento Basico do Estado de Sao Paulo (SABESP) sponsored ADR (d) | 245,800 | 11,515,730 | |
TOTAL COMMON STOCKS (Cost $1,763,532,073) | 1,929,325,829 | ||
Money Market Funds - 3.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 44,428,177 | 44,428,177 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 15,656,081 | 15,656,081 | |
TOTAL MONEY MARKET FUNDS (Cost $60,084,258) | 60,084,258 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $1,823,616,331) | 1,989,410,087 |
NET OTHER ASSETS - (2.1)% | (41,263,555) | ||
NET ASSETS - 100% | $ 1,948,146,532 | ||
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. |
(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 $89,604 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 8/2/12 | 8/1/07 | $ 50 |
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 | $ 1,891,051 |
Fidelity Securities Lending Cash Central Fund | 613,266 |
Total | $ 2,504,317 |
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, |
InfuSystems Holdings, Inc. | $ 3,846,575 | $ 4,668,136 | $ - | $ - | $ 5,014,240 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.2% |
Brazil | 3.7% |
Bermuda | 2.2% |
United Kingdom | 1.9% |
Switzerland | 1.1% |
Others (individually less than 1%) | 5.9% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $15,131,948) - See accompanying schedule: Unaffiliated issuers (cost $1,755,403,742) | $ 1,924,311,589 |
|
Fidelity Central Funds (cost $60,084,258) | 60,084,258 |
|
Other affiliated issuers (cost $8,128,331) | 5,014,240 |
|
Total Investments (cost $1,823,616,331) |
| $ 1,989,410,087 |
Foreign currency held at value (cost $288,025) | 286,083 | |
Receivable for investments sold | 38,402,747 | |
Receivable for fund shares sold | 1,409,000 | |
Dividends receivable | 1,072,066 | |
Distributions receivable from Fidelity Central Funds | 231,479 | |
Prepaid expenses | 5,534 | |
Other receivables | 223,869 | |
Total assets | 2,031,040,865 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 57,038,894 | |
Payable for fund shares redeemed | 8,633,947 | |
Accrued management fee | 934,885 | |
Other affiliated payables | 460,005 | |
Other payables and accrued expenses | 170,521 | |
Collateral on securities loaned, at value | 15,656,081 | |
Total liabilities | 82,894,333 | |
|
|
|
Net Assets | $ 1,948,146,532 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,693,325,833 | |
Undistributed net investment income | 2,286,929 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 86,580,333 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 165,953,437 | |
Net Assets, for 17,053,539 shares outstanding | $ 1,948,146,532 | |
Net Asset Value, offering price and redemption price per share ($1,948,146,532 ÷ 17,053,539 shares) | $ 114.24 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 19,288,462 |
Special dividends |
| 2,163,000 |
Interest |
| 50,711 |
Income from Fidelity Central Funds (including $613,266 from security lending) |
| 2,504,317 |
Total income |
| 24,006,490 |
|
|
|
Expenses | ||
Management fee | $ 11,739,504 | |
Transfer agent fees | 4,963,598 | |
Accounting and security lending fees | 647,168 | |
Custodian fees and expenses | 228,764 | |
Independent trustees' compensation | 7,766 | |
Appreciation in deferred trustee compensation account | 437 | |
Registration fees | 55,836 | |
Audit | 51,279 | |
Legal | 13,120 | |
Miscellaneous | 93,580 | |
Total expenses before reductions | 17,801,052 | |
Expense reductions | (161,217) | 17,639,835 |
Net investment income (loss) | 6,366,655 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $239,124) | 241,412,940 | |
Foreign currency transactions | (349,736) | |
Total net realized gain (loss) |
| 241,063,204 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $184,828) | (227,169,499) | |
Assets and liabilities in foreign currencies | 36,917 | |
Total change in net unrealized appreciation (depreciation) |
| (227,132,582) |
Net gain (loss) | 13,930,622 | |
Net increase (decrease) in net assets resulting from operations | $ 20,297,277 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Health Care Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 6,366,655 | $ 6,722,615 |
Net realized gain (loss) | 241,063,204 | 156,765,299 |
Change in net unrealized appreciation (depreciation) | (227,132,582) | (83,817,769) |
Net increase (decrease) in net assets resulting from operations | 20,297,277 | 79,670,145 |
Distributions to shareholders from net investment income | (6,192,733) | (3,281,740) |
Distributions to shareholders from net realized gain | (224,013,816) | (284,464,403) |
Total distributions | (230,206,549) | (287,746,143) |
Share transactions | 297,559,081 | 284,188,477 |
Reinvestment of distributions | 216,028,272 | 271,255,684 |
Cost of shares redeemed | (429,358,886) | (653,962,965) |
Net increase (decrease) in net assets resulting from share transactions | 84,228,467 | (98,518,804) |
Redemption fees | 44,318 | 54,584 |
Total increase (decrease) in net assets | (125,636,487) | (306,540,218) |
|
|
|
Net Assets | ||
Beginning of period | 2,073,783,019 | 2,380,323,237 |
End of period (including undistributed net investment income of $2,286,929 and undistributed net investment income | $ 1,948,146,532 | $ 2,073,783,019 |
Other Information Shares | ||
Sold | 2,338,021 | 2,259,157 |
Issued in reinvestment of distributions | 1,705,095 | 2,185,999 |
Redeemed | (3,347,369) | (5,200,459) |
Net increase (decrease) | 695,747 | (755,303) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 126.78 | $ 139.09 | $ 127.07 | $ 123.36 | $ 99.56 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .39 F | .39 | (.17) | .14 | .13 |
Net realized and unrealized gain (loss) | 1.63 | 4.49 | 25.97 | 3.69 | 23.84 |
Total from investment operations | 2.02 | 4.88 | 25.80 | 3.83 | 23.97 |
Distributions from net investment income | (.39) | (.20) | (.04) | (.13) | (.18) |
Distributions from net realized gain | (14.17) | (16.99) | (13.75) | - | - |
Total distributions | (14.56) | (17.19) | (13.79) | (.13) | (.18) |
Redemption fees added to paid in capital C | - I | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 114.24 | $ 126.78 | $ 139.09 | $ 127.07 | $ 123.36 |
Total Return A,B | .72% | 4.13% | 20.42% | 3.12% | 24.11% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .85% | .88% | .91% | .93% | 1.02% |
Expenses net of fee waivers, if any | .85% | .88% | .91% | .93% | 1.02% |
Expenses net of all reductions | .84% | .87% | .87% | .92% | .99% |
Net investment income (loss) | .30% F | .31% | (.12)% | .11% | .12% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,948,147 | $ 2,073,783 | $ 2,380,323 | $ 1,906,252 | $ 2,035,782 |
Portfolio turnover rate E | 120% | 91% | 120% | 32% | 104% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.13 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .20% G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Delivery Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Medical Delivery Portfolio | -4.00% | 20.16% | 7.78% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Medical Delivery Portfolio on February 28, 1998. 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
Select Medical Delivery Portfolio
Management's Discussion of Fund Performance
Comments from Matthew Sabel, Portfolio Manager of Select Medical Delivery Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months that ended February 29, 2008, the fund fell 4.00%, outperforming the 4.67% decline of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Providers & Services Index, but slightly lagging the S&P 500®. Favorable security selection and an underweighting in managed health care and health care distributors contributed to the fund's return relative to the MSCI index, as did solid stock selection in health care facilities. Favorable currency movements further aided relative performance due to the fund's foreign investments. Unsuccessful stock selection and an underweighting in health care services detracted, as did the negative performance of the fund's out-of-benchmark positions in health care supplies and biotechnology. Top contributors to the fund's performance relative to the MSCI benchmark included pharmacy benefit managers (PBMs) Express Scripts and Caremark - which was acquired by CVS; an underweighting in managed health care firm WellPoint, no longer held at period end; a holding in drug distributor McKesson; and timely ownership of managed health care firm Wellcare Health Plans. Among the detractors were an out-of-benchmark position in ambulance company Rural/Metro, underweightings in PBM Medco Health Solutions and managed health care firm Aetna, and an investment in health care facility operator Brookdale Senior Living.
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
Select Medical Delivery Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
UnitedHealth Group, Inc. | 21.0 | 23.5 |
McKesson Corp. | 9.2 | 9.0 |
Express Scripts, Inc. | 7.3 | 5.0 |
Humana, Inc. | 7.0 | 4.1 |
Health Net, Inc. | 5.1 | 2.6 |
Inverness Medical Innovations, Inc. | 4.1 | 4.2 |
CVS Caremark Corp. | 2.8 | 2.7 |
Universal American Financial Corp. | 2.7 | 1.6 |
Medial Saude SA | 2.6 | 0.4 |
Aetna, Inc. | 2.6 | 0.0 |
| 64.4 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Health Care Providers | 83.6% |
|
| Health Care Equipment & Supplies | 6.1% |
|
| Food & Staples Retailing | 2.8% |
|
| Health Care Technology | 2.7% |
|
| Diversified Consumer Services | 1.4% |
|
| All Others* | 3.4% |
|
| |||
As of August 31, 2007 | |||
| Health Care Providers | 79.6% |
|
| Health Care Equipment & Supplies | 7.1% |
|
| Food & Staples Retailing | 2.7% |
|
| Health Care Technology | 1.6% |
|
| Insurance | 1.6% |
|
| All Others* | 7.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Medical Delivery Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.5% | |||
Biotechnology - 0.5% | |||
Alnylam Pharmaceuticals, Inc. (a) | 29,300 | $ 832,120 | |
Arena Pharmaceuticals, Inc. (a) | 56,746 | 384,738 | |
deCODE genetics, Inc. (a) | 196,600 | 578,004 | |
Memory Pharmaceuticals Corp. (a) | 877,394 | 561,532 | |
Theravance, Inc. (a) | 22,300 | 366,835 | |
| 2,723,229 | ||
DIVERSIFIED CONSUMER SERVICES - 1.4% | |||
Specialized Consumer Services - 1.4% | |||
Carriage Services, Inc. Class A (a) | 506,549 | 4,001,737 | |
Service Corp. International | 311,430 | 3,363,444 | |
Stewart Enterprises, Inc. Class A | 5,615 | 33,522 | |
| 7,398,703 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.7% | |||
Other Diversifed Financial Services - 0.7% | |||
MBF Healthcare Acquisition Corp. unit | 435,100 | 3,441,641 | |
FOOD & STAPLES RETAILING - 2.8% | |||
Drug Retail - 2.8% | |||
A&D Pharma Holdings NV (Reg. S) unit | 12,500 | 227,700 | |
CVS Caremark Corp. | 371,483 | 15,000,484 | |
| 15,228,184 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 6.1% | |||
Health Care Equipment - 1.9% | |||
Aspect Medical Systems, Inc. (a)(e) | 480,800 | 5,995,576 | |
Covidien Ltd. | 40,000 | 1,711,600 | |
Golden Meditech Co. Ltd. | 4,472,000 | 1,601,334 | |
NeuroMetrix, Inc. (a)(e) | 8,500 | 20,655 | |
Quidel Corp. (a) | 50,000 | 821,500 | |
| 10,150,665 | ||
Health Care Supplies - 4.2% | |||
Atrion Corp. | 7,500 | 765,000 | |
InfuSystems Holdings, Inc. (a) | 20,000 | 70,400 | |
Inverness Medical Innovations, Inc. (a) | 758,500 | 22,110,275 | |
| 22,945,675 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 33,096,340 | ||
HEALTH CARE PROVIDERS & SERVICES - 83.2% | |||
Health Care Distributors & Services - 14.5% | |||
Cardinal Health, Inc. | 178,800 | 10,574,232 | |
Henry Schein, Inc. (a) | 163,332 | 9,770,520 | |
McKesson Corp. | 850,100 | 49,951,876 | |
Profarma Distribuidora de Produtos Farmaceuticos SA (a) | 450,000 | 7,965,542 | |
United Drug PLC (Ireland) | 55,000 | 322,576 | |
| 78,584,746 | ||
| |||
Shares | Value | ||
Health Care Facilities - 9.7% | |||
Acibadem Saglik Hizmetleri AS | 781,476 | $ 5,506,509 | |
Apollo Hospitals Enterprise Ltd. | 676,527 | 8,291,686 | |
Bangkok Chain Hospital PCL | 4,250,000 | 1,004,933 | |
Bangkok Dusit Medical Service PCL | 297,600 | 312,233 | |
Brookdale Senior Living, Inc. (e) | 97,477 | 2,543,175 | |
Bumrungrad Hospital PCL (For. Reg.) | 190,500 | 220,749 | |
Emeritus Corp. (a) | 266,824 | 5,907,483 | |
Health Management Associates, Inc. Class A | 1,385,000 | 7,409,750 | |
LifePoint Hospitals, Inc. (a) | 75,367 | 1,888,697 | |
National Healthcare Corp. | 7,470 | 348,550 | |
Sun Healthcare Group, Inc. (a) | 524,037 | 7,724,305 | |
Sunrise Senior Living, Inc. (a) | 10,000 | 273,800 | |
Tenet Healthcare Corp. (a) | 75,000 | 360,750 | |
U.S. Physical Therapy, Inc. (a) | 73,046 | 967,860 | |
Universal Health Services, Inc. Class B | 100,000 | 5,342,000 | |
VCA Antech, Inc. (a) | 129,300 | 4,151,823 | |
| 52,254,303 | ||
Health Care Services - 16.9% | |||
AMN Healthcare Services, Inc. (a) | 53,600 | 867,784 | |
Bio-Reference Laboratories, Inc. (a) | 20,000 | 553,000 | |
Diagnosticos da America SA | 644,300 | 12,165,211 | |
Emergency Medical Services Corp. | 100 | 2,473 | |
Express Scripts, Inc. (a) | 664,900 | 39,295,590 | |
Genoptix, Inc. | 25,000 | 641,750 | |
Health Grades, Inc. (a) | 1,277,615 | 6,975,778 | |
Healthways, Inc. (a) | 64,800 | 2,225,880 | |
HMS Holdings Corp. (a) | 61,829 | 1,691,641 | |
Laboratory Corp. of America Holdings (a) | 14,300 | 1,105,533 | |
Medco Health Solutions, Inc. (a) | 166,700 | 7,386,477 | |
Nighthawk Radiology Holdings, Inc. (a)(e) | 721,723 | 8,242,077 | |
Omnicare, Inc. (e) | 87,300 | 1,831,554 | |
Pediatrix Medical Group, Inc. (a) | 50,500 | 3,333,505 | |
Rural/Metro Corp. (a)(f) | 1,957,400 | 5,284,980 | |
Virtual Radiologic Corp. | 3,800 | 66,044 | |
| 91,669,277 | ||
Managed Health Care - 42.1% | |||
Aetna, Inc. | 283,400 | 14,056,640 | |
Health Net, Inc. (a) | 624,100 | 27,422,954 | |
Healthspring, Inc. (a) | 99,900 | 1,753,245 | |
Humana, Inc. (a) | 551,171 | 37,661,514 | |
Medial Saude SA (a) | 1,154,000 | 14,094,760 | |
Molina Healthcare, Inc. (a) | 20,000 | 633,000 | |
UnitedHealth Group, Inc. | 2,436,447 | 113,246,058 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Managed Health Care - continued | |||
Universal American Financial Corp. (a) | 852,596 | $ 14,647,599 | |
Wellcare Health Plans, Inc. (a)(e) | 80,000 | 3,819,200 | |
| 227,334,970 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 449,843,296 | ||
HEALTH CARE TECHNOLOGY - 2.7% | |||
Health Care Technology - 2.7% | |||
Cerner Corp. (a) | 34,801 | 1,512,103 | |
Eclipsys Corp. (a) | 378,100 | 8,072,435 | |
HLTH Corp. (a) | 430,800 | 5,100,672 | |
| 14,685,210 | ||
INDUSTRIAL CONGLOMERATES - 0.4% | |||
Industrial Conglomerates - 0.4% | |||
Max India Ltd. (a) | 470,000 | 2,315,356 | |
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
WebMD Health Corp. Class A (a)(e) | 63,400 | 1,766,324 | |
LIFE SCIENCES TOOLS & SERVICES - 0.8% | |||
Life Sciences Tools & Services - 0.8% | |||
Bruker BioSciences Corp. (a) | 209,017 | 2,857,262 | |
Medtox Scientific, Inc. (a) | 35,000 | 559,650 | |
Wuxi Pharmatech Cayman, Inc. Sponsored ADR (e) | 22,100 | 530,400 | |
| 3,947,312 | ||
PHARMACEUTICALS - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Nexmed, Inc. (a) | 327,800 | 501,534 | |
SOFTWARE - 0.0% | |||
Systems Software - 0.0% | |||
Quality Systems, Inc. | 1,300 | 42,354 | |
TOTAL COMMON STOCKS (Cost $490,242,662) | 534,989,483 | ||
Nonconvertible Bonds - 0.4% | ||||
| Principal Amount | Value | ||
HEALTH CARE PROVIDERS & SERVICES - 0.4% | ||||
Health Care Services - 0.4% | ||||
Rural/Metro Corp.: | ||||
0% 3/15/16 (d) | $ 2,790,000 | $ 2,036,700 | ||
9.875% 3/15/15 | 20,000 | 18,350 | ||
TOTAL CORPORATE BONDS (Cost $2,188,157) | 2,055,050 | |||
Money Market Funds - 4.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 16,147,288 | $ 16,147,288 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 9,540,600 | 9,540,600 | |
TOTAL MONEY MARKET FUNDS (Cost $25,687,888) | 25,687,888 | ||
TOTAL INVESTMENT PORTFOLIO - 104.1% (Cost $518,118,707) | 562,732,421 |
NET OTHER ASSETS - (4.1)% | (22,235,147) | ||
NET ASSETS - 100% | $ 540,497,274 | ||
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. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) 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 | $ 762,002 |
Fidelity Securities Lending Cash Central Fund | 359,831 |
Total | $ 1,121,833 |
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, |
Health Grades, Inc. | $ 10,192,464 | $ 3,328,051 | $ 6,847,206 | $ - | $ - |
Rural/Metro Corp. | 14,817,518 | - | - | - | 5,284,980 |
Total | $ 25,009,982 | $ 3,328,051 | $ 6,847,206 | $ - | $ 5,284,980 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 89.7% |
Brazil | 6.3% |
India | 1.9% |
Turkey | 1.0% |
Others (individually less than 1%) | 1.1% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $9,127,003) - See accompanying schedule: Unaffiliated issuers (cost $477,338,085) | $ 531,759,553 |
|
Fidelity Central Funds (cost $25,687,888) | 25,687,888 |
|
Other affiliated issuers (cost $15,092,734) | 5,284,980 |
|
Total Investments (cost $518,118,707) |
| $ 562,732,421 |
Foreign currency held at value (cost $165,386) | 164,159 | |
Receivable for investments sold | 11,465,652 | |
Receivable for fund shares sold | 484,456 | |
Dividends receivable | 95,116 | |
Interest receivable | 905 | |
Distributions receivable from Fidelity Central Funds | 36,376 | |
Prepaid expenses | 1,535 | |
Other receivables | 5,954 | |
Total assets | 574,986,574 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 10,300 | |
Payable for investments purchased | 21,965,016 | |
Payable for fund shares redeemed | 2,467,591 | |
Accrued management fee | 276,777 | |
Other affiliated payables | 169,890 | |
Other payables and accrued expenses | 59,126 | |
Collateral on securities loaned, at value | 9,540,600 | |
Total liabilities | 34,489,300 | |
|
|
|
Net Assets | $ 540,497,274 | |
Net Assets consist of: |
| |
Paid in capital | $ 482,611,002 | |
Undistributed net investment income | 1,179,540 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 12,072,073 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 44,634,659 | |
Net Assets, for 11,938,119 shares outstanding | $ 540,497,274 | |
Net Asset Value, offering price and redemption price per share ($540,497,274 ÷ 11,938,119 shares) | $ 45.27 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 1,205,023 |
Special dividends |
| 4,761,750 |
Interest |
| 266,808 |
Income from Fidelity Central Funds (including $359,831 from security lending) |
| 1,121,833 |
Total income |
| 7,355,414 |
|
|
|
Expenses | ||
Management fee | $ 3,634,238 | |
Transfer agent fees | 1,840,480 | |
Accounting and security lending fees | 243,628 | |
Custodian fees and expenses | 103,941 | |
Independent trustees' compensation | 2,535 | |
Registration fees | 63,555 | |
Audit | 55,727 | |
Legal | 4,319 | |
Interest | 6,429 | |
Miscellaneous | 30,351 | |
Total expenses before reductions | 5,985,203 | |
Expense reductions | (38,383) | 5,946,820 |
Net investment income (loss) | 1,408,594 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 47,391,267 | |
Other affiliated issuers | 1,089,412 |
|
Foreign currency transactions | (196,292) | |
Total net realized gain (loss) |
| 48,284,387 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $24,801) | (79,079,150) | |
Assets and liabilities in foreign currencies | 35,537 | |
Total change in net unrealized appreciation (depreciation) |
| (79,043,613) |
Net gain (loss) | (30,759,226) | |
Net increase (decrease) in net assets resulting from operations | $ (29,350,632) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Delivery Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,408,594 | $ (4,868,748) |
Net realized gain (loss) | 48,284,387 | 87,934,009 |
Change in net unrealized appreciation (depreciation) | (79,043,613) | (115,789,754) |
Net increase (decrease) in net assets resulting from operations | (29,350,632) | (32,724,493) |
Distributions to shareholders from net realized gain | (50,920,643) | (79,276,226) |
Share transactions | 374,625,171 | 251,334,506 |
Reinvestment of distributions | 48,846,356 | 75,721,552 |
Cost of shares redeemed | (446,389,762) | (1,041,431,790) |
Net increase (decrease) in net assets resulting from share transactions | (22,918,235) | (714,375,732) |
Redemption fees | 45,642 | 156,545 |
Total increase (decrease) in net assets | (103,143,868) | (826,219,906) |
|
|
|
Net Assets | ||
Beginning of period | 643,641,142 | 1,469,861,048 |
End of period (including undistributed net investment income of $1,179,540 and accumulated net investment loss | $ 540,497,274 | $ 643,641,142 |
Other Information Shares | ||
Sold | 7,144,220 | 4,957,037 |
Issued in reinvestment of distributions | 944,218 | 1,525,404 |
Redeemed | (8,765,390) | (20,600,304) |
Net increase (decrease) | (676,952) | (14,117,863) |
Financial Highlights
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 51.02 | $ 54.98 | $ 46.80 | $ 32.76 | $ 22.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .11 F | (.29) | (.31) | (.28) | (.30) |
Net realized and unrealized gain (loss) | (1.69) | 1.20 G | 11.41 | 14.28 | 10.20 |
Total from investment operations | (1.58) | .91 | 11.10 | 14.00 | 9.90 |
Distributions from net realized gain | (4.17) | (4.88) | (2.94) | - | - |
Redemption fees added to paid in capital C | - J | .01 | .02 | .04 | .02 |
Net asset value, end of period | $ 45.27 | $ 51.02 | $ 54.98 | $ 46.80 | $ 32.76 |
Total Return A,B | (4.00)% | 2.23% | 24.54% | 42.86% | 43.43% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .92% | .95% | .95% | 1.03% | 1.30% |
Expenses net of fee waivers, if any | .92% | .95% | .95% | 1.03% | 1.30% |
Expenses net of all reductions | .91% | .94% | .91% | .92% | 1.24% |
Net investment income (loss) | .22% F | (.58)% | (.60)% | (.72)% | (1.11)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 540,497 | $ 643,641 | $ 1,469,861 | $ 706,183 | $ 210,255 |
Portfolio turnover rate E | 113% | 92% | 106% | 244% | 196% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.38 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.52)%. G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. H 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 other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Equipment and Systems Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Life of |
Select Medical Equipment and Systems Portfolio | 12.57% | 14.86% | 14.78% |
A From April 28, 1998.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Select Medical Equipment and Systems Portfolio on April 28, 1998, when the fund started. 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
Select Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Comments from Edward Yoon, Portfolio Manager of Select Medical Equipment and Systems Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund rose 12.57%, substantially outperforming the S&P 500® and the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Health Care Equipment & Supplies Index, which rose 7.10%. Good stock picking in the health care equipment group accounted for much of this outperformance of the MSCI index. The fund benefited, for example, from its underweighted positions in Boston Scientific, which faced safety and efficacy questions in the drug-eluting coronary stent market, and in Zimmer Holdings, which faced a Department of Justice investigation into its selling practices in the orthopedic implant market. Stock picking in the life science tools and services group, which is not part of the benchmark index, also helped performance. One example is Illumina, a strong-performing company that develops technology for genetic analysis. On the other hand, our underweighted position in Intuitive Surgical, which makes robotic surgical equipment, detracted from relative performance. Not owning Dade Behring, a diagnostics stock that appreciated when the company was acquired, also hurt.
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
Select Medical Equipment and Systems Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Medtronic, Inc. | 17.4 | 17.1 |
Covidien Ltd. | 10.9 | 1.7 |
Baxter International, Inc. | 9.1 | 9.4 |
Becton, Dickinson & Co. | 8.3 | 10.3 |
Boston Scientific Corp. | 4.5 | 0.0 |
C.R. Bard, Inc. | 4.2 | 8.1 |
Stryker Corp. | 3.2 | 0.0 |
Alcon, Inc. | 3.2 | 4.8 |
Allergan, Inc. | 3.1 | 3.4 |
St. Jude Medical, Inc. | 2.8 | 3.3 |
| 66.7 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Health Care Equipment & Supplies | 82.1% |
|
| Life Sciences Tools & Services | 9.2% |
|
| Pharmaceuticals | 3.5% |
|
| Biotechnology | 2.4% |
|
| Health Care Providers & Services | 1.0% |
|
| All Others* | 1.8% |
|
| |||
As of August 31, 2007 | |||
| Health Care Equipment & Supplies | 78.0% |
|
| Life Sciences Tools & Services | 10.7% |
|
| Pharmaceuticals | 3.8% |
|
| Biotechnology | 3.2% |
|
| Health Care Providers & Services | 1.4% |
|
| All Others* | 2.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Medical Equipment and Systems Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
BIOTECHNOLOGY - 2.4% | |||
Biotechnology - 2.4% | |||
Alnylam Pharmaceuticals, Inc. (a)(d) | 250,000 | $ 7,100,000 | |
CSL Ltd. | 300,000 | 10,061,831 | |
deCODE genetics, Inc. (a)(d) | 700,000 | 2,058,000 | |
Diagnocure, Inc. (a) | 474,700 | 1,186,690 | |
MannKind Corp. (a)(d) | 250,363 | 1,770,066 | |
Nanosphere, Inc. | 80,000 | 740,000 | |
Third Wave Technologies, Inc. (a) | 600,000 | 4,782,000 | |
| 27,698,587 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Agilent Technologies, Inc. (a) | 100,000 | 3,061,000 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 82.1% | |||
Health Care Equipment - 75.5% | |||
American Medical Systems Holdings, Inc. (a)(d) | 2,040,000 | 29,763,600 | |
ArthroCare Corp. (a)(d) | 160,000 | 6,424,000 | |
Aspect Medical Systems, Inc. (a) | 159,106 | 1,984,052 | |
Baxter International, Inc. | 1,800,000 | 106,236,000 | |
Becton, Dickinson & Co. | 1,080,000 | 97,653,600 | |
Boston Scientific Corp. (a)(d) | 4,200,000 | 52,878,000 | |
C.R. Bard, Inc. | 520,000 | 49,290,800 | |
Covidien Ltd. | 2,980,000 | 127,514,200 | |
Cyberonics, Inc. (a) | 300,000 | 3,870,000 | |
Electro-Optical Sciences, Inc. warrants 11/2/11 (a)(e) | 90,313 | 158,287 | |
ev3, Inc. (a) | 500,000 | 4,420,000 | |
Gen-Probe, Inc. (a) | 420,000 | 20,080,200 | |
Heartware Ltd. (a) | 5,997,483 | 2,577,849 | |
Hillenbrand Industries, Inc. | 450,000 | 23,611,500 | |
Hologic, Inc. (a) | 250,000 | 15,077,500 | |
Home Diagnostics, Inc. (a) | 100,000 | 726,000 | |
Hospira, Inc. (a) | 180,000 | 7,660,800 | |
Integra LifeSciences Holdings Corp. (a)(d) | 195,000 | 8,080,800 | |
Intuitive Surgical, Inc. (a) | 25,000 | 7,048,000 | |
Kinetic Concepts, Inc. (a) | 50,000 | 2,569,500 | |
Masimo Corp. | 100,000 | 3,206,000 | |
Medtronic, Inc. | 4,125,000 | 203,609,999 | |
Mentor Corp. | 154,000 | 4,567,640 | |
Micrus Endovascular Corp. (a) | 310,000 | 4,386,500 | |
NuVasive, Inc. (a)(d) | 132,000 | 5,087,280 | |
ResMed, Inc. (a)(d) | 50,000 | 2,024,500 | |
Smith & Nephew PLC sponsored ADR (d) | 180,000 | 11,768,400 | |
St. Jude Medical, Inc. (a) | 750,000 | 32,235,000 | |
| |||
Shares | Value | ||
Stereotaxis, Inc. (a)(d) | 246,631 | $ 1,423,061 | |
Stryker Corp. | 575,000 | 37,438,250 | |
The Spectranetics Corp. (a) | 260,000 | 2,340,000 | |
ThermoGenesis Corp. (a) | 599,788 | 995,648 | |
Zimmer Holdings, Inc. (a) | 90,000 | 6,776,100 | |
| 883,483,066 | ||
Health Care Supplies - 6.6% | |||
Alcon, Inc. | 255,000 | 36,906,150 | |
Cooper Companies, Inc. (d) | 35,000 | 1,196,650 | |
Haemonetics Corp. (a) | 150,000 | 8,715,000 | |
Immucor, Inc. (a) | 540,000 | 16,092,000 | |
Inverness Medical Innovations, Inc. (a) | 400,000 | 11,660,000 | |
RTI Biologics, Inc. (a) | 299,928 | 2,579,381 | |
TranS1, Inc. | 5,200 | 68,796 | |
| 77,217,977 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 960,701,043 | ||
HEALTH CARE PROVIDERS & SERVICES - 1.0% | |||
Health Care Distributors & Services - 1.0% | |||
Henry Schein, Inc. (a) | 100,000 | 5,982,000 | |
Patterson Companies, Inc. (a) | 150,000 | 5,280,000 | |
| 11,262,000 | ||
LIFE SCIENCES TOOLS & SERVICES - 9.2% | |||
Life Sciences Tools & Services - 9.2% | |||
Affymetrix, Inc. (a)(d) | 770,000 | 14,768,600 | |
Applera Corp. - Applied Biosystems Group | 575,000 | 19,383,250 | |
Bruker BioSciences Corp. (a) | 300,000 | 4,101,000 | |
Charles River Laboratories International, Inc. (a) | 190,000 | 11,130,200 | |
Illumina, Inc. (a) | 327,000 | 23,678,070 | |
Invitrogen Corp. (a) | 140,000 | 11,828,600 | |
QIAGEN NV (a)(d) | 1,050,000 | 23,089,500 | |
| 107,979,220 | ||
MACHINERY - 0.2% | |||
Industrial Machinery - 0.2% | |||
Pall Corp. | 60,000 | 2,362,200 | |
PHARMACEUTICALS - 3.5% | |||
Pharmaceuticals - 3.5% | |||
Allergan, Inc. (d) | 605,000 | 35,834,150 | |
BioMimetic Therapeutics, Inc. (a) | 198,600 | 2,728,764 | |
ULURU, Inc. (a) | 350,000 | 913,500 | |
XenoPort, Inc. (a) | 20,600 | 1,054,102 | |
| 40,530,516 | ||
TOTAL COMMON STOCKS (Cost $1,019,865,673) | 1,153,594,566 | ||
Money Market Funds - 7.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 19,944,845 | $ 19,944,845 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 66,445,350 | 66,445,350 | |
TOTAL MONEY MARKET FUNDS (Cost $86,390,195) | 86,390,195 | ||
TOTAL INVESTMENT PORTFOLIO - 106.0% (Cost $1,106,255,868) | 1,239,984,761 |
NET OTHER ASSETS - (6.0)% | (70,123,626) | ||
NET ASSETS - 100% | $ 1,169,861,135 | ||
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. |
(c) Includes 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 $158,287 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Electro-Optical Sciences, Inc. warrants 11/2/11 | 11/1/06 | $ 9 |
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 | $ 482,299 |
Fidelity Securities Lending Cash Central Fund | 584,513 |
Total | $ 1,066,812 |
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, |
NeuroMetrix, Inc. | $ 7,873,822 | $ - | $ 6,595,270 | $ - | $ - |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 81.7% |
Bermuda | 10.9% |
Switzerland | 3.2% |
Netherlands | 2.0% |
Australia | 1.1% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 0.1% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $63,467,075) - See accompanying schedule: Unaffiliated issuers (cost $1,019,865,673) | $ 1,153,594,566 |
|
Fidelity Central Funds (cost $86,390,195) | 86,390,195 |
|
Total Investments (cost $1,106,255,868) |
| $ 1,239,984,761 |
Receivable for investments sold | 7,175,865 | |
Receivable for fund shares sold | 4,262,564 | |
Dividends receivable | 63,290 | |
Distributions receivable from Fidelity Central Funds | 137,863 | |
Prepaid expenses | 2,519 | |
Other receivables | 3,441 | |
Total assets | 1,251,630,303 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 13,258,294 | |
Payable for fund shares redeemed | 1,233,984 | |
Accrued management fee | 527,937 | |
Other affiliated payables | 248,903 | |
Other payables and accrued expenses | 54,700 | |
Collateral on securities loaned, at value | 66,445,350 | |
Total liabilities | 81,769,168 | |
|
|
|
Net Assets | $ 1,169,861,135 | |
Net Assets consist of: |
| |
Paid in capital | $ 989,719,981 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 46,410,634 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 133,730,520 | |
Net Assets, for 47,922,656 shares outstanding | $ 1,169,861,135 | |
Net Asset Value, offering price and redemption price per share ($1,169,861,135 ÷ 47,922,656 shares) | $ 24.41 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 5,048,498 |
Interest |
| 8,087 |
Income from Fidelity Central Funds (including $584,513 from security lending) |
| 1,066,812 |
Total income |
| 6,123,397 |
|
|
|
Expenses | ||
Management fee | $ 5,054,421 | |
Transfer agent fees | 2,378,955 | |
Accounting and security lending fees | 321,316 | |
Custodian fees and expenses | 34,630 | |
Independent trustees' compensation | 3,245 | |
Registration fees | 81,664 | |
Audit | 38,943 | |
Legal | 5,065 | |
Interest | 8,259 | |
Miscellaneous | 40,158 | |
Total expenses before reductions | 7,966,656 | |
Expense reductions | (24,205) | 7,942,451 |
Net investment income (loss) | (1,819,054) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 115,368,619 | |
Other affiliated issuers | (10,363,316) |
|
Foreign currency transactions | (87,159) | |
Total net realized gain (loss) |
| 104,918,144 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (5,875,407) | |
Assets and liabilities in foreign currencies | 1,732 | |
Total change in net unrealized appreciation (depreciation) |
| (5,873,675) |
Net gain (loss) | 99,044,469 | |
Net increase (decrease) in net assets resulting from operations | $ 97,225,415 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Medical Equipment and Systems Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,819,054) | $ (1,894,107) |
Net realized gain (loss) | 104,918,144 | 75,450,042 |
Change in net unrealized appreciation (depreciation) | (5,873,675) | (37,056,573) |
Net increase (decrease) in net assets resulting from operations | 97,225,415 | 36,499,362 |
Distributions to shareholders from net realized gain | (76,638,625) | (84,052,518) |
Share transactions | 655,708,750 | 166,020,263 |
Reinvestment of distributions | 73,785,048 | 80,778,740 |
Cost of shares redeemed | (377,258,197) | (517,423,736) |
Net increase (decrease) in net assets resulting from share transactions | 352,235,601 | (270,624,733) |
Redemption fees | 64,121 | 35,458 |
Total increase (decrease) in net assets | 372,886,512 | (318,142,431) |
|
|
|
Net Assets | ||
Beginning of period | 796,974,623 | 1,115,117,054 |
End of period | $ 1,169,861,135 | $ 796,974,623 |
Other Information Shares | ||
Sold | 26,109,754 | 7,116,270 |
Issued in reinvestment of distributions | 3,039,592 | 3,475,653 |
Redeemed | (14,899,288) | (22,203,852) |
Net increase (decrease) | 14,250,058 | (11,611,929) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 23.67 | $ 24.62 | $ 23.70 | $ 20.99 | $ 15.63 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | (.05) | (.04) | (.06) | (.09) |
Net realized and unrealized gain (loss) | 2.97 | 1.35 | 1.80 | 2.88 | 5.97 |
Total from investment operations | 2.92 | 1.30 | 1.76 | 2.82 | 5.88 |
Distributions from net realized gain | (2.18) | (2.25) | (.84) | (.11) | (.53) |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 24.41 | $ 23.67 | $ 24.62 | $ 23.70 | $ 20.99 |
Total Return A,B | 12.57% | 5.66% | 7.36% | 13.49% | 37.94% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .88% | .93% | .96% | 1.00% | 1.18% |
Expenses net of fee waivers, if any | .88% | .93% | .96% | 1.00% | 1.18% |
Expenses net of all reductions | .88% | .92% | .92% | .98% | 1.15% |
Net investment income (loss) | (.20)% | (.22)% | (.18)% | (.28)% | (.46)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,169,861 | $ 796,975 | $ 1,115,117 | $ 966,579 | $ 571,596 |
Portfolio turnover rate E | 129% | 71% | 99% | 28% | 33% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Pharmaceuticals Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Life of |
Select Pharmaceuticals Portfolio | 1.64% | 10.34% | 2.04% |
A From June 18, 2001.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Select 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 performed over the same period.
Annual Report
Select Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Comments from Andrew Oh, Portfolio Manager of Select Pharmaceuticals Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund rose 1.64%, outperforming the S&P 500® and the Morgan Stanley Capital InternationalSM (MSCI ®) US Investable Market Pharmaceuticals Index, which declined 3.92%. Good stock picking in pharmaceuticals was the primary source of this outperformance of the MSCI index. The fund held overweighted positions in Merck, which benefited from two successful product launches; in XenoPort, which developed an innovative drug for restless-leg syndrome; and in Perrigo, which received approval for over-the-counter versions of two best-selling drugs. Performance also was helped by an underweighted position in Pfizer, which fell because of a major upcoming drug patent expiration and a limited pipeline. Favorable currency movements had a positive impact as well. However, performance was hurt by an underweighted position in Johnson & Johnson, a large-cap pharmaceutical stock that benefited from a major restructuring and the announcement of a $10 billion share repurchase program. An out-of-benchmark investment in Allscripts Healthcare Solutions also detracted, as this health care technology company was hurt by contract delays.
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
Select Pharmaceuticals Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Merck & Co., Inc. | 13.8 | 14.9 |
Abbott Laboratories | 11.1 | 6.1 |
Wyeth | 8.0 | 5.4 |
Schering-Plough Corp. | 6.2 | 8.2 |
Pfizer, Inc. | 6.1 | 1.1 |
Eli Lilly & Co. | 4.8 | 2.6 |
Johnson & Johnson | 4.6 | 5.4 |
Bristol-Myers Squibb Co. | 4.4 | 7.6 |
Allergan, Inc. | 3.7 | 3.4 |
Perrigo Co. | 2.2 | 1.0 |
| 64.9 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Pharmaceuticals | 81.6% |
|
| Biotechnology | 6.2% |
|
| Health Care Equipment & Supplies | 3.4% |
|
| Life Sciences Tools | 2.8% |
|
| Health Care Technology | 1.7% |
|
| All Others* | 4.3% |
|
| |||
As of August 31, 2007 | |||
| Pharmaceuticals | 79.0% |
|
| Biotechnology | 6.5% |
|
| Health Care Equipment & Supplies | 3.9% |
|
| Health Care Technology | 3.5% |
|
| Life Sciences Tools & Services | 2.0% |
|
| All Others* | 5.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Pharmaceuticals Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
BIOTECHNOLOGY - 6.2% | |||
Biotechnology - 6.2% | |||
Acambis PLC (a) | 100 | $ 232 | |
Acorda Therapeutics, Inc. (a) | 32,200 | 658,168 | |
Alexion Pharmaceuticals, Inc. (a) | 300 | 18,183 | |
Alnylam Pharmaceuticals, Inc. (a) | 13,000 | 369,200 | |
Ambrilia Biopharma, Inc. (a) | 48,500 | 29,572 | |
Amylin Pharmaceuticals, Inc. (a) | 14,060 | 372,168 | |
Biocon Ltd. | 300 | 3,297 | |
Biogen Idec, Inc. (a) | 6,100 | 355,996 | |
BioMarin Pharmaceutical, Inc. (a) | 8,000 | 304,320 | |
Celgene Corp. (a) | 6,900 | 388,953 | |
Cephalon, Inc. (a) | 4,800 | 289,632 | |
Cepheid, Inc. (a) | 4,500 | 124,560 | |
Chelsea Therapeutics International Ltd. (a)(d) | 21,400 | 132,894 | |
Cougar Biotechnology, Inc. (a) | 18,500 | 492,285 | |
Crucell NV sponsored ADR (a)(d) | 4,600 | 63,986 | |
CSL Ltd. | 95,423 | 3,200,434 | |
Cubist Pharmaceuticals, Inc. (a) | 5,500 | 100,100 | |
Diagnocure, Inc. (a) | 100 | 250 | |
Dynavax Technologies Corp. (a) | 300 | 1,866 | |
EPIX Pharmaceuticals, Inc. (a) | 100 | 305 | |
Genentech, Inc. (a) | 100 | 7,575 | |
Genomic Health, Inc. (a) | 2,900 | 55,303 | |
Gilead Sciences, Inc. (a) | 8,300 | 392,756 | |
GTx, Inc. (a) | 4,000 | 65,480 | |
Human Genome Sciences, Inc. (a) | 8,900 | 52,599 | |
Incyte Corp. (a) | 6,200 | 61,442 | |
Indevus Pharmaceuticals, Inc. (a) | 136,500 | 677,040 | |
Isis Pharmaceuticals, Inc. (a) | 6,400 | 92,160 | |
Martek Biosciences (a) | 100 | 2,866 | |
Memory Pharmaceuticals Corp. (a) | 100 | 64 | |
Myriad Genetics, Inc. (a) | 29,000 | 1,073,580 | |
Nanosphere, Inc. | 100 | 925 | |
ONYX Pharmaceuticals, Inc. (a) | 7,300 | 199,436 | |
Poniard Pharmaceuticals, Inc. (a) | 100 | 410 | |
Prana Biotechnology Ltd. ADR (a) | 1,400 | 6,314 | |
Progenics Pharmaceuticals, Inc. (a) | 200 | 3,060 | |
Resverlogix Corp. (a) | 100 | 1,423 | |
Rigel Pharmaceuticals, Inc. (a) | 10,500 | 208,110 | |
Savient Pharmaceuticals, Inc. (a) | 1,000 | 22,680 | |
Targacept, Inc. (a) | 100 | 791 | |
Theravance, Inc. (a) | 16,100 | 264,845 | |
Third Wave Technologies, Inc. (a) | 15,900 | 126,723 | |
Transition Therapeutics, Inc. (a) | 2,222 | 22,490 | |
United Therapeutics Corp. (a) | 2,400 | 202,008 | |
Vertex Pharmaceuticals, Inc. (a) | 80 | 1,400 | |
| 10,447,881 | ||
CHEMICALS - 0.8% | |||
Diversified Chemicals - 0.5% | |||
Bayer AG sponsored ADR | 11,500 | 877,450 | |
| |||
Shares | Value | ||
Specialty Chemicals - 0.3% | |||
Sigma Aldrich Corp. | 9,200 | $ 506,184 | |
TOTAL CHEMICALS | 1,383,634 | ||
FOOD & STAPLES RETAILING - 0.2% | |||
Drug Retail - 0.2% | |||
China Nepstar Chain Drugstore Ltd. ADR | 100 | 1,100 | |
CVS Caremark Corp. | 10,600 | 428,028 | |
| 429,128 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 3.4% | |||
Health Care Equipment - 3.1% | |||
Abiomed, Inc. (a) | 11,800 | 168,740 | |
American Medical Systems Holdings, Inc. (a) | 15,700 | 229,063 | |
Baxter International, Inc. | 6,900 | 407,238 | |
Becton, Dickinson & Co. | 6,700 | 605,814 | |
C.R. Bard, Inc. | 6,500 | 616,135 | |
China Medical Technologies, Inc. sponsored ADR (d) | 25,600 | 1,177,600 | |
Clinical Data, Inc. (a) | 100 | 2,038 | |
Cochlear Ltd. | 100 | 4,986 | |
Exactech, Inc. (a) | 4,000 | 105,000 | |
Gen-Probe, Inc. (a) | 6,200 | 296,422 | |
Hologic, Inc. (a) | 100 | 6,031 | |
Insulet Corp. | 100 | 1,713 | |
Integra LifeSciences Holdings Corp. (a) | 1,400 | 58,016 | |
Mentor Corp. | 700 | 20,762 | |
Meridian Bioscience, Inc. | 600 | 20,562 | |
Mindray Medical International Ltd. sponsored ADR | 21,300 | 781,710 | |
Nobel Biocare Holding AG (Switzerland) | 100 | 24,188 | |
Quidel Corp. (a) | 17,000 | 279,310 | |
ResMed, Inc. (a) | 100 | 4,049 | |
Sonova Holding AG | 2,836 | 268,792 | |
The Spectranetics Corp. (a) | 100 | 900 | |
William Demant Holding AS (a) | 1,000 | 71,576 | |
| 5,150,645 | ||
Health Care Supplies - 0.3% | |||
Align Technology, Inc. (a) | 21,000 | 259,350 | |
Chembio Diagnostics, Inc. (a) | 100 | 22 | |
Cooper Companies, Inc. | 100 | 3,419 | |
Immucor, Inc. (a) | 5,900 | 175,820 | |
Inverness Medical Innovations, Inc. (a) | 1,200 | 34,980 | |
| 473,591 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 5,624,236 | ||
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - 1.6% | |||
Health Care Distributors & Services - 0.8% | |||
McKesson Corp. | 23,500 | $ 1,380,860 | |
Profarma Distribuidora de Produtos Farmaceuticos SA (a) | 1,000 | 17,701 | |
| 1,398,561 | ||
Health Care Services - 0.7% | |||
BioScrip, Inc. (a) | 100 | 703 | |
Diagnosticos da America SA | 500 | 9,441 | |
Emergency Medical Services Corp. | 700 | 17,311 | |
Express Scripts, Inc. (a) | 5,900 | 348,690 | |
Health Grades, Inc. (a) | 3,900 | 21,294 | |
HealthExtras, Inc. (a) | 8,000 | 220,400 | |
Healthways, Inc. (a) | 2,000 | 68,700 | |
Medco Health Solutions, Inc. (a) | 12,000 | 531,720 | |
| 1,218,259 | ||
Managed Health Care - 0.1% | |||
Magellan Health Services, Inc. (a) | 100 | 4,333 | |
National Medical Health Card Systems, Inc. (a) | 100 | 1,044 | |
Universal American Financial Corp. (a) | 4,500 | 77,310 | |
| 82,687 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 2,699,507 | ||
HEALTH CARE TECHNOLOGY - 1.7% | |||
Health Care Technology - 1.7% | |||
Allscripts Healthcare Solutions, Inc. (a)(d) | 23,700 | 252,879 | |
Cerner Corp. (a) | 35,600 | 1,546,820 | |
Eclipsys Corp. (a) | 4,500 | 96,075 | |
Phase Forward, Inc. (a) | 31,500 | 501,795 | |
TriZetto Group, Inc. (a) | 22,500 | 439,200 | |
| 2,836,769 | ||
LIFE SCIENCES TOOLS & SERVICES - 2.8% | |||
Life Sciences Tools & Services - 2.8% | |||
Affymetrix, Inc. (a) | 10,100 | 193,718 | |
AMAG Pharmaceuticals, Inc. (a) | 1,600 | 70,032 | |
Applera Corp. - Celera Genomics Group (a) | 100 | 1,386 | |
Bruker BioSciences Corp. (a) | 17,300 | 236,491 | |
Charles River Laboratories International, Inc. (a) | 6,400 | 374,912 | |
Covance, Inc. (a) | 4,800 | 405,168 | |
ICON PLC sponsored ADR (a) | 3,200 | 211,520 | |
Illumina, Inc. (a) | 6,600 | 477,906 | |
Invitrogen Corp. (a) | 700 | 59,143 | |
Lonza Group AG | 6,704 | 883,346 | |
Medivation, Inc. (a)(d) | 22,000 | 352,220 | |
Millipore Corp. (a) | 2,400 | 167,760 | |
PAREXEL International Corp. (a) | 6,800 | 373,660 | |
PerkinElmer, Inc. | 100 | 2,482 | |
| |||
Shares | Value | ||
Pharmaceutical Product Development, Inc. | 2,300 | $ 103,661 | |
QIAGEN NV (a) | 5,077 | 111,643 | |
Sequenom, Inc. (a) | 4,000 | 27,960 | |
Techne Corp. (a) | 3,366 | 230,201 | |
Thermo Fisher Scientific, Inc. (a) | 2,000 | 111,860 | |
Waters Corp. (a) | 5,200 | 309,972 | |
| 4,705,041 | ||
PERSONAL PRODUCTS - 0.8% | |||
Personal Products - 0.8% | |||
Chattem, Inc. (a) | 15,000 | 1,168,500 | |
Prestige Brands Holdings, Inc. (a) | 13,800 | 106,398 | |
| 1,274,898 | ||
PHARMACEUTICALS - 81.6% | |||
Pharmaceuticals - 81.6% | |||
Abbott Laboratories | 347,300 | 18,597,915 | |
Adolor Corp. (a) | 100 | 457 | |
Akorn, Inc. (a) | 130,600 | 830,616 | |
Alembic Ltd. | 110,000 | 148,792 | |
Allergan, Inc. | 104,000 | 6,159,920 | |
Alpharma, Inc. Class A (a) | 10,600 | 266,908 | |
Anesiva, Inc. (a) | 100 | 476 | |
Ardea Biosciences, Inc. (a) | 21,800 | 310,650 | |
ARYx Therapeutics, Inc. | 900 | 7,569 | |
Aurobindo Pharma Ltd. | 1,000 | 8,103 | |
Auxilium Pharmaceuticals, Inc. (a) | 16,300 | 522,252 | |
Barr Pharmaceuticals, Inc. (a) | 23,650 | 1,115,098 | |
Barrier Therapeutics, Inc. (a) | 13,000 | 47,450 | |
Biodel, Inc. | 13,500 | 188,865 | |
BMP Sunstone Corp. (a)(d) | 11,100 | 95,793 | |
BMP Sunstone Corp. warrants 8/21/12 (a)(f) | 1,000 | 1,106 | |
Bristol-Myers Squibb Co. | 322,700 | 7,296,247 | |
Cardiome Pharma Corp. (a) | 28,400 | 215,875 | |
Cipla Ltd. | 100 | 513 | |
Elan Corp. PLC sponsored ADR (a) | 58,300 | 1,327,491 | |
Eli Lilly & Co. | 159,000 | 7,953,180 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 26,300 | 690,638 | |
Forest Laboratories, Inc. (a) | 38,920 | 1,547,848 | |
GlaxoSmithKline PLC sponsored ADR | 14,300 | 627,913 | |
Guangzhou Pharmaceutical Co. Ltd. (H Shares) | 51,000 | 42,713 | |
Hikma Pharmaceuticals PLC | 100 | 983 | |
Impax Laboratories, Inc. (a) | 47,600 | 489,328 | |
Inspire Pharmaceuticals, Inc. (a) | 55,000 | 246,950 | |
Intercell AG (a) | 13,600 | 517,515 | |
Ipsen SA | 11,600 | 702,186 | |
Johnson & Johnson | 123,500 | 7,652,060 | |
King Pharmaceuticals, Inc. (a) | 56,200 | 595,720 | |
Lev Pharmaceuticals, Inc. (a) | 18,500 | 20,720 | |
Map Pharmaceuticals, Inc. | 16,100 | 209,300 | |
Matrixx Initiatives, Inc. (a) | 31,400 | 455,300 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Medicines Co. (a) | 5,100 | $ 98,226 | |
Medicis Pharmaceutical Corp. Class A | 14,200 | 291,242 | |
Merck & Co., Inc. | 521,800 | 23,115,737 | |
Merck KGaA | 8,761 | 1,090,959 | |
Mylan, Inc. (d) | 65,800 | 779,072 | |
Nexmed, Inc. (a) | 413,700 | 632,961 | |
Novartis AG sponsored ADR | 25,040 | 1,230,716 | |
Noven Pharmaceuticals, Inc. (a) | 15,200 | 206,112 | |
Novo Nordisk AS Series B | 38,400 | 2,625,408 | |
Par Pharmaceutical Companies, Inc. (a) | 8,400 | 148,596 | |
Perrigo Co. | 112,500 | 3,759,750 | |
Pfizer, Inc. | 460,500 | 10,259,940 | |
Pharmstandard OJSC GDR unit (a)(e) | 3,600 | 99,720 | |
Pozen, Inc. (a) | 100 | 1,219 | |
Questcor Pharmaceuticals, Inc. (a) | 3,000 | 13,500 | |
Schering-Plough Corp. | 480,690 | 10,430,973 | |
Sciele Pharma, Inc. (a)(d) | 4,200 | 86,940 | |
Sepracor, Inc. (a) | 15,900 | 341,373 | |
Shire PLC | 100,700 | 1,961,636 | |
Sirtris Pharmaceuticals, Inc. (d) | 6,700 | 79,998 | |
Stada Arzneimittel AG | 8,200 | 575,969 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 13,200 | 647,724 | |
Tong Ren Tang Technologies Co. Ltd. | 100 | 163 | |
Valeant Pharmaceuticals International (a) | 25,400 | 349,250 | |
ViroPharma, Inc. (a) | 12,900 | 118,164 | |
Warner Chilcott Ltd. (a) | 21,300 | 359,331 | |
Watson Pharmaceuticals, Inc. (a) | 47,300 | 1,315,413 | |
Wyeth | 306,220 | 13,357,316 | |
XenoPort, Inc. (a)(d) | 70,900 | 3,627,953 | |
| 136,499,811 | ||
TOTAL COMMON STOCKS (Cost $154,543,235) | 165,900,905 | ||
Money Market Funds - 3.7% | |||
|
| ||
Fidelity Cash Central Fund, 3.24% (b) | 629,616 | 629,616 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 5,525,650 | 5,525,650 | |
TOTAL MONEY MARKET FUNDS (Cost $6,155,266) | 6,155,266 | ||
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $160,698,501) | 172,056,171 |
NET OTHER ASSETS - (2.8)% | (4,726,606) | ||
NET ASSETS - 100% | $ 167,329,565 | ||
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. |
(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 $99,720 or 0.1% of net assets. |
(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 $1,106 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
BMP Sunstone Corp. warrants 8/21/12 | 8/17/07 | $ 125 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 169,875 |
Fidelity Securities Lending Cash Central Fund | 84,343 |
Total | $ 254,218 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.3% |
Australia | 1.9% |
Denmark | 1.6% |
United Kingdom | 1.6% |
Germany | 1.4% |
Switzerland | 1.4% |
Cayman Islands | 1.2% |
Others (individually less than 1%) | 2.6% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $5,038,451) - See accompanying schedule: Unaffiliated issuers (cost $154,543,235) | $ 165,900,905 |
|
Fidelity Central Funds (cost $6,155,266) | 6,155,266 |
|
Total Investments (cost $160,698,501) |
| $ 172,056,171 |
Receivable for investments sold | 6,197,464 | |
Receivable for fund shares sold | 101,787 | |
Dividends receivable | 466,798 | |
Distributions receivable from Fidelity Central Funds | 8,922 | |
Prepaid expenses | 526 | |
Other receivables | 317 | |
Total assets | 178,831,985 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 54,991 | |
Payable for fund shares redeemed | 5,730,949 | |
Accrued management fee | 90,149 | |
Other affiliated payables | 57,870 | |
Other payables and accrued expenses | 42,811 | |
Collateral on securities loaned, at value | 5,525,650 | |
Total liabilities | 11,502,420 | |
|
|
|
Net Assets | $ 167,329,565 | |
Net Assets consist of: |
| |
Paid in capital | $ 155,190,191 | |
Undistributed net investment income | 553,068 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 227,788 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 11,358,518 | |
Net Assets, for 15,912,399 shares outstanding | $ 167,329,565 | |
Net Asset Value, offering price and redemption price per share ($167,329,565 ÷ 15,912,399 shares) | $ 10.52 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 3,510,690 |
Interest |
| 36 |
Income from Fidelity Central Funds (including $84,343 from security lending) |
| 254,218 |
Total income |
| 3,764,944 |
|
|
|
Expenses | ||
Management fee | $ 1,166,724 | |
Transfer agent fees | 609,351 | |
Accounting and security lending fees | 85,491 | |
Custodian fees and expenses | 30,987 | |
Independent trustees' compensation | 773 | |
Registration fees | 37,368 | |
Audit | 42,227 | |
Legal | 1,244 | |
Interest | 9,669 | |
Miscellaneous | 9,923 | |
Total expenses before reductions | 1,993,757 | |
Expense reductions | (5,274) | 1,988,483 |
Net investment income (loss) | 1,776,461 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 6,106,065 | |
Investment not meeting investment restrictions | (700) | |
Foreign currency transactions | (7,354) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 825 | |
Total net realized gain (loss) |
| 6,098,836 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,288,710) | |
Assets and liabilities in foreign currencies | 779 | |
Total change in net unrealized appreciation (depreciation) |
| (6,287,931) |
Net gain (loss) | (189,095) | |
Net increase (decrease) in net assets resulting from operations | $ 1,587,366 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Pharmaceuticals Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,776,461 | $ 1,472,971 |
Net realized gain (loss) | 6,098,836 | 3,407,446 |
Change in net unrealized appreciation (depreciation) | (6,287,931) | 9,452,597 |
Net increase (decrease) in net assets resulting from operations | 1,587,366 | 14,333,014 |
Distributions to shareholders from net investment income | (1,913,683) | (782,855) |
Distributions to shareholders from net realized gain | (8,339,317) | (4,395,701) |
Total distributions | (10,253,000) | (5,178,556) |
Share transactions | 150,830,868 | 286,567,788 |
Reinvestment of distributions | 8,257,255 | 4,802,781 |
Cost of shares redeemed | (178,255,837) | (247,920,783) |
Net increase (decrease) in net assets resulting from share transactions | (19,167,714) | 43,449,786 |
Redemption fees | 34,692 | 52,583 |
Total increase (decrease) in net assets | (27,798,656) | 52,656,827 |
|
|
|
Net Assets | ||
Beginning of period | 195,128,221 | 142,471,394 |
End of period (including undistributed net investment income of $553,068 and undistributed net investment income | $ 167,329,565 | $ 195,128,221 |
Other Information Shares | ||
Sold | 12,855,111 | 27,141,862 |
Issued in reinvestment of distributions | 708,682 | 462,448 |
Redeemed | (15,593,749) | (23,347,236) |
Net increase (decrease) | (2,029,956) | 4,257,074 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.88 | $ 10.41 | $ 8.64 | $ 8.95 | $ 7.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .10 | .08 | .02 | - I | (.01) |
Net realized and unrealized gain (loss) | .13 F | .74 | 1.77 | (.31) | 1.95 |
Total from investment operations | .23 | .82 | 1.79 | (.31) | 1.94 |
Distributions from net investment income | (.11) | (.04) | (.02) | - | - |
Distributions from net realized gain | (.48) | (.31) | - | - | - |
Total distributions | (.59) | (.35) | (.02) | - | - |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 10.52 | $ 10.88 | $ 10.41 | $ 8.64 | $ 8.95 |
Total Return A,B | 1.64% | 8.05% | 20.68% | (3.46)% | 27.86% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .95% | 1.02% | 1.11% | 1.20% | 1.59% |
Expenses net of fee waivers, if any | .95% | 1.02% | 1.11% | 1.20% | 1.59% |
Expenses net of all reductions | .95% | 1.01% | 1.03% | 1.19% | 1.57% |
Net investment income (loss) | .85% | .73% | .23% | .05% | (.10)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 167,330 | $ 195,128 | $ 142,471 | $ 95,502 | $ 87,158 |
Portfolio turnover rate E | 119% | 204% | 207% | 42% | 80% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as available dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Health Care Portfolio, Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds will claim 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 the fund's 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 capital gains, foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for | Unrealized | Unrealized | Net Unrealized |
Biotechnology Portfolio | $ 1,257,259,168 | $ 85,937,021 | $ (151,785,326) | $ (65,848,305) |
Health Care Portfolio | 1,829,567,588 | 286,070,302 | (126,227,803) | 159,842,499 |
Medical Delivery Portfolio | 521,482,344 | 87,299,124 | (46,049,047) | 41,250,077 |
Medical Equipment and Systems Portfolio | 1,109,641,162 | 171,771,370 | (41,427,771) | 130,343,599 |
Pharmaceuticals Portfolio | 162,465,240 | 17,185,206 | (7,594,275) | 9,590,931 |
| Undistributed | Undistributed | Capital |
Biotechnology Portfolio | $ - | $ - | $ 237,503,787 |
Health Care Portfolio | 1,966,801 | 77,674,820 | - |
Medical Delivery Portfolio | 297,515 | 3,895,698 | - |
Medical Equipment and Systems Portfolio | 10,667,554 | 25,771,956 | - |
Pharmaceuticals Portfolio | 225,189 | 812,447 | - |
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 29, 2008 | Ordinary | Long-term | Total |
Health Care Portfolio | $ 69,257,641 | $ 160,948,908 | $ 230,206,549 |
Medical Delivery Portfolio | - | 50,920,643 | 50,920,643 |
Medical Equipment and Systems Portfolio | 25,157,382 | 51,481,243 | 76,638,625 |
Pharmaceuticals Portfolio | 2,090,312 | 8,162,688 | 10,253,000 |
February 28, 2007 | Ordinary | Long-term | Total |
Health Care Portfolio | $ 26,055,370 | $ 261,690,773 | $ 287,746,143 |
Medical Delivery Portfolio | 17,789,600 | 61,486,626 | 79,276,226 |
Medical Equipment and Systems Portfolio | - | 84,052,518 | 84,052,518 |
Pharmaceuticals Portfolio | 2,484,417 | 2,694,139 | 5,178,556 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 | 1,816,443,602 | 2,105,420,226 |
Health Care Portfolio | 2,467,786,575 | 2,606,821,714 |
Medical Delivery Portfolio | 714,102,418 | 778,273,769 |
Medical Equipment and Systems Portfolio | 1,420,787,270 | 1,158,172,466 |
Pharmaceuticals Portfolio | 241,924,836 | 269,831,049 |
Pharmaceuticals Portfolio realized a gain and loss of $125 and $825, respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $825 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 |
Biotechnology Portfolio | .30% | .26% | .56% |
Health Care Portfolio | .30% | .26% | .56% |
Medical Delivery Portfolio | .30% | .26% | .56% |
Medical Equipment and Systems Portfolio | .30% | .26% | .56% |
Pharmaceuticals Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .28% |
Health Care Portfolio | .24% |
Medical Delivery Portfolio | .28% |
Medical Equipment and Systems Portfolio | .26% |
Pharmaceuticals Portfolio | .29% |
Accounting and Security Lending Fees. FSC 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 | $ 31,827 |
Health Care Portfolio | 18,030 |
Medical Delivery Portfolio | 9,018 |
Medical Equipment and Systems Portfolio | 9,122 |
Pharmaceuticals Portfolio | 5,861 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily | Weighted Average | Interest |
Biotechnology Portfolio | Borrower | $ 4,024,977 | 5.01% | $ 24,664 |
Medical Delivery Portfolio | Borrower | 4,996,769 | 3.46% | 6,241 |
Medical Equipment and Systems Portfolio | Borrower | 4,992,700 | 5.39% | 7,481 |
Pharmaceuticals Portfolio | Borrower | 6,631,462 | 3.37% | 8,074 |
Annual Report
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Biotechnology Portfolio | $ 3,031 |
Health Care Portfolio | 4,885 |
Medical Delivery Portfolio | 1,510 |
Medical Equipment and Systems Portfolio | 2,072 |
Pharmaceuticals Portfolio | 485 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Medical Delivery Portfolio | $ 1,011,500 | 3.35% | $ 188 |
Medical Equipment and Systems Portfolio | 2,511,000 | 5.58% | 778 |
Pharmaceuticals Portfolio | 6,756,000 | 4.25% | 1,595 |
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 and transfer agent, 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 | Transfer |
Biotechnology Portfolio | $ 3,657 | $ - | $ 20,511 |
Health Care Portfolio | 108,054 | 11,015 | 41,659 |
Medical Delivery Portfolio | 30,460 | - | 7,767 |
Medical Equipment and Systems Portfolio | 15,286 | 658 | 8,071 |
Pharmaceuticals Portfolio | 2,495 | - | 2,718 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
Biotechnology Portfolio | $ 200,381 |
Health Care Portfolio | 411,516 |
Medical Delivery Portfolio | 78,410 |
Medical Equipment and Systems Portfolio | 41,958 |
Pharmaceuticals Portfolio | 8,892 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
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 position of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Name, Age; Principal Occupation | |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Biotechnology Portfolio, Select Health Care Portfolio, Select Medical Delivery Portfolio, Select Medical Equipment and Systems Portfolio, and Select Pharmaceuticals Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Health Care Portfolio | 04/14/08 | 04/11/08 | $0.12 | $4.66 |
Select Medical Delivery Portfolio | 04/14/08 | 04/11/08 | $0.03 | $0.35 |
Select Medical Equipment and Systems Portfolio | 04/14/08 | 04/11/08 | - | $0.77 |
Select Pharmaceuticals Portfolio | 04/14/08 | 04/11/08 | $0.02 | $0.06 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Health Care Portfolio | $191,257,903 |
Select Medical Delivery Portfolio | $39,192,307 |
Select Medical Equipment and Systems Portfolio | $56,153,522 |
Select Pharmaceuticals Portfolio | $6,053,381 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Health Care Portfolio | 87% | 31% |
Select Medical Equipment and Systems Portfolio | - | 15% |
Select Pharmaceuticals Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2007 | December 2007 |
Select Health Care Portfolio | 89% | 35% |
Select Medical Equipment and Systems Portfolio | - | 17% |
Select Pharmaceuticals Portfolio | 100% | 100% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 3 | ||
For Select Health Care Portfolio, a shareholder proposal concerning "oversight procedures to screen out investments in companies that, in the judgment of the Board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity". | ||
Affirmative | 313,671,818.29 | 29.066 |
Against | 603,940,537.45 | 55.963 |
Abstain | 64,309,260.67 | 5.959 |
Broker Non-Votes | 97,258,397.16 | 9.012 |
TOTAL | 1,079,180,013.57 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
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Fidelity Investments
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(letter_graphic)For Retirement
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Fidelity Investments
P.O. Box 770001
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Annual Report
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Annual Report
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Fidelity®
Select Portfolios®
Industrials Sector
Select Air Transportation Portfolio
Select Defense and Aerospace Portfolio
Select Environmental Portfolio
Select Industrial Equipment Portfolio
Select Industrials Portfolio
Select Transportation Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Industrials Sector |
|
|
Air Transportation |
| |
Defense and Aerospace |
| |
Environmental |
| |
Industrial Equipment |
| |
Industrials |
| |
Transportation |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by
Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Air Transportation Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 805.80 | $ 4.49 |
HypotheticalA | $ 1,000.00 | $ 1,019.89 | $ 5.02 |
Defense and Aerospace Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 924.50 | $ 4.12 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Environmental Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 996.30 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,019.64 | $ 5.27 |
Industrial Equipment Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 961.30 | $ 4.24 |
HypotheticalA | $ 1,000.00 | $ 1,020.54 | $ 4.37 |
Industrials Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 952.50 | $ 4.81 |
HypotheticalA | $ 1,000.00 | $ 1,019.94 | $ 4.97 |
Transportation Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 898.00 | $ 4.53 |
HypotheticalA | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Air Transportation Portfolio | 1.00% |
Defense and Aerospace Portfolio | .86% |
Environmental Portfolio | 1.05% |
Industrial Equipment Portfolio | .87% |
Industrials Portfolio | .99% |
Transportation Portfolio | .96% |
Annual Report
Select Air Transportation Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Air Transportation Portfolio | -16.72% | 17.83% | 8.46% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Air Transportation Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Select Air Transportation Portfolio
Management's Discussion of Fund Performance
Comments from Maurice FitzMaurice, Portfolio Manager of Select Air Transportation Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund returned -16.72% for the year ending February 29, 2008, compared with -15.64% for the Standard & Poor's® (S&P®) Custom Air Transportation Index, which became the fund's supplemental benchmark on November 1, 2007. The new benchmark is a customized index created by S&P that reflects the specific investment policies of the fund and, thus, in Fidelity's view, will be a better benchmark for evaluating the fund's performance over time. The fund outperformed the -19.09% return of a blended index combining the returns of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Transportation Index, with which the fund was compared through October, and the new S&P benchmark mentioned above, with which the fund was compared during the period's final four months.1 During the 12-month period, the fund underperformed the S&P 500®. Stock picking in aerospace/defense was by far the most significant contributor to the fund's performance relative to its blended index. Aircraft parts manufacturer Precision Castparts topped the list of contributors, helped by reports of strong sales of its aerospace and industrial components. Goodrich, an airline equipment and services provider, rose due to increased demand for its principal products and services. Out-of-benchmark positions in defense equipment manufacturers Raytheon and General Dynamics also helped buoy the fund's performance. Not owning trucking stocks, which struggled during the period, was helpful as well. An out-of-index position in Harris Corp., a communications and information technology company, also did well, helped by better-than-expected earnings. I sold our position in Harris by the end of the period. The fund also benefited from underweighting air freight/logistics stocks. On the downside, the fund suffered from not owning railroads, which were outside the scope of its mandate. As a result, the fund missed such opportunities as Union Pacific and CSX, which benefited from rising demand for commodities, allowing the companies to maintain their pricing power. Overweighted positions in airlines US Airways and American Airlines' parent company, AMR, also were detractors. Lastly, an out-of-index holding in diversified metals/mining - Titanium Metals, a main supplier of titanium to aircraft companies such as Boeing - dragged on results.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending February 29, 2008. From March 1, 2007, through October 31, 2007, the fund compared its performance to the MSCI US Investable Market Transportation index. On November 1, 2007, the fund began comparing its performance to a different index, the S&P Custom Air Transportation index. For the 12-month period ending February 29, 2008, the blended index (MSCI and S&P) returned -19.09%.
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
Select Air Transportation Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Precision Castparts Corp. | 9.2 | 10.3 |
United Parcel Service, Inc. Class B | 9.0 | 5.0 |
FedEx Corp. | 8.0 | 4.7 |
The Boeing Co. | 5.2 | 1.1 |
Bombardier, Inc. Class B (sub. vtg.) | 4.8 | 2.2 |
Expeditors International of Washington, Inc. | 4.7 | 6.1 |
Goodrich Corp. | 4.6 | 4.7 |
UAL Corp. | 4.5 | 4.3 |
Titanium Metals Corp. | 4.4 | 5.4 |
Northwest Airlines Corp. | 4.0 | 0.0 |
| 58.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Aerospace & Defense | 34.3% |
|
| Airlines | 31.3% |
|
| Air Freight & Logistics | 26.1% |
|
| Metals & Mining | 4.4% |
|
| Industrial Conglomerates | 1.2% |
|
| All Others* | 2.7% |
|
| |||
As of August 31, 2007 | |||
| Aerospace & Defense | 43.3% |
|
| Air Freight & Logistics | 25.9% |
|
| Airlines | 18.7% |
|
| Metals & Mining | 5.4% |
|
| Communications Equipment | 2.5% |
|
| All Others* | 4.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Air Transportation Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 97.7% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 34.3% | |||
Aerospace & Defense - 34.3% | |||
Bombardier, Inc. Class B (sub. vtg.) (a) | 393,800 | $ 2,253,030 | |
General Dynamics Corp. | 6,800 | 556,580 | |
Goodrich Corp. | 36,200 | 2,144,126 | |
Hexcel Corp. (a) | 14,300 | 288,717 | |
Lockheed Martin Corp. | 2,500 | 258,000 | |
Precision Castparts Corp. | 39,300 | 4,338,327 | |
Raytheon Co. | 11,200 | 726,208 | |
Rockwell Collins, Inc. | 30,500 | 1,796,450 | |
Spirit AeroSystems Holdings, Inc. | 49,200 | 1,329,384 | |
The Boeing Co. | 29,300 | 2,425,747 | |
| 16,116,569 | ||
AIR FREIGHT & LOGISTICS - 26.1% | |||
Air Freight & Logistics - 26.1% | |||
Expeditors International of Washington, Inc. | 56,000 | 2,201,920 | |
FedEx Corp. | 42,250 | 3,723,493 | |
Forward Air Corp. | 19,300 | 566,455 | |
Hub Group, Inc. Class A (a) | 19,100 | 572,809 | |
United Parcel Service, Inc. Class B (d) | 60,200 | 4,228,448 | |
UTI Worldwide, Inc. | 56,600 | 949,748 | |
| 12,242,873 | ||
AIRLINES - 31.0% | |||
Airlines - 31.0% | |||
ACE Aviation Holdings, Inc. Class A (a) | 22,400 | 535,387 | |
AirTran Holdings, Inc. (a) | 81,000 | 584,820 | |
Alaska Air Group, Inc. (a) | 100 | 2,440 | |
AMR Corp. (a)(d) | 124,200 | 1,591,002 | |
Continental Airlines, Inc. Class B (a) | 56,200 | 1,358,916 | |
Delta Air Lines, Inc. (a) | 101,840 | 1,359,564 | |
ExpressJet Holdings, Inc. Class A (a) | 200 | 486 | |
Frontier Airlines Holdings, Inc. (a) | 5 | 15 | |
JetBlue Airways Corp. (a) | 37,400 | 203,830 | |
Northwest Airlines Corp. (a) | 139,800 | 1,877,514 | |
Pinnacle Airlines Corp. (a) | 600 | 6,726 | |
Ryanair Holdings PLC sponsored ADR (a)(d) | 40,700 | 1,163,206 | |
SkyWest, Inc. | 14,700 | 325,164 | |
Southwest Airlines Co. | 127,200 | 1,559,472 | |
UAL Corp. | 69,900 | 2,117,970 | |
US Airways Group, Inc. (a) | 57,166 | 708,858 | |
WestJet Airlines Ltd. (a) | 55,750 | 1,128,540 | |
| 14,523,910 | ||
| |||
Shares | Value | ||
INDUSTRIAL CONGLOMERATES - 1.2% | |||
Industrial Conglomerates - 1.2% | |||
Textron, Inc. | 10,500 | $ 568,785 | |
METALS & MINING - 4.4% | |||
Diversified Metals & Mining - 4.4% | |||
Titanium Metals Corp. (d) | 100,500 | 2,072,310 | |
OIL, GAS & CONSUMABLE FUELS - 0.7% | |||
Oil & Gas Refining & Marketing - 0.7% | |||
Valero Energy Corp. | 5,600 | 323,512 | |
Oil & Gas Storage & Transport - 0.0% | |||
Ship Finance International Ltd. (NY Shares) | 18 | 465 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 323,977 | ||
TOTAL COMMON STOCKS (Cost $42,886,948) | 45,848,424 | ||
Nonconvertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
AIRLINES - 0.3% | ||||
Airlines - 0.3% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 3,500,000 | 140,000 | ||
Money Market Funds - 22.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 3.24% (b) | 1,091,232 | 1,091,232 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 9,240,289 | 9,240,289 | |
TOTAL MONEY MARKET FUNDS (Cost $10,331,521) | 10,331,521 | ||
TOTAL INVESTMENT PORTFOLIO - 120.0% (Cost $53,323,443) | 56,319,945 | ||
NET OTHER ASSETS - (20.0)% | (9,377,138) | ||
NET ASSETS - 100% | $ 46,942,807 | ||
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. |
(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 | $ 16,772 |
Fidelity Securities Lending Cash Central Fund | 34,432 |
Total | $ 51,204 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 87.1% |
Canada | 8.4% |
Ireland | 2.5% |
British Virgin Islands | 2.0% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,428,783) - See accompanying schedule: Unaffiliated issuers (cost $42,991,922) | $ 45,988,424 |
|
Fidelity Central Funds (cost $10,331,521) | 10,331,521 |
|
Total Investments (cost $53,323,443) |
| $ 56,319,945 |
Receivable for fund shares sold | 33,543 | |
Dividends receivable | 54,139 | |
Distributions receivable from Fidelity Central Funds | 3,780 | |
Prepaid expenses | 185 | |
Other receivables | 1,068 | |
Total assets | 56,412,660 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 162,536 | |
Accrued management fee | 23,134 | |
Other affiliated payables | 13,870 | |
Other payables and accrued expenses | 30,024 | |
Collateral on securities loaned, at value | 9,240,289 | |
Total liabilities | 9,469,853 | |
|
|
|
Net Assets | $ 46,942,807 | |
Net Assets consist of: |
| |
Paid in capital | $ 37,869,415 | |
Accumulated net investment loss | (4) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,076,894 | |
Net unrealized appreciation (depreciation) on investments | 2,996,502 | |
Net Assets, for 1,252,725 shares outstanding | $ 46,942,807 | |
Net Asset Value, offering price and redemption price per share ($46,942,807 ÷ 1,252,725 shares) | $ 37.47 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 510,247 |
Special dividends |
| 157,595 |
Interest |
| 1,537 |
Income from Fidelity Central Funds (including $34,432 from security lending) |
| 51,204 |
Total income |
| 720,583 |
|
|
|
Expenses | ||
Management fee | $ 431,212 | |
Transfer agent fees | 230,091 | |
Accounting and security lending fees | 33,111 | |
Custodian fees and expenses | 18,175 | |
Independent trustees' compensation | 309 | |
Registration fees | 30,102 | |
Audit | 36,196 | |
Legal | 591 | |
Miscellaneous | 4,638 | |
Total expenses before reductions | 784,425 | |
Expense reductions | (4,759) | 779,666 |
Net investment income (loss) | (59,083) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 12,479,262 | |
Foreign currency transactions | (6,529) | |
Total net realized gain (loss) |
| 12,472,733 |
Change in net unrealized appreciation (depreciation) on investment securities | (21,762,283) | |
Net gain (loss) | (9,289,550) | |
Net increase (decrease) in net assets resulting from operations | $ (9,348,633) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Air 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) | $ (59,083) | $ (142,128) |
Net realized gain (loss) | 12,472,733 | 5,041,791 |
Change in net unrealized appreciation (depreciation) | (21,762,283) | 9,206,214 |
Net increase (decrease) in net assets resulting from operations | (9,348,633) | 14,105,877 |
Distributions to shareholders from net realized gain | (8,187,067) | (2,737,561) |
Share transactions | 32,946,702 | 235,838,995 |
Reinvestment of distributions | 7,857,086 | 2,563,316 |
Cost of shares redeemed | (123,642,326) | (220,199,811) |
Net increase (decrease) in net assets resulting from share transactions | (82,838,538) | 18,202,500 |
Redemption fees | 15,284 | 89,643 |
Total increase (decrease) in net assets | (100,358,954) | 29,660,459 |
|
|
|
Net Assets | ||
Beginning of period | 147,301,761 | 117,641,302 |
End of period (including accumulated net investment loss of $4 and accumulated net investment loss of $12, respectively) | $ 46,942,807 | $ 147,301,761 |
Other Information Shares | ||
Sold | 667,471 | 4,974,556 |
Issued in reinvestment of distributions | 172,279 | 55,583 |
Redeemed | (2,490,225) | (4,854,045) |
Net increase (decrease) | (1,650,475) | 176,094 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.74 | $ 43.14 | $ 33.46 | $ 30.04 | $ 19.58 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) F | (.06) | (.04) | .07 | (.13) |
Net realized and unrealized gain (loss) | (7.61) | 8.48 | 10.44 | 3.73 | 10.55 |
Total from investment operations | (7.65) | 8.42 | 10.40 | 3.80 | 10.42 |
Distributions from net investment income | - | - | (.01) | (.06) | - |
Distributions from net realized gain | (5.63) | (.86) | (.75) | (.36) | - |
Total distributions | (5.63) | (.86) | (.76) | (.42) | - |
Redemption fees added to paid in capital C | .01 | .04 | .04 | .04 | .04 |
Net asset value, end of period | $ 37.47 | $ 50.74 | $ 43.14 | $ 33.46 | $ 30.04 |
Total Return A, B | (16.72)% | 19.81% | 31.40% | 12.92% | 53.42% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.01% | 1.00% | 1.16% | 1.23% | 1.49% |
Expenses net of fee waivers, if any | 1.01% | 1.00% | 1.16% | 1.23% | 1.49% |
Expenses net of all reductions | 1.01% | .99% | 1.11% | 1.21% | 1.42% |
Net investment income (loss) | (.08)% F | (.12)% | (.11)% | .22% | (.47)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,943 | $ 147,302 | $ 117,641 | $ 35,292 | $ 34,724 |
Portfolio turnover rate E | 47% | 165% | 93% | 71% | 140% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.10 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.28)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Defense and Aerospace Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Defense and Aerospace Portfolio | 2.80% | 22.25% | 11.04% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Defense and Aerospace Portfolio on February 28, 1998. 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
Select Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Comments from Andrew Hatem, Portfolio Manager of Select Defense and Aerospace Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund returned 2.80% for the year, compared with a 9.87% gain for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Aerospace & Defense Index and a modest decline for the S&P 500®. The fund lagged the MSCI index mainly due to weak stock picks across a variety of out-of-index industries, particularly in diversified metals and mining, and also in the construction/farm machinery and heavy trucks group. Among the biggest detractors were Force Protection, a leading maker of armored military vehicles, whose stock fell after the U.S. Army failed to renew a supply contract; Titanium Metals, a maker of high-quality titanium products, which slid on concerns about excess supplies of the metal; and US Airways, the commercial airline. All three of these stocks were out-of-index holdings. Underweighting index heavyweight Honeywell International, a strong performer during the period, also hurt. On the upside, productive stock picking in the fund's primary arena - aerospace and defense contractors - coupled with owning stakes in some strong-performing defense electronics firms, helped offset some of the fund's less-productive results. Among the standout contributors were Stanley, Inc., a provider of information technology services to U.S. military and civilian agencies, which continued to win new contracts; and EDO Corp., a defense electronics maker, which was sold at a very attractive premium during the period. Stanley, Inc., was no longer held at period end. The fund's biggest relative contribution came from a large underweighting in Boeing, a major aircraft maker whose stock underperformed due to worries about delays in its next-generation 787 aircraft program.
Note to shareholders: Maurice FitzMaurice will become manager of the fund on May 1, 2008, replacing Andrew Hatem.
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
Select Defense and Aerospace Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
The Boeing Co. | 12.7 | 8.2 |
Lockheed Martin Corp. | 11.4 | 12.2 |
General Dynamics Corp. | 9.2 | 11.5 |
Honeywell International, Inc. | 8.9 | 0.5 |
Precision Castparts Corp. | 8.0 | 6.5 |
Raytheon Co. | 4.9 | 11.3 |
Northrop Grumman Corp. | 4.9 | 0.0 |
L-3 Communications Holdings, Inc. | 4.1 | 2.1 |
Rockwell Collins, Inc. | 4.0 | 4.9 |
Goodrich Corp. | 4.0 | 2.7 |
| 72.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Aerospace & Defense | 83.6% |
|
| Metals & Mining | 4.2% |
|
| Communications Equipment | 2.3% |
|
| Electrical Equipment | 2.3% |
|
| IT Services | 1.4% |
|
| All Others* | 6.2% |
|
| |||
As of August 31, 2007 | |||
| Aerospace & Defense | 80.5% |
|
| Communications Equipment | 3.7% |
|
| Metals & Mining | 3.7% |
|
| IT Services | 3.4% |
|
| Trading Companies & Distributors | 1.6% |
|
| All Others* | 7.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Defense and Aerospace Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 83.6% | |||
Aerospace & Defense - 83.6% | |||
AAR Corp. (a) | 208,600 | $ 5,400,654 | |
AeroVironment, Inc. | 10,000 | 212,400 | |
BE Aerospace, Inc. (a) | 665,700 | 22,833,510 | |
DRS Technologies, Inc. | 359,200 | 20,147,528 | |
DynCorp International, Inc. Class A (a) | 255,000 | 4,238,100 | |
GenCorp, Inc. (non-vtg.) (a) | 181,300 | 1,885,520 | |
General Dynamics Corp. | 1,365,200 | 111,741,620 | |
Goodrich Corp. | 810,750 | 48,020,723 | |
Hexcel Corp. (a)(d) | 425,800 | 8,596,902 | |
Honeywell International, Inc. | 1,866,800 | 107,415,672 | |
L-3 Communications Holdings, Inc. | 470,500 | 50,009,445 | |
Ladish Co., Inc. (a) | 37,700 | 1,345,890 | |
Lockheed Martin Corp. | 1,333,200 | 137,586,240 | |
Northrop Grumman Corp. | 750,400 | 58,988,944 | |
Orbital Sciences Corp. (a)(d) | 421,592 | 9,127,467 | |
Precision Castparts Corp. | 873,600 | 96,436,704 | |
Raytheon Co. | 914,452 | 59,293,068 | |
Rockwell Collins, Inc. | 815,500 | 48,032,950 | |
Spirit AeroSystems Holdings, Inc. | 1,010,900 | 27,314,518 | |
Taser International, Inc. (a)(d) | 292,400 | 3,295,348 | |
The Boeing Co. (d) | 1,850,000 | 153,161,498 | |
TransDigm Group, Inc. (a) | 528,800 | 20,549,168 | |
Triumph Group, Inc. | 254,600 | 14,407,814 | |
| 1,010,041,683 | ||
AIRLINES - 1.2% | |||
Airlines - 1.2% | |||
AMR Corp. (a) | 441,200 | 5,651,772 | |
Northwest Airlines Corp. (a) | 332,700 | 4,468,161 | |
UAL Corp. | 91,900 | 2,784,570 | |
US Airways Group, Inc. (a) | 161,800 | 2,006,320 | |
| 14,910,823 | ||
AUTO COMPONENTS - 0.5% | |||
Auto Parts & Equipment - 0.5% | |||
Spartan Motors, Inc. | 683,850 | 5,559,701 | |
CHEMICALS - 0.4% | |||
Commodity Chemicals - 0.4% | |||
NL Industries, Inc. (d) | 464,200 | 5,041,212 | |
COMMUNICATIONS EQUIPMENT - 2.3% | |||
Communications Equipment - 2.3% | |||
Ciena Corp. (a) | 302,500 | 7,813,575 | |
Harris Corp. | 412,000 | 20,117,960 | |
| 27,931,535 | ||
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 1.2% | |||
Construction & Engineering - 1.2% | |||
Fluor Corp. | 25,500 | $ 3,550,875 | |
KBR, Inc. (a) | 181,400 | 6,046,062 | |
URS Corp. (a) | 132,000 | 5,316,960 | |
| 14,913,897 | ||
ELECTRICAL EQUIPMENT - 2.3% | |||
Electrical Components & Equipment - 1.6% | |||
First Solar, Inc. (a) | 40,100 | 8,228,520 | |
JA Solar Holdings Co. Ltd. ADR | 451,200 | 6,447,648 | |
Sunpower Corp. Class A (a)(d) | 69,500 | 4,567,540 | |
| 19,243,708 | ||
Heavy Electrical Equipment - 0.7% | |||
Vestas Wind Systems AS (a) | 77,000 | 7,805,308 | |
TOTAL ELECTRICAL EQUIPMENT | 27,049,016 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.8% | |||
Electronic Equipment & Instruments - 0.8% | |||
CPI International, Inc. (a) | 4,700 | 48,880 | |
FLIR Systems, Inc. (a) | 315,800 | 8,987,668 | |
| 9,036,548 | ||
IT SERVICES - 1.4% | |||
IT Consulting & Other Services - 1.4% | |||
CACI International, Inc. Class A (a) | 101,200 | 4,418,392 | |
ManTech International Corp. Class A (a) | 61,700 | 2,719,736 | |
NCI, Inc. Class A (a) | 341,362 | 6,048,935 | |
SRA International, Inc. Class A (a) | 154,200 | 3,700,800 | |
| 16,887,863 | ||
MACHINERY - 1.1% | |||
Construction & Farm Machinery & Heavy Trucks - 1.1% | |||
Force Protection, Inc. (a)(d) | 1,845,753 | 7,586,045 | |
Navistar International Corp. (a) | 105,500 | 5,955,475 | |
| 13,541,520 | ||
METALS & MINING - 4.2% | |||
Diversified Metals & Mining - 2.2% | |||
RTI International Metals, Inc. (a) | 131,700 | 7,226,379 | |
Titanium Metals Corp. (d) | 947,200 | 19,531,264 | |
| 26,757,643 | ||
Steel - 2.0% | |||
Allegheny Technologies, Inc. (d) | 100,700 | 7,789,145 | |
Carpenter Technology Corp. | 257,200 | 16,159,876 | |
| 23,949,021 | ||
TOTAL METALS & MINING | 50,706,664 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 0.4% | |||
Oil & Gas Refining & Marketing - 0.4% | |||
Tesoro Corp. | 127,600 | $ 4,739,064 | |
TOTAL COMMON STOCKS (Cost $1,080,456,242) | 1,200,359,526 | ||
Money Market Funds - 4.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 4,987,488 | 4,987,488 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 47,264,200 | 47,264,200 | |
TOTAL MONEY MARKET FUNDS (Cost $52,251,688) | 52,251,688 | ||
TOTAL INVESTMENT PORTFOLIO - 103.7% (Cost $1,132,707,930) | 1,252,611,214 | ||
NET OTHER ASSETS - (3.7)% | (44,744,500) | ||
NET ASSETS - 100% | $ 1,207,866,714 | ||
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. |
(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 | $ 1,173,629 |
Fidelity Securities Lending Cash Central Fund | 1,035,443 |
Total | $ 2,209,072 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $40,857,510) - See accompanying schedule: Unaffiliated issuers (cost $1,080,456,242) | $ 1,200,359,526 |
|
Fidelity Central Funds (cost $52,251,688) | 52,251,688 |
|
Total Investments (cost $1,132,707,930) |
| $ 1,252,611,214 |
Receivable for investments sold | 6,170,596 | |
Receivable for fund shares sold | 1,593,344 | |
Dividends receivable | 2,529,714 | |
Distributions receivable from Fidelity Central Funds | 75,813 | |
Prepaid expenses | 3,950 | |
Other receivables | 636 | |
Total assets | 1,262,985,267 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,380,768 | |
Payable for fund shares redeemed | 2,511,395 | |
Accrued management fee | 581,129 | |
Other affiliated payables | 311,903 | |
Other payables and accrued expenses | 69,158 | |
Collateral on securities loaned, at value | 47,264,200 | |
Total liabilities | 55,118,553 | |
|
|
|
Net Assets | $ 1,207,866,714 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,005,242,422 | |
Undistributed net investment income | 1,909,243 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 80,811,765 | |
Net unrealized appreciation (depreciation) on investments | 119,903,284 | |
Net Assets, for 15,111,366 shares outstanding | $ 1,207,866,714 | |
Net Asset Value, offering price and redemption price per share ($1,207,866,714 ÷ 15,111,366 shares) | $ 79.93 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 12,994,103 |
Interest |
| 7,250 |
Income from Fidelity Central Funds (including $1,035,443 from security lending) |
| 2,209,072 |
Total income |
| 15,210,425 |
|
|
|
Expenses | ||
Management fee | $ 7,462,502 | |
Transfer agent fees | 3,459,726 | |
Accounting and security lending fees | 439,627 | |
Custodian fees and expenses | 30,048 | |
Independent trustees' compensation | 4,888 | |
Registration fees | 80,261 | |
Audit | 40,562 | |
Legal | 7,157 | |
Interest | 18,321 | |
Miscellaneous | 56,460 | |
Total expenses before reductions | 11,599,552 | |
Expense reductions | (18,536) | 11,581,016 |
Net investment income (loss) | 3,629,409 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 131,968,512 | |
Other affiliated issuers | 575,876 |
|
Foreign currency transactions | 3,031 | |
Total net realized gain (loss) |
| 132,547,419 |
Change in net unrealized appreciation (depreciation) on investment securities | (110,925,120) | |
Net gain (loss) | 21,622,299 | |
Net increase (decrease) in net assets resulting from operations | $ 25,251,708 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 3,629,409 | $ 952,390 |
Net realized gain (loss) | 132,547,419 | 125,640,046 |
Change in net unrealized appreciation (depreciation) | (110,925,120) | 15,144,274 |
Net increase (decrease) in net assets resulting from operations | 25,251,708 | 141,736,710 |
Distributions to shareholders from net investment income | (2,154,171) | (612,095) |
Distributions to shareholders from net realized gain | (106,507,666) | (80,003,674) |
Total distributions | (108,661,837) | (80,615,769) |
Share transactions | 568,779,773 | 585,618,510 |
Reinvestment of distributions | 103,468,716 | 77,580,350 |
Cost of shares redeemed | (584,357,467) | (423,187,600) |
Net increase (decrease) in net assets resulting from share transactions | 87,891,022 | 240,011,260 |
Redemption fees | 91,811 | 113,031 |
Total increase (decrease) in net assets | 4,572,704 | 301,245,232 |
|
|
|
Net Assets | ||
Beginning of period | 1,203,294,010 | 902,048,778 |
End of period (including undistributed net investment income of $1,909,243 and undistributed net investment income of $542,092, respectively) | $ 1,207,866,714 | $ 1,203,294,010 |
Other Information Shares | ||
Sold | 6,374,164 | 7,180,965 |
Issued in reinvestment of distributions | 1,205,425 | 956,556 |
Redeemed | (6,714,951) | (5,322,738) |
Net increase (decrease) | 864,638 | 2,814,783 |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.46 | $ 78.91 | $ 67.18 | $ 55.07 | $ 36.30 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .24 | .08 | .13 | .25 | (.09) |
Net realized and unrealized gain (loss) | 2.46 | 12.07 | 15.04 | 12.28 | 18.85 |
Total from investment operations | 2.70 | 12.15 | 15.17 | 12.53 | 18.76 |
Distributions from net investment income | (.14) | (.05) | (.11) | (.19) | - |
Distributions from net realized gain | (7.10) | (6.56) | (3.34) | (.25) | - |
Total distributions | (7.24) | (6.61) | (3.45) | (.44) | - |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 79.93 | $ 84.46 | $ 78.91 | $ 67.18 | $ 55.07 |
Total Return A,B | 2.80% | 15.90% | 23.02% | 22.82% | 51.71% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .87% | .92% | .97% | 1.02% | 1.28% |
Expenses net of fee waivers, if any | .87% | .92% | .97% | 1.02% | 1.28% |
Expenses net of all reductions | .87% | .92% | .95% | 1.00% | 1.24% |
Net investment income (loss) | .27% | .10% | .19% | .41% | (.19)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,207,867 | $ 1,203,294 | $ 902,049 | $ 583,116 | $ 321,915 |
Portfolio turnover rate E | 57% | 82% | 50% | 38% | 47% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Environmental Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Environmental Portfolio | 3.27% | 12.85% | 0.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Environmental Portfolio on February 28, 1998. 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
Select Environmental Portfolio
Management's Discussion of Fund Performance
Comments from Stavros Koutsantonis, Portfolio Manager of Select Environmental Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months that ended February 29, 2008, the fund returned 3.27%, compared with 3.62% for the Morgan Stanley Capital InternationalSM (MSCI ®) US Investable Market Industrials Index and outperforming the S&P 500®. The fund slightly underperformed the MSCI index due in part to the underperformance of an out-of-index holding in food retailer Whole Foods Market. Not owning any aerospace and defense stocks - an area that did well but was outside of the fund's investment mandate - also dampened returns, as did unfavorable stock selection and an underweighting in the construction and engineering group. Positive contributions to the fund's relative return came from the solid performance of out-of-benchmark multi-utilities stocks and from not owning any investments in airlines, another group outside of the fund's focus. Other detractors included waste management firm Allied Waste Industries, out-of-benchmark positions in specialty chemicals company Nalco Holding and food distributor United Natural Foods, and not owning farm and construction machinery manufacturer Deere & Co. Among the stocks that contributed to the fund's relative return were French multi-utility Veolia Environnement - not part of the MSCI benchmark - medical waste management company Stericycle, an out-of-benchmark position in cleaning products provider Ecolab, not owning conglomerate and index component General Electric, and Covanta, a company that converts waste to energy.
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
Select Environmental Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Waste Management, Inc. | 11.1 | 10.7 |
Republic Services, Inc. | 9.5 | 8.7 |
Ecolab, Inc. | 8.3 | 12.1 |
Veolia Environnement sponsored ADR | 8.1 | 9.7 |
Nalco Holding Co. | 6.3 | 2.5 |
Allied Waste Industries, Inc. | 6.1 | 4.7 |
Covanta Holding Corp. | 4.8 | 4.4 |
Stericycle, Inc. | 4.5 | 5.4 |
Whole Foods Market, Inc. | 4.1 | 4.2 |
Waste Connections, Inc. | 3.9 | 4.5 |
| 66.7 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Commercial Services & Supplies | 43.9% |
|
| Chemicals | 15.5% |
|
| Machinery | 11.0% |
|
| Multi-utilities | 8.1% |
|
| Food & Staples Retailing | 5.0% |
|
| All Others* | 16.5% |
|
| |||
As of August 31, 2007 | |||
| Commercial Services & Supplies | 44.2% |
|
| Chemicals | 15.3% |
|
| Machinery | 11.6% |
|
| Multi-utilities | 9.7% |
|
| Food & Staples Retailing | 5.7% |
|
| All Others* | 13.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Environmental Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 94.9% | |||
Shares | Value | ||
CHEMICALS - 15.5% | |||
Commodity Chemicals - 0.9% | |||
Calgon Carbon Corp. (a)(d) | 20,100 | $ 328,434 | |
Specialty Chemicals - 14.6% | |||
Ecolab, Inc. | 68,500 | 3,205,115 | |
Nalco Holding Co. | 112,000 | 2,419,200 | |
| 5,624,315 | ||
TOTAL CHEMICALS | 5,952,749 | ||
COMMERCIAL SERVICES & SUPPLIES - 43.9% | |||
Diversified Commercial & Professional Services - 1.2% | |||
Tetra Tech, Inc. (a) | 23,300 | 439,671 | |
Environmental & Facility Services - 42.7% | |||
Allied Waste Industries, Inc. (a) | 229,700 | 2,375,098 | |
Bennett Environmental, Inc. (a) | 45,100 | 7,333 | |
Casella Waste Systems, Inc. Class A (a) | 42,300 | 418,347 | |
Clean Harbors, Inc. (a) | 10,000 | 615,200 | |
Covanta Holding Corp. (a) | 64,500 | 1,849,860 | |
Republic Services, Inc. | 119,450 | 3,646,809 | |
Stericycle, Inc. (a) | 31,960 | 1,722,324 | |
TRC Companies, Inc. (a) | 8,700 | 44,109 | |
Waste Connections, Inc. (a) | 49,250 | 1,495,230 | |
Waste Management, Inc. | 129,993 | 4,267,670 | |
Waste Services, Inc. (a) | 1,000 | 8,090 | |
| 16,450,070 | ||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 16,889,741 | ||
ELECTRICAL EQUIPMENT - 4.4% | |||
Electrical Components & Equipment - 3.6% | |||
FuelCell Energy, Inc. (a)(d) | 33,100 | 236,996 | |
Hydrogenics Corp. (a) | 3,300 | 1,815 | |
JA Solar Holdings Co. Ltd. ADR | 35,400 | 505,866 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 17,600 | 654,192 | |
| 1,398,869 | ||
Heavy Electrical Equipment - 0.8% | |||
Capstone Turbine Corp. (a)(d) | 91,100 | 165,802 | |
Plug Power, Inc. (a) | 44,400 | 133,644 | |
| 299,446 | ||
TOTAL ELECTRICAL EQUIPMENT | 1,698,315 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.7% | |||
Electronic Equipment & Instruments - 3.7% | |||
Itron, Inc. (a)(d) | 15,100 | 1,439,483 | |
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Newpark Resources, Inc. (a) | 40,400 | 178,972 | |
| |||
Shares | Value | ||
FOOD & STAPLES RETAILING - 5.0% | |||
Food Distributors - 0.9% | |||
United Natural Foods, Inc. (a) | 19,700 | $ 333,324 | |
Food Retail - 4.1% | |||
Whole Foods Market, Inc. (d) | 45,400 | 1,595,810 | |
TOTAL FOOD & STAPLES RETAILING | 1,929,134 | ||
FOOD PRODUCTS - 1.7% | |||
Packaged Foods & Meats - 1.7% | |||
Hain Celestial Group, Inc. (a) | 17,900 | 483,300 | |
SunOpta, Inc. (a) | 31,300 | 189,991 | |
| 673,291 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 1.1% | |||
Independent Power Producers & Energy Traders - 1.1% | |||
Ormat Technologies, Inc. (d) | 9,700 | 423,502 | |
MACHINERY - 11.0% | |||
Construction & Farm Machinery & Heavy Trucks - 1.1% | |||
Lindsay Corp. | 5,500 | 432,410 | |
Industrial Machinery - 9.9% | |||
CLARCOR, Inc. | 22,500 | 805,500 | |
Donaldson Co., Inc. | 35,200 | 1,484,032 | |
Kadant, Inc. (a) | 7,000 | 175,700 | |
Pall Corp. | 33,700 | 1,326,769 | |
| 3,792,001 | ||
TOTAL MACHINERY | 4,224,411 | ||
MULTI-UTILITIES - 8.1% | |||
Multi-Utilities - 8.1% | |||
Veolia Environnement sponsored ADR | 35,200 | 3,134,560 | |
TOTAL COMMON STOCKS (Cost $37,001,454) | 36,544,158 | ||
Money Market Funds - 15.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 1,728,991 | 1,728,991 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 4,313,600 | 4,313,600 | |
TOTAL MONEY MARKET FUNDS (Cost $6,042,591) | 6,042,591 | ||
Cash Equivalents - 0.1% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 1.71%, dated 2/29/08 due 3/3/08 (Collateralized by U.S. Treasury Obligations) # | $ 43,006 | $ 43,000 | |
TOTAL INVESTMENT PORTFOLIO - 110.7% (Cost $43,087,045) | 42,629,749 |
NET OTHER ASSETS - (10.7)% | (4,120,238) | ||
NET ASSETS - 100% | $ 38,509,511 | ||
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. |
(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. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$43,000 due 3/03/08 at 1.71% | |
BNP Paribas Securities Corp. | $ 1,850 |
Banc of America Securities LLC | 6,243 |
Barclays Capital, Inc. | 9,964 |
Citigroup Global Markets, Inc. | 15,981 |
J.P. Morgan Securities, Inc. | 6,243 |
Merrill Lynch Government Securities, Inc. | 846 |
Mizuho Securities USA, Inc. | 1,873 |
| $ 43,000 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 37,868 |
Fidelity Securities Lending Cash Central Fund | 62,617 |
Total | $ 100,485 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 88.4% |
France | 8.1% |
Cayman Islands | 3.0% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $657,634 all of which will expire on February 28, 2015. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Environmental Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,084,272 and repurchase agreements of $43,000) - See accompanying schedule: Unaffiliated issuers (cost $37,044,454) | $ 36,587,158 |
|
Fidelity Central Funds (cost $6,042,591) | 6,042,591 |
|
Total Investments (cost $43,087,045) |
| $ 42,629,749 |
Cash | 761 | |
Receivable for fund shares sold | 324,489 | |
Dividends receivable | 3,872 | |
Distributions receivable from Fidelity Central Funds | 8,239 | |
Prepaid expenses | 97 | |
Total assets | 42,967,207 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 87,508 | |
Accrued management fee | 17,583 | |
Other affiliated payables | 10,438 | |
Other payables and accrued expenses | 28,567 | |
Collateral on securities loaned, at value | 4,313,600 | |
Total liabilities | 4,457,696 | |
|
|
|
Net Assets | $ 38,509,511 | |
Net Assets consist of: |
| |
Paid in capital | $ 39,903,442 | |
Accumulated net investment loss | (229) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (936,406) | |
Net unrealized appreciation (depreciation) on investments | (457,296) | |
Net Assets, for 2,174,803 shares outstanding | $ 38,509,511 | |
Net Asset Value, offering price and redemption price per share ($38,509,511 ÷ 2,174,803 shares) | $ 17.71 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 414,816 |
Interest |
| 105 |
Income from Fidelity Central Funds (including $62,617 from security lending) |
| 100,485 |
Total income |
| 515,406 |
|
|
|
Expenses | ||
Management fee | $ 222,717 | |
Transfer agent fees | 119,506 | |
Accounting and security lending fees | 16,608 | |
Custodian fees and expenses | 10,186 | |
Independent trustees' compensation | 176 | |
Registration fees | 23,088 | |
Audit | 36,003 | |
Legal | 319 | |
Miscellaneous | 2,419 | |
Total expenses before reductions | 431,022 | |
Expense reductions | (3,041) | 427,981 |
Net investment income (loss) | 87,425 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 3,325,285 | |
Foreign currency transactions | 5,103 | |
Total net realized gain (loss) |
| 3,330,388 |
Change in net unrealized appreciation (depreciation) on investment securities | (2,298,812) | |
Net gain (loss) | 1,031,576 | |
Net increase (decrease) in net assets resulting from operations | $ 1,119,001 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Environmental Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 87,425 | $ (88,886) |
Net realized gain (loss) | 3,330,388 | (3,726,307) |
Change in net unrealized appreciation (depreciation) | (2,298,812) | (2,113,664) |
Net increase (decrease) in net assets resulting from operations | 1,119,001 | (5,928,857) |
Distributions to shareholders from net investment income | (134,764) | - |
Share transactions | 28,716,456 | 175,272,057 |
Reinvestment of distributions | 128,530 | - |
Cost of shares redeemed | (37,701,054) | (178,453,053) |
Net increase (decrease) in net assets resulting from share transactions | (8,856,068) | (3,180,996) |
Redemption fees | 4,778 | 88,998 |
Total increase (decrease) in net assets | (7,867,053) | (9,020,855) |
|
|
|
Net Assets | ||
Beginning of period | 46,376,564 | 55,397,419 |
End of period (including accumulated net investment loss of $229 and accumulated net investment loss of $205, respectively) | $ 38,509,511 | $ 46,376,564 |
Other Information Shares | ||
Sold | 1,562,983 | 9,773,005 |
Issued in reinvestment of distributions | 6,588 | - |
Redeemed | (2,089,625) | (10,271,871) |
Net increase (decrease) | (520,054) | (498,866) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.21 | $ 17.35 | $ 13.80 | $ 13.29 | $ 9.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .04 | (.02) | (.02) | (.14) | (.25) |
Net realized and unrealized gain (loss) | .53 | (.14) | 3.55 | .64 | 3.83 |
Total from investment operations | .57 | (.16) | 3.53 | .50 | 3.58 |
Distributions from net investment income | (.07) | - | - | - | - |
Redemption fees added to paid in capital C | - H | .02 | .02 | .01 | - H |
Net asset value, end of period | $ 17.71 | $ 17.21 | $ 17.35 | $ 13.80 | $ 13.29 |
Total Return A,B | 3.27% | (.81)% | 25.72% | 3.84% | 36.87% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.08% | 1.11% | 1.40% | 1.87% | 2.57% |
Expenses net of fee waivers, if any | 1.08% | 1.11% | 1.25% | 1.83% | 2.50% |
Expenses net of all reductions | 1.07% | 1.09% | 1.16% | 1.74% | 2.50% |
Net investment income (loss) | .22% | (.12)% | (.14)% | (1.06)% | (2.12)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,510 | $ 46,377 | $ 55,397 | $ 12,005 | $ 12,269 |
Portfolio turnover rate E | 76% | 224% | 166% | 220% | 90% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrial Equipment Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Industrial Equipment Portfolio | 9.25% | 19.38% | 7.11% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Industrial Equipment Portfolio on February 28, 1998. 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
Select Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Comments from Vincent Montemaggiore, Portfolio Manager of Select Industrial Equipment Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned 9.25%, topping the S&P 500® and also the 7.22% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Capital Goods Index. Versus the MSCI index, the fund benefited from favorable stock selection in aerospace and defense and in the electrical components and equipment group. Individual contributors were led by mining equipment maker Bucyrus International, which was aided in part by the market's outlook for strong coal prices and potential synergies from a large, recently completed acquisition that doubled the size of the company and was purchased at a bargain price. Underweighting General Electric, our largest holding at period end and the index's largest component, also helped performance, as did overweighting Flowserve, a maker of pumps, valves and other flow control products, and SPX, a diversified industrial with exposure to power and utility end markets. Underweighting Boeing and overweighting Honeywell International, both aerospace and defense holdings, also helped. Conversely, stock picking detracted in several industries, but none of the damage was significant. Agricultural equipment manufacturer and index component Deere & Co. was an underweighted position that hurt us, as it managed to post a strong gain despite what I thought was a rich valuation. Underweighting industrial conglomerate 3M also detracted modestly, while overweighted exposures to industrial machinery provider Ingersoll-Rand and Oshkosh, a manufacturer of fire trucks, military trucks and aerial work platforms, worked against our results. Deere, 3M and Oshkosh were sold from the fund by period end.
Note to shareholders: Jonathan Kasen will become manager of the fund on May 1, 2008, replacing Vincent Montemaggiore.
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
Select Industrial Equipment Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 16.0 | 20.4 |
United Technologies Corp. | 8.4 | 6.8 |
Honeywell International, Inc. | 6.2 | 4.1 |
Lockheed Martin Corp. | 4.1 | 2.9 |
Eaton Corp. | 4.0 | 2.9 |
Illinois Tool Works, Inc. | 3.7 | 3.5 |
Ingersoll-Rand Co. Ltd. Class A | 3.7 | 2.8 |
Raytheon Co. | 3.6 | 2.3 |
Emerson Electric Co. | 3.4 | 3.8 |
ITT Corp. | 3.3 | 2.1 |
| 56.4 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Aerospace & Defense | 28.9% |
|
| Machinery | 28.7% |
|
| Industrial Conglomerates | 20.6% |
|
| Electrical Equipment | 7.5% |
|
| Construction & Engineering | 3.4% |
|
| All Others* | 10.9% |
|
| |||
As of August 31, 2007 | |||
| Industrial Conglomerates | 29.5% |
|
| Machinery | 28.1% |
|
| Aerospace & Defense | 21.6% |
|
| Electrical Equipment | 9.2% |
|
| Construction & Engineering | 5.1% |
|
| All Others* | 6.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Industrial Equipment Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 28.9% | |||
Aerospace & Defense - 28.9% | |||
General Dynamics Corp. | 52,000 | $ 4,256,200 | |
Honeywell International, Inc. (d) | 181,700 | 10,455,018 | |
Lockheed Martin Corp. | 67,100 | 6,924,720 | |
Precision Castparts Corp. | 26,000 | 2,870,140 | |
Raytheon Co. | 93,600 | 6,069,024 | |
Spirit AeroSystems Holdings, Inc. | 12,500 | 337,750 | |
The Boeing Co. | 44,900 | 3,717,271 | |
United Technologies Corp. (d) | 201,500 | 14,207,765 | |
| 48,837,888 | ||
AUTO COMPONENTS - 2.7% | |||
Auto Parts & Equipment - 2.7% | |||
Johnson Controls, Inc. | 121,800 | 4,002,348 | |
WABCO Holdings, Inc. | 14,266 | 596,033 | |
| 4,598,381 | ||
BUILDING PRODUCTS - 1.5% | |||
Building Products - 1.5% | |||
Masco Corp. | 88,000 | 1,644,720 | |
Owens Corning (a) | 18,400 | 347,024 | |
USG Corp. (a)(d) | 14,500 | 493,435 | |
| 2,485,179 | ||
CHEMICALS - 0.6% | |||
Specialty Chemicals - 0.6% | |||
Albemarle Corp. | 25,000 | 948,500 | |
COMMERCIAL SERVICES & SUPPLIES - 1.3% | |||
Diversified Commercial & Professional Services - 1.3% | |||
The Brink's Co. | 33,100 | 2,215,383 | |
CONSTRUCTION & ENGINEERING - 3.4% | |||
Construction & Engineering - 3.4% | |||
Fluor Corp. | 14,102 | 1,963,704 | |
Jacobs Engineering Group, Inc. (a) | 22,000 | 1,766,380 | |
KBR, Inc. (a) | 18,900 | 629,937 | |
Shaw Group, Inc. (a) | 16,700 | 1,075,146 | |
URS Corp. (a) | 6,600 | 265,848 | |
| 5,701,015 | ||
ELECTRICAL EQUIPMENT - 7.5% | |||
Electrical Components & Equipment - 5.6% | |||
Acuity Brands, Inc. | 32,300 | 1,434,443 | |
AMETEK, Inc. | 13,450 | 572,836 | |
Emerson Electric Co. | 114,200 | 5,819,632 | |
| |||
Shares | Value | ||
First Solar, Inc. (a) | 6,700 | $ 1,374,840 | |
Sunpower Corp. Class A (a) | 4,600 | 302,312 | |
| 9,504,063 | ||
Heavy Electrical Equipment - 1.9% | |||
ABB Ltd. sponsored ADR | 60,400 | 1,512,416 | |
Alstom SA | 4,900 | 1,029,680 | |
Vestas Wind Systems AS (a) | 6,400 | 648,753 | |
| 3,190,849 | ||
TOTAL ELECTRICAL EQUIPMENT | 12,694,912 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% | |||
Electronic Equipment & Instruments - 0.4% | |||
Itron, Inc. (a) | 7,800 | 743,574 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 2.0% | |||
Health Care Equipment - 2.0% | |||
Covidien Ltd. | 78,300 | 3,350,457 | |
INDUSTRIAL CONGLOMERATES - 20.6% | |||
Industrial Conglomerates - 20.6% | |||
General Electric Co. | 817,650 | 27,096,920 | |
McDermott International, Inc. (a) | 35,900 | 1,874,698 | |
Siemens AG sponsored ADR | 32,900 | 4,200,014 | |
Textron, Inc. | 32,100 | 1,738,857 | |
| 34,910,489 | ||
MACHINERY - 28.7% | |||
Construction & Farm Machinery & Heavy Trucks - 6.7% | |||
Bucyrus International, Inc. Class A (d) | 20,900 | 2,087,492 | |
Cummins, Inc. | 78,400 | 3,949,792 | |
Joy Global, Inc. | 13,100 | 869,447 | |
Navistar International Corp. (a) | 18,900 | 1,066,905 | |
Terex Corp. (a) | 51,200 | 3,453,440 | |
| 11,427,076 | ||
Industrial Machinery - 22.0% | |||
Danaher Corp. | 56,700 | 4,204,305 | |
Eaton Corp. | 84,900 | 6,845,487 | |
Flowserve Corp. | 15,100 | 1,644,390 | |
Illinois Tool Works, Inc. (d) | 127,200 | 6,241,704 | |
Ingersoll-Rand Co. Ltd. Class A | 148,500 | 6,216,210 | |
ITT Corp. | 98,800 | 5,556,512 | |
SPX Corp. (d) | 32,900 | 3,365,670 | |
Sulzer AG (Reg.) | 2,657 | 3,050,520 | |
| 37,124,798 | ||
TOTAL MACHINERY | 48,551,874 | ||
Common Stocks - continued | |||
Shares | Value | ||
ROAD & RAIL - 0.9% | |||
Trucking - 0.9% | |||
Landstar System, Inc. | 14,200 | $ 658,596 | |
Old Dominion Freight Lines, Inc. (a) | 30,100 | 820,225 | |
| 1,478,821 | ||
TOTAL COMMON STOCKS (Cost $162,569,301) | 166,516,473 | ||
Money Market Funds - 12.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 2,876,863 | 2,876,863 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 18,145,566 | 18,145,566 | |
TOTAL MONEY MARKET FUNDS (Cost $21,022,429) | 21,022,429 | ||
TOTAL INVESTMENT PORTFOLIO - 110.9% (Cost $183,591,730) | 187,538,902 |
NET OTHER ASSETS - (10.9)% | (18,493,709) | ||
NET ASSETS - 100% | $ 169,045,193 | ||
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. |
(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 | $ 121,970 |
Fidelity Securities Lending Cash Central Fund | 44,552 |
Total | $ 166,522 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 87.0% |
Bermuda | 5.7% |
Switzerland | 2.7% |
Germany | 2.5% |
Panama | 1.1% |
Others (individually less than 1%) | 1.0% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $17,133,609) - See accompanying schedule: Unaffiliated issuers (cost $162,569,301) | $ 166,516,473 |
|
Fidelity Central Funds (cost $21,022,429) | 21,022,429 |
|
Total Investments (cost $183,591,730) |
| $ 187,538,902 |
Receivable for investments sold | 1,800,849 | |
Receivable for fund shares sold | 373,233 | |
Dividends receivable | 497,461 | |
Distributions receivable from Fidelity Central Funds | 12,420 | |
Prepaid expenses | 495 | |
Other receivables | 4,375 | |
Total assets | 190,227,735 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 2,882,954 | |
Accrued management fee | 80,065 | |
Other affiliated payables | 37,256 | |
Other payables and accrued expenses | 36,701 | |
Collateral on securities loaned, at value | 18,145,566 | |
Total liabilities | 21,182,542 | |
|
|
|
Net Assets | $ 169,045,193 | |
Net Assets consist of: |
| |
Paid in capital | $ 160,494,037 | |
Undistributed net investment income | 554,537 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,048,754 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 3,947,865 | |
Net Assets, for 5,209,609 shares outstanding | $ 169,045,193 | |
Net Asset Value, offering price and redemption price per share ($169,045,193 ÷ 5,209,609 shares) | $ 32.45 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 2,328,798 |
Interest |
| 31 |
Income from Fidelity Central Funds (including $44,552 from security lending) |
| 166,522 |
Total income |
| 2,495,351 |
|
|
|
Expenses | ||
Management fee | $ 830,020 | |
Transfer agent fees | 320,960 | |
Accounting and security lending fees | 60,246 | |
Custodian fees and expenses | 20,289 | |
Independent trustees' compensation | 527 | |
Registration fees | 32,478 | |
Audit | 40,175 | |
Legal | 592 | |
Interest | 1,103 | |
Miscellaneous | 6,568 | |
Total expenses before reductions | 1,312,958 | |
Expense reductions | (2,193) | 1,310,765 |
Net investment income (loss) | 1,184,586 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 11,465,429 | |
Foreign currency transactions | 10,783 | |
Total net realized gain (loss) |
| 11,476,212 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (12,353,017) | |
Assets and liabilities in foreign currencies | 494 | |
Total change in net unrealized appreciation (depreciation) |
| (12,352,523) |
Net gain (loss) | (876,311) | |
Net increase (decrease) in net assets resulting from operations | $ 308,275 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrial Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,184,586 | $ 511,422 |
Net realized gain (loss) | 11,476,212 | 1,628,211 |
Change in net unrealized appreciation (depreciation) | (12,352,523) | 2,987,293 |
Net increase (decrease) in net assets resulting from operations | 308,275 | 5,126,926 |
Distributions to shareholders from net investment income | (873,074) | (265,173) |
Distributions to shareholders from net realized gain | (8,279,648) | (918,016) |
Total distributions | (9,152,722) | (1,183,189) |
Share transactions | 180,107,533 | 96,154,133 |
Reinvestment of distributions | 8,917,566 | 1,138,035 |
Cost of shares redeemed | (93,677,794) | (93,519,662) |
Net increase (decrease) in net assets resulting from share transactions | 95,347,305 | 3,772,506 |
Redemption fees | 14,587 | 41,433 |
Total increase (decrease) in net assets | 86,517,445 | 7,757,676 |
|
|
|
Net Assets | ||
Beginning of period | 82,527,748 | 74,770,072 |
End of period (including undistributed net investment income of $554,537 and undistributed net investment income of $293,326, respectively) | $ 169,045,193 | $ 82,527,748 |
Other Information Shares | ||
Sold | 5,037,479 | 3,169,330 |
Issued in reinvestment of distributions | 255,260 | 37,422 |
Redeemed | (2,703,266) | (3,151,568) |
Net increase (decrease) | 2,589,473 | 55,184 |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 31.50 | $ 29.15 | $ 26.85 | $ 24.60 | $ 16.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .28 | .18 | .07 | (.04) | (.02) |
Net realized and unrealized gain (loss) | 2.73 F | 2.59 | 4.02 | 3.26 | 8.59 |
Total from investment operations | 3.01 | 2.77 | 4.09 | 3.22 | 8.57 |
Distributions from net investment income | (.23) | (.10) | (.02) | - | - |
Distributions from net realized gain | (1.83) | (.33) | (1.78) | (.98) | - |
Total distributions | (2.06) | (.43) | (1.80) | (.98) | - |
Redemption fees added to paid in capital C | - I | .01 | .01 | .01 | .03 |
Net asset value, end of period | $ 32.45 | $ 31.50 | $ 29.15 | $ 26.85 | $ 24.60 |
Total Return A,B | 9.25% | 9.59% | 16.17% | 13.37% | 53.75% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .88% | .99% | 1.03% | 1.07% | 1.37% |
Expenses net of fee waivers, if any | .88% | .99% | 1.03% | 1.07% | 1.37% |
Expenses net of all reductions | .88% | .98% | 1.02% | 1.06% | 1.33% |
Net investment income (loss) | .80% | .60% | .27% | (.17)% | (.08)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 169,045 | $ 82,528 | $ 74,770 | $ 46,305 | $ 66,383 |
Portfolio turnover rate E | 92% | 104% | 40% | 51% | 95% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrials Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Industrials Portfolio A | 7.14% | 20.70% | 9.11% |
A Prior to October 1, 2006, Select 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 Select Industrials Portfolio on February 28, 1998 when the fund started. 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
Select Industrials Portfolio
Management's Discussion of Fund Performance
Comments from Tobias Welo, Portfolio Manager of Select Industrials Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned 7.14%, beating the S&P 500® and the 3.62% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Industrials Index. Versus the MSCI index, the fund benefited from favorable stock selection and an overweighting in construction and engineering stocks. Stock selection in heavy electrical equipment and in the aerospace and defense group also helped our results. Additionally, the fund's foreign securities benefited from currency fluctuations. Among individual holdings, construction and engineering stock Shaw Group was the fund's top contributor, benefiting from the build-out of global energy infrastructure and also from stronger demand for nuclear energy. Other contributors included aerospace giant Honeywell International; Flowserve, a maker of pumps, valves and other flow control products; Switzerland-based ABB, an out-of-benchmark provider of power transmission and distribution equipment; and mining equipment provider Bucyrus International. Our results were further bolstered by heavily underweighting General Electric, the fund's largest holding and also the biggest benchmark component. Conversely, underweighting the strong-performing railroad group worked against us, as did unrewarding picks in the environmental and facility services group and an underweighted exposure to the construction/farm machinery/heavy trucks segment. US Airways Group was the biggest detractor. Crude oil prices near $100 per barrel sent the company's fuel costs soaring and dealt the stock a significant setback. A large underweighting in index component Deere & Co., a maker of farm and construction equipment, also held back our performance. Vehicle and equipment rental provider Hertz Global Holdings and Masco, a well-managed building products supplier, detracted as well. US Airways Group and Deere & Co. 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
Select Industrials Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 8.3 | 10.0 |
United Technologies Corp. | 5.4 | 6.8 |
Honeywell International, Inc. | 4.7 | 4.2 |
Lockheed Martin Corp. | 3.7 | 2.6 |
The Boeing Co. | 2.9 | 0.0 |
Danaher Corp. | 2.7 | 2.9 |
FedEx Corp. | 2.3 | 0.0 |
The Brink's Co. | 2.3 | 2.0 |
Siemens AG sponsored ADR | 2.1 | 1.6 |
Sulzer AG (Reg.) | 2.1 | 0.4 |
| 36.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Machinery | 21.7% |
|
| Aerospace & Defense | 19.7% |
|
| Industrial Conglomerates | 12.3% |
|
| Commercial Services & Supplies | 11.2% |
|
| Electrical Equipment | 9.0% |
|
| All Others* | 26.1% |
|
| |||
As of August 31, 2007 | |||
| Aerospace & Defense | 18.9% |
|
| Machinery | 18.6% |
|
| Industrial Conglomerates | 17.0% |
|
| Electrical Equipment | 8.3% |
|
| Road & Rail | 8.3% |
|
| All Others* | 28.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Industrials Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 96.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 19.7% | |||
Aerospace & Defense - 19.7% | |||
Honeywell International, Inc. | 102,200 | $ 5,880,588 | |
Lockheed Martin Corp. | 43,900 | 4,530,480 | |
Northrop Grumman Corp. | 16,030 | 1,260,118 | |
Raytheon Co. | 39,100 | 2,535,244 | |
The Boeing Co. | 44,100 | 3,651,039 | |
United Technologies Corp. | 94,601 | 6,670,317 | |
| 24,527,786 | ||
AIR FREIGHT & LOGISTICS - 3.1% | |||
Air Freight & Logistics - 3.1% | |||
C.H. Robinson Worldwide, Inc. (d) | 18,300 | 929,091 | |
FedEx Corp. | 32,900 | 2,899,477 | |
| 3,828,568 | ||
AIRLINES - 0.6% | |||
Airlines - 0.6% | |||
Delta Air Lines, Inc. (a) | 53,678 | 716,601 | |
AUTO COMPONENTS - 2.7% | |||
Auto Parts & Equipment - 2.7% | |||
Johnson Controls, Inc. | 75,600 | 2,484,216 | |
WABCO Holdings, Inc. | 20,900 | 873,202 | |
| 3,357,418 | ||
AUTOMOBILES - 0.8% | |||
Automobile Manufacturers - 0.8% | |||
Fiat SpA | 50,000 | 1,055,732 | |
BUILDING PRODUCTS - 1.3% | |||
Building Products - 1.3% | |||
Masco Corp. | 83,510 | 1,560,802 | |
CHEMICALS - 2.1% | |||
Specialty Chemicals - 2.1% | |||
Albemarle Corp. | 29,550 | 1,121,127 | |
Nalco Holding Co. | 57,200 | 1,235,520 | |
W.R. Grace & Co. (a) | 13,900 | 295,097 | |
| 2,651,744 | ||
COMMERCIAL SERVICES & SUPPLIES - 11.2% | |||
Commercial Printing - 0.6% | |||
R.R. Donnelley & Sons Co. | 25,900 | 824,397 | |
Diversified Commercial & Professional Services - 4.0% | |||
Cintas Corp. | 13,900 | 400,042 | |
Corrections Corp. of America (a) | 32,700 | 878,322 | |
Equifax, Inc. | 27,200 | 930,784 | |
The Brink's Co. | 41,864 | 2,801,958 | |
| 5,011,106 | ||
Environmental & Facility Services - 5.0% | |||
Allied Waste Industries, Inc. (a) | 167,700 | 1,734,018 | |
Fuel Tech, Inc. (a)(d) | 50,696 | 1,017,469 | |
| |||
Shares | Value | ||
Waste Connections, Inc. (a) | 34,300 | $ 1,041,348 | |
Waste Management, Inc. | 73,400 | 2,409,722 | |
| 6,202,557 | ||
Human Resource & Employment Services - 1.1% | |||
Manpower, Inc. | 23,384 | 1,325,873 | |
Office Services & Supplies - 0.5% | |||
Avery Dennison Corp. | 11,700 | 600,444 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 13,964,377 | ||
CONSTRUCTION & ENGINEERING - 2.6% | |||
Construction & Engineering - 2.6% | |||
Chicago Bridge & Iron Co. NV | 27,900 | 1,297,908 | |
Quanta Services, Inc. (a) | 94 | 2,245 | |
Shaw Group, Inc. (a) | 26,400 | 1,699,632 | |
URS Corp. (a) | 6,400 | 257,792 | |
| 3,257,577 | ||
ELECTRICAL EQUIPMENT - 9.0% | |||
Electrical Components & Equipment - 6.4% | |||
Acuity Brands, Inc. | 13,300 | 590,653 | |
AMETEK, Inc. | 14,350 | 611,167 | |
Cooper Industries Ltd. Class A | 32,400 | 1,358,532 | |
Emerson Electric Co. | 39,000 | 1,987,440 | |
First Solar, Inc. (a) | 4,900 | 1,005,480 | |
Nexans SA | 10,700 | 1,168,116 | |
SolarWorld AG | 6,900 | 312,879 | |
Sunpower Corp. Class A (a)(d) | 12,900 | 847,788 | |
| 7,882,055 | ||
Heavy Electrical Equipment - 2.6% | |||
ABB Ltd. sponsored ADR | 30,200 | 756,208 | |
Alstom SA | 4,900 | 1,029,680 | |
Suzlon Energy Ltd. | 37,491 | 260,837 | |
Vestas Wind Systems AS (a) | 12,000 | 1,216,412 | |
| 3,263,137 | ||
TOTAL ELECTRICAL EQUIPMENT | 11,145,192 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3% | |||
Electronic Equipment & Instruments - 0.3% | |||
Itron, Inc. (a)(d) | 3,400 | 324,122 | |
HEALTH CARE PROVIDERS & SERVICES - 0.4% | |||
Health Care Distributors & Services - 0.4% | |||
Henry Schein, Inc. (a) | 9,300 | 556,326 | |
INDUSTRIAL CONGLOMERATES - 12.3% | |||
Industrial Conglomerates - 12.3% | |||
General Electric Co. | 311,401 | 10,319,827 | |
Siemens AG sponsored ADR | 21,000 | 2,680,860 | |
Tyco International Ltd. | 58,436 | 2,340,946 | |
| 15,341,633 | ||
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - 21.7% | |||
Construction & Farm Machinery & Heavy Trucks - 7.2% | |||
Bucyrus International, Inc. Class A (d) | 8,134 | $ 812,424 | |
Caterpillar, Inc. | 23,000 | 1,663,590 | |
CNH Global NV | 12,200 | 628,300 | |
Cummins, Inc. | 38,100 | 1,919,478 | |
Navistar International Corp. (a) | 12,300 | 694,335 | |
Oshkosh Co. (d) | 33,000 | 1,322,310 | |
Terex Corp. (a) | 28,100 | 1,895,345 | |
| 8,935,782 | ||
Industrial Machinery - 14.5% | |||
Briggs & Stratton Corp. | 18,130 | 323,983 | |
Danaher Corp. | 45,500 | 3,373,825 | |
Eaton Corp. | 17,800 | 1,435,214 | |
Flowserve Corp. | 15,400 | 1,677,060 | |
Illinois Tool Works, Inc. | 48,600 | 2,384,802 | |
Ingersoll-Rand Co. Ltd. Class A | 50,500 | 2,113,930 | |
ITT Corp. | 32,300 | 1,816,552 | |
Pall Corp. | 22,900 | 901,573 | |
SPX Corp. (d) | 14,098 | 1,442,225 | |
Sulzer AG (Reg.) | 2,240 | 2,571,759 | |
| 18,040,923 | ||
TOTAL MACHINERY | 26,976,705 | ||
METALS & MINING - 0.5% | |||
Diversified Metals & Mining - 0.5% | |||
Titanium Metals Corp. | 28,630 | 590,351 | |
ROAD & RAIL - 7.6% | |||
Railroads - 2.8% | |||
Norfolk Southern Corp. | 37,500 | 1,983,375 | |
Union Pacific Corp. | 11,700 | 1,459,692 | |
| 3,443,067 | ||
Trucking - 4.8% | |||
Con-way, Inc. | 4,600 | 208,426 | |
Hertz Global Holdings, Inc. (a) | 47,700 | 569,061 | |
J.B. Hunt Transport Services, Inc. | 9,200 | 251,804 | |
Knight Transportation, Inc. | 37,200 | 550,188 | |
Landstar System, Inc. | 34,818 | 1,614,859 | |
| |||
Shares | Value | ||
Old Dominion Freight Lines, Inc. (a) | 42,457 | $ 1,156,953 | |
Ryder System, Inc. | 28,600 | 1,647,646 | |
| 5,998,937 | ||
TOTAL ROAD & RAIL | 9,442,004 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Rush Enterprises, Inc. Class A (a) | 46,174 | 684,299 | |
TOTAL COMMON STOCKS (Cost $118,047,981) | 119,981,237 | ||
Nonconvertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
AIRLINES - 0.0% | ||||
Airlines - 0.0% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 670,000 | 26,800 | ||
Money Market Funds - 5.7% | |||
Shares |
| ||
Fidelity Cash Central Fund, 3.24% (b) | 3,365,831 | 3,365,831 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 3,716,825 | 3,716,825 | |
TOTAL MONEY MARKET FUNDS (Cost $7,082,656) | 7,082,656 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $125,150,002) | 127,090,693 |
NET OTHER ASSETS - (2.1)% | (2,647,436) | ||
NET ASSETS - 100% | $ 124,443,257 | ||
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. |
(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 | $ 85,205 |
Fidelity Securities Lending Cash Central Fund | 46,530 |
Total | $ 131,735 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.0% |
Bermuda | 4.7% |
Switzerland | 2.7% |
Germany | 2.4% |
France | 1.7% |
Netherlands | 1.5% |
Denmark | 1.0% |
Others (individually less than 1%) | 1.0% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $3,487,391) - See accompanying schedule: Unaffiliated issuers (cost $118,067,346) | $ 120,008,037 |
|
Fidelity Central Funds (cost $7,082,656) | 7,082,656 |
|
Total Investments (cost $125,150,002) |
| $ 127,090,693 |
Receivable for investments sold | 1,237,549 | |
Receivable for fund shares sold | 1,250,825 | |
Dividends receivable | 257,383 | |
Distributions receivable from Fidelity Central Funds | 18,018 | |
Prepaid expenses | 328 | |
Other receivables | 575 | |
Total assets | 129,855,371 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,301,403 | |
Payable for fund shares redeemed | 270,122 | |
Accrued management fee | 56,214 | |
Other affiliated payables | 33,426 | |
Other payables and accrued expenses | 34,124 | |
Collateral on securities loaned, at value | 3,716,825 | |
Total liabilities | 5,412,114 | |
|
|
|
Net Assets | $ 124,443,257 | |
Net Assets consist of: |
| |
Paid in capital | $ 121,551,968 | |
Undistributed net investment income | 265,301 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 685,412 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,940,576 | |
Net Assets, for 6,071,045 shares outstanding | $ 124,443,257 | |
Net Asset Value, offering price and redemption price per share ($124,443,257 ÷ 6,071,045 shares) | $ 20.50 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 1,443,335 |
Interest |
| 35 |
Income from Fidelity Central Funds (including $46,530 from security lending) |
| 131,735 |
Total income |
| 1,575,105 |
|
|
|
Expenses | ||
Management fee | $ 592,778 | |
Transfer agent fees | 319,441 | |
Accounting and security lending fees | 42,098 | |
Custodian fees and expenses | 32,363 | |
Independent trustees' compensation | 379 | |
Registration fees | 25,629 | |
Audit | 36,197 | |
Legal | 510 | |
Miscellaneous | 11,456 | |
Total expenses before reductions | 1,060,851 | |
Expense reductions | (4,427) | 1,056,424 |
Net investment income (loss) | 518,681 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $14,065) | 5,853,827 | |
Foreign currency transactions | (4,824) | |
Total net realized gain (loss) |
| 5,849,003 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (4,890,182) | |
Assets and liabilities in foreign currencies | (25) | |
Total change in net unrealized appreciation (depreciation) |
| (4,890,207) |
Net gain (loss) | 958,796 | |
Net increase (decrease) in net assets resulting from operations | $ 1,477,477 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Industrials Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 518,681 | $ 542,016 |
Net realized gain (loss) | 5,849,003 | 9,412,213 |
Change in net unrealized appreciation (depreciation) | (4,890,207) | (6,918,422) |
Net increase (decrease) in net assets resulting from operations | 1,477,477 | 3,035,807 |
Distributions to shareholders from net investment income | (402,070) | (285,699) |
Distributions to shareholders from net realized gain | (7,628,266) | (6,810,352) |
Total distributions | (8,030,336) | (7,096,051) |
Share transactions | 113,432,100 | 96,555,061 |
Reinvestment of distributions | 7,700,139 | 6,780,780 |
Cost of shares redeemed | (66,163,349) | (106,990,221) |
Net increase (decrease) in net assets resulting from share transactions | 54,968,890 | (3,654,380) |
Redemption fees | 16,044 | 45,420 |
Total increase (decrease) in net assets | 48,432,075 | (7,669,204) |
|
|
|
Net Assets | ||
Beginning of period | 76,011,182 | 83,680,386 |
End of period (including undistributed net investment income of $265,301 and undistributed net investment income | $ 124,443,257 | $ 76,011,182 |
Other Information Shares | ||
Sold | 5,077,420 | 4,527,115 |
Issued in reinvestment of distributions | 358,631 | 328,326 |
Redeemed | (3,036,797) | (5,174,527) |
Net increase (decrease) | 2,399,254 | (319,086) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 20.70 | $ 20.97 | $ 19.21 | $ 16.22 | $ 11.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .11 | .14 | .06 | .05 | .02 |
Net realized and unrealized gain (loss) | 1.40 | 1.55 | 3.06 | 3.99 | 5.46 |
Total from investment operations | 1.51 | 1.69 | 3.12 | 4.04 | 5.48 |
Distributions from net investment income | (.09) | (.08) | (.05) | (.02) | (.01) |
Distributions from net realized gain | (1.62) | (1.89) | (1.32) | (1.04) | (.30) |
Total distributions | (1.71) | (1.97) | (1.37) | (1.06) | (.31) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 20.50 | $ 20.70 | $ 20.97 | $ 19.21 | $ 16.22 |
Total Return A,B | 7.14% | 8.34% | 17.23% | 25.60% | 49.87% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.00% | 1.10% | 1.12% | 1.19% | 1.60% |
Expenses net of fee waivers, if any | 1.00% | 1.10% | 1.12% | 1.19% | 1.60% |
Expenses net of all reductions | .99% | 1.09% | 1.07% | 1.15% | 1.57% |
Net investment income (loss) | .49% | .66% | .34% | .27% | .14% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 124,443 | $ 76,011 | $ 83,680 | $ 64,969 | $ 36,797 |
Portfolio turnover rate E | 108% | 185% | 168% | 151% | 166% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Transportation Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Transportation Portfolio | -8.89% | 17.35% | 9.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Transportation Portfolio on February 28, 1998. 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
Select Transportation Portfolio
Management's Discussion of Fund Performance
Comments from Maurice FitzMaurice, Portfolio Manager of Select Transportation Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the year, the fund returned -8.89%, falling behind the -4.41% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Transportation Index and also lagging the S&P 500®. An overweighting in airlines and an underweighting in railroads were two factors that significantly hurt performance. The fund's positions in US Airways and American Airlines' parent company, AMR, which were slightly overweighted compared with the index, were negatively affected by historically high fuel costs, squeezing profit margins. Underweightings in rail service providers Burlington Northern Santa Fe and CSX, which performed well thanks to strong demand and pricing power for their services, were a drag on performance as well. Stock selection within the out-of-index diversified metals and mining group also held back results. The most significant detractor in this area was Titanium Metals, which supplies titanium to aircraft manufacturers such as Boeing. A significant underweighting in United Parcel Service (UPS) hurt results as well. In addition, our overall positioning in the marine segment was counterproductive. On the positive side, stock selection in trucking, aerospace/defense and construction/farm machinery/heavy trucks helped counter some of the underperformance. A substantial underweighting in air freight/logistics provider FedEx provided the biggest boost to fund performance. Railroad company Union Pacific held up nicely, maintaining its pricing power as commodity prices rose. Underweighting Southwest Airlines also helped, as the airline was hurt by rising fuel costs. An underweighting in car and truck rental company Avis Budget Group was a plus as well. An out-of-index holding in mining equipment manufacturer Bucyrus International also aided performance as global demand for coal, copper and other minerals remained strong. I sold our position in Bucyrus by the end of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Transportation Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
United Parcel Service, Inc. Class B | 17.3 | 8.7 |
Union Pacific Corp. | 13.3 | 12.8 |
FedEx Corp. | 9.4 | 7.0 |
Norfolk Southern Corp. | 6.7 | 8.3 |
Burlington Northern Santa Fe Corp. | 4.1 | 11.5 |
Southwest Airlines Co. | 2.9 | 1.4 |
CSX Corp. | 2.7 | 4.6 |
Expeditors International of Washington, Inc. | 2.4 | 3.4 |
UAL Corp. | 2.2 | 2.2 |
C.H. Robinson Worldwide, Inc. | 2.2 | 3.1 |
| 63.2 |
|
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Road & Rail | 35.5% |
|
| Air Freight & Logistics | 34.9% |
|
| Airlines | 13.7% |
|
| Marine | 4.6% |
|
| Oil, Gas & Consumable Fuels | 2.4% |
|
| All Others* | 8.9% |
|
| |||
As of August 31, 2007 | |||
| Road & Rail | 47.3% |
|
| Air Freight & Logistics | 27.0% |
|
| Airlines | 12.6% |
|
| Marine | 3.6% |
|
| Metals & Mining | 2.9% |
|
| All Others* | 6.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Transportation Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 94.3% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 1.1% | |||
Aerospace & Defense - 1.1% | |||
Bombardier, Inc. Class B (sub. vtg.) (a) | 40,700 | $ 232,855 | |
General Dynamics Corp. | 3,100 | 253,735 | |
Precision Castparts Corp. | 1,600 | 176,624 | |
Spirit AeroSystems Holdings, Inc. | 7,700 | 208,054 | |
The Boeing Co. | 1,800 | 149,022 | |
| 1,020,290 | ||
AIR FREIGHT & LOGISTICS - 34.9% | |||
Air Freight & Logistics - 34.9% | |||
C.H. Robinson Worldwide, Inc. (d) | 40,000 | 2,030,800 | |
Expeditors International of Washington, Inc. | 57,520 | 2,261,686 | |
FedEx Corp. (d) | 98,900 | 8,716,057 | |
Forward Air Corp. | 58,895 | 1,728,568 | |
Hub Group, Inc. Class A (a) | 8,460 | 253,715 | |
United Parcel Service, Inc. Class B (d) | 227,400 | 15,972,576 | |
UTI Worldwide, Inc. | 76,500 | 1,283,670 | |
| 32,247,072 | ||
AIRLINES - 13.7% | |||
Airlines - 13.7% | |||
AirTran Holdings, Inc. (a) | 69,300 | 500,346 | |
AMR Corp. (a) | 107,900 | 1,382,199 | |
Continental Airlines, Inc. Class B (a) | 42,300 | 1,022,814 | |
Delta Air Lines, Inc. (a) | 121,502 | 1,622,052 | |
JetBlue Airways Corp. (a) | 102,500 | 558,625 | |
Northwest Airlines Corp. (a) | 125,600 | 1,686,808 | |
Ryanair Holdings PLC sponsored ADR (a)(d) | 17,076 | 488,032 | |
Southwest Airlines Co. | 218,387 | 2,677,425 | |
UAL Corp. | 67,600 | 2,048,280 | |
US Airways Group, Inc. (a) | 56,000 | 694,400 | |
| 12,680,981 | ||
AUTOMOBILES - 0.2% | |||
Automobile Manufacturers - 0.2% | |||
General Motors Corp. | 6,500 | 151,320 | |
CONSTRUCTION & ENGINEERING - 0.2% | |||
Construction & Engineering - 0.2% | |||
Great Lakes Dredge & Dock Corp. | 30,354 | 185,463 | |
MARINE - 4.6% | |||
Marine - 4.6% | |||
Alexander & Baldwin, Inc. | 15,100 | 665,004 | |
Eagle Bulk Shipping, Inc. | 12,400 | 330,212 | |
Genco Shipping & Trading Ltd. | 10,400 | 606,008 | |
Horizon Lines, Inc. Class A (d) | 35,790 | 721,884 | |
Kirby Corp. (a) | 11,500 | 518,420 | |
| |||
Shares | Value | ||
Navios Maritime Holdings, Inc. | 48,100 | $ 534,391 | |
OceanFreight, Inc. | 31,200 | 687,336 | |
Ultrapetrol (Bahamas) Ltd. (a) | 14,300 | 200,200 | |
| 4,263,455 | ||
METALS & MINING - 1.3% | |||
Diversified Metals & Mining - 1.3% | |||
Titanium Metals Corp. (d) | 60,000 | 1,237,200 | |
OIL, GAS & CONSUMABLE FUELS - 2.4% | |||
Oil & Gas Refining & Marketing - 0.4% | |||
Valero Energy Corp. | 7,100 | 410,167 | |
Oil & Gas Storage & Transport - 2.0% | |||
Double Hull Tankers, Inc. | 28,600 | 321,750 | |
Overseas Shipholding Group, Inc. | 8,600 | 539,392 | |
Ship Finance International Ltd. | 23,000 | 594,320 | |
Teekay Tankers Ltd. | 600 | 10,140 | |
Top Ships, Inc. (a) | 127,900 | 351,725 | |
| 1,817,327 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,227,494 | ||
ROAD & RAIL - 35.5% | |||
Railroads - 27.6% | |||
Burlington Northern Santa Fe Corp. | 42,600 | 3,739,428 | |
Canadian Pacific Railway Ltd. | 6,600 | 479,817 | |
CSX Corp. | 51,300 | 2,489,076 | |
Kansas City Southern (a) | 8,850 | 316,830 | |
Norfolk Southern Corp. | 117,600 | 6,219,864 | |
Union Pacific Corp. | 98,700 | 12,313,812 | |
| 25,558,827 | ||
Trucking - 7.9% | |||
Avis Budget Group, Inc. (a) | 10,000 | 114,300 | |
Con-way, Inc. | 16,300 | 738,553 | |
Heartland Express, Inc. | 14,600 | 204,108 | |
Hertz Global Holdings, Inc. (a) | 39,700 | 473,621 | |
J.B. Hunt Transport Services, Inc. | 31,900 | 873,103 | |
Knight Transportation, Inc. | 42,000 | 621,180 | |
Landstar System, Inc. | 19,970 | 926,209 | |
Marten Transport Ltd. (a) | 18,800 | 272,412 | |
Old Dominion Freight Lines, Inc. (a) | 22,700 | 618,575 | |
Ryder System, Inc. | 21,400 | 1,232,854 | |
Saia, Inc. (a) | 40,100 | 579,445 | |
Werner Enterprises, Inc. | 12,000 | 213,480 | |
YRC Worldwide, Inc. (a)(d) | 31,000 | 426,560 | |
| 7,294,400 | ||
TOTAL ROAD & RAIL | 32,853,227 | ||
Common Stocks - continued | |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 0.4% | |||
Trading Companies & Distributors - 0.4% | |||
Rush Enterprises, Inc. Class A (a) | 21,650 | $ 320,853 | |
TOTAL COMMON STOCKS (Cost $80,229,130) | 87,187,355 | ||
Money Market Funds - 29.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 2,482,080 | 2,482,080 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 24,301,425 | 24,301,425 | |
TOTAL MONEY MARKET FUNDS (Cost $26,783,505) | 26,783,505 | ||
TOTAL INVESTMENT PORTFOLIO - 123.3% (Cost $107,012,635) | 113,970,860 |
NET OTHER ASSETS - (23.3)% |
| (21,538,750) | |
NET ASSETS - 100% | $ 92,432,110 | ||
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. |
(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 | $ 60,757 |
Fidelity Securities Lending Cash Central Fund | 48,221 |
Total | $ 108,978 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $23,013,235) - See accompanying schedule: Unaffiliated issuers (cost $80,229,130) | $ 87,187,355 |
|
Fidelity Central Funds (cost $26,783,505) | 26,783,505 |
|
Total Investments (cost $107,012,635) |
| $ 113,970,860 |
Receivable for fund shares sold | 2,880,640 | |
Dividends receivable | 164,780 | |
Distributions receivable from Fidelity Central Funds | 19,857 | |
Prepaid expenses | 233 | |
Other receivables | 465 | |
Total assets | 117,036,835 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 213,945 | |
Accrued management fee | 39,825 | |
Other affiliated payables | 18,456 | |
Other payables and accrued expenses | 31,074 | |
Collateral on securities loaned, at value | 24,301,425 | |
Total liabilities | 24,604,725 | |
|
|
|
Net Assets | $ 92,432,110 | |
Net Assets consist of: |
| |
Paid in capital | $ 82,970,688 | |
Undistributed net investment income | 266,146 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 2,237,051 | |
Net unrealized appreciation (depreciation) on investments | 6,958,225 | |
Net Assets, for 2,084,714 shares outstanding | $ 92,432,110 | |
Net Asset Value, offering price and redemption price per share ($92,432,110 ÷ 2,084,714 shares) | $ 44.34 | |
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 981,535 |
Special dividends |
| 135,450 |
Interest |
| 124 |
Income from Fidelity Central Funds (including $48,221 from security lending) |
| 108,978 |
Total income |
| 1,226,087 |
|
|
|
Expenses | ||
Management fee | $ 506,938 | |
Transfer agent fees | 269,287 | |
Accounting and security lending fees | 37,708 | |
Custodian fees and expenses | 16,361 | |
Independent trustees' compensation | 337 | |
Registration fees | 28,322 | |
Audit | 36,202 | |
Legal | 588 | |
Miscellaneous | 6,561 | |
Total expenses before reductions | 902,304 | |
Expense reductions | (1,599) | 900,705 |
Net investment income (loss) | 325,382 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 8,215,408 | |
Foreign currency transactions | (1,354) | |
Total net realized gain (loss) |
| 8,214,054 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (17,145,821) | |
Assets and liabilities in foreign currencies | (78) | |
Total change in net unrealized appreciation (depreciation) |
| (17,145,899) |
Net gain (loss) | (8,931,845) | |
Net increase (decrease) in net assets resulting from operations | $ (8,606,463) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 325,382 | $ 99,455 |
Net realized gain (loss) | 8,214,054 | 717,917 |
Change in net unrealized appreciation (depreciation) | (17,145,899) | (1,783,679) |
Net increase (decrease) in net assets resulting from operations | (8,606,463) | (966,307) |
Distributions to shareholders from net investment income | (115,413) | (46,855) |
Distributions to shareholders from net realized gain | (6,213,287) | (2,366,175) |
Total distributions | (6,328,700) | (2,413,030) |
Share transactions | 73,610,965 | 188,256,102 |
Reinvestment of distributions | 5,922,468 | 2,323,914 |
Cost of shares redeemed | (77,216,334) | (186,218,427) |
Net increase (decrease) in net assets resulting from share transactions | 2,317,099 | 4,361,589 |
Redemption fees | 23,033 | 118,088 |
Total increase (decrease) in net assets | (12,595,031) | 1,100,340 |
|
|
|
Net Assets | ||
Beginning of period | 105,027,141 | 103,926,801 |
End of period (including undistributed net investment income of $266,146 and undistributed net investment income | $ 92,432,110 | $ 105,027,141 |
Other Information Shares | ||
Sold | 1,461,784 | 3,661,348 |
Issued in reinvestment of distributions | 124,605 | 45,239 |
Redeemed | (1,483,372) | (3,794,241) |
Net increase (decrease) | 103,017 | (87,654) |
Financial Highlights
Years ended February 28, | 2008 J | 2007 | 2006 | 2005 | 2004 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 53.00 | $ 50.22 | $ 42.08 | $ 32.84 | $ 22.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .19 F | .04 | .17 | .20 G | (.12) |
Net realized and unrealized gain (loss) | (4.66) | 3.72 H | 8.99 | 9.24 | 10.13 |
Total from investment operations | (4.47) | 3.76 | 9.16 | 9.44 | 10.01 |
Distributions from net investment income | (.07) | (.02) | (.10) | (.11) | - |
Distributions from net realized gain | (4.13) | (1.01) | (.96) | (.13) | - |
Total distributions | (4.20) | (1.03) | (1.06) | (.24) | - |
Redemption fees added to paid in capital C | .01 | .05 | .04 | .04 | .03 |
Net asset value, end of period | $ 44.34 | $ 53.00 | $ 50.22 | $ 42.08 | $ 32.84 |
Total Return A,B | (8.89)% | 7.65% | 22.24% | 28.86% | 44.04% |
Ratios to Average Net Assets D,I |
|
|
|
|
|
Expenses before reductions | .99% | 1.03% | 1.13% | 1.17% | 1.57% |
Expenses net of fee waivers, if any | .99% | 1.03% | 1.13% | 1.17% | 1.57% |
Expenses net of all reductions | .99% | 1.02% | 1.11% | 1.14% | 1.53% |
Net investment income (loss) | .36% F | .09% | .40% | .53% G | (.40)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 92,432 | $ 105,027 | $ 103,927 | $ 81,958 | $ 37,583 |
Portfolio turnover rate E | 84% | 133% | 142% | 148% | 86% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .21%. G Investment income per share reflects a special dividend which amounted to $.09 per share and an in-kind dividend received in a corporate reorganization which amounted to $.08 per share. Excluding these special dividends, the ratio of net investment income (loss) to average net assets would have been .06%. H 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as available dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, Certain Funds will claim 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 short-term capital gains, foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for Federal | Unrealized | Unrealized | Net Unrealized |
Air Transportation Portfolio | $ 53,544,519 | $ 10,427,530 | $ (7,652,104) | $ 2,775,426 |
Defense and Aerospace Portfolio | 1,134,034,863 | 215,018,577 | (96,442,226) | 118,576,351 |
Environmental Portfolio | 43,365,814 | 3,613,403 | (4,349,468) | (736,065) |
Industrial Equipment Portfolio | 184,316,989 | 15,261,219 | (12,039,306) | 3,221,913 |
Industrials Portfolio | 126,153,785 | 11,114,003 | (10,177,095) | 936,908 |
Transportation Portfolio | 108,849,265 | 15,182,136 | (10,060,541) | 5,121,595 |
| Undistributed | Undistributed | Capital Loss |
Air Transportation Portfolio | $ - | $ 3,664,276 | $ - |
Defense and Aerospace Portfolio | 1,607,016 | 69,135,058 | - |
Environmental Portfolio | - | - | (657,634) |
Industrial Equipment Portfolio | 311,603 | 2,682,992 | - |
Industrials Portfolio | 84,098 | 363,575 | - |
Transportation Portfolio | 128,714 | 1,970,096 | - |
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 29, 2008 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ - | $ 8,187,067 | $ 8,187,067 |
Defense and Aerospace Portfolio | 21,061,992 | 87,599,845 | 108,661,837 |
Environmental Portfolio | 134,764 | - | 134,764 |
Industrial Equipment Portfolio | 1,085,710 | 8,067,012 | 9,152,722 |
Industrials Portfolio | 2,512,452 | 5,517,884 | 8,030,336 |
Transportation Portfolio | 115,413 | 6,213,287 | 6,328,700 |
February 28, 2007 |
|
|
|
| Ordinary | Long-term | Total |
Air Transportation Portfolio | $ 34,281 | $ 2,703,280 | $ 2,737,561 |
Defense and Aerospace Portfolio | 8,083,424 | 72,532,345 | 80,615,769 |
Industrial Equipment Portfolio | 473,930 | 709,259 | 1,183,189 |
Industrials Portfolio | 1,434,237 | 5,661,814 | 7,096,051 |
Transportation Portfolio | 46,855 | 2,366,175 | 2,413,030 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 | 37,662,908 | 129,073,481 |
Defense and Aerospace Portfolio | 765,214,290 | 743,698,356 |
Environmental Portfolio | 29,612,941 | 38,460,618 |
Industrial Equipment Portfolio | 220,879,728 | 135,284,491 |
Industrials Portfolio | 157,511,396 | 113,018,565 |
Transportation Portfolio | 75,238,345 | 81,576,205 |
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
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Air Transportation Portfolio | .30% | .26% | .56% |
Defense and Aerospace Portfolio | .30% | .26% | .56% |
Environmental Portfolio | .30% | .26% | .56% |
Industrial Equipment Portfolio | .30% | .26% | .56% |
Industrials Portfolio | .30% | .26% | .56% |
Transportation Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .30% |
|
Defense and Aerospace Portfolio | .26% |
|
Environmental Portfolio | .30% |
|
Industrial Equipment Portfolio | .22% |
|
Industrials Portfolio | .30% |
|
Transportation Portfolio | .30% |
|
Accounting and Security Lending Fees. FSC 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 | $ 1,146 |
Defense and Aerospace Portfolio | 4,137 |
Environmental Portfolio | 779 |
Industrial Equipment Portfolio | 1,494 |
Industrials Portfolio | 2,912 |
Transportation Portfolio | 2,941 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average | Weighted | Interest |
Defense and Aerospace Portfolio | Borrower | $ 5,067,538 | 4.44% | $ 8,133 |
Industrial Equipment Portfolio | Borrower | 3,713,000 | 5.35% | 1,103 |
Annual Report
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Air Transportation Portfolio | $ 204 |
Defense and Aerospace Portfolio | 2,993 |
Environmental Portfolio | 96 |
Industrial Equipment Portfolio | 315 |
Industrials Portfolio | 232 |
Transportation Portfolio | 214 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average | Weighted |
Defense and Aerospace Portfolio | $10,979,375 | 4.18% |
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 transfer agent, 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 | Transfer Agent |
|
|
|
Air Transportation Portfolio | $ 4,064 | $ 672 |
Defense and Aerospace Portfolio | - | 18,306 |
Environmental Portfolio | 644 | 2,384 |
Industrial Equipment Portfolio | 1,859 | 314 |
Industrials Portfolio | 844 | 3,567 |
Transportation Portfolio | 520 | 1,053 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
|
|
Air Transportation Portfolio | $ 7,823 |
Defense and Aerospace Portfolio | 46,186 |
Environmental Portfolio | 2,916 |
Industrial Equipment Portfolio | 8,602 |
Industrials Portfolio | 9,781 |
Transportation Portfolio | 8,878 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trusts or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment:2005 Deputy Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Air Transportation Portfolio, Select Defense and Aerospace Portfolio, Select Environmental Portfolio, Select Industrial Equipment Portfolio, Select Industrials Protfolio, and Select Transportation Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Air Transportation Portfolio | 04/14/08 | 04/11/08 | $0.00 | $2.99 |
Select Defense and Aerospace Portfolio | 04/14/08 | 04/11/08 | $0.11 | $4.75 |
Select Industrial Equipment Portfolio | 04/14/08 | 04/11/08 | $0.06 | $0.50 |
Select Industrials Portfolio | 04/14/08 | 04/11/08 | $0.02 | $0.06 |
Select Transportation Portfolio | 04/14/08 | 04/11/08 | $0.08 | $1.21 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Air Transportation Portfolio | $11,798,383 |
Select Defense and Aerospace Portfolio | $122,016,975 |
Select Industrial Equipment Portfolio | $11,459,908 |
Select Industrials Portfolio | $3,371,167 |
Select Transportation Portfolio | $7,987,931 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Defense and Aerospace Portfolio | 48% | 100% |
Select Environmental Portfolio | - | 100% |
Select Industrial Equipment Portfolio | 100% | 100% |
Select Industrials Portfolio | 96% | 44% |
Select 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 2007 | December 2007 |
Select Defense and Aerospace Portfolio | 50% | 100% |
Select Environmental Portfolio | - | 100% |
Select Industrial Equipment Portfolio | 100% | 100% |
Select Industrials Portfolio | 97% | 45% |
Select Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. 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
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELCI-UANN-0408
1.813656.103
Fidelity®
Select Portfolios®
Materials Sector
Select Chemicals Portfolio
Select Gold Portfolio
Select Materials Portfolio
Select Paper and Forest Products Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
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 | |
Paper and Forest Products | 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 |
| |
Proxy Voting Results |
|
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 (search for "proxy voting guidelines") 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 or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Chemicals Portfolio | 19.40% | 22.95% | 10.31% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Chemicals Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Matthew Schuldt, who became Portfolio Manager of Select Chemicals Portfolio on January 9, 2008
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12-month period ending February 29, 2008, the fund was up 19.40%, underperforming the 23.41% return for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Chemicals Index but outperforming the S&P 500®. Relative to the MSCI index, the fund's underweighting in the fertilizers and agricultural chemicals industry hurt, more than offsetting positive stock selection among these issues. Specifically, the fund's underweightings in agricultural biochemical company Monsanto and fertilizer company Mosaic detracted, as did a lack of exposure to fertilizer supplier and index component Terra Industries for much of the period. I've significantly increased exposure to fertilizers and agricultural chemicals stocks since taking over the fund. Certain stock picks and an overweighting in the lagging specialty chemicals area also detracted. Cash, though only a modest allocation, hurt as well amid significant price run-ups for many chemicals stocks. Cash was reduced during the period as buying opportunities arose. Among the positives, strong stock picking and the fund's underweighting in the lagging diversified chemicals industry helped. Specifically, we had underweightings in major index components Dow Chemical and DuPont. Dow's stock continued to struggle due to market concern regarding the company's long-term competitiveness, while DuPont was hampered by a number of factors related to its diverse product lines, including a slowdown among end-users in the auto and housing industries. The fund's overall positioning in industrial gases also was a positive, as was strong stock selection in that same group and among commodity and diversified chemicals issues.
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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Actual | $ 1,000.00 | $ 1,061.00 | $ 4.66 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
* Expenses are equal to the Fund's annualized expense ratio of .91%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 19.3 | 9.1 |
E.I. du Pont de Nemours & Co. | 9.6 | 11.8 |
Dow Chemical Co. | 7.5 | 10.3 |
Praxair, Inc. | 6.5 | 4.5 |
The Mosaic Co. | 5.6 | 2.0 |
Albemarle Corp. | 4.4 | 2.7 |
Air Products & Chemicals, Inc. | 3.5 | 7.7 |
Ecolab, Inc. | 3.3 | 2.9 |
CF Industries Holdings, Inc. | 2.6 | 0.4 |
PPG Industries, Inc. | 2.3 | 4.3 |
| 64.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Chemicals | 94.7% |
|
| Food Products | 0.5% |
|
| Containers & | 0.2% |
|
| All Others* | 4.6% |
|
As of August 31, 2007 | |||
| Chemicals | 95.0% |
|
| Industrial Conglomerates | 1.4% |
|
| All Others* | 3.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 95.4% | |||
Shares | Value | ||
CHEMICALS - 94.7% | |||
Commodity Chemicals - 2.8% | |||
Calgon Carbon Corp. (a) | 48,530 | $ 792,980 | |
Celanese Corp. Class A | 181,786 | 7,071,475 | |
Georgia Gulf Corp. (d) | 146,500 | 887,790 | |
Spartech Corp. | 11,300 | 160,121 | |
| 8,912,366 | ||
Diversified Chemicals - 24.8% | |||
Cabot Corp. | 98,500 | 2,698,900 | |
Dow Chemical Co. | 639,600 | 24,106,524 | |
E.I. du Pont de Nemours & Co. (d) | 663,400 | 30,795,028 | |
Eastman Chemical Co. | 36,200 | 2,382,322 | |
FMC Corp. | 114,912 | 6,505,168 | |
Hercules, Inc. | 307,000 | 5,624,240 | |
PPG Industries, Inc. (d) | 120,000 | 7,437,600 | |
| 79,549,782 | ||
Fertilizers & Agricultural Chemicals - 31.5% | |||
CF Industries Holdings, Inc. | 68,800 | 8,399,104 | |
Israel Chemicals Ltd. | 75,000 | 1,059,487 | |
K&S AG | 6,000 | 1,745,673 | |
Monsanto Co. | 535,000 | 61,888,801 | |
Potash Corp. of Saskatchewan, Inc. | 45,000 | 7,150,500 | |
Syngenta AG (Switzerland) | 5,000 | 1,433,000 | |
Terra Industries, Inc. (a) | 35,000 | 1,582,350 | |
The Mosaic Co. (a) | 161,000 | 17,919,300 | |
| 101,178,215 | ||
Industrial Gases - 12.1% | |||
Air Products & Chemicals, Inc. | 122,900 | 11,224,457 | |
Airgas, Inc. | 69,900 | 3,396,441 | |
Linde AG | 25,000 | 3,325,907 | |
Praxair, Inc. | 260,460 | 20,909,729 | |
| 38,856,534 | ||
Specialty Chemicals - 23.5% | |||
Albemarle Corp. | 368,900 | 13,996,066 | |
Arch Chemicals, Inc. | 60,000 | 2,094,600 | |
Chemtura Corp. | 381,473 | 3,150,967 | |
Cytec Industries, Inc. | 24,100 | 1,380,448 | |
Ecolab, Inc. | 228,200 | 10,677,478 | |
H.B. Fuller Co. | 169,311 | 3,851,825 | |
Innospec, Inc. | 141,600 | 2,653,584 | |
Lubrizol Corp. | 85,600 | 4,990,480 | |
Minerals Technologies, Inc. | 48,100 | 2,899,468 | |
Nalco Holding Co. | 201,100 | 4,343,760 | |
OM Group, Inc. (a) | 60,900 | 3,686,277 | |
| |||
Shares | Value | ||
OMNOVA Solutions, Inc. (a) | 697,200 | $ 2,719,080 | |
Rockwood Holdings, Inc. (a) | 131,300 | 4,029,597 | |
Rohm & Haas Co. (d) | 91,550 | 4,907,996 | |
RPM International, Inc. | 67,800 | 1,417,698 | |
Sigma Aldrich Corp. | 89,300 | 4,913,286 | |
Valspar Corp. | 68,400 | 1,483,596 | |
W.R. Grace & Co. (a) | 84,300 | 1,789,689 | |
Zoltek Companies, Inc. (a)(d) | 20,000 | 457,600 | |
| 75,443,495 | ||
TOTAL CHEMICALS | 303,940,392 | ||
CONTAINERS & PACKAGING - 0.2% | |||
Paper Packaging - 0.2% | |||
Smurfit-Stone Container Corp. (a) | 75,000 | 596,250 | |
FOOD PRODUCTS - 0.5% | |||
Agricultural Products - 0.5% | |||
Bunge Ltd. | 14,000 | 1,551,760 | |
TOTAL COMMON STOCKS (Cost $257,577,901) | 306,088,402 | ||
Money Market Funds - 10.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 15,125,728 | 15,125,728 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 19,323,175 | 19,323,175 | |
TOTAL MONEY MARKET FUNDS (Cost $34,448,903) | 34,448,903 | ||
TOTAL INVESTMENT PORTFOLIO - 106.1% (Cost $292,026,804) | 340,537,305 | ||
NET OTHER ASSETS - (6.1)% | (19,702,297) | ||
NET ASSETS - 100% | $ 320,835,008 | ||
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. |
(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 | $ 511,499 |
Fidelity Securities Lending Cash Central Fund | 87,602 |
Total | $ 599,101 |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $5,841,847 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $18,467,653) - See accompanying schedule: Unaffiliated issuers (cost $257,577,901) | $ 306,088,402 |
|
Fidelity Central Funds (cost $34,448,903) | 34,448,903 |
|
Total Investments (cost $292,026,804) |
| $ 340,537,305 |
Receivable for fund shares sold | 9,411,528 | |
Dividends receivable | 455,546 | |
Distributions receivable from Fidelity Central Funds | 43,428 | |
Prepaid expenses | 622 | |
Other receivables | 886 | |
Total assets | 350,449,315 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,670,524 | |
Payable for fund shares redeemed | 379,262 | |
Accrued management fee | 135,949 | |
Other affiliated payables | 71,129 | |
Other payables and accrued expenses | 34,268 | |
Collateral on securities loaned, at value | 19,323,175 | |
Total liabilities | 29,614,307 | |
|
|
|
Net Assets | $ 320,835,008 | |
Net Assets consist of: |
| |
Paid in capital | $ 275,737,791 | |
Undistributed net investment income | 844,788 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,258,072) | |
Net unrealized appreciation (depreciation) on investments | 48,510,501 | |
Net Assets, for 3,945,726 shares outstanding | $ 320,835,008 | |
Net Asset Value, offering price and redemption price per share ($320,835,008 ÷ 3,945,726 shares) | $ 81.31 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 3,707,685 |
Interest |
| 187 |
Income from Fidelity Central Funds |
| 599,101 |
Total income |
| 4,306,973 |
|
|
|
Expenses | ||
Management fee | $ 1,198,302 | |
Transfer agent fees | 599,554 | |
Accounting and security lending fees | 87,812 | |
Custodian fees and expenses | 6,291 | |
Independent trustees' compensation | 813 | |
Registration fees | 56,183 | |
Audit | 39,089 | |
Legal | 1,098 | |
Miscellaneous | 9,244 | |
Total expenses before reductions | 1,998,386 | |
Expense reductions | (3,427) | 1,994,959 |
Net investment income (loss) | 2,312,014 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,855,758 | |
Foreign currency transactions | (2,012) | |
Total net realized gain (loss) |
| 2,853,746 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,821,007 | |
Assets and liabilities in foreign currencies | (36) | |
Total change in net unrealized appreciation (depreciation) |
| 23,820,971 |
Net gain (loss) | 26,674,717 | |
Net increase (decrease) in net assets resulting from operations | $ 28,986,731 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Chemicals Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,312,014 | $ 1,153,744 |
Net realized gain (loss) | 2,853,746 | 12,882,856 |
Change in net unrealized appreciation (depreciation) | 23,820,971 | 1,610,953 |
Net increase (decrease) in net assets resulting from operations | 28,986,731 | 15,647,553 |
Distributions to shareholders from net investment income | (1,582,334) | (1,181,285) |
Distributions to shareholders from net realized gain | (7,794,878) | (13,503,574) |
Total distributions | (9,377,212) | (14,684,859) |
Share transactions | 351,992,638 | 64,860,259 |
Reinvestment of distributions | 8,951,180 | 14,065,125 |
Cost of shares redeemed | (179,421,319) | (74,979,800) |
Net increase (decrease) in net assets resulting from share transactions | 181,522,499 | 3,945,584 |
Redemption fees | 28,477 | 36,993 |
Total increase (decrease) in net assets | 201,160,495 | 4,945,271 |
|
|
|
Net Assets | ||
Beginning of period | 119,674,513 | 114,729,242 |
End of period (including undistributed net investment income of $844,788 and undistributed net investment income of $335,388, respectively) | $ 320,835,008 | $ 119,674,513 |
Other Information Shares | ||
Sold | 4,442,680 | 935,612 |
Issued in reinvestment of distributions | 110,321 | 209,640 |
Redeemed | (2,302,398) | (1,100,860) |
Net increase (decrease) | 2,250,603 | 44,392 |
Financial Highlights
|
|
|
| ||
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.60 | $ 69.50 | $ 71.52 | $ 51.75 | $ 36.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .85 | .82 F | .52 | .45 G | .46 |
Net realized and unrealized gain (loss) | 12.80 | 11.08 | (.33) | 19.83 | 14.82 |
Total from investment operations | 13.65 | 11.90 | .19 | 20.28 | 15.28 |
Distributions from net investment income | (.49) | (.87) | (.52) | (.18) | (.37) |
Distributions from net realized gain | (2.46) | (9.96) | (1.72) | (.38) | - |
Total distributions | (2.95) | (10.83) | (2.24) | (.56) | (.37) |
Redemption fees added to paid in capital C | .01 | .03 | .03 | .05 | .05 |
Net asset value, end of period | $ 81.31 | $ 70.60 | $ 69.50 | $ 71.52 | $ 51.75 |
Total Return A, B | 19.40% | 18.51% | .51% | 39.38% | 41.73% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .93% | 1.06% | 1.04% | 1.08% | 1.48% |
Expenses net of fee waivers, if any | .93% | 1.06% | 1.04% | 1.08% | 1.48% |
Expenses net of all reductions | .93% | 1.06% | .99% | 1.04% | 1.43% |
Net investment income (loss) | 1.08% | 1.19% F | .78% | .73% G | 1.03% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 320,835 | $ 119,675 | $ 114,729 | $ 237,144 | $ 50,502 |
Portfolio turnover rate E | 65% | 90% | 141% | 73% | 107% |
A Total 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 $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .82%. GAs a result in the change in the estimate of the return of capital components of dividend income realized in the year ended February 28, 2004, net investment income per share and the ratio of net investment income to average net assets for the year ended February 28, 2005 have been reduced by $.07 per share and .12%, respectively. The change in estimate has no impact on total net assets or total return of the class. 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 other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Chemicals Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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 and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 60,022,192 |
|
Unrealized depreciation | (12,116,979) |
|
Net unrealized appreciation (depreciation) | 47,905,213 |
|
Undistributed ordinary income | 344,980 |
|
|
|
|
Cost for federal income tax purposes | $ 292,632,092 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 7,777,560 | $ 1,181,285 |
Long-term Capital Gains | 1,599,652 | 13,503,574 |
Total | $ 9,377,212 | $ 14,684,859 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $302,121,350 and $134,135,589, 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to an annual rate of .29% of average net assets.
Accounting and Security Lending Fees. FSC 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 $1,078 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $453 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $87,602.
Annual Report
Notes to Financial Statements - continued
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 $757 for the period. In addition, through arrangements with the Fund's custodian and transfer agent, 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 and transfer agent expenses by $266 and $2,382, respectively.
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $11,243.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Gold | 45.10% | 26.28% | 17.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold on February 28, 1998. 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
Management's Discussion of Fund Performance
Comments from S. Joseph Wickwire II, Portfolio Manager of Select Gold Portfolio
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, reducing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, Select Gold returned 45.10%, beating the 42.95% return of the Standard & Poor's®/Citigroup BMI Global Gold Index and the modest decline of the S&P 500®. Versus the S&P®/Citigroup index, solid stock picking in the fund's core universe of gold mining stocks drove performance. Australia-based Newcrest Mining, the fund's fourth-largest holding at period end, was its top contributor. The company was successful in improving its operations, projects and financial position, and was rewarded by the market for these achievements. Also aiding our results were Canadian holding Arizona Star Resource; Buenaventura, a Peruvian silver, gold and copper mining company; and West African gold producer Randgold Resources. Arizona Star Resource - whose sole asset was bought by Barrick Gold during the period - and Buenaventura were out-of-index positions. Underweighting major index component Newmont Mining was helpful as well. In absolute terms, the fund's return was bolstered by currency movements given its considerable foreign exposure. On the negative side, the fund's investments in the precious metals and minerals group and in the diversified metals and mining segment detracted from performance, as did its cash position. Underweighting Barrick Gold, the stock with the largest weighting in the S&P/Citigroup index, detracted from performance. Although I liked the company and it was one of the fund's largest positions, I didn't think it appropriate to carry the position at its benchmark weighting of approximately 18%. Diamond exploration company and out-of-index holding Shore Gold also weighed on our results, along with IAMGOLD. All the detractors I mentioned are based in Canada.
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, 2007 to February 29, 2008).
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.
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| Expenses Paid |
Class A |
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|
|
Actual | $ 1,000.00 | $ 1,483.00 | $ 7.10 |
HypotheticalA | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,481.70 | $ 8.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,476.70 | $ 11.76 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,477.20 | $ 11.64 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Gold |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.19 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.13 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.15% |
Class T | 1.40% |
Class B | 1.91% |
Class C | 1.89% |
Gold | .84% |
Institutional Class | .83% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.5 | 8.1 |
Barrick Gold Corp. | 7.8 | 7.9 |
Newmont Mining Corp. | 7.1 | 5.0 |
Newcrest Mining Ltd. | 6.7 | 8.3 |
Kinross Gold Corp. | 5.8 | 4.9 |
Lihir Gold Ltd. | 5.8 | 7.3 |
Agnico-Eagle Mines Ltd. | 4.1 | 4.1 |
Yamana Gold, Inc. | 4.1 | 2.6 |
Gold Fields Ltd. sponsored ADR | 3.0 | 6.6 |
Randgold Resources Ltd. sponsored ADR | 3.0 | 3.4 |
| 55.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Gold | 77.9% |
|
| Precious Metals & Minerals | 8.1% |
|
| Diversified Metals & Mining | 3.6% |
|
| Coal & Consumable Fuels | 1.9% |
|
| Steel | 1.4% |
|
| All Others* | 7.1% |
|
As of August 31, 2007 | |||
| Gold | 89.2% |
|
| Precious Metals & Minerals | 8.1% |
|
| Diversified Metals & Mining | 1.2% |
|
| Steel | 0.5% |
|
| All Others* | 1.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 90.2% | |||
Shares | Value | ||
Australia - 8.4% | |||
METALS & MINING - 8.2% | |||
Aluminum - 0.4% | |||
Alumina Ltd. | 1,552,508 | $ 9,147,074 | |
Gold - 7.8% | |||
Newcrest Mining Ltd. | 4,726,283 | 164,316,537 | |
Pan Australian Resources Ltd. (a) | 8,389,000 | 8,093,471 | |
Sino Gold Mining Ltd. (a)(d) | 1,787,441 | 12,500,064 | |
Troy Resources NL (a)(f) | 2,300,000 | 6,076,927 | |
| 190,986,999 | ||
TOTAL METALS & MINING | 200,134,073 | ||
OIL, GAS & CONSUMABLE FUELS - 0.2% | |||
Coal & Consumable Fuels - 0.2% | |||
Energy Resources of Australia Ltd. | 200,799 | 3,923,057 | |
TOTAL AUSTRALIA | 204,057,130 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Precious Metals & Minerals - 0.7% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,155,000 | 17,329,629 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce sponsored ADR | 51,200 | 1,783,808 | |
Canada - 46.3% | |||
METALS & MINING - 46.3% | |||
Diversified Metals & Mining - 1.4% | |||
Anatolia Minerals Development Ltd. (a) | 29,000 | 116,407 | |
First Quantum Minerals Ltd. | 107,600 | 9,985,298 | |
FNX Mining Co., Inc. (a) | 228,100 | 7,507,910 | |
Ivanhoe Mines Ltd. (a) | 550,500 | 7,177,394 | |
Kimber Resources, Inc. (a) | 16,100 | 14,234 | |
Lundin Mining Corp. (a) | 475,100 | 4,060,354 | |
Nautilus Minerals, Inc. (a) | 44,000 | 119,831 | |
Thompson Creek Metals Co., Inc. (a) | 305,000 | 6,229,866 | |
| 35,211,294 | ||
Gold - 41.8% | |||
Agnico-Eagle Mines Ltd. | 1,453,100 | 100,412,377 | |
Alamos Gold, Inc. (a) | 3,249,000 | 24,729,445 | |
Aquiline Resources, Inc. (a) | 875,500 | 9,484,101 | |
Aquiline Resources, Inc. (a)(f) | 1,024,600 | 11,099,269 | |
Aurelian Resources, Inc. (a) | 818,400 | 7,634,685 | |
Aurizon Mines Ltd. (a) | 547,900 | 2,522,216 | |
Barrick Gold Corp. | 3,637,000 | 189,232,661 | |
Centerra Gold, Inc. (a) | 377,200 | 5,642,380 | |
| |||
Shares | Value | ||
Coral Gold Resources Ltd. (a)(e) | 2,016,600 | $ 2,869,001 | |
Crystallex International Corp. (a) | 943,000 | 1,964,484 | |
Detour Gold Corp. warrants 6/21/08 (a)(f) | 615,000 | 10,844,449 | |
Eldorado Gold Corp. (a) | 4,287,200 | 29,756,187 | |
European Goldfields Ltd. (a) | 197,000 | 1,185,143 | |
Franco-Nevada Corp. | 210,900 | 4,847,882 | |
Gabriel Resources Ltd. (a) | 139,200 | 261,694 | |
Goldcorp, Inc. | 4,825,800 | 208,371,775 | |
Golden Star Resources Ltd. (a) | 4,009,769 | 16,543,531 | |
Great Basin Gold Ltd. (a) | 1,407,900 | 4,649,840 | |
Guyana Goldfields, Inc. (a) | 758,000 | 5,546,060 | |
High River Gold Mines Ltd. (a) | 1,512,800 | 5,180,769 | |
High River Gold Mines Ltd. (a)(f) | 1,300,000 | 4,452,010 | |
High River Gold Mines Ltd. warrants 11/8/10 (a)(f) | 650,000 | 693,562 | |
IAMGOLD Corp. | 7,762,100 | 62,787,781 | |
Jaguar Mining, Inc. (a) | 147,900 | 1,998,953 | |
Kinross Gold Corp. (a) | 5,710,300 | 141,299,533 | |
Kinross Gold Corp. warrants 9/7/11 (a) | 600,000 | 2,560,845 | |
Northgate Minerals Corp. (a) | 681,000 | 2,117,636 | |
Novagold Resources, Inc. (a) | 800,000 | 9,064,580 | |
Orezone Resources, Inc. Class A (a) | 8,870,700 | 15,775,342 | |
Peak Gold Ltd. (a)(f) | 5,857,000 | 3,868,757 | |
Peak Gold Ltd. warrants 4/3/12 (a)(f) | 2,928,500 | 550,554 | |
Red Back Mining, Inc. (a) | 1,420,800 | 12,575,751 | |
Red Back Mining, Inc. (a)(f) | 1,033,000 | 9,143,265 | |
US Gold Canadian Acquisition Corp. (a)(e) | 2,501,516 | 8,770,114 | |
Western Goldfields, Inc. (a) | 371,200 | 1,369,296 | |
Yamana Gold, Inc. | 5,497,000 | 98,929,800 | |
| 1,018,735,728 | ||
Precious Metals & Minerals - 3.1% | |||
B2Gold Corp. | 702,500 | 1,613,383 | |
Eastern Platinum Ltd. (a) | 600,000 | 2,164,524 | |
Etruscan Resources, Inc. (a) | 923,800 | 2,196,730 | |
Etruscan Resources, Inc. (a)(f) | 1,549,400 | 3,684,362 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(f) | 774,700 | 393,628 | |
Harry Winston Diamond Corp. | 471,990 | 12,350,737 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 12,676,185 | |
Pan American Silver Corp. (a) | 500,000 | 20,000,000 | |
Rockwell Diamonds, Inc. (a) | 319,000 | 168,569 | |
Shore Gold, Inc. (a) | 2,860,000 | 12,991,413 | |
Silver Standard Resources, Inc. (a) | 206,300 | 7,657,857 | |
Silvercorp Metals, Inc. | 60,000 | 603,628 | |
| 76,501,016 | ||
TOTAL METALS & MINING | 1,130,448,038 | ||
Common Stocks - continued | |||
Shares | Value | ||
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 35,714,000 | $ 47,174,585 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 99,800 | 7,586,796 | |
Papua New Guinea - 5.8% | |||
METALS & MINING - 5.8% | |||
Gold - 5.8% | |||
Lihir Gold Ltd. (a) | 36,363,877 | 140,827,682 | |
Peru - 1.3% | |||
METALS & MINING - 1.3% | |||
Precious Metals & Minerals - 1.3% | |||
Compania de Minas Buenaventura SA | 350,000 | 26,610,500 | |
Compania de Minas Buenaventura SA sponsored ADR | 50,000 | 3,801,500 | |
| 30,412,000 | ||
Russia - 0.0% | |||
METALS & MINING - 0.0% | |||
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) unit (a) | 39,000 | 347,100 | |
South Africa - 8.8% | |||
METALS & MINING - 8.8% | |||
Diversified Metals & Mining - 0.2% | |||
African Rainbow Minerals Ltd. | 234,859 | 6,062,905 | |
Gold - 6.2% | |||
Anglogold Ashanti Ltd. sponsored ADR (d) | 1,140,500 | 41,194,860 | |
Gold Fields Ltd. sponsored ADR | 5,216,300 | 74,019,297 | |
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | 18,804,860 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,375,000 | 16,692,500 | |
| 150,711,517 | ||
Precious Metals & Minerals - 2.4% | |||
Anglo Platinum Ltd. | 59,058 | 9,258,866 | |
Impala Platinum Holdings Ltd. | 1,179,212 | 48,760,416 | |
| 58,019,282 | ||
TOTAL METALS & MINING | 214,793,704 | ||
| |||
Shares | Value | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 1.0% | |||
Anglo American PLC (United Kingdom) | 193,300 | $ 12,269,093 | |
BHP Billiton PLC | 395,900 | 12,664,584 | |
| 24,933,677 | ||
Gold - 3.0% | |||
Randgold Resources Ltd. sponsored ADR | 1,409,274 | 72,774,909 | |
Precious Metals & Minerals - 0.6% | |||
Hochschild Mining PLC | 1,054,058 | 9,151,974 | |
Lonmin PLC | 76,000 | 4,958,381 | |
Mwana Africa PLC (a) | 2,850 | 2,113 | |
| 14,112,468 | ||
TOTAL METALS & MINING | 111,821,054 | ||
United States of America - 12.0% | |||
METALS & MINING - 10.3% | |||
Aluminum - 0.3% | |||
Alcoa, Inc. | 203,500 | 7,557,990 | |
Diversified Metals & Mining - 0.9% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 129,300 | 13,041,198 | |
Titanium Metals Corp. | 492,838 | 10,162,320 | |
| 23,203,518 | ||
Gold - 8.0% | |||
Newmont Mining Corp. | 3,402,000 | 174,080,340 | |
Royal Gold, Inc. (d) | 610,768 | 19,245,300 | |
US Gold Corp. (a) | 318,400 | 1,117,584 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 407,113 | |
| 194,850,337 | ||
Steel - 1.1% | |||
Nucor Corp. | 114,200 | 7,373,894 | |
Steel Dynamics, Inc. | 214,000 | 12,467,640 | |
United States Steel Corp. | 59,100 | 6,409,395 | |
| 26,250,929 | ||
TOTAL METALS & MINING | 251,862,774 | ||
OIL, GAS & CONSUMABLE FUELS - 1.7% | |||
Coal & Consumable Fuels - 1.7% | |||
CONSOL Energy, Inc. | 469,300 | $ 35,657,414 | |
Peabody Energy Corp. | 99,700 | 5,645,014 | |
| 41,302,428 | ||
TOTAL UNITED STATES OF AMERICA | 293,165,202 | ||
TOTAL COMMON STOCKS (Cost $1,511,332,409) | 2,199,746,728 | ||
Commodities - 3.4% | ||||
| Troy | Value | ||
Gold Bullion (a) | 84,500 | $ 82,253,568 | ||
Money Market Funds - 8.4% | |||
| Shares |
|
|
Fidelity Cash Central Fund, 3.24% (b) | 154,989,471 | 154,989,471 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 51,019,275 | 51,019,275 | |
TOTAL MONEY MARKET FUNDS (Cost $206,008,746) | 206,008,746 | ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $1,792,206,855) | 2,488,009,042 | ||
NET OTHER ASSETS - (2.0)% | (48,063,629) | ||
NET ASSETS - 100% | $ 2,439,945,413 | ||
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. |
(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 $50,806,783 or 1.9% of net assets. |
(g) 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 $407,113 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
US Gold Corp. warrants 2/22/11 | 2/8/06 | $ 179,112 |
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 | $ 4,483,468 |
Fidelity Securities Lending Cash Central Fund | 305,527 |
Total | $ 4,788,995 |
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, end of period |
Arizona Star Resource Corp. | $ 43,863,024 | $ - | $ 68,049,545 | $ - | $ - |
Central Asia Gold Ltd. | 5,874,969 | - | 6,765,535 | - | - |
Coral Gold Resources Ltd. | 2,034,618 | - | - | - | 2,869,001 |
IAMGOLD Corp. | 83,536,403 | 37,756,426 | 52,681,280 | 396,893 | - |
Meridian Gold, Inc. | 141,535,462 | 11,114,622 | 175,519,189 | - | - |
Minefinders Corp. Ltd. | 33,742,038 | - | 22,728,120 | - | - |
Orezone Resources, Inc. Class A | 18,041,127 | - | 2,037,688 | - | - |
Tone Resources Ltd. | 2,366,021 | - | 2,654,193 | - | - |
US Gold Canadian Acquisition Corp. | - | 12,695,730 | - | - | 8,770,114 |
White Knight Resources Ltd. | 6,087,418 | - | 7,050,424 | - | - |
Total | $ 337,081,080 | $ 61,566,778 | $ 337,485,974 | $ 396,893 | $ 11,639,115 |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select Gold Cayman Ltd. | $ - | $ 74,865,700 | $ - | $ - | $ 82,233,978 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investments, at value (including securities loaned of $48,929,231) - See accompanying schedule: Unaffiliated issuers (cost $1,496,489,449) | $ 2,188,107,613 |
|
Fidelity Central Funds (cost $206,008,746) | 206,008,746 |
|
Other affiliated issuers (cost $14,842,960) | 11,639,115 |
|
Commodities | 82,253,568 |
|
Total Investments (cost $1,792,206,855) |
| $ 2,488,009,042 |
Receivable for fund shares sold | 28,409,170 | |
Dividends receivable | 715,366 | |
Distributions receivable from Fidelity Central Funds | 330,523 | |
Prepaid expenses | 4,242 | |
Receivable from investment advisor for expense reductions | 16,771 | |
Other receivables | 53,844 | |
Total assets | 2,517,538,958 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,222,702 | |
Payable for fund shares redeemed | 5,738,698 | |
Accrued management fee | 1,032,070 | |
Distribution fees payable | 20,939 | |
Other affiliated payables | 439,944 | |
Other payables and accrued expenses | 119,917 | |
Collateral on securities loaned, at value | 51,019,275 | |
Total liabilities | 77,593,545 | |
|
|
|
Net Assets | $ 2,439,945,413 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,772,662,139 | |
Accumulated net investment loss | (3,177) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (28,479,034) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 695,765,485 | |
Net Assets | $ 2,439,945,413 | |
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.19 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.19) | $ 49.01 | |
Class T: | $ 46.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.17) | $ 47.84 | |
Class B: | $ 45.97 | |
|
|
|
Class C: | $ 45.85 | |
|
|
|
|
|
|
Gold: | $ 46.37 | |
|
|
|
Institutional Class: | $ 46.34 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Gold Portfolio
Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $396,893 earned from other affiliated issuers) |
| $ 7,214,916 |
Interest |
| 36,516 |
Income from Fidelity Central Funds |
| 4,788,995 |
Total income |
| 12,040,427 |
|
|
|
Expenses | ||
Management fee | $ 8,843,447 | |
Transfer agent fees | 3,480,684 | |
Distribution fees | 84,461 | |
Accounting and security lending fees | 523,529 | |
Custodian fees and expenses | 210,565 | |
Independent trustees' compensation | 6,241 | |
Registration fees | 150,943 | |
Audit | 44,995 | |
Legal | 83,632 | |
Miscellaneous | 77,106 | |
Total expenses before reductions | 13,505,603 | |
Expense reductions | (602,121) | 12,903,482 |
Net investment income (loss) | (863,055) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 90,039,584 | |
Other affiliated issuers | 97,820,563 |
|
Foreign currency transactions | 1,653,116 | |
Total net realized gain (loss) |
| 189,513,263 |
Change in net unrealized appreciation (depreciation) on: Investments | 426,676,495 | |
Assets and liabilities in foreign currencies | 3,916 | |
Total change in net unrealized appreciation (depreciation) |
| 426,680,411 |
Net gain (loss) | 616,193,674 | |
Net increase (decrease) in net assets resulting from operations | $ 615,330,619 | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (863,055) | $ 9,095,705 |
Net realized gain (loss) | 189,513,263 | 107,242,792 |
Change in net unrealized appreciation (depreciation) | 426,680,411 | 60,139,115 |
Net increase (decrease) in net assets resulting from operations | 615,330,619 | 176,477,612 |
Distributions to shareholders from net investment income | (7,077,865) | (754,152) |
Distributions to shareholders from net realized gain | (201,157,130) | (195,955,908) |
Total distributions | (208,234,995) | (196,710,060) |
Share transactions - net increase (decrease) | 554,230,717 | 170,798,657 |
Redemption fees | 544,215 | 1,843,164 |
Total increase (decrease) in net assets | 961,870,556 | 152,409,373 |
|
|
|
Net Assets | ||
Beginning of period | 1,478,074,857 | 1,325,665,484 |
End of period (including accumulated net investment loss of $3,177 and undistributed net investment income of $9,093,033, respectively) | $ 2,439,945,413 | $ 1,478,074,857 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.00 | (.07) H |
Total from investment operations | 14.85 | (.08) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.01) | - |
Total distributions | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.19 | $ 36.53 |
Total Return B, C, D | 44.59% | (.19)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.17% | 1.13% A |
Expenses net of all reductions | 1.13% | 1.10% A |
Net investment income (loss) | (.37)% | (.18)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.05 | (.09) H |
Total from investment operations | 14.80 | (.12) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.97) | - |
Total distributions | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.17 | $ 36.49 |
Total Return B, C, D | 44.45% | (.30)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.42% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.46% A |
Expenses net of all reductions | 1.39% | 1.43% A |
Net investment income (loss) | (.63)% | (.40)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.95 | (.08) H |
Total from investment operations | 14.50 | (.15) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.84) | - |
Total distributions | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.97 | $ 36.46 |
Total Return B, C, D | 43.53% | (.38)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.93% | 1.96% A |
Expenses net of all reductions | 1.90% | 1.93% A |
Net investment income (loss) | (1.14)% | (.93)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,869 | $ 902 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.91 | (.10) H |
Total from investment operations | 14.46 | (.17) |
Distributions from net investment income | (.17) | - |
Distributions from net realized gain | (4.89) | - |
Total distributions | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.85 | $ 36.44 |
Total Return B, C, D | 43.49% | (.44)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.99% A |
Net investment income (loss) | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,835 | $ 437 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Gold
| |||||
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 | $ 22.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | .22 F | .04 | .02 G | (.01) |
Net realized and unrealized gain (loss) | 15.05 | 5.49 | 12.21 | .18 | 5.85 |
Total from investment operations | 15.03 | 5.71 | 12.25 | .20 | 5.84 |
Distributions from net investment income | (.18) | (.02) | (.02) | - | (1.42) |
Distributions from net realized gain | (5.03) | (5.10) | (3.84) | - | - |
Total distributions | (5.21) | (5.12) | (3.86) | - | (1.42) |
Redemption fees added to paid in capital C | .01 | .04 | .06 | .05 | .06 |
Net asset value, end of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Total Return A, B | 45.10% | 16.19% | 48.84% | .92% | 26.79% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of fee waivers, if any | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of all reductions | .81% | .87% | .82% | .89% | 1.04% |
Net investment income (loss) | (.05)% | .62% F | .13% | .07% G | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 | $ 735,744 |
Portfolio turnover rate E | 55% | 85% | 108% | 79% | 41% |
A Total 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%. GInvestment 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 (.08)%. 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 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. I For the year ended February 29. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) D | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.03 | (.08) G |
Total from investment operations | 15.02 | (.07) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.04) | - |
Total distributions | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 46.34 | $ 36.54 |
Total Return B, C | 45.10% | (.16)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | .83% | .94% A |
Expenses net of fee waivers, if any | .83% | .94% A |
Expenses net of all reductions | .79% | .91% A |
Net investment income (loss) | (.03)% | .12% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,174 | $ 385 |
Portfolio turnover rate F | 55% | 85% |
A Annualized 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. GThe 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Consolidated Financial Statements
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in Fidelity Select Gold Cayman Ltd., a wholly-owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities, consistent with the investment objective of the fund. As of February 29, 2008, the Fund held $82,233,978 in the Subsidiary, representing 3.4% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include the accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.
The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 681,289,657 |
|
Unrealized depreciation | (36,971,788) |
|
Net unrealized appreciation (depreciation) | 644,317,869 |
|
Undistributed long-term capital gain | 9,018,404 |
|
|
|
|
Cost for federal income tax purposes | $ 1,843,691,173 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 81,662,441 | $ 72,402,616 |
Long-term Capital Gains | 126,572,554 | 124,307,444 |
Total | $ 208,234,995 | $ 196,710,060 |
Annual Report
4. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
5. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term investments, aggregated $1,165,131,181 and $832,255,722, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at an annual rate of .30% of its net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period FMR reimbursed the Fund $24,300.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,836 | $ 936 |
Class T | .25% | .25% | 15,486 | 570 |
Class B | .75% | .25% | 23,737 | 18,077 |
Class C | .75% | .25% | 27,402 | 14,204 |
|
|
| $ 84,461 | $ 33,787 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 45,888 |
Class T | 8,502 |
Class B* | 2,182 |
Class C* | 3,616 |
| $ 60,188 |
* 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the sub-transfer agent for all Fund shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 20,029 | .28 |
Class T | 8,862 | .29 |
Class B | 6,928 | .29 |
Class C | 7,528 | .28 |
Gold | 3,434,145 | .22 |
Institutional Class | 3,192 | .20 |
| $ 3,480,684 |
|
Accounting and Security Lending Fees. FSC 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 $1,784 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $3,655 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $305,527.
Annual Report
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 $475,444 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $33,396. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Gold | $ 27,814 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 13,831 | $ - |
Class T | 6,353 | - |
Class B | 4,260 | - |
Class C | 3,734 | - |
Gold | 7,042,946 | 754,152 |
Institutional Class | 6,741 | - |
Total | $ 7,077,865 | $ 754,152 |
From net realized gain |
|
|
Class A | $ 955,695 | $ - |
Class T | 425,795 | - |
Class B | 289,226 | - |
Class C | 343,986 | - |
Gold | 198,940,407 | 195,955,908 |
Institutional Class | 202,021 | - |
Total | $ 201,157,130 | $ 195,955,908 |
Annual Report
Notes to Consolidated Financial Statements - continued
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 567,655 | 52,274 | $ 23,751,338 | $ 1,914,223 |
Reinvestment of distributions | 25,125 | - | 945,727 | - |
Shares redeemed | (67,262) | (1,428) | (2,616,226) | (52,108) |
Net increase (decrease) | 525,518 | 50,846 | $ 22,080,839 | $ 1,862,115 |
Class T |
|
|
|
|
Shares sold | 245,988 | 29,954 | $ 10,279,473 | $ 1,097,866 |
Reinvestment of distributions | 11,403 | - | 428,815 | - |
Shares redeemed | (41,858) | - | (1,666,054) | - |
Net increase (decrease) | 215,533 | 29,954 | $ 9,042,234 | $ 1,097,866 |
Class B |
|
|
|
|
Shares sold | 138,954 | 24,802 | $ 5,690,539 | $ 903,324 |
Reinvestment of distributions | 7,385 | - | 276,855 | - |
Shares redeemed | (21,658) | (60) | (874,114) | (2,269) |
Net increase (decrease) | 124,681 | 24,742 | $ 5,093,280 | $ 901,055 |
Class C |
|
|
|
|
Shares sold | 253,353 | 12,002 | $ 10,551,196 | $ 438,523 |
Reinvestment of distributions | 8,652 | - | 324,140 | - |
Shares redeemed | (37,666) | - | (1,511,191) | - |
Net increase (decrease) | 224,339 | 12,002 | $ 9,364,145 | $ 438,523 |
Gold |
|
|
|
|
Shares sold | 30,095,254 | 37,990,378 | $ 1,246,042,833 | $ 1,364,967,296 |
Reinvestment of distributions | 5,273,633 | 5,102,742 | 197,489,804 | 188,386,905 |
Shares redeemed | (24,338,085) | (39,683,634) | (937,121,869) | (1,387,242,690) |
Net increase (decrease) | 11,030,802 | 3,409,486 | $ 506,410,768 | $ 166,111,511 |
Institutional Class |
|
|
|
|
Shares sold | 128,523 | 11,934 | $ 5,080,204 | $ 438,322 |
Reinvestment of distributions | 4,588 | - | 171,536 | - |
Shares redeemed | (75,163) | (1,395) | (3,012,289) | (50,735) |
Net increase (decrease) | 57,948 | 10,539 | $ 2,239,451 | $ 387,587 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Materials A | 17.10% | 24.17% | 11.28% |
A Prior to October 1, 2006, Materials operated under certain different investment policies. The historical performance for this fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials on February 28, 1998. 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
Management's Discussion of Fund Performance
Comments from Tobias Welo, who became Portfolio Manager of Select Materials Portfolio on January 9, 2008
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the year ending February 29, 2008, the fund was up 17.10%, outpacing the S&P 500® and the 14.89% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Strong industry selection played a key role in the fund's outperformance of its MSCI benchmark. For example, underweightings in weak-performing industries such as construction materials, paper products and paper packaging aided results, as did solid stock picking within the first two areas. In addition, good stock selection and an underweighting in the lagging diversified chemicals group helped. Given the fund's exposure to foreign stocks, currency fluctuations further enhanced the fund's return. Among individual holdings, an out-of-benchmark position in Rio Tinto was the top contributor. A diversified metals and mining company, Rio Tinto was boosted by strong metals prices and multiple takeover offers from Australian mining concern BHP Billiton. Also boosting performance was out-of-index holding Agrium, a Canadian fertilizer company that benefited from strong demand for crops and favorable market reaction to its purchase of UAP Holding, an agricultural products distributor. Not owning lagging paper-related names in the index, such as Canadian pulp and paper producer Domtar, aided results as well. Among detractors, the fund's slight underweighting in fertilizers and agricultural chemicals hurt, including an underweighting in fertilizer company CF Industries. In addition, the fund's overweighting in Titanium Metals disappointed, as the firm struggled through sluggish earnings announcements and construction delays among its end-users. Certain stock picks within the specialty and commodity chemicals areas also detracted, as did the fund's overall positioning in the steel industry over the course of the period. Some of the stocks I've mentioned in this review 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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,065.30 | $ 6.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,063.90 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Materials |
|
|
|
Actual | $ 1,000.00 | $ 1,067.00 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,066.70 | $ 4.62 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.94% |
Materials | .88% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 10.7 | 7.2 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 7.4 | 4.8 |
Alcoa, Inc. | 5.6 | 4.3 |
E.I. du Pont de Nemours & Co. | 5.3 | 8.3 |
Praxair, Inc. | 4.8 | 3.9 |
Nucor Corp. | 3.9 | 2.8 |
Newmont Mining Corp. | 3.6 | 1.6 |
The Mosaic Co. | 3.4 | 1.7 |
Dow Chemical Co. | 3.2 | 4.7 |
Weyerhaeuser Co. | 2.5 | 2.1 |
| 50.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Chemicals | 52.0% |
|
| Metals & Mining | 32.6% |
|
| Containers & Packaging | 6.9% |
|
| Paper & Forest Products | 3.6% |
|
| Oil, Gas & Consumable Fuels | 1.3% |
|
| All Others* | 3.6% |
|
As of August 31, 2007 | |||
| Chemicals | 53.8% |
|
| Metals & Mining | 28.0% |
|
| Paper & Forest Products | 5.2% |
|
| Containers & Packaging | 4.4% |
|
| Industrial Conglomerates | 3.0% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
CHEMICALS - 52.0% | |||
Commodity Chemicals - 3.4% | |||
Celanese Corp. Class A | 250,500 | $ 9,744,450 | |
Spartech Corp. | 156,220 | 2,213,637 | |
Tronox, Inc. Class A | 250,900 | 1,121,523 | |
| 13,079,610 | ||
Diversified Chemicals - 14.5% | |||
Dow Chemical Co. | 325,300 | 12,260,557 | |
E.I. du Pont de Nemours & Co. | 446,200 | 20,712,604 | |
FMC Corp. | 97,600 | 5,525,136 | |
Hercules, Inc. | 264,695 | 4,849,212 | |
Huntsman Corp. | 108,300 | 2,613,279 | |
Olin Corp. | 99,929 | 1,920,635 | |
PPG Industries, Inc. | 136,900 | 8,485,062 | |
| 56,366,485 | ||
Fertilizers & Agricultural Chemicals - 14.7% | |||
Monsanto Co. | 359,844 | 41,626,754 | |
Potash Corp. of Saskatchewan, Inc. | 14,400 | 2,288,160 | |
The Mosaic Co. (a) | 118,638 | 13,204,409 | |
| 57,119,323 | ||
Industrial Gases - 6.6% | |||
Air Products & Chemicals, Inc. | 39,500 | 3,607,535 | |
Airgas, Inc. | 69,600 | 3,381,864 | |
Praxair, Inc. | 231,800 | 18,608,904 | |
| 25,598,303 | ||
Specialty Chemicals - 12.8% | |||
Albemarle Corp. | 142,752 | 5,416,011 | |
Cytec Industries, Inc. | 56,100 | 3,213,408 | |
Ecolab, Inc. | 159,000 | 7,439,610 | |
H.B. Fuller Co. | 113,508 | 2,582,307 | |
Innospec, Inc. | 214,262 | 4,015,270 | |
Minerals Technologies, Inc. | 40,980 | 2,470,274 | |
Nalco Holding Co. | 285,918 | 6,175,829 | |
OMNOVA Solutions, Inc. (a) | 615,568 | 2,400,715 | |
Rockwood Holdings, Inc. (a) | 152,700 | 4,686,363 | |
Rohm & Haas Co. (d) | 120,350 | 6,451,964 | |
Valspar Corp. | 110,200 | 2,390,238 | |
W.R. Grace & Co. (a) | 103,100 | 2,188,813 | |
| 49,430,802 | ||
TOTAL CHEMICALS | 201,594,523 | ||
CONSTRUCTION MATERIALS - 0.5% | |||
Construction Materials - 0.5% | |||
Polaris Minerals Corp. (a) | 38,700 | 377,149 | |
Polaris Minerals Corp. (a)(e) | 151,600 | 1,477,409 | |
| 1,854,558 | ||
| |||
Shares | Value | ||
CONTAINERS & PACKAGING - 6.9% | |||
Metal & Glass Containers - 5.0% | |||
Ball Corp. | 88,979 | $ 3,923,974 | |
Crown Holdings, Inc. (a) | 208,600 | 5,196,226 | |
Greif, Inc. Class A | 42,700 | 2,792,153 | |
Owens-Illinois, Inc. (a) | 131,200 | 7,406,240 | |
| 19,318,593 | ||
Paper Packaging - 1.9% | |||
Packaging Corp. of America | 67,500 | 1,538,325 | |
Smurfit-Stone Container Corp. (a) | 385,500 | 3,064,725 | |
Temple-Inland, Inc. | 207,500 | 2,848,975 | |
| 7,452,025 | ||
TOTAL CONTAINERS & PACKAGING | 26,770,618 | ||
MACHINERY - 0.5% | |||
Industrial Machinery - 0.5% | |||
ITT Corp. | 37,400 | 2,103,376 | |
METALS & MINING - 32.6% | |||
Aluminum - 5.6% | |||
Alcoa, Inc. | 579,400 | 21,518,916 | |
Diversified Metals & Mining - 9.2% | |||
Compass Minerals International, Inc. | 20,100 | 1,144,092 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 283,428 | 28,586,548 | |
Rio Tinto PLC sponsored ADR | 4,400 | 1,999,580 | |
Titanium Metals Corp. (d) | 181,800 | 3,748,716 | |
| 35,478,936 | ||
Gold - 5.8% | |||
Goldcorp, Inc. | 116,100 | 5,013,047 | |
Lihir Gold Ltd. (a) | 632,145 | 2,448,130 | |
Newmont Mining Corp. | 275,400 | 14,092,218 | |
Royal Gold, Inc. (d) | 32,300 | 1,017,773 | |
| 22,571,168 | ||
Precious Metals & Minerals - 0.7% | |||
Impala Platinum Holdings Ltd. | 43,700 | 1,806,995 | |
Pan American Silver Corp. (a) | 22,800 | 912,000 | |
| 2,718,995 | ||
Steel - 11.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 54,000 | 4,105,080 | |
Carpenter Technology Corp. | 67,000 | 4,209,610 | |
Nucor Corp. | 232,000 | 14,980,240 | |
Reliance Steel & Aluminum Co. | 79,100 | 4,386,886 | |
Steel Dynamics, Inc. | 116,600 | 6,793,116 | |
United States Steel Corp. | 87,400 | 9,478,530 | |
| 43,953,462 | ||
TOTAL METALS & MINING | 126,241,477 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 1.3% | |||
Coal & Consumable Fuels - 1.3% | |||
Alpha Natural Resources, Inc. (a) | 47,200 | $ 1,913,488 | |
Peabody Energy Corp. | 53,800 | 3,046,156 | |
| 4,959,644 | ||
PAPER & FOREST PRODUCTS - 3.6% | |||
Forest Products - 2.7% | |||
Louisiana-Pacific Corp. | 57,500 | 625,600 | |
Weyerhaeuser Co. | 161,700 | 9,896,040 | |
| 10,521,640 | ||
Paper Products - 0.9% | |||
Glatfelter | 164,656 | 2,168,520 | |
Wausau-Mosinee Paper Corp. | 144,877 | 1,135,836 | |
| 3,304,356 | ||
TOTAL PAPER & FOREST PRODUCTS | 13,825,996 | ||
TOTAL COMMON STOCKS (Cost $323,637,947) | 377,350,192 | ||
Money Market Funds - 4.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 8,391,028 | $ 8,391,028 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 8,915,050 | 8,915,050 | |
TOTAL MONEY MARKET FUNDS (Cost $17,306,078) | 17,306,078 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $340,944,025) | 394,656,270 |
NET OTHER ASSETS - (1.9)% | (7,362,526) | ||
NET ASSETS - 100% | $ 387,293,744 | ||
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. |
(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 $1,477,409 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 | $ 808,183 |
Fidelity Securities Lending Cash Central Fund | 107,174 |
Total | $ 915,357 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,959,182) - See accompanying schedule: Unaffiliated issuers (cost $323,637,947) | $ 377,350,192 |
|
Fidelity Central Funds (cost $17,306,078) | 17,306,078 |
|
Total Investments (cost $340,944,025) |
| $ 394,656,270 |
Receivable for fund shares sold | 2,356,858 | |
Dividends receivable | 444,913 | |
Distributions receivable from Fidelity Central Funds | 24,558 | |
Prepaid expenses | 1,024 | |
Other receivables | 4,129 | |
Total assets | 397,487,752 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 246,439 | |
Payable for fund shares redeemed | 711,324 | |
Accrued management fee | 172,900 | |
Distribution fees payable | 15,068 | |
Other affiliated payables | 90,706 | |
Other payables and accrued expenses | 42,521 | |
Collateral on securities loaned, at value | 8,915,050 | |
Total liabilities | 10,194,008 | |
|
|
|
Net Assets | $ 387,293,744 | |
Net Assets consist of: |
| |
Paid in capital | $ 330,122,002 | |
Undistributed net investment income | 1,848,037 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,611,755 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 53,711,950 | |
Net Assets | $ 387,293,744 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 57.00 | |
|
|
|
Maximum offering price per share (100/94.25 of $57.00) | $ 60.48 | |
Class T: | $ 56.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $56.80) | $ 58.86 | |
Class B: | $ 56.59 | |
|
|
|
Class C: | $ 56.50 | |
|
|
|
|
|
|
Materials: | $ 57.01 | |
|
|
|
Institutional Class: | $ 57.00 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,345,845 |
Interest |
| 1,926 |
Income from Fidelity Central Funds |
| 915,357 |
Total income |
| 7,263,128 |
|
|
|
Expenses | ||
Management fee | $ 1,996,306 | |
Transfer agent fees | 904,639 | |
Distribution fees | 106,827 | |
Accounting and security lending fees | 141,588 | |
Custodian fees and expenses | 15,698 | |
Independent trustees' compensation | 1,257 | |
Registration fees | 123,862 | |
Audit | 40,881 | |
Legal | 1,692 | |
Interest | 10,195 | |
Miscellaneous | 18,085 | |
Total expenses before reductions | 3,361,030 | |
Expense reductions | (51,841) | 3,309,189 |
Net investment income (loss) | 3,953,939 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,067,113 | |
Foreign currency transactions | 10,689 | |
Total net realized gain (loss) |
| 16,077,802 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,233,296 | |
Assets and liabilities in foreign currencies | (582) | |
Total change in net unrealized appreciation (depreciation) |
| 23,232,714 |
Net gain (loss) | 39,310,516 | |
Net increase (decrease) in net assets resulting from operations | $ 43,264,455 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,953,939 | $ 1,709,789 |
Net realized gain (loss) | 16,077,802 | 18,867,189 |
Change in net unrealized appreciation (depreciation) | 23,232,714 | 2,128,067 |
Net increase (decrease) in net assets resulting from operations | 43,264,455 | 22,705,045 |
Distributions to shareholders from net investment income | (2,382,687) | (1,721,356) |
Distributions to shareholders from net realized gain | (14,617,568) | (17,315,347) |
Total distributions | (17,000,255) | (19,036,703) |
Share transactions - net increase (decrease) | 127,763,307 | 59,771,650 |
Redemption fees | 66,997 | 236,747 |
Total increase (decrease) in net assets | 154,094,504 | 63,676,739 |
|
|
|
Net Assets | ||
Beginning of period | 233,199,240 | 169,522,501 |
End of period (including undistributed net investment income of $1,848,037 and undistributed net investment income of $276,784, respectively) | $ 387,293,744 | $ 233,199,240 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .46 | .17 |
Net realized and unrealized gain (loss) | 8.05 | 3.93 |
Total from investment operations | 8.51 | 4.10 |
Distributions from net investment income | (.32) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.53) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 51.01 |
Total Return B, C, D | 16.79% | 8.76% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.40% A |
Expenses net of all reductions | 1.21% | 1.38% A |
Net investment income (loss) | .83% | 1.76% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .32 | .11 |
Net realized and unrealized gain (loss) | 8.00 | 3.87 |
Total from investment operations | 8.32 | 3.98 |
Distributions from net investment income | (.21) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.42) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.80 | $ 50.89 |
Total Return B, C, D | 16.45% | 8.51% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.62% A |
Net investment income (loss) | .57% | 1.18% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,850 | $ 707 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .06 |
Net realized and unrealized gain (loss) | 7.98 | 3.84 |
Total from investment operations | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.25) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.59 | $ 50.81 |
Total Return B, C, D | 15.89% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.97% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.12% A |
Net investment income (loss) | .07% | .60% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,173 | $ 662 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .09 |
Net realized and unrealized gain (loss) | 7.97 | 3.81 |
Total from investment operations | 8.01 | 3.90 |
Distributions from net investment income | (.12) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.33) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.50 | $ 50.81 |
Total Return B, C, D | 15.87% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.96% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.13% A |
Net investment income (loss) | .07% | .89% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 8,743 | $ 547 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Materials
| |||||
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 | $ 23.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .42 | .32 | .15 | .13 F |
Net realized and unrealized gain (loss) | 8.01 | 9.36 | 6.40 | 5.47 | 12.07 |
Total from investment operations | 8.65 | 9.78 | 6.72 | 5.62 | 12.20 |
Distributions from net investment income | (.36) | (.48) | (.25) | (.12) | (.12) |
Distributions from net realized gain | (2.21) | (4.79) | (.93) | (.74) | - |
Total distributions | (2.57) | (5.27) | (1.18) | (.86) | (.12) |
Redemption fees added to paid in capital C | .01 | .06 | .03 | .03 | .08 |
Net asset value, end of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Total Return A, B | 17.10% | 22.29% | 17.01% | 16.09% | 51.73% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.05% | 1.06% | 1.31% |
Expenses net of fee waivers, if any | .90% | .98% | 1.05% | 1.06% | 1.31% |
Expenses net of all reductions | .89% | .96% | 1.01% | 1.02% | 1.17% |
Net investment income (loss) | 1.14% | .87% | .78% | .42% | .43% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 | $ 135,131 |
Portfolio turnover rate E | 77% | 185% | 124% | 89% | 175% |
A Total 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 $.07 per share. 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 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. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .64 | .08 |
Net realized and unrealized gain (loss) | 8.00 | 3.92 |
Total from investment operations | 8.64 | 4.00 |
Distributions from net investment income | (.36) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.56) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 50.91 |
Total Return B, C | 17.08% | 8.55% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .89% | 1.06% A |
Expenses net of fee waivers, if any | .89% | 1.06% A |
Expenses net of all reductions | .89% | 1.04% A |
Net investment income (loss) | 1.14% | .79% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,820 | $ 119 |
Portfolio turnover rate F | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 67,533,814 |
|
Unrealized depreciation | (17,166,142) |
|
Net unrealized appreciation (depreciation) | 50,367,672 |
|
|
|
|
Cost for federal income tax purposes | $ 344,288,598 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 7,456,139 | $ 4,275,377 |
Long-term Capital Gains | 9,544,116 | 14,761,326 |
Total | $ 17,000,255 | $ 19,036,703 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 $380,491,263 and $262,508,222, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 16,083 | $ 2,093 |
Class T | .25% | .25% | 20,380 | 588 |
Class B | .75% | .25% | 26,889 | 20,448 |
Class C | .75% | .25% | 43,475 | 26,842 |
|
|
| $ 106,827 | $ 49,971 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,085 |
Class T | 10,621 |
Class B* | 2,770 |
Class C* | 2,046 |
| $ 52,522 |
* 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
6. 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Materials shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,154 | .30 |
Class T | 12,304 | .30 |
Class B | 8,106 | .30 |
Class C | 12,868 | .30 |
Materials | 848,933 | .25 |
Institutional Class | 3,274 | .24 |
| $ 904,639 |
|
Accounting and Security Lending Fees. FSC 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 $4,847 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. 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 | $ 7,843,800 | 4.68% | $ 10,195 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $743 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $107,174.
Annual Report
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 $6,824 for the period In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 2,634 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 49,508 | $ - |
Class T | 17,252 | - |
Class B | 2,017 | - |
Class C | 11,702 | - |
Materials | 2,291,825 | 1,721,356 |
Institutional Class | 10,383 | - |
Total | $ 2,382,687 | $ 1,721,356 |
From net realized gain |
|
|
Class A | $ 297,274 | $ - |
Class T | 171,986 | - |
Class B | 120,699 | - |
Class C | 203,194 | - |
Materials | 13,774,394 | 17,315,347 |
Institutional Class | 50,021 | - |
Total | $ 14,617,568 | $ 17,315,347 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 264,311 | 19,960 | $ 14,817,528 | $ 1,010,235 |
Reinvestment of distributions | 5,853 | - | 336,777 | - |
Shares redeemed | (70,440) | - | (3,880,036) | - |
Net increase (decrease) | 199,724 | 19,960 | $ 11,274,269 | $ 1,010,235 |
Class T |
|
|
|
|
Shares sold | 146,420 | 13,890 | $ 8,122,926 | $ 703,837 |
Reinvestment of distributions | 2,954 | - | 169,021 | - |
Shares redeemed | (42,653) | - | (2,369,950) | - |
Net increase (decrease) | 106,721 | 13,890 | $ 5,921,997 | $ 703,837 |
Class B |
|
|
|
|
Shares sold | 83,153 | 13,022 | $ 4,611,263 | $ 643,438 |
Reinvestment of distributions | 2,052 | - | 116,729 | - |
Shares redeemed | (24,486) | - | (1,341,792) | - |
Net increase (decrease) | 60,719 | 13,022 | $ 3,386,200 | $ 643,438 |
Class C |
|
|
|
|
Shares sold | 171,703 | 10,758 | $ 9,620,121 | $ 546,127 |
Reinvestment of distributions | 3,133 | - | 178,976 | - |
Shares redeemed | (30,841) | - | (1,682,683) | - |
Net increase (decrease) | 143,995 | 10,758 | $ 8,116,414 | $ 546,127 |
Materials |
|
|
|
|
Shares sold | 7,472,335 | 6,290,426 | $ 416,206,078 | $ 311,961,345 |
Reinvestment of distributions | 270,946 | 378,787 | 15,331,841 | 18,026,752 |
Shares redeemed | (6,067,742) | (5,806,915) | (334,236,130) | (273,224,056) |
Net increase (decrease) | 1,675,539 | 862,298 | $ 97,301,789 | $ 56,764,041 |
Institutional Class |
|
|
|
|
Shares sold | 88,023 | 4,445 | $ 5,168,897 | $ 210,000 |
Reinvestment of distributions | 963 | - | 55,576 | - |
Shares redeemed | (59,388) | (2,112) | (3,461,835) | (106,028) |
Net increase (decrease) | 29,598 | 2,333 | $ 1,762,638 | $ 103,972 |
A Share transactions for Class A, Class T, Class B and Institutional Class are for the period December 12,2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Select Paper and Forest Products Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Paper and Forest Products Portfolio | -16.45% | 4.75% | 3.29% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Paper and Forest Products Portfolio on February 28, 1998. 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
Select Paper and Forest Products Portfolio
Management's Discussion of Fund Performance
Comments from Justin Bennett, Portfolio Manager of Select Paper and Forest Products Portfolio during the period covered by this report
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -16.45%, trailing the 14.89% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Additionally, the fund lagged the S&P 500®. Versus the broader MSCI index, the fund suffered because its three primary areas of emphasis - paper products, paper packaging and forest products, where we had significant overweightings - all registered sizable losses, in contrast to a number of strong-performing index groups outside of my investment universe, such as fertilizers and agricultural chemicals, precious metals and industrial metals. Corrugated packaging and building products maker Temple-Inland was our biggest detractor. The extreme weakness in residential construction put a significant dent in the company's overall results and cut its stock price roughly in half. Our results also were hurt by Smurfit-Stone Container, which makes containerboard, as well as by forest products producer Weyerhaeuser. Lastly, not owning two strong-performing index components, mining company Freeport-McMoRan Copper & Gold and agricultural products producer Monsanto, detracted. Conversely, the fund derived considerable benefit from stock selection in paper products and forest products. Not owning some of the weak-performing index groups - diversified chemicals, construction materials and specialty chemicals - also helped. Forestar Real Estate Group, an out-of-index holding, was a key contributor. The stock had become undervalued after the company was spun off from Temple-Inland. Taiwan-based paper pulp producer Chung Hwa Pulp was another contributor, as was Lee & Man Paper Manufacturing, a Hong Kong producer of cardboard for boxes. Not owning some large index components that performed poorly - notably Dow Chemical - was helpful as well.
Note to shareholders: John Sheehy will become Co-Manager of Select Paper and Forest Products Portfolio on March 3, 2008, and sole Portfolio Manager on May 1, 2008.
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
Select Paper and Forest Products Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Actual | $ 1,000.00 | $ 861.10 | $ 5.69 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,018.75 | $ 6.17 |
* Expenses are equal to the Fund's annualized expense ratio of 1.23%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Select Paper and Forest Products Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Weyerhaeuser Co. | 10.3 | 9.7 |
Temple-Inland, Inc. | 8.2 | 10.3 |
Domtar Corp. | 7.5 | 3.6 |
Smurfit-Stone Container Corp. | 7.0 | 5.6 |
Forestar Real Estate Group, Inc. | 5.9 | 0.0 |
Potlatch Corp. | 4.9 | 4.2 |
Glatfelter | 4.8 | 2.6 |
Sealed Air Corp. | 4.8 | 4.8 |
Schweitzer-Mauduit International, Inc. | 4.1 | 2.2 |
Wausau-Mosinee Paper Corp. | 3.3 | 1.4 |
| 60.8 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Paper & Forest Products | 47.0% |
|
| Containers & Packaging | 30.2% |
|
| Real Estate Management & Development | 6.9% |
|
| Real Estate Investment Trusts | 6.1% |
|
| Machinery | 2.0% |
|
| All Others* | 7.8% |
|
As of August 31, 2007 | |||
| Paper & Forest Products | 54.2% |
|
| Containers & Packaging | 29.7% |
|
| Real Estate Investment Trusts | 11.9% |
|
| Machinery | 1.5% |
|
| Trading Companies & Distributors | 1.2% |
|
| All Others* | 1.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Paper and Forest Products Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 94.1% | |||
Shares | Value | ||
CONTAINERS & PACKAGING - 30.2% | |||
Metal & Glass Containers - 2.2% | |||
Greif, Inc. Class A | 4,900 | $ 320,411 | |
Silgan Holdings, Inc. | 1,500 | 70,110 | |
| 390,521 | ||
Paper Packaging - 28.0% | |||
Bemis Co., Inc. | 14,900 | 369,818 | |
Cascades, Inc. | 37,000 | 312,830 | |
Graphic Packaging Corp. (a) | 11,100 | 34,188 | |
Kazakhstan Kagazy PLC GDR (a)(e) | 5,000 | 22,500 | |
Packaging Corp. of America | 8,300 | 189,157 | |
Rock-Tenn Co. Class A | 7,000 | 187,810 | |
Sealed Air Corp. | 35,750 | 865,508 | |
Smurfit-Stone Container Corp. (a) | 160,270 | 1,274,147 | |
Sonoco Products Co. | 12,100 | 340,857 | |
Temple-Inland, Inc. | 107,400 | 1,474,602 | |
| 5,071,417 | ||
TOTAL CONTAINERS & PACKAGING | 5,461,938 | ||
FOOD PRODUCTS - 1.1% | |||
Agricultural Products - 1.1% | |||
BrasilAgro - Compania Brasileira de Propriedades Agricolas (a) | 29,000 | 193,356 | |
HOUSEHOLD PRODUCTS - 0.0% | |||
Household Products - 0.0% | |||
Kimberly-Clark Corp. | 100 | 6,518 | |
MACHINERY - 2.0% | |||
Industrial Machinery - 2.0% | |||
Albany International Corp. Class A | 1,300 | 44,629 | |
Kadant, Inc. (a) | 7,600 | 190,760 | |
Xerium Technologies, Inc. | 25,900 | 129,759 | |
| 365,148 | ||
PAPER & FOREST PRODUCTS - 47.0% | |||
Forest Products - 19.2% | |||
Canfor Corp. (a) | 12,100 | 98,369 | |
Deltic Timber Corp. | 3,000 | 142,620 | |
Gunns Ltd. | 87,728 | 264,549 | |
International Forest Products Ltd. (Interfor) Class A (sub. vtg.) (a) | 19,300 | 98,064 | |
Louisiana-Pacific Corp. | 24,500 | 266,560 | |
Masisa SA ADR | 2,000 | 20,000 | |
Norbord, Inc. | 39,400 | 231,423 | |
Samling Global Ltd. | 420,000 | 65,668 | |
| |||
Shares | Value | ||
Stella-Jones, Inc. | 5,300 | $ 198,740 | |
Timbercorp Ltd. | 75,129 | 86,094 | |
TimberWest Forest Corp. | 2,000 | 27,864 | |
West Fraser Timber Co. Ltd. | 3,200 | 104,092 | |
Weyerhaeuser Co. | 30,600 | 1,872,719 | |
| 3,476,762 | ||
Paper Products - 27.8% | |||
Aracruz Celulose SA (PN-B) sponsored ADR (non-vtg.) | 4,400 | 318,736 | |
Boise, Inc. (a) | 10,300 | 83,945 | |
Buckeye Technologies, Inc. (a) | 8,700 | 94,047 | |
Canfor Pulp Income Fund | 3,700 | 33,088 | |
Chung Hwa Pulp Corp. | 153,000 | 103,433 | |
Domtar Corp. (a) | 213,700 | 1,361,269 | |
Glatfelter | 65,800 | 866,586 | |
Kapstone Paper & Packaging Corp. (a)(d) | 5,900 | 39,235 | |
Lee & Man Paper Manufacturing Ltd. | 62,800 | 175,331 | |
Mercer International, Inc. (SBI) (a)(d) | 5,700 | 41,382 | |
Mondi PLC | 8,100 | 62,481 | |
Neenah Paper, Inc. | 6,000 | 156,300 | |
Nine Dragons Paper (Holdings) Ltd. | 126,000 | 221,817 | |
Schweitzer-Mauduit International, Inc. | 32,500 | 746,525 | |
Votorantim Celulose e Papel SA sponsored ADR (non-vtg.) | 4,000 | 125,840 | |
Wausau-Mosinee Paper Corp. | 75,800 | 594,272 | |
| 5,024,287 | ||
TOTAL PAPER & FOREST PRODUCTS | 8,501,049 | ||
REAL ESTATE INVESTMENT TRUSTS - 6.1% | |||
Specialized REITs - 6.1% | |||
Plum Creek Timber Co., Inc. | 5,500 | 223,795 | |
Potlatch Corp. | 21,279 | 878,184 | |
| 1,101,979 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 6.9% | |||
Real Estate Management & Development - 6.9% | |||
Consolidated-Tomoka Land Co. | 2,800 | 144,200 | |
Forestar Real Estate Group, Inc. (a) | 43,433 | 1,058,897 | |
The St. Joe Co. (d) | 1,100 | 42,295 | |
| 1,245,392 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.8% | |||
Trading Companies & Distributors - 0.8% | |||
Beacon Roofing Supply, Inc. (a) | 5,500 | 47,080 | |
BlueLinx Corp. (d) | 19,300 | 104,992 | |
| 152,072 | ||
TOTAL COMMON STOCKS (Cost $23,327,592) | 17,027,452 | ||
Money Market Funds - 6.6% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 1,005,957 | $ 1,005,957 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 195,500 | 195,500 | |
TOTAL MONEY MARKET FUNDS (Cost $1,201,457) | 1,201,457 | ||
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $24,529,049) | 18,228,909 |
NET OTHER ASSETS - (0.7)% | (124,762) | ||
NET ASSETS - 100% | $ 18,104,147 | ||
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. |
(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 $22,500 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 | $ 82,738 |
Fidelity Securities Lending Cash Central Fund | 35,908 |
Total | $ 118,646 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 84.7% |
Canada | 6.0% |
Brazil | 3.6% |
Australia | 2.0% |
China | 1.2% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 1.5% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $1,659,402 all of which will expire on February 28, 2011. |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $1,213,286 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Paper and Forest Products Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $182,340) - See accompanying schedule: Unaffiliated issuers (cost $23,327,592) | $ 17,027,452 |
|
Fidelity Central Funds (cost $1,201,457) | 1,201,457 |
|
Total Investments (cost $24,529,049) |
| $ 18,228,909 |
Receivable for investments sold | 437,022 | |
Receivable for fund shares sold | 13,069 | |
Dividends receivable | 31,315 | |
Distributions receivable from Fidelity Central Funds | 1,846 | |
Prepaid expenses | 71 | |
Other receivables | 155 | |
Total assets | 18,712,387 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 357,002 | |
Payable for fund shares redeemed | 11,658 | |
Accrued management fee | 8,994 | |
Other affiliated payables | 5,836 | |
Other payables and accrued expenses | 29,250 | |
Collateral on securities loaned, at value | 195,500 | |
Total liabilities | 608,240 | |
|
|
|
Net Assets | $ 18,104,147 | |
Net Assets consist of: |
| |
Paid in capital | $ 27,520,420 | |
Undistributed net investment income | 176,683 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,292,550) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (6,300,406) | |
Net Assets, for 655,419 shares outstanding | $ 18,104,147 | |
Net Asset Value, offering price and redemption price per share ($18,104,147 ÷ 655,419 shares) | $ 27.62 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 653,207 |
Special dividends |
| 659,075 |
Interest |
| 139,797 |
Income from Fidelity Central Funds |
| 118,646 |
Total income |
| 1,570,725 |
|
|
|
Expenses | ||
Management fee | $ 232,203 | |
Transfer agent fees | 121,206 | |
Accounting and security lending fees | 16,531 | |
Custodian fees and expenses | 25,938 | |
Independent trustees' compensation | 155 | |
Registration fees | 28,321 | |
Audit | 36,027 | |
Legal | 348 | |
Miscellaneous | 3,366 | |
Total expenses before reductions | 464,095 | |
Expense reductions | (9,184) | 454,911 |
Net investment income (loss) | 1,115,814 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 1,094,328 | |
Foreign currency transactions | 6,084 | |
Total net realized gain (loss) |
| 1,100,412 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (7,656,493) | |
Assets and liabilities in foreign currencies | (441) | |
Total change in net unrealized appreciation (depreciation) |
| (7,656,934) |
Net gain (loss) | (6,556,522) | |
Net increase (decrease) in net assets resulting from operations | $ (5,440,708) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Paper and Forest Products Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,115,814 | $ 750,658 |
Net realized gain (loss) | 1,100,412 | 709,838 |
Change in net unrealized appreciation (depreciation) | (7,656,934) | 3,084,463 |
Net increase (decrease) in net assets resulting from operations | (5,440,708) | 4,544,959 |
Distributions to shareholders from net investment income | (1,107,744) | (1,010,431) |
Share transactions | 55,862,823 | 54,434,705 |
Reinvestment of distributions | 1,051,891 | 912,003 |
Cost of shares redeemed | (88,812,783) | (31,078,414) |
Net increase (decrease) in net assets resulting from share transactions | (31,898,069) | 24,268,294 |
Redemption fees | 24,082 | 7,802 |
Total increase (decrease) in net assets | (38,422,439) | 27,810,624 |
|
|
|
Net Assets | ||
Beginning of period | 56,526,586 | 28,715,962 |
End of period (including undistributed net investment income of $176,683 and undistributed net investment income of $167,591, respectively) | $ 18,104,147 | $ 56,526,586 |
Other Information Shares | ||
Sold | 1,585,085 | 1,659,581 |
Issued in reinvestment of distributions | 33,077 | 28,970 |
Redeemed | (2,599,544) | (989,339) |
Net increase (decrease) | (981,382) | 699,212 |
Financial Highlights
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| ||
Years ended February 28, | 2008 J | 2007 | 2006 | 2005 | 2004 J |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 34.53 | $ 30.63 | $ 31.64 | $ 31.64 | $ 24.07 |
Income from Investment Operations |
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Net investment income (loss) C | .92 F | .89 G | .61 H | .14 | (.05) |
Net realized and unrealized gain (loss) | (6.46) | 4.37 | (1.53) | (.06) | 7.59 |
Total from investment operations | (5.54) | 5.26 | (.92) | .08 | 7.54 |
Distributions from net investment income | (1.39) | (1.37) | (.13) | (.12) | - |
Redemption fees added to paid in capital C | .02 | .01 | .04 | .04 | .03 |
Net asset value, end of period | $ 27.62 | $ 34.53 | $ 30.63 | $ 31.64 | $ 31.64 |
Total Return A, B | (16.45)% | 17.70% | (2.77)% | .37% | 31.45% |
Ratios to Average Net Assets D, I |
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Expenses before reductions | 1.11% | 1.25% | 1.31% | 1.33% | 2.01% |
Expenses net of fee waivers, if any | 1.11% | 1.20% | 1.25% | 1.32% | 2.01% |
Expenses net of all reductions | 1.09% | 1.19% | 1.21% | 1.30% | 1.94% |
Net investment income (loss) | 2.67% F | 2.85% G | 2.10% H | .45% | (.20)% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 18,104 | $ 56,527 | $ 28,716 | $ 27,685 | $ 28,818 |
Portfolio turnover rate E | 221% | 126% | 207% | 65% | 188% |
A Total 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 $.54 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.09%. GInvestment income per share reflects a special dividend which amounted to $.30 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.88%. HInvestment income per share reflects a special dividend which amounted to $.42 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .64%. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Paper and Forest Products 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 invest 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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions 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,
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received.
Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 328,953 |
|
Unrealized depreciation | (7,069,379) |
|
Net unrealized appreciation (depreciation) | (6,740,426) |
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Capital loss carryforward | (1,659,402) |
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|
|
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Cost for federal income tax purposes | $ 24,969,335 |
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The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 1,107,744 | $ 1,010,431 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 $86,953,921 and $112,760,528, 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period the transfer agent fees were equivalent to an annual rate of .29% of average net assets.
Accounting and Security Lending Fees. FSC 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 $1,414 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $94 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $35,908.
Annual Report
Notes to Financial Statements - continued
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 $8,863 for the period. In addition, through arrangements with the Fund's transfer agent, 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 transfer agent expenses by $316.
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,990.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio, Materials Portfolio, and Paper and Forest Products 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 statement of changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial position of Chemicals Portfolio, Gold Portfolio, Materials Portfolio, and Paper and Forest Products Portfolio (funds of Fidelity Select Portfolios) and Gold Portfolio's wholly owned subsidiary at February 29, 2008, the results of their operations for the year then ended , the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers, LLP
Boston, Massachusetts
April 23, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Chemicals Portfolio, Select Gold Portfolio, Select Materials Portfolio, and Select Paper and Forest Products Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Chemicals Portfolio | 04/14/08 | 04/11/08 | $0.07 | $0.02 |
Select Gold Portfolio | 04/14/08 | 04/11/08 | $0.00 | $0.17 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Chemicals Portfolio | $ 1,440,096 |
Select Gold Portfolio | $ 114,223,721 |
Select Materials Portfolio | $ 6,623,467 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Chemicals Portfolio | 99% | 38% |
Select Gold Portfolio | 0% | 2% |
Select Materials Portfolio | 100% | 71% |
Select Paper and Forest Products Portfolio | 78% | 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 2007 | December 2007 |
Select Chemicals Portfolio | 99% | 38% |
Select Gold Portfolio | 14% | 9% |
Select Materials Portfolio | 100% | 65% |
Select Paper and Forest Products 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 |
Select Gold Portfolio | 04/16/07 | $0.201 | $0.0022 |
Select Gold Portfolio | 12/17/07 | $0.075 | $0.0086 |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. 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
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
SELMT-UANN-0408
1.846031.101
Fidelity®
Select Portfolios®
Energy Sector
Select Energy Portfolio
Select Energy Service Portfolio
Select Natural Gas Portfolio
Select Natural Resources Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Energy Sector |
|
|
Energy |
| |
Energy Service |
| |
Natural Gas |
| |
Natural Resources |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Energy Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 1,144.50 | $ 4.43 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
Energy Service Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 1,009.00 | $ 4.15 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
Natural Gas Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 1,244.40 | $ 4.69 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
Natural Resources Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 1,170.20 | $ 4.53 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized |
Energy Portfolio | .83% |
Energy Service Portfolio | .83% |
Natural Gas Portfolio | .84% |
Natural Resources Portfolio | .84% |
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Energy Portfolio | 40.72% | 31.50% | 16.57% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Energy Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Select Energy Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's 40.72% return strongly outpaced the S&P 500® and the 33.10% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Index. Prudent stock selection and overweighting coal and consumable fuels, oil and gas equipment and services, oil and gas exploration and production (E&P), and oil and gas drilling propelled the fund's return past that of the MSCI benchmark. However, our emphasis on the refining segment curbed gains slightly. A large overweighting in natural gas producer Range Resources was the fund's top contributor given its strong return, while overweighting U.S. coal company CONSOL Energy proved to be our second-best performer. Underweighting integrated oil giant Exxon Mobil further contributed when its stock performance lagged others in the energy sector. An outsized stake in oil-rig manufacturer National Oilwell Varco and a large, non-index position in Danish wind turbine manufacturer Vestas Wind Systems also boosted returns. Detractors included overwieghted stakes in independent U.S. oil refinery Valero Energy, West Coast oil and gas refiner Tesoro, and oil and gas E&P company Plains Exploration & Production. I reduced the Plains position substantially. Underweighting oil and gas E&P company Apache and integrated oil and gas company Occidental Petroleum also hurt results.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Energy Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 11.9 | 16.0 |
Valero Energy Corp. | 6.1 | 7.0 |
Range Resources Corp. | 5.8 | 3.7 |
National Oilwell Varco, Inc. | 5.4 | 6.0 |
Schlumberger Ltd. (NY Shares) | 4.5 | 7.6 |
CONSOL Energy, Inc. | 3.9 | 1.1 |
Ultra Petroleum Corp. | 3.8 | 3.1 |
Peabody Energy Corp. | 3.5 | 1.1 |
Cabot Oil & Gas Corp. | 3.4 | 2.7 |
Transocean, Inc. | 3.2 | 2.2 |
| 51.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Oil, Gas & Consumable Fuels | 68.2% |
|
| Energy Equipment & Services | 25.9% |
|
| Electrical Equipment | 3.1% |
|
| Construction & Engineering | 0.7% |
|
| Chemicals | 0.5% |
|
| All Others* | 1.6% |
|
As of August 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 64.2% |
|
| Energy Equipment & Services | 31.4% |
|
| Electrical Equipment | 1.5% |
|
| Construction & Engineering | 1.0% |
|
| Industrial Conglomerates | 0.4% |
|
| All Others* | 1.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Energy Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
CHEMICALS - 0.5% | |||
Specialty Chemicals - 0.5% | |||
Albemarle Corp. | 414,846 | $ 15,739,257 | |
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Fuel Tech, Inc. (a)(d) | 45,359 | 910,355 | |
CONSTRUCTION & ENGINEERING - 0.7% | |||
Construction & Engineering - 0.7% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 69,400 | 3,228,488 | |
Jacobs Engineering Group, Inc. (a) | 240,300 | 19,293,687 | |
| 22,522,175 | ||
ELECTRICAL EQUIPMENT - 3.1% | |||
Electrical Components & Equipment - 1.5% | |||
Energy Conversion Devices, Inc. (a) | 46 | 1,222 | |
Evergreen Solar, Inc. (a) | 41,500 | 398,815 | |
First Solar, Inc. (a) | 14,700 | 3,016,440 | |
JA Solar Holdings Co. Ltd. ADR | 857,700 | 12,256,533 | |
Q-Cells AG (a) | 41,500 | 3,334,065 | |
Renewable Energy Corp. AS (a) | 166,700 | 4,076,990 | |
Sunpower Corp. Class A (a) | 361,060 | 23,728,863 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 52,700 | 1,958,859 | |
| 48,771,787 | ||
Heavy Electrical Equipment - 1.6% | |||
Suzlon Energy Ltd. | 666,754 | 4,638,821 | |
Vestas Wind Systems AS (a) | 443,400 | 44,946,411 | |
| 49,585,232 | ||
TOTAL ELECTRICAL EQUIPMENT | 98,357,019 | ||
ENERGY EQUIPMENT & SERVICES - 25.9% | |||
Oil & Gas Drilling - 9.0% | |||
Atwood Oceanics, Inc. (a) | 265,100 | 24,678,159 | |
Diamond Offshore Drilling, Inc. | 303,400 | 36,659,822 | |
Helmerich & Payne, Inc. | 72,000 | 3,227,760 | |
Nabors Industries Ltd. (a) | 1,495,383 | 47,149,426 | |
Noble Corp. | 907,800 | 44,618,370 | |
Pride International, Inc. (a) | 740,516 | 26,243,887 | |
Transocean, Inc. (a) | 715,851 | 100,584,224 | |
| 283,161,648 | ||
Oil & Gas Equipment & Services - 16.9% | |||
BJ Services Co. | 62,200 | 1,613,468 | |
Cameron International Corp. (a) | 231,800 | 9,846,864 | |
Compagnie Generale de Geophysique SA (a) | 50,100 | 12,221,152 | |
Emer International Group Ltd. (a) | 3,775,000 | 1,566,497 | |
Expro International Group PLC | 469,100 | 11,649,874 | |
Exterran Holdings, Inc. (a) | 206,200 | 14,361,830 | |
FMC Technologies, Inc. (a) | 394,280 | 22,339,905 | |
| |||
Shares | Value | ||
Fugro NV (Certificaten Van Aandelen) unit | 166,467 | $ 12,557,556 | |
Halliburton Co. | 64 | 2,451 | |
NATCO Group, Inc. Class A (a) | 5,099 | 242,967 | |
National Oilwell Varco, Inc. (a) | 2,748,412 | 171,226,068 | |
Oceaneering International, Inc. (a) | 244,719 | 14,683,140 | |
Oil States International, Inc. (a) | 141,600 | 5,969,856 | |
Petroleum Geo-Services ASA | 535,750 | 12,851,353 | |
Saipem SpA | 336,700 | 13,754,766 | |
Schlumberger Ltd. (NY Shares) | 1,629,960 | 140,910,042 | |
Smith International, Inc. | 438,897 | 27,663,678 | |
Superior Energy Services, Inc. (a) | 498,800 | 20,296,172 | |
Tidewater, Inc. | 53,900 | 3,026,485 | |
W-H Energy Services, Inc. (a) | 25,600 | 1,609,472 | |
Weatherford International Ltd. (a) | 519,800 | 35,824,616 | |
| 534,218,212 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 817,379,860 | ||
GAS UTILITIES - 0.3% | |||
Gas Utilities - 0.3% | |||
Questar Corp. | 145,328 | 8,029,372 | |
Zhongyu Gas Holdings Ltd. (a) | 18,872,000 | 2,048,355 | |
| 10,077,727 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
AES Corp. (a) | 119,700 | 2,152,206 | |
Constellation Energy Group, Inc. | 33,400 | 2,950,890 | |
NRG Energy, Inc. (a) | 63,300 | 2,612,391 | |
| 7,715,487 | ||
INDUSTRIAL CONGLOMERATES - 0.2% | |||
Industrial Conglomerates - 0.2% | |||
McDermott International, Inc. (a) | 119,300 | 6,229,846 | |
MULTI-UTILITIES - 0.0% | |||
Multi-Utilities - 0.0% | |||
Sempra Energy | 96 | 5,100 | |
OIL, GAS & CONSUMABLE FUELS - 68.2% | |||
Coal & Consumable Fuels - 9.8% | |||
Alpha Natural Resources, Inc. (a) | 27,700 | 1,122,958 | |
Arch Coal, Inc. | 680,700 | 34,776,963 | |
CONSOL Energy, Inc. | 1,606,310 | 122,047,434 | |
Foundation Coal Holdings, Inc. | 366,400 | 21,166,928 | |
International Coal Group, Inc. (a) | 98,300 | 611,426 | |
Massey Energy Co. | 255,300 | 9,767,778 | |
Natural Resource Partners LP | 13,800 | 442,704 | |
Peabody Energy Corp. | 1,959,800 | 110,963,876 | |
PT Bumi Resources Tbk | 8,082,000 | 6,596,536 | |
| 307,496,603 | ||
Integrated Oil & Gas - 21.2% | |||
ConocoPhillips | 1,073,470 | 88,786,704 | |
Exxon Mobil Corp. | 4,320,510 | 375,927,574 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Integrated Oil & Gas - continued | |||
Hess Corp. | 525,500 | $ 48,966,090 | |
Marathon Oil Corp. | 839,300 | 44,617,188 | |
Murphy Oil Corp. | 100 | 8,038 | |
Occidental Petroleum Corp. | 702,200 | 54,329,214 | |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 414,000 | 48,578,760 | |
Suncor Energy, Inc. | 83,000 | 8,561,049 | |
| 669,774,617 | ||
Oil & Gas Exploration & Production - 26.3% | |||
American Oil & Gas, Inc. NV (a) | 244,953 | 1,175,774 | |
Apache Corp. | 128,800 | 14,774,648 | |
Aurora Oil & Gas Corp. (a) | 259,156 | 171,043 | |
Cabot Oil & Gas Corp. | 2,146,757 | 106,801,161 | |
Canadian Natural Resources Ltd. | 135,300 | 10,141,485 | |
Chesapeake Energy Corp. | 1,151,800 | 52,084,396 | |
Concho Resources, Inc. | 406,800 | 9,478,440 | |
EOG Resources, Inc. | 648,147 | 77,123,012 | |
EXCO Resources, Inc. (a) | 18,300 | 317,505 | |
Goodrich Petroleum Corp. (a) | 84,900 | 2,048,637 | |
Kodiak Oil & Gas Corp. (a) | 490,070 | 1,083,055 | |
Newfield Exploration Co. (a) | 63,000 | 3,488,940 | |
Noble Energy, Inc. | 241,900 | 18,723,060 | |
OPTI Canada, Inc. (a) | 455,500 | 8,007,876 | |
Petrohawk Energy Corp. (a) | 2,320,656 | 41,957,460 | |
Plains Exploration & Production Co. (a) | 201,005 | 10,854,270 | |
Quicksilver Resources, Inc. (a) | 1,693,000 | 58,239,200 | |
Range Resources Corp. | 2,971,600 | 181,802,488 | |
Southwestern Energy Co. (a) | 663,800 | 43,299,674 | |
Ultra Petroleum Corp. (a) | 1,529,401 | 120,012,096 | |
Vanguard Natural Resources LLC | 16,400 | 266,664 | |
XTO Energy, Inc. | 1,120,625 | 69,153,769 | |
| 831,004,653 | ||
Oil & Gas Refining & Marketing - 8.6% | |||
Frontier Oil Corp. | 475,900 | 16,994,389 | |
Holly Corp. | 74,800 | 3,993,572 | |
Petroplus Holdings AG (a) | 86,629 | 5,751,667 | |
Sunoco, Inc. | 195,424 | 11,936,498 | |
Tesoro Corp. | 968,400 | 35,966,376 | |
Valero Energy Corp. | 3,313,399 | 191,415,060 | |
Western Refining, Inc. | 268,849 | 5,355,472 | |
| 271,413,034 | ||
| |||
Shares | Value | ||
Oil & Gas Storage & Transport - 2.3% | |||
Copano Energy LLC | 4,900 | $ 178,605 | |
El Paso Pipeline Partners LP | 223,800 | 5,245,872 | |
Energy Transfer Equity LP | 174,225 | 5,794,724 | |
Williams Companies, Inc. | 1,652,600 | 59,526,652 | |
| 70,745,853 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,150,434,760 | ||
TOTAL COMMON STOCKS (Cost $2,062,015,564) | 3,129,371,586 | ||
Money Market Funds - 1.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 35,084,449 | 35,084,449 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 399,000 | 399,000 | |
TOTAL MONEY MARKET FUNDS (Cost $35,483,449) | 35,483,449 | ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $2,097,499,013) | 3,164,855,035 | ||
NET OTHER ASSETS - (0.3)% | (9,003,238) | ||
NET ASSETS - 100% | $ 3,155,851,797 | ||
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. |
(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 | $ 977,592 |
Fidelity Securities Lending Cash Central Fund | 111,311 |
Total | $ 1,088,903 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 82.8% |
Canada | 4.7% |
Netherlands Antilles | 4.5% |
Cayman Islands | 2.0% |
Brazil | 1.5% |
Denmark | 1.4% |
Others (individually less than 1%) | 3.1% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $381,330) - See accompanying schedule: Unaffiliated issuers (cost $2,062,015,564) | $ 3,129,371,586 |
|
Fidelity Central Funds (cost $35,483,449) | 35,483,449 |
|
Total Investments (cost $2,097,499,013) |
| $ 3,164,855,035 |
Receivable for investments sold | 12,628,314 | |
Receivable for fund shares sold | 9,546,576 | |
Dividends receivable | 4,167,283 | |
Distributions receivable from Fidelity Central Funds | 55,454 | |
Prepaid expenses | 7,780 | |
Other receivables | 16,512 | |
Total assets | 3,191,276,954 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 29,243,335 | |
Payable for fund shares redeemed | 3,540,136 | |
Accrued management fee | 1,409,327 | |
Other affiliated payables | 653,559 | |
Other payables and accrued expenses | 179,800 | |
Collateral on securities loaned, at value | 399,000 | |
Total liabilities | 35,425,157 | |
|
|
|
Net Assets | $ 3,155,851,797 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,011,326,427 | |
Undistributed net investment income | 446,148 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 76,783,932 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,067,295,290 | |
Net Assets, for 48,939,643 shares outstanding | $ 3,155,851,797 | |
Net Asset Value, offering price and redemption price per share ($3,155,851,797 ÷ 48,939,643 shares) | $ 64.48 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 22,449,395 |
Interest |
| 3,972 |
Income from Fidelity Central Funds (including $111,311 from security lending) |
| 1,088,903 |
Total income |
| 23,542,270 |
|
|
|
Expenses | ||
Management fee | $ 15,245,508 | |
Transfer agent fees | 6,463,848 | |
Accounting and security lending fees | 813,377 | |
Custodian fees and expenses | 102,342 | |
Independent trustees' compensation | 10,217 | |
Registration fees | 124,840 | |
Audit | 45,147 | |
Legal | 19,632 | |
Interest | 30,824 | |
Miscellaneous | 132,013 | |
Total expenses before reductions | 22,987,748 | |
Expense reductions | (76,635) | 22,911,113 |
Net investment income (loss) | 631,157 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $14,693) | 227,482,953 | |
Foreign currency transactions | 65,156 | |
Total net realized gain (loss) |
| 227,548,109 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60,693) | 617,612,253 | |
Assets and liabilities in foreign currencies | (39) | |
Total change in net unrealized appreciation (depreciation) |
| 617,612,214 |
Net gain (loss) | 845,160,323 | |
Net increase (decrease) in net assets resulting from operations | $ 845,791,480 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 631,157 | $ 9,197,808 |
Net realized gain (loss) | 227,548,109 | 190,155,380 |
Change in net unrealized appreciation (depreciation) | 617,612,214 | (47,750,583) |
Net increase (decrease) in net assets resulting from operations | 845,791,480 | 151,602,605 |
Distributions to shareholders from net investment income | (2,129,374) | (4,748,680) |
Distributions to shareholders from net realized gain | (176,432,494) | (226,752,869) |
Total distributions | (178,561,868) | (231,501,549) |
Share transactions | 1,244,851,803 | 1,231,553,047 |
Reinvestment of distributions | 169,542,081 | 222,569,462 |
Cost of shares redeemed | (1,071,446,589) | (1,777,274,000) |
Net increase (decrease) in net assets resulting from share transactions | 342,947,295 | (323,151,491) |
Redemption fees | 277,550 | 648,583 |
Total increase (decrease) in net assets | 1,010,454,457 | (402,401,852) |
|
|
|
Net Assets | ||
Beginning of period | 2,145,397,340 | 2,547,799,192 |
End of period (including undistributed net investment income of $446,148 and undistributed net investment income of $4,942,151, respectively) | $ 3,155,851,797 | $ 2,145,397,340 |
Other Information Shares | ||
Sold | 20,488,134 | 24,389,971 |
Issued in reinvestment of distributions | 2,752,295 | 4,357,368 |
Redeemed | (18,263,322) | (36,564,806) |
Net increase (decrease) | 4,977,107 | (7,817,467) |
Financial Highlights
|
|
|
| ||
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 48.80 | $ 49.20 | $ 38.71 | $ 26.52 | $ 20.63 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | .18 | .12 | .19 | .13 |
Net realized and unrealized gain (loss) | 19.61 | 4.13 | 12.87 | 12.43 | 5.89 |
Total from investment operations | 19.62 | 4.31 | 12.99 | 12.62 | 6.02 |
Distributions from net investment income | (.05) | (.10) | (.09) | (.17) | (.14) |
Distributions from net realized gain | (3.90) | (4.62) | (2.44) | (.28) | - |
Total distributions | (3.95) | (4.72) | (2.53) | (.45) | (.14) |
Redemption fees added to paid in capital C | .01 | .01 | .03 | .02 | .01 |
Net asset value, end of period | $ 64.48 | $ 48.80 | $ 49.20 | $ 38.71 | $ 26.52 |
Total Return A, B | 40.72% | 8.57% | 34.39% | 48.07% | 29.34% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .84% | .89% | .94% | .97% | 1.18% |
Expenses net of fee waivers, if any | .84% | .89% | .94% | .97% | 1.18% |
Expenses net of all reductions | .84% | .89% | .89% | .93% | 1.17% |
Net investment income (loss) | .02% | .36% | .27% | .62% | .59% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,155,852 | $ 2,145,397 | $ 2,547,799 | $ 1,148,860 | $ 286,847 |
Portfolio turnover rate E | 55% | 102% | 128% | 91% | 33% |
A Total 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. FExpense 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Energy Service Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Energy Service Portfolio | 42.91% | 27.72% | 14.33% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Energy Service Portfolio on February 28, 1998. 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
Select Energy Service Portfolio
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Select Energy Service Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's 42.91% return strongly outpaced the S&P 500® and the 36.11% gain of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Energy Equipment & Services Index. With stock performance among energy services companies more varied over the past 12 months than in prior periods, security selection played a key role in the fund's outperformance of the MSCI index. Beneficial subsector weightings also helped propel its return past that of the MSCI benchmark. Two of the fund's top performers were overweighted positions in drilling equipment manufacturer National Oilwell Varco and offshore rig owner Diamond Offshore Drilling. Both companies benefited from their exposure to international and deepwater oil exploration and a shortage of deepwater drilling equipment. A non-index position in Danish company Vestas Wind Systems also contributed, as did underweightings in two laggards: gas-well stimulation service provider BJ Services and oil-services equipment maker Baker Hughes. Missteps included faltering out-of-benchmark holdings JA Solar, based in China, and French oil and gas equipment/services company Geophysique. Underweightings in offshore rig company Transocean, oil and gas equipment maker Weatherford International and land rig company Helmerich & Payne also hurt as all three performed 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
Select Energy Service Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. (NY Shares) | 21.4 | 24.1 |
Transocean, Inc. | 9.7 | 4.7 |
National Oilwell Varco, Inc. | 9.1 | 9.4 |
Weatherford International Ltd. | 6.3 | 3.6 |
Nabors Industries Ltd. | 4.8 | 1.2 |
Noble Corp. | 4.8 | 3.7 |
Halliburton Co. | 4.4 | 4.3 |
Smith International, Inc. | 3.1 | 4.7 |
Diamond Offshore Drilling, Inc. | 2.7 | 4.1 |
Hercules Offshore, Inc. | 1.8 | 0.3 |
| 68.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Energy Equipment & Services | 95.0% |
|
| Electrical Equipment | 3.7% |
|
| Industrial Conglomerates | 0.3% |
|
| Machinery | 0.3% |
|
| Independent Power Producers & Energy Traders | 0.0% |
|
| All Others* | 0.7% |
|
As of August 31, 2007 | |||
| Energy Equipment & Services | 94.6% |
|
| Electrical Equipment | 2.0% |
|
| Industrial Conglomerates | 1.2% |
|
| Independent Power Producers & Energy Traders | 0.0% |
|
| All Others* | 2.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Energy Service Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
ELECTRICAL EQUIPMENT - 3.7% | |||
Electrical Components & Equipment - 2.3% | |||
First Solar, Inc. (a) | 31,000 | $ 6,361,200 | |
JA Solar Holdings Co. Ltd. ADR | 577,200 | 8,248,188 | |
Q-Cells AG (a) | 71,000 | 5,704,062 | |
Renewable Energy Corp. AS (a) | 110,900 | 2,712,287 | |
SolarWorld AG | 104,300 | 4,729,466 | |
Sunpower Corp. Class A (a)(d) | 264,100 | 17,356,652 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 153,800 | 5,716,746 | |
| 50,828,601 | ||
Heavy Electrical Equipment - 1.4% | |||
Gamesa Corporacion Tecnologica, SA | 119,300 | 4,858,847 | |
Suzlon Energy Ltd. | 750,000 | 5,217,990 | |
Vestas Wind Systems AS (a) | 211,400 | 21,429,119 | |
| 31,505,956 | ||
TOTAL ELECTRICAL EQUIPMENT | 82,334,557 | ||
ENERGY EQUIPMENT & SERVICES - 95.0% | |||
Oil & Gas Drilling - 31.5% | |||
Atwood Oceanics, Inc. (a) | 365,600 | 34,033,704 | |
Bronco Drilling Co., Inc. (a) | 492,600 | 7,788,006 | |
Diamond Offshore Drilling, Inc. | 506,500 | 61,200,395 | |
ENSCO International, Inc. | 4,200 | 251,328 | |
Grey Wolf, Inc. (a) | 2,590,400 | 16,060,480 | |
Helmerich & Payne, Inc. | 433,600 | 19,438,288 | |
Hercules Offshore, Inc. (a)(d) | 1,635,531 | 41,444,356 | |
Nabors Industries Ltd. (a) | 3,463,100 | 109,191,543 | |
Noble Corp. | 2,181,100 | 107,201,065 | |
Parker Drilling Co. (a) | 785,672 | 5,209,005 | |
Patterson-UTI Energy, Inc. | 1,232,200 | 29,240,106 | |
Pioneer Drilling Co. (a) | 352,600 | 4,728,366 | |
Pride International, Inc. (a)(d) | 1,052,986 | 37,317,824 | |
Rowan Companies, Inc. | 307,300 | 12,387,263 | |
Transocean, Inc. (a) | 1,552,787 | 218,182,101 | |
Unit Corp. (a) | 144,400 | 7,963,660 | |
| 711,637,490 | ||
Oil & Gas Equipment & Services - 63.5% | |||
Baker Hughes, Inc. | 936 | 62,983 | |
Basic Energy Services, Inc. (a) | 11,000 | 232,760 | |
BJ Services Co. (d) | 1,228,600 | 31,869,884 | |
Bristow Group, Inc. (a) | 22,400 | 1,181,824 | |
Cal Dive International, Inc. (a) | 62 | 646 | |
Cameron International Corp. (a)(d) | 968,300 | 41,133,384 | |
Carbo Ceramics, Inc. | 100 | 3,694 | |
Compagnie Generale de Geophysique SA (a) | 50,300 | 12,269,939 | |
Complete Production Services, Inc. (a) | 118,500 | 2,301,270 | |
Core Laboratories NV (a) | 54,000 | 6,566,400 | |
Dresser-Rand Group, Inc. (a) | 701,800 | 23,910,326 | |
| |||
Shares | Value | ||
Dril-Quip, Inc. (a) | 280,600 | $ 13,126,468 | |
Emer International Group Ltd. (a) | 2,922,000 | 1,212,531 | |
Expro International Group PLC | 714,800 | 17,751,716 | |
Exterran Holdings, Inc. (a) | 414,513 | 28,870,830 | |
FMC Technologies, Inc. (a)(d) | 671,000 | 38,018,860 | |
Fugro NV (Certificaten Van Aandelen) unit | 246,400 | 18,587,358 | |
Gulfmark Offshore, Inc. (a) | 100 | 5,066 | |
Halliburton Co. | 2,563,234 | 98,171,862 | |
Helix Energy Solutions Group, Inc. (a) | 62,300 | 2,194,206 | |
Hornbeck Offshore Services, Inc. (a) | 116,500 | 5,234,345 | |
ION Geophysical Corp. (a) | 183,700 | 2,441,373 | |
Lufkin Industries, Inc. | 57,700 | 3,298,132 | |
Matrix Service Co. (a) | 51,200 | 1,041,408 | |
NATCO Group, Inc. Class A (a) | 339,508 | 16,177,556 | |
National Oilwell Varco, Inc. (a)(d) | 3,310,062 | 206,216,863 | |
Newpark Resources, Inc. (a) | 100 | 443 | |
Oceaneering International, Inc. (a) | 482,700 | 28,962,000 | |
Oil States International, Inc. (a)(d) | 455,100 | 19,187,016 | |
Petroleum Geo-Services ASA | 665,800 | 15,970,940 | |
RPC, Inc. (d) | 180,300 | 2,374,551 | |
Saipem SpA | 204,300 | 8,346,001 | |
Schlumberger Ltd. (NY Shares) (d) | 5,596,446 | 483,812,757 | |
SEACOR Holdings, Inc. (a) | 100 | 9,599 | |
Smith International, Inc. (d) | 1,117,956 | 70,464,767 | |
Superior Energy Services, Inc. (a) | 929,600 | 37,825,424 | |
Superior Well Services, Inc. (a) | 94,500 | 2,442,825 | |
T-3 Energy Services, Inc. (a) | 166,900 | 8,239,853 | |
TETRA Technologies, Inc. (a) | 100 | 1,718 | |
Tidewater, Inc. (d) | 262,600 | 14,744,990 | |
Trico Marine Services, Inc. (a) | 59,200 | 2,339,584 | |
W-H Energy Services, Inc. (a) | 279,700 | 17,584,739 | |
Weatherford International Ltd. (a) | 2,075,910 | 143,071,717 | |
Willbros Group, Inc. (a)(d) | 154,300 | 5,286,318 | |
| 1,432,546,926 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 2,144,184,416 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.0% | |||
Independent Power Producers & Energy Traders - 0.0% | |||
Clipper Windpower PLC (a) | 59,800 | 702,271 | |
INDUSTRIAL CONGLOMERATES - 0.3% | |||
Industrial Conglomerates - 0.3% | |||
Keppel Corp. Ltd. | 127,000 | 957,100 | |
McDermott International, Inc. (a) | 111,600 | 5,827,752 | |
| 6,784,852 | ||
MACHINERY - 0.3% | |||
Industrial Machinery - 0.3% | |||
Chart Industries, Inc. (a) | 201,600 | 6,916,896 | |
TOTAL COMMON STOCKS (Cost $1,476,964,783) | 2,240,922,992 | ||
Money Market Funds - 7.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 10,607,625 | $ 10,607,625 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 162,400,300 | 162,400,300 | |
TOTAL MONEY MARKET FUNDS (Cost $173,007,925) | 173,007,925 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $1,649,972,708) | 2,413,930,917 | ||
NET OTHER ASSETS - (7.0)% | (157,825,801) | ||
NET ASSETS - 100% | $ 2,256,105,116 | ||
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. |
(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 | $ 1,103,272 |
Fidelity Securities Lending Cash Central Fund | 1,017,894 |
Total | $ 2,121,166 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 67.1% |
Netherlands Antilles | 21.4% |
Cayman Islands | 5.6% |
Netherlands | 1.1% |
Denmark | 1.0% |
Others (individually less than 1%) | 3.8% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $151,724,330) - See accompanying schedule: Unaffiliated issuers (cost $1,476,964,783) | $ 2,240,922,992 |
|
Fidelity Central Funds (cost 173,007,925) | 173,007,925 |
|
Total Investments (cost $1,649,972,708) |
| $ 2,413,930,917 |
Receivable for investments sold | 68,446,249 | |
Receivable for fund shares sold | 6,013,982 | |
Dividends receivable | 2,478,228 | |
Distributions receivable from Fidelity Central Funds | 96,377 | |
Prepaid expenses | 6,537 | |
Other receivables | 11,299 | |
Total assets | 2,490,983,589 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 67,379,946 | |
Payable for fund shares redeemed | 3,492,436 | |
Accrued management fee | 1,002,300 | |
Other affiliated payables | 470,646 | |
Other payables and accrued expenses | 132,845 | |
Collateral on securities loaned, at value | 162,400,300 | |
Total liabilities | 234,878,473 | |
|
|
|
Net Assets | $ 2,256,105,116 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,383,858,540 | |
Accumulated net investment loss | (1,163) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 108,339,457 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 763,908,282 | |
Net Assets, for 24,359,117 shares outstanding | $ 2,256,105,116 | |
Net Asset Value, offering price and redemption price per share ($2,256,105,116 ÷ 24,359,117 shares) | $ 92.62 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,789,825 |
Interest |
| 15,179 |
Income from Fidelity Central Funds (including $1,017,894 from security lending) |
| 2,121,166 |
Total income |
| 11,926,170 |
|
|
|
Expenses | ||
Management fee | $ 11,109,328 | |
Transfer agent fees | 4,367,843 | |
Accounting and security lending fees | 628,356 | |
Custodian fees and expenses | 84,101 | |
Independent trustees' compensation | 7,528 | |
Registration fees | 188,551 | |
Audit | 42,313 | |
Legal | 11,896 | |
Interest | 66,697 | |
Miscellaneous | 96,614 | |
Total expenses before reductions | 16,603,227 | |
Expense reductions | (47,352) | 16,555,875 |
Net investment income (loss) | (4,629,705) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $37,607) | 125,958,385 | |
Foreign currency transactions | (31,587) | |
Total net realized gain (loss) |
| 125,926,798 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $31,085) | 384,438,780 | |
Assets and liabilities in foreign currencies | (18,828) | |
Total change in net unrealized appreciation (depreciation) |
| 384,419,952 |
Net gain (loss) | 510,346,750 | |
Net increase (decrease) in net assets resulting from operations | $ 505,717,045 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (4,629,705) | $ (4,954,235) |
Net realized gain (loss) | 125,926,798 | 133,809,769 |
Change in net unrealized appreciation (depreciation) | 384,419,952 | (128,699,034) |
Net increase (decrease) in net assets resulting from operations | 505,717,045 | 156,500 |
Distributions to shareholders from net realized gain | (48,414,370) | (92,210,989) |
Share transactions | 1,788,482,418 | 1,150,774,571 |
Reinvestment of distributions | 46,304,551 | 88,457,527 |
Cost of shares redeemed | (1,257,831,911) | (1,661,826,381) |
Net increase (decrease) in net assets resulting from share transactions | 576,955,058 | (422,594,283) |
Redemption fees | 443,438 | 1,976,642 |
Total increase (decrease) in net assets | 1,034,701,171 | (512,672,130) |
|
|
|
Net Assets | ||
Beginning of period | 1,221,403,945 | 1,734,076,075 |
End of period (including accumulated net investment loss of $1,163 and accumulated net investment loss of $826, respectively) | $ 2,256,105,116 | $ 1,221,403,945 |
Other Information Shares | ||
Sold | 19,609,141 | 15,753,549 |
Issued in reinvestment of distributions | 573,388 | 1,218,147 |
Redeemed | (14,103,217) | (24,182,884) |
Net increase (decrease) | 6,079,312 | (7,211,188) |
Financial Highlights
|
|
|
| ||
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.82 | $ 68.03 | $ 49.44 | $ 35.65 | $ 29.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.21) | (.21) F | (.12) G | (.20) | (.24) |
Net realized and unrealized gain (loss) | 28.45 | 3.07 | 18.64 | 13.95 | 6.14 |
Total from investment operations | 28.24 | 2.86 | 18.52 | 13.75 | 5.90 |
Distributions from net realized gain | (2.46) | (4.15) | - | - | - |
Redemption fees added to paid in capital C | .02 | .08 | .07 | .04 | .02 |
Net asset value, end of period | $ 92.62 | $ 66.82 | $ 68.03 | $ 49.44 | $ 35.65 |
Total Return A, B | 42.91% | 3.92% | 37.60% | 38.68% | 19.91% |
Ratios to Average Net AssetsD, H |
|
|
|
|
|
Expenses before reductions | .83% | .88% | .94% | .98% | 1.14% |
Expenses net of fee waivers, if any | .83% | .88% | .94% | .98% | 1.14% |
Expenses net of all reductions | .83% | .88% | .91% | .96% | 1.13% |
Net investment income (loss) | (.23)% | (.30)% F | (.21)% G | (.53)% | (.79)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,256,105 | $ 1,221,404 | $ 1,734,076 | $ 896,252 | $ 463,384 |
Portfolio turnover rate E | 64% | 92% | 58% | 34% | 23% |
A Total 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. C Calculated 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 $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.39)%. GInvestment income per share reflects a special dividend which amounted to $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.34)%. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Natural Gas Portfolio | 38.08% | 31.04% | 18.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Natural Gas Portfolio on February 28, 1998. 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
Select Natural Gas Portfolio
Management's Discussion of Fund Performance
Comments from James McElligott, Portfolio Manager of Select Natural Gas Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
Select Natural Gas gained 38.08% for the year, nicely ahead of the 33.86% return of the Standard & Poor's® Custom Natural Gas Index and the S&P 500®. Most of this excess return versus the MSCI index came from favorable stock selection in oil and gas refining/marketing, oil and gas exploration/production (E&P), and oil and gas drilling. Having minimal exposure to various utilities-related segments of the index helped as well, since these areas did not perform as well as the more pure-play oil and gas segments, which I generally chose to overweight. An overweighting in the E&P and equipment/services industries also helped relative results. Among the top contributors were E&P companies Range Resources and Quicksilver Resources, as well CONSOL Energy, a coal company. On the flip side, an overweighting in the refining/marketing segment hurt the fund's relative return, as record-high oil prices narrowed profit margins for oil refiners. Unproductive stock picks in such areas as independent power/energy trade, coal/consumable fuels, and oil and gas storage/transport also held back our relative results. Among the biggest detractors were independent refiner Valero Energy and Evergreen Energy, a coal conversion company.
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
Select Natural Gas Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Quicksilver Resources, Inc. | 8.2 | 10.6 |
Range Resources Corp. | 7.6 | 10.0 |
Ultra Petroleum Corp. | 6.8 | 4.7 |
Valero Energy Corp. | 6.7 | 9.3 |
Chesapeake Energy Corp. | 6.6 | 3.3 |
EOG Resources, Inc. | 5.5 | 4.0 |
Plains Exploration & Production Co. | 5.5 | 4.0 |
Southwestern Energy Co. | 4.8 | 1.0 |
XTO Energy, Inc. | 4.5 | 4.1 |
Transocean, Inc. | 4.3 | 1.9 |
| 60.5 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Oil, Gas & Consumable Fuels | 76.2% |
|
| Energy Equipment & Services | 15.2% |
|
| Independent Power Producers & Energy Traders | 3.1% |
|
| Electric Utilities | 1.7% |
|
| Electrical Equipment | 1.4% |
|
| All Others* | 2.4% |
|
As of August 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 74.4% |
|
| Energy Equipment & Services | 16.7% |
|
| Independent Power Producers & Energy Traders | 4.8% |
|
| Electric Utilities | 2.9% |
|
| Electrical Equipment | 0.5% |
|
| All Others* | 0.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Natural Gas Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Specialized Finance - 0.2% | |||
Climate Exchange PLC (a) | 169,100 | $ 4,239,356 | |
ELECTRIC UTILITIES - 1.7% | |||
Electric Utilities - 1.7% | |||
Enernoc, Inc. (d) | 87,500 | 1,293,250 | |
Reliant Energy, Inc. (a)(d) | 1,122,200 | 25,586,160 | |
| 26,879,410 | ||
ELECTRICAL EQUIPMENT - 1.4% | |||
Electrical Components & Equipment - 1.0% | |||
JA Solar Holdings Co. Ltd. ADR | 75,900 | 1,084,611 | |
Orion Energy Systems, Inc. | 30,000 | 270,600 | |
Renewable Energy Corp. AS (a) | 292,700 | 7,158,579 | |
Sunpower Corp. Class A (a) | 10,900 | 716,348 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 182,600 | 6,787,242 | |
| 16,017,380 | ||
Heavy Electrical Equipment - 0.4% | |||
Suzlon Energy Ltd. | 150,000 | 1,043,598 | |
Vestas Wind Systems AS (a) | 47,700 | 4,835,236 | |
| 5,878,834 | ||
TOTAL ELECTRICAL EQUIPMENT | 21,896,214 | ||
ENERGY EQUIPMENT & SERVICES - 15.2% | |||
Oil & Gas Drilling - 11.5% | |||
Atwood Oceanics, Inc. (a) | 273,145 | 25,427,068 | |
Diamond Offshore Drilling, Inc. | 366,300 | 44,260,029 | |
ENSCO International, Inc. | 136,600 | 8,174,144 | |
Helmerich & Payne, Inc. | 64,200 | 2,878,086 | |
Nabors Industries Ltd. (a) | 340,100 | 10,723,353 | |
Pride International, Inc. (a) | 470,500 | 16,674,520 | |
Rowan Companies, Inc. (d) | 182,100 | 7,340,451 | |
Transocean, Inc. (a) | 487,827 | 68,544,572 | |
| 184,022,223 | ||
Oil & Gas Equipment & Services - 3.7% | |||
Baker Hughes, Inc. | 1,100 | 74,019 | |
Cameron International Corp. (a) | 358,600 | 15,233,328 | |
Emer International Group Ltd. (a) | 1,702,000 | 706,272 | |
Expro International Group PLC | 322,100 | 7,999,199 | |
Exterran Holdings, Inc. (a) | 48,300 | 3,364,095 | |
Helix Energy Solutions Group, Inc. (a) | 2,600 | 91,572 | |
National Oilwell Varco, Inc. (a) | 208,456 | 12,986,809 | |
Oceaneering International, Inc. (a) | 44,900 | 2,694,000 | |
Oil States International, Inc. (a) | 80,200 | 3,381,232 | |
Schlumberger Ltd. (NY Shares) | 8,700 | 752,115 | |
Smith International, Inc. | 66,790 | 4,209,774 | |
Weatherford International Ltd. (a) | 112,100 | 7,725,932 | |
| 59,218,347 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 243,240,570 | ||
| |||
Shares | Value | ||
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Questar Corp. | 25,900 | $ 1,430,975 | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.1% | |||
Independent Power Producers & Energy Traders - 3.1% | |||
Clipper Windpower PLC (a) | 406,700 | 4,776,144 | |
Constellation Energy Group, Inc. | 1,300 | 114,855 | |
Dynegy, Inc. Class A (a) | 5,781,600 | 42,783,840 | |
NRG Energy, Inc. (a) | 51,600 | 2,129,532 | |
| 49,804,371 | ||
METALS & MINING - 0.0% | |||
Diversified Metals & Mining - 0.0% | |||
Ivanhoe Mines Ltd. (a) | 50,000 | 651,898 | |
OIL, GAS & CONSUMABLE FUELS - 75.6% | |||
Coal & Consumable Fuels - 3.1% | |||
Arch Coal, Inc. | 37,800 | 1,931,202 | |
CONSOL Energy, Inc. | 200,300 | 15,218,794 | |
Evergreen Energy, Inc. (a)(d)(e) | 5,399,315 | 11,608,527 | |
International Coal Group, Inc. (a)(d) | 476,800 | 2,965,696 | |
Peabody Energy Corp. | 64,600 | 3,657,652 | |
PT Bumi Resources Tbk | 16,479,500 | 13,450,584 | |
Uranium One, Inc. (a) | 157,100 | 828,565 | |
| 49,661,020 | ||
Integrated Oil & Gas - 1.2% | |||
Hess Corp. | 190,200 | 17,722,836 | |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 1,900 | 222,946 | |
Suncor Energy, Inc. | 7,000 | 722,016 | |
| 18,667,798 | ||
Oil & Gas Exploration & Production - 57.7% | |||
Apache Corp. | 134,700 | 15,451,437 | |
Aurora Oil & Gas Corp. (a) | 3,958,153 | 2,612,381 | |
Cabot Oil & Gas Corp. | 731,725 | 36,403,319 | |
Canadian Natural Resources Ltd. | 21,800 | 1,634,031 | |
Chesapeake Energy Corp. (d) | 2,326,900 | 105,222,418 | |
Concho Resources, Inc. | 18,900 | 440,370 | |
Denbury Resources, Inc. (a) | 641,000 | 20,441,490 | |
EOG Resources, Inc. (d) | 743,700 | 88,492,863 | |
Forest Oil Corp. (a) | 270,763 | 13,356,739 | |
Newfield Exploration Co. (a)(d) | 322,400 | 17,854,512 | |
Noble Energy, Inc. (d) | 226,900 | 17,562,060 | |
Plains Exploration & Production Co. (a) | 1,635,650 | 88,325,100 | |
Quicksilver Gas Services LP | 210,600 | 5,069,142 | |
Quicksilver Resources, Inc. (a)(d) | 3,834,654 | 131,912,100 | |
Range Resources Corp. | 1,997,700 | 122,219,286 | |
Southwestern Energy Co. (a) | 1,186,800 | 77,414,964 | |
Ultra Petroleum Corp. (a)(d) | 1,382,801 | 108,508,394 | |
XTO Energy, Inc. | 1,169,175 | 72,149,789 | |
| 925,070,395 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Refining & Marketing - 11.4% | |||
CVR Energy, Inc. (d) | 285,000 | $ 8,008,500 | |
Frontier Oil Corp. | 221,200 | 7,899,052 | |
Holly Corp. | 143,500 | 7,661,465 | |
Petroplus Holdings AG (a) | 28,564 | 1,896,485 | |
Reliance Industries Ltd. | 112,908 | 6,900,013 | |
Tesoro Corp. | 818,319 | 30,392,368 | |
Valero Energy Corp. | 1,875,000 | 108,318,750 | |
Western Refining, Inc. (d) | 625,000 | 12,450,000 | |
| 183,526,633 | ||
Oil & Gas Storage & Transport - 2.2% | |||
Boardwalk Pipeline Partners, LP | 188,000 | 4,459,360 | |
Copano Energy LLC (d) | 514,003 | 18,735,409 | |
Williams Partners LP | 325,333 | 12,079,614 | |
| 35,274,383 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,212,200,229 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.2% | |||
Real Estate Management & Development - 0.2% | |||
Indiabulls Real Estate Ltd. (a) | 200,000 | 3,130,597 | |
TOTAL COMMON STOCKS (Cost $1,121,124,294) | 1,563,473,620 | ||
Nonconvertible Bonds - 0.6% | ||||
| Principal Amount |
| ||
OIL, GAS & CONSUMABLE FUELS - 0.6% | ||||
Oil & Gas Storage & Transport - 0.6% | ||||
Morgan Stanley 4/15/08 Sr. Notes Exchangeable for Common Stock of Plains All American Pipeline, L.P. (f) | $ 12,000,000 | 9,625,200 | ||
Money Market Funds - 12.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 3.24% (b) | 22,307,924 | 22,307,924 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 177,793,940 | 177,793,940 | |
TOTAL MONEY MARKET FUNDS (Cost $200,101,864) | 200,101,864 | ||
TOTAL INVESTMENT PORTFOLIO - 110.6% (Cost $1,333,227,749) | 1,773,200,684 | ||
NET OTHER ASSETS - (10.6)% | (169,930,712) | ||
NET ASSETS - 100% | $ 1,603,269,972 | ||
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. |
(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 $9,625,200 or 0.6% 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 | $ 923,147 |
Fidelity Securities Lending Cash Central Fund | 995,735 |
Total | $ 1,918,882 |
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, end of period |
Evergreen Energy, Inc. | $ 9,148,390 | $ 30,219,062 | $ 7,032,474 | $ - | $ 11,608,527 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 89.0% |
Canada | 7.1% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 2.9% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $168,855,311) - See accompanying schedule: Unaffiliated issuers (cost $1,099,911,452) | $ 1,561,490,293 |
|
Fidelity Central Funds (cost $200,101,864) | 200,101,864 |
|
Other affiliated issuers (cost $33,214,433) | 11,608,527 |
|
Total Investments (cost $1,333,227,749) |
| $ 1,773,200,684 |
Receivable for fund shares sold | 13,645,735 | |
Dividends receivable | 840,393 | |
Distributions receivable from Fidelity Central Funds | 212,905 | |
Prepaid expenses | 3,455 | |
Other receivables | 3,963 | |
Total assets | 1,787,907,135 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,190,637 | |
Payable for fund shares redeemed | 1,256,061 | |
Accrued management fee | 690,357 | |
Other affiliated payables | 313,032 | |
Other payables and accrued expenses | 393,136 | |
Collateral on securities loaned, at value | 177,793,940 | |
Total liabilities | 184,637,163 | |
|
|
|
Net Assets | $ 1,603,269,972 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,080,200,585 | |
Accumulated net investment loss | (2,473,455) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 85,889,499 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 439,653,343 | |
Net Assets, for 32,122,482 shares outstanding | $ 1,603,269,972 | |
Net Asset Value, offering price and redemption price per share ($1,603,269,972 ÷ 32,122,482 shares) | $ 49.91 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 7,751,601 |
Interest |
| 47,982 |
Income from Fidelity Central Funds (including $995,735 from security lending) |
| 1,918,882 |
Total income |
| 9,718,465 |
|
|
|
Expenses | ||
Management fee | $ 7,228,421 | |
Transfer agent fees | 3,134,956 | |
Accounting and security lending fees | 436,519 | |
Custodian fees and expenses | 64,759 | |
Independent trustees' compensation | 4,656 | |
Registration fees | 79,282 | |
Audit | 40,582 | |
Legal | 9,694 | |
Interest | 8,233 | |
Miscellaneous | 62,754 | |
Total expenses before reductions | 11,069,856 | |
Expense reductions | (61,340) | 11,008,516 |
Net investment income (loss) | (1,290,051) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $445,908) | 159,877,935 | |
Other affiliated issuers | (1,234,615) |
|
Foreign currency transactions | (38,246) | |
Total net realized gain (loss) |
| 158,605,074 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $319,594) | 235,843,454 | |
Assets and liabilities in foreign currencies | 2 | |
Total change in net unrealized appreciation (depreciation) |
| 235,843,456 |
Net gain (loss) | 394,448,530 | |
Net increase (decrease) in net assets resulting from operations | $ 393,158,479 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,290,051) | $ (1,106,497) |
Net realized gain (loss) | 158,605,074 | 143,236,503 |
Change in net unrealized appreciation (depreciation) | 235,843,456 | (35,828,546) |
Net increase (decrease) in net assets resulting from operations | 393,158,479 | 106,301,460 |
Distributions to shareholders from net realized gain | (114,570,067) | (105,118,798) |
Share transactions | 801,203,677 | 573,033,635 |
Reinvestment of distributions | 105,819,959 | 100,548,446 |
Cost of shares redeemed | (608,096,713) | (1,205,228,167) |
Net increase (decrease) in net assets resulting from share transactions | 298,926,923 | (531,646,086) |
Redemption fees | 165,396 | 473,958 |
Total increase (decrease) in net assets | 577,680,731 | (529,989,466) |
|
|
|
Net Assets | ||
Beginning of period | 1,025,589,241 | 1,555,578,707 |
End of period (including accumulated net investment loss of $2,473,455 and undistributed net investment income of $88,807, respectively) | $ 1,603,269,972 | $ 1,025,589,241 |
Other Information Shares | ||
Sold | 17,460,484 | 14,468,811 |
Issued in reinvestment of distributions | 2,363,894 | 2,485,813 |
Redeemed | (13,596,684) | (31,092,157) |
Net increase (decrease) | 6,227,694 | (14,137,533) |
Financial Highlights
|
|
|
| ||
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.61 | $ 38.86 | $ 34.41 | $ 23.00 | $ 17.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | (.03) F | (.09) | .01 | (.09) |
Net realized and unrealized gain (loss) | 14.53 | 4.08 | 8.58 | 11.83 | 5.65 |
Total from investment operations | 14.48 | 4.05 | 8.49 | 11.84 | 5.56 |
Distributions from net investment income | - | - | - | (.02) | - |
Distributions from net realized gain | (4.19) | (3.31) | (4.08) | (.44) | - |
Redemption fees added to paid in capital C | .01 | .01 | .04 | .03 | .02 |
Net asset value, end of period | $ 49.91 | $ 39.61 | $ 38.86 | $ 34.41 | $ 23.00 |
Total Return A, B | 38.08% | 10.43% | 26.28% | 52.01% | 32.03% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .95% | .98% | 1.21% |
Expenses net of fee waivers, if any | .85% | .90% | .95% | .98% | 1.21% |
Expenses net of all reductions | .85% | .89% | .88% | .94% | 1.14% |
Net investment income (loss) | (.10)% | (.09)% F | (.24)% | .02% | (.46)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,603,270 | $ 1,025,589 | $ 1,555,579 | $ 947,538 | $ 224,475 |
Portfolio turnover rate E | 68% | 59% | 148% | 190% | 171% |
A Total 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. C Calculated 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 $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Natural Resources Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Natural Resources Portfolio | 41.62% | 32.42% | 16.90% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Natural Resources Portfolio on February 28, 1998. 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
Select Natural Resources Portfolio
Management's Discussion of Fund Performance
Comments from John Dowd, Portfolio Manager of Select Natural Resources Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's 41.62% return solidly beat the S&P 500® index and the 34.01% gain of the Standard & Poor's® GSSI Natural Resources Index. Strong stock selection and key overweightings in the fertilizer and coal industries were critical to this outperformance of the S&P® GSSI index, as were my choices within oil and gas drilling and natural gas. Rising commodities prices and currency fluctuations also boosted returns. Unfortunately, an underweighting in the gold and metals/mining industries curbed gains slightly. A large, non-index position in fertilizer company Mosaic helped this stock become the fund's leading contributor. Overweighted stakes in U.S. coal company CONSOL Energy, drilling equipment manufacturer National Oilwell Varco, and natural gas producer Range Resources also contributed. An out-of-benchmark position in Brazilian oil company Petrobras boosted returns as well. On the other hand, an outsized stake in Titanium Metals and an out-of-benchmark position in titanium mining company RTI International Metals dampened returns due to airline project delays. Underweightings in diversified mining company Freeport McMoRan Copper & Gold and aluminum company Alcan also detracted, as did an overweighting in oil refiner Valero Energy. Alcan was acquired 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
Select Natural Resources Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
CONSOL Energy, Inc. | 4.0 | 0.8 |
National Oilwell Varco, Inc. | 4.0 | 5.0 |
Schlumberger Ltd. (NY Shares) | 4.0 | 6.4 |
Exxon Mobil Corp. | 4.0 | 7.0 |
Valero Energy Corp. | 4.0 | 3.9 |
Peabody Energy Corp. | 3.5 | 1.4 |
XTO Energy, Inc. | 2.7 | 1.4 |
Transocean, Inc. | 2.6 | 1.5 |
Range Resources Corp. | 2.5 | 2.1 |
EOG Resources, Inc. | 2.4 | 1.1 |
| 33.7 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Oil, Gas & Consumable Fuels | 56.8% |
|
| Energy Equipment & Services | 23.0% |
|
| Metals & Mining | 10.5% |
|
| Chemicals | 3.4% |
|
| Electrical Equipment | 2.6% |
|
| All Others* | 3.7% |
|
As of August 31, 2007 | |||
| Oil, Gas & Consumable Fuels | 48.3% |
|
| Energy Equipment & Services | 26.8% |
|
| Metals & Mining | 10.0% |
|
| Chemicals | 3.1% |
|
| Independent Power Producers & Energy Traders | 2.3% |
|
| All Others* | 9.5% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Natural Resources Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
CHEMICALS - 3.4% | |||
Commodity Chemicals - 0.3% | |||
Calgon Carbon Corp. (a) | 146,700 | $ 2,397,078 | |
Formosa Chemicals & Fibre Corp. | 1,255,830 | 3,051,876 | |
Georgia Gulf Corp. | 20,650 | 125,139 | |
Tokai Carbon Co. Ltd. | 22,000 | 187,403 | |
| 5,761,496 | ||
Fertilizers & Agricultural Chemicals - 2.6% | |||
CF Industries Holdings, Inc. | 109,300 | 13,343,344 | |
Potash Corp. of Saskatchewan, Inc. | 95,700 | 15,206,730 | |
The Mosaic Co. (a) | 313,200 | 34,859,160 | |
| 63,409,234 | ||
Specialty Chemicals - 0.5% | |||
Albemarle Corp. | 309,400 | 11,738,636 | |
Tokuyama Corp. | 120,000 | 893,626 | |
| 12,632,262 | ||
TOTAL CHEMICALS | 81,802,992 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Clean Harbors, Inc. (a) | 7,200 | 442,944 | |
CONSTRUCTION & ENGINEERING - 0.7% | |||
Construction & Engineering - 0.7% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 327,600 | 15,239,952 | |
Jacobs Engineering Group, Inc. (a) | 1,100 | 88,319 | |
Quanta Services, Inc. (a) | 71,790 | 1,714,345 | |
| 17,042,616 | ||
CONTAINERS & PACKAGING - 0.1% | |||
Paper Packaging - 0.1% | |||
Smurfit-Stone Container Corp. (a) | 252,300 | 2,005,785 | |
Temple-Inland, Inc. | 59,900 | 822,427 | |
| 2,828,212 | ||
ELECTRIC UTILITIES - 0.1% | |||
Electric Utilities - 0.1% | |||
PPL Corp. | 33,800 | 1,533,844 | |
Reliant Energy, Inc. (a) | 69,600 | 1,586,880 | |
| 3,120,724 | ||
ELECTRICAL EQUIPMENT - 2.6% | |||
Electrical Components & Equipment - 1.6% | |||
Energy Conversion Devices, Inc. (a) | 100 | 2,657 | |
First Solar, Inc. (a) | 4,100 | 841,320 | |
JA Solar Holdings Co. Ltd. ADR | 724,500 | 10,353,105 | |
Q-Cells AG (a) | 56,900 | 4,571,284 | |
Renewable Energy Corp. AS (a) | 112,800 | 2,758,755 | |
| |||
Shares | Value | ||
Sunpower Corp. Class A (a)(d) | 220,100 | $ 14,464,972 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 172,000 | 6,393,240 | |
| 39,385,333 | ||
Heavy Electrical Equipment - 1.0% | |||
Areva (investment certificates)(non-vtg.) (d) | 900 | 953,222 | |
Suzlon Energy Ltd. | 30,000 | 208,720 | |
Vestas Wind Systems AS (a) | 225,400 | 22,848,266 | |
| 24,010,208 | ||
TOTAL ELECTRICAL EQUIPMENT | 63,395,541 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 34,700 | 3,307,951 | |
ENERGY EQUIPMENT & SERVICES - 23.0% | |||
Oil & Gas Drilling - 7.7% | |||
Atwood Oceanics, Inc. (a) | 195,600 | 18,208,404 | |
Diamond Offshore Drilling, Inc. | 172,400 | 20,831,092 | |
Helmerich & Payne, Inc. | 27,000 | 1,210,410 | |
Hercules Offshore, Inc. (a) | 1,194 | 30,256 | |
Nabors Industries Ltd. (a) | 1,435,800 | 45,270,774 | |
Noble Corp. | 465,900 | 22,898,985 | |
Patterson-UTI Energy, Inc. | 50,500 | 1,198,365 | |
Pride International, Inc. (a) | 389,800 | 13,814,512 | |
Rowan Companies, Inc. | 1,000 | 40,310 | |
Transocean, Inc. (a) | 445,120 | 62,543,811 | |
| 186,046,919 | ||
Oil & Gas Equipment & Services - 15.3% | |||
Baker Hughes, Inc. | 90 | 6,056 | |
BJ Services Co. | 187,200 | 4,855,968 | |
Cameron International Corp. (a) | 250,100 | 10,624,248 | |
Compagnie Generale de Geophysique SA (a)(d) | 84,900 | 20,710,095 | |
Emer International Group Ltd. (a) | 2,704,000 | 1,122,068 | |
Expro International Group PLC | 327,500 | 8,133,306 | |
Exterran Holdings, Inc. (a) | 110,750 | 7,713,738 | |
FMC Technologies, Inc. (a) | 315,400 | 17,870,564 | |
Fugro NV (Certificaten Van Aandelen) unit | 150,800 | 11,375,705 | |
Global Industries Ltd. (a) | 68,300 | 1,257,403 | |
Halliburton Co. | 100 | 3,830 | |
NATCO Group, Inc. Class A (a) | 28,909 | 1,377,514 | |
National Oilwell Varco, Inc. (a) | 1,550,122 | 96,572,601 | |
Oceaneering International, Inc. (a) | 182,300 | 10,938,000 | |
Oil States International, Inc. (a) | 4,400 | 185,504 | |
Petroleum Geo-Services ASA | 392,950 | 9,425,925 | |
Saipem SpA | 252,600 | 10,319,138 | |
Schlumberger Ltd. (NY Shares) | 1,116,352 | 96,508,630 | |
Smith International, Inc. | 594,300 | 37,458,729 | |
Superior Energy Services, Inc. (a) | 52,200 | 2,124,018 | |
Tidewater, Inc. | 76,900 | 4,317,935 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES - CONTINUED | |||
Oil & Gas Equipment & Services - continued | |||
W-H Energy Services, Inc. (a) | 19,500 | $ 1,225,965 | |
Weatherford International Ltd. (a) | 259,990 | 17,918,511 | |
| 372,045,451 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 558,092,370 | ||
FOOD PRODUCTS - 0.0% | |||
Agricultural Products - 0.0% | |||
Archer Daniels Midland Co. | 3,100 | 139,810 | |
GAS UTILITIES - 0.1% | |||
Gas Utilities - 0.1% | |||
Questar Corp. | 29,400 | 1,624,350 | |
Zhongyu Gas Holdings Ltd. (a) | 12,744,000 | 1,383,226 | |
| 3,007,576 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 1.6% | |||
Independent Power Producers & Energy Traders - 1.6% | |||
AES Corp. (a) | 206,200 | 3,707,476 | |
Constellation Energy Group, Inc. | 65,800 | 5,813,430 | |
Dynegy, Inc. Class A (a) | 159,784 | 1,182,402 | |
Mirant Corp. (a) | 375,800 | 13,904,600 | |
NRG Energy, Inc. (a) | 318,770 | 13,155,638 | |
| 37,763,546 | ||
INDUSTRIAL CONGLOMERATES - 0.0% | |||
Industrial Conglomerates - 0.0% | |||
McDermott International, Inc. (a) | 100 | 5,222 | |
MACHINERY - 0.0% | |||
Construction & Farm Machinery & Heavy Trucks - 0.0% | |||
Joy Global, Inc. | 50 | 3,319 | |
Trinity Industries, Inc. | 28,200 | 794,394 | |
| 797,713 | ||
METALS & MINING - 10.5% | |||
Aluminum - 1.0% | |||
Alcoa, Inc. | 654,900 | 24,322,986 | |
Century Aluminum Co. (a) | 1,900 | 125,647 | |
| 24,448,633 | ||
Diversified Metals & Mining - 1.8% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 162,267 | 16,366,250 | |
RTI International Metals, Inc. (a) | 255,138 | 13,999,422 | |
Teck Cominco Ltd. Class B (sub. vtg.) | 3,400 | 135,682 | |
Titanium Metals Corp. (d) | 670,376 | 13,823,153 | |
| 44,324,507 | ||
Gold - 6.9% | |||
Barrick Gold Corp. | 505,400 | 26,295,900 | |
Eldorado Gold Corp. (a) | 1,240,100 | 8,607,167 | |
Gold Fields Ltd. sponsored ADR | 653,000 | 9,266,070 | |
Goldcorp, Inc. | 524,100 | 22,629,957 | |
| |||
Shares | Value | ||
Harmony Gold Mining Co. Ltd. sponsored ADR (a) | 401,100 | $ 4,869,354 | |
IAMGOLD Corp. | 963,200 | 7,791,344 | |
Kinross Gold Corp. (a) | 256,167 | 6,338,770 | |
Lihir Gold Ltd. (a) | 4,167,781 | 16,140,714 | |
Newcrest Mining Ltd. | 690,632 | 24,010,889 | |
Newmont Mining Corp. | 343,400 | 17,571,778 | |
Randgold Resources Ltd. sponsored ADR | 291,600 | 15,058,224 | |
Royal Gold, Inc. | 74,200 | 2,338,042 | |
Yamana Gold, Inc. | 330,000 | 5,939,027 | |
| 166,857,236 | ||
Precious Metals & Minerals - 0.5% | |||
Aquarius Platinum Ltd. (United Kingdom) | 734,500 | 11,020,444 | |
Shore Gold, Inc. (a) | 221,300 | 1,005,245 | |
| 12,025,689 | ||
Steel - 0.3% | |||
Allegheny Technologies, Inc. | 900 | 69,615 | |
ArcelorMittal SA (NY Reg.) Class A | 91,100 | 6,925,422 | |
Hitachi Metals Ltd. | 10,000 | 139,824 | |
| 7,134,861 | ||
TOTAL METALS & MINING | 254,790,926 | ||
OIL, GAS & CONSUMABLE FUELS - 56.8% | |||
Coal & Consumable Fuels - 9.5% | |||
Alpha Natural Resources, Inc. (a) | 16,400 | 664,856 | |
Arch Coal, Inc. | 354,600 | 18,116,514 | |
Cameco Corp. | 242,600 | 9,503,816 | |
CONSOL Energy, Inc. | 1,280,100 | 97,261,996 | |
Foundation Coal Holdings, Inc. | 178,800 | 10,329,276 | |
International Coal Group, Inc. (a) | 218,100 | 1,356,582 | |
Massey Energy Co. | 150,100 | 5,742,826 | |
Natural Resource Partners LP | 39,500 | 1,267,160 | |
Peabody Energy Corp. (d) | 1,512,000 | 85,609,440 | |
USEC, Inc. (a) | 1,600 | 10,208 | |
| 229,862,674 | ||
Integrated Oil & Gas - 15.2% | |||
ConocoPhillips | 670,830 | 55,484,349 | |
Exxon Mobil Corp. | 1,104,415 | 96,095,149 | |
Hess Corp. | 416,400 | 38,800,152 | |
Husky Energy, Inc. (d) | 87,600 | 3,712,128 | |
Marathon Oil Corp. | 733,100 | 38,971,596 | |
MOL Hungarian Oil and Gas PLC Series A (For. Reg.) | 600 | 82,078 | |
OAO Gazprom sponsored ADR | 150,257 | 7,518,860 | |
Occidental Petroleum Corp. | 479,200 | 37,075,704 | |
OMV AG | 61,435 | 4,438,543 | |
Petro-Canada | 28,900 | 1,383,547 | |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 382,600 | 44,894,284 | |
SandRidge Energy, Inc. | 9,400 | 353,816 | |
Suncor Energy, Inc. | 393,700 | 40,608,252 | |
| 369,418,458 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - 22.8% | |||
American Oil & Gas, Inc. NV (a) | 162,600 | $ 780,480 | |
Anadarko Petroleum Corp. | 1,800 | 114,732 | |
Apache Corp. | 141,300 | 16,208,523 | |
Aurora Oil & Gas Corp. (a) | 12,100 | 7,986 | |
Cabot Oil & Gas Corp. | 910,700 | 45,307,325 | |
Canadian Natural Resources Ltd. | 505,100 | 37,860,044 | |
Chesapeake Energy Corp. | 982,100 | 44,410,562 | |
Comstock Resources, Inc. (a) | 1,300 | 47,190 | |
Denbury Resources, Inc. (a) | 127,400 | 4,062,786 | |
Devon Energy Corp. | 800 | 82,176 | |
EnCana Corp. | 262,784 | 20,036,262 | |
EOG Resources, Inc. | 484,200 | 57,614,958 | |
EXCO Resources, Inc. (a) | 3,600 | 62,460 | |
Forest Oil Corp. (a) | 67,378 | 3,323,757 | |
Goodrich Petroleum Corp. (a) | 4,300 | 103,759 | |
Hugoton Royalty Trust | 19,957 | 563,785 | |
Mariner Energy, Inc. (a) | 85,124 | 2,360,489 | |
Newfield Exploration Co. (a) | 276,200 | 15,295,956 | |
Nexen, Inc. | 233,000 | 7,269,041 | |
Noble Energy, Inc. (d) | 176,200 | 13,637,880 | |
OPTI Canada, Inc. (a) | 332,300 | 5,841,969 | |
Penn West Energy Trust | 62,800 | 1,772,861 | |
Petrohawk Energy Corp. (a) | 1,683,540 | 30,438,403 | |
Plains Exploration & Production Co. (a) | 230,143 | 12,427,722 | |
Quicksilver Resources, Inc. (a) | 590,700 | 20,320,080 | |
Range Resources Corp. | 1,005,873 | 61,539,310 | |
Southwestern Energy Co. (a) | 855,700 | 55,817,311 | |
Ultra Petroleum Corp. (a) | 391,300 | 30,705,311 | |
Vanguard Natural Resources LLC | 11,200 | 182,112 | |
XTO Energy, Inc. | 1,071,850 | 66,143,864 | |
| 554,339,094 | ||
Oil & Gas Refining & Marketing - 7.1% | |||
Frontier Oil Corp. | 373,700 | 13,344,827 | |
Holly Corp. | 38,400 | 2,050,176 | |
Neste Oil Oyj | 2,600 | 90,963 | |
Petroplus Holdings AG (a) | 41,984 | 2,787,496 | |
Sunoco, Inc. | 294,600 | 17,994,168 | |
Tesoro Corp. | 970,300 | 36,036,942 | |
Valero Energy Corp. | 1,659,188 | 95,851,291 | |
Western Refining, Inc. | 162,900 | 3,244,968 | |
| 171,400,831 | ||
| |||
Shares | Value | ||
Oil & Gas Storage & Transport - 2.2% | |||
Copano Energy LLC | 3,700 | $ 134,865 | |
El Paso Pipeline Partners LP | 156,400 | 3,666,016 | |
Energy Transfer Equity LP | 130,500 | 4,340,430 | |
Williams Companies, Inc. | 1,296,100 | 46,685,522 | |
| 54,826,833 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,379,847,890 | ||
PAPER & FOREST PRODUCTS - 0.0% | |||
Forest Products - 0.0% | |||
Weyerhaeuser Co. | 100 | 6,120 | |
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.0% | |||
Real Estate Management & Development - 0.0% | |||
Forestar Real Estate Group, Inc. (a) | 19,966 | 486,771 | |
TOTAL COMMON STOCKS (Cost $1,833,852,895) | 2,406,878,924 | ||
Money Market Funds - 3.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 48,154,695 | 48,154,695 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 41,804,686 | 41,804,686 | |
TOTAL MONEY MARKET FUNDS (Cost $89,959,381) | 89,959,381 | ||
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $1,923,812,276) | 2,496,838,305 | ||
NET OTHER ASSETS - (2.8)% | (68,463,338) | ||
NET ASSETS - 100% | $ 2,428,374,967 | ||
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. |
(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 | $ 1,442,101 |
Fidelity Securities Lending Cash Central Fund | 270,088 |
Total | $ 1,712,189 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 73.3% |
Canada | 10.4% |
Netherlands Antilles | 4.0% |
Brazil | 1.8% |
Cayman Islands | 1.6% |
Netherlands | 1.1% |
Australia | 1.0% |
Denmark | 1.0% |
Others (individually less than 1%) | 5.8% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $39,021,804) - See accompanying schedule: Unaffiliated issuers (cost $1,833,852,895) | $ 2,406,878,924 |
|
Fidelity Central Funds (cost $89,959,381) | 89,959,381 |
|
Total Investments (cost $1,923,812,276) |
| $ 2,496,838,305 |
Receivable for investments sold | 17,306,875 | |
Receivable for fund shares sold | 13,383,644 | |
Dividends receivable | 2,369,728 | |
Distributions receivable from Fidelity Central Funds | 83,658 | |
Prepaid expenses | 5,190 | |
Other receivables | 33,477 | |
Total assets | 2,530,020,877 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 56,032,016 | |
Payable for fund shares redeemed | 2,156,276 | |
Accrued management fee | 1,063,245 | |
Other affiliated payables | 494,095 | |
Other payables and accrued expenses | 95,592 | |
Collateral on securities loaned, at value | 41,804,686 | |
Total liabilities | 101,645,910 | |
|
|
|
Net Assets | $ 2,428,374,967 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,817,363,438 | |
Undistributed net investment income | 700,062 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 37,283,859 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 573,027,608 | |
Net Assets, for 62,272,902 shares outstanding | $ 2,428,374,967 | |
Net Asset Value, offering price and redemption price per share ($2,428,374,967 ÷ 62,272,902 shares) | $ 39.00 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 14,363,079 |
Interest |
| 5,331 |
Income from Fidelity Central Funds (including $270,088 from security lending) |
| 1,712,189 |
Total income |
| 16,080,599 |
|
|
|
Expenses | ||
Management fee | $ 9,585,884 | |
Transfer agent fees | 4,102,958 | |
Accounting and security lending fees | 539,575 | |
Custodian fees and expenses | 85,051 | |
Independent trustees' compensation | 5,991 | |
Registration fees | 148,173 | |
Audit | 41,050 | |
Legal | 7,435 | |
Interest | 25,218 | |
Miscellaneous | 85,801 | |
Total expenses before reductions | 14,627,136 | |
Expense reductions | (140,770) | 14,486,366 |
Net investment income (loss) | 1,594,233 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 87,968,637 | |
Foreign currency transactions | 59,430 | |
Total net realized gain (loss) |
| 88,028,067 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 394,029,938 | |
Assets and liabilities in foreign currencies | 1,792 | |
Total change in net unrealized appreciation (depreciation) |
| 394,031,730 |
Net gain (loss) | 482,059,797 | |
Net increase (decrease) in net assets resulting from operations | $ 483,654,030 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Natural Resources Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,594,233 | $ 3,327,214 |
Net realized gain (loss) | 88,028,067 | 45,326,211 |
Change in net unrealized appreciation (depreciation) | 394,031,730 | 27,988,507 |
Net increase (decrease) in net assets resulting from operations | 483,654,030 | 76,641,932 |
Distributions to shareholders from net investment income | (1,264,149) | (2,640,805) |
Distributions to shareholders from net realized gain | (70,917,949) | (34,829,928) |
Total distributions | (72,182,098) | (37,470,733) |
Share transactions | 1,775,253,829 | 1,116,394,207 |
Reinvestment of distributions | 69,411,696 | 36,219,564 |
Cost of shares redeemed | (786,519,744) | (1,114,690,019) |
Net increase (decrease) in net assets resulting from share transactions | 1,058,145,781 | 37,923,752 |
Redemption fees | 314,569 | 508,195 |
Total increase (decrease) in net assets | 1,469,932,282 | 77,603,146 |
|
|
|
Net Assets | ||
Beginning of period | 958,442,685 | 880,839,539 |
End of period (including undistributed net investment income of $700,062 and undistributed net investment income of $907,896, respectively) | $ 2,428,374,967 | $ 958,442,685 |
Other Information Shares | ||
Sold | 49,318,162 | 40,071,811 |
Issued in reinvestment of distributions | 1,934,801 | 1,283,333 |
Redeemed | (22,315,817) | (42,071,305) |
Net increase (decrease) | 28,937,146 | (716,161) |
Financial Highlights
|
|
|
| ||
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 28.75 | $ 25.87 | $ 20.07 | $ 14.90 | $ 11.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .03 | .08 | .05 | .09 | .03 |
Net realized and unrealized gain (loss) | 11.74 | 3.81 | 6.72 | 5.42 | 3.82 |
Total from investment operations | 11.77 | 3.89 | 6.77 | 5.51 | 3.85 |
Distributions from net investment income | (.03) | (.07) | (.04) | (.07) | - |
Distributions from net realized gain | (1.50) | (.95) | (.95) | (.28) | - |
Total distributions | (1.53) | (1.02) | (.99) | (.35) | - |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 39.00 | $ 28.75 | $ 25.87 | $ 20.07 | $ 14.90 |
Total Return A, B | 41.62% | 15.18% | 34.50% | 37.51% | 34.96% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .85% | .93% | .99% | 1.04% | 1.59% |
Expenses net of fee waivers, if any | .85% | .93% | .99% | 1.04% | 1.59% |
Expenses net of all reductions | .85% | .92% | .93% | 1.00% | 1.59% |
Net investment income (loss) | .09% | .31% | .21% | .55% | .24% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,428,375 | $ 958,443 | $ 880,840 | $ 308,695 | $ 76,778 |
Portfolio turnover rate E | 44% | 116% | 119% | 101% | 32% |
A Total 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. C Calculated 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. FExpense 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 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. GFor the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources 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 are non diversified with the exception of Natural Resources 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. The Natural Resources Portfolio may also invest in certain precious metals. 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 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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as available dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds will claim 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. For the Natural Gas Fund and Natural Resource Fund, certain adjustments have been made to the accounts relating to prior periods. Collectively, 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, passive foreign investment companies (PFIC), partnerships, net operating losses and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for Federal | Unrealized | Unrealized | Net Unrealized |
Energy Portfolio | $ 2,107,195,271 | $ 1,113,603,341 | $ (55,943,577) | $ 1,057,659,764 |
Energy Service Portfolio | 1,654,475,574 | 794,501,920 | (35,046,577) | 759,455,343 |
Natural Gas Portfolio | 1,337,101,207 | 513,732,062 | (77,632,585) | 436,099,477 |
Natural Resources Portfolio | 1,928,198,058 | 646,510,316 | (77,870,069) | 568,640,247 |
| Undistributed | Undistributed |
Energy Portfolio | $ 323,671 | $ 62,351,915 |
Energy Service Portfolio | - | 95,700,582 |
Natural Gas Portfolio | 7,107,462 | 65,782,546 |
Natural Resources Portfolio | 511,746 | 30,465,117 |
The tax character of distributions paid was as follows:
February 29, 2008 |
|
|
|
| Ordinary | Long-term | Total |
Energy Portfolio | $ 2,129,374 | $ 176,432,494 | $ 178,561,868 |
Energy Service Portfolio | - | 48,414,370 | 48,414,370 |
Natural Gas Portfolio | 14,490,433 | 100,079,634 | 114,570,067 |
Natural Resources Portfolio | 1,264,149 | 70,917,949 | 72,182,098 |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
February 28, 2007 |
|
|
|
| Ordinary | Long-term | Total |
Energy Portfolio | $ 78,563,119 | $ 152,938,430 | $ 231,501,549 |
Energy Service Portfolio | 2,760,766 | 89,450,223 | 92,210,989 |
Natural Gas Portfolio | 25,399,488 | 79,719,310 | 105,118,798 |
Natural Resources Portfolio | 13,833,491 | 23,637,242 | 37,470,733 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Energy Portfolio | 1,626,974,900 | 1,478,136,507 |
Energy Service Portfolio | 1,769,199,661 | 1,249,024,152 |
Natural Gas Portfolio | 1,016,368,123 | 865,835,954 |
Natural Resources Portfolio | 1,716,666,158 | 747,899,564 |
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% |
Annual Report
Notes to Financial Statements - continued
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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .24% |
Energy Service Portfolio | .22% |
Natural Gas Portfolio | .24% |
Natural Resources Portfolio | .24% |
Accounting and Security Lending Fees. FSC 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. 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 as follows:
| Amount |
Energy Portfolio | $ 10,143 |
Energy Service Portfolio | 7,933 |
Natural Gas Portfolio | 6,810 |
Natural Resources Portfolio | 7,779 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily | Weighted Average Interest Rate | Interest |
Energy Portfolio | Borrower | $ 15,576,563 | 4.45% | $ 30,824 |
Energy Service Portfolio | Borrower | 15,481,400 | 4.40% | 66,227 |
Natural Gas Portfolio | Borrower | 6,048,400 | 4.90% | 8,233 |
Natural Resources Portfolio | Borrower | 14,364,643 | 4.51% | 25,218 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Energy Portfolio | $ 6,121 |
Energy Service Portfolio | 4,298 |
Natural Gas Portfolio | 2,913 |
Natural Resources Portfolio | 3,693 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash
Annual Report
8. Security Lending - continued
Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Daily | Weighted Average Interest Rate |
Energy Service Portfolio | $ 4,440,000 | 3.81% |
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 and transfer agent, 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 Arrangements | Custody | Transfer Agent |
|
|
|
|
Energy Portfolio | $ 42,456 | $ - | $ 33,643 |
Energy Service Portfolio | 24,147 | - | 22,878 |
Natural Gas Portfolio | 39,134 | - | 21,933 |
Natural Resources Portfolio | 92,092 | 3,519 | 44,922 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
Energy Portfolio | $ 36,056 |
Energy Service Portfolio | 38,619 |
Natural Gas Portfolio | 59,116 |
Natural Resources Portfolio | 11,884 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
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 position of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Energy Portfolio, Select Energy Services Portfolio, Select Natural Gas Portfolio, Select Natural Resources Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Energy Portfolio | 04/14/08 | 04/11/08 | $0.01 | $1.26 |
Select Energy Service Portfolio | 04/14/08 | 04/11/08 | $0.00 | $4.00 |
Select Natural Gas Portfolio | 04/14/08 | 04/11/08 | $0.00 | $2.09 |
Select Natural Resources Portfolio | 04/14/08 | 04/11/08 | $0.01 | $0.48 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Energy Portfolio | $213,707,261 |
Select Energy Service Portfolio | $126,420,075 |
Select Natural Gas Portfolio | $121,073,977 |
Select Natural Resources Portfolio | $83,898,327 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Energy Portfolio | 100% | 0% |
Select Natural Gas Portfolio | 0% | 20% |
Select 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 2007 | December 2007 |
Select Energy Portfolio | 100% | 0% |
Select Natural Gas Portfolio | 0% | 23% |
Select Natural Resources Portfolio | 100% | 100% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. 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
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.)
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Automated line for quickest service
SELNR-UANN-0408
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Fidelity®
Select Portfolios®
Information Technology Sector
Select Communications Equipment Portfolio
Select Computers Portfolio
Select Electronics Portfolio
Select IT Services Portfolio
Select Networking and Infrastructure Portfolio
Select Software and Computer Services Portfolio
Select Technology Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | 3 |
|
Shareholder Expense Example | 4 |
|
Fund Updates* |
|
|
Information Technology Sector |
|
|
Communications Equipment | 6 |
|
Computers | 13 |
|
Electronics | 20 |
|
IT Services | 28 |
|
Networking and Infrastructure | 35 |
|
Software and Computer Services | 43 |
|
Technology | 50 |
|
Notes to Financial Statements | 59 |
|
Report of Independent Registered Public Accounting Firm | 65 |
|
Trustees and Officers | 66 |
|
Distributions | 72 |
|
Proxy Voting Results | 73 |
|
* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Communications Equipment Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 843.10 | $ 4.26 |
HypotheticalA | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
Computers Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 874.30 | $ 4.24 |
HypotheticalA | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Electronics Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 753.70 | $ 3.84 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
IT Services Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 926.90 | $ 5.08 |
HypotheticalA | $ 1,000.00 | $ 1,019.59 | $ 5.32 |
Networking and Infrastructure Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 749.00 | $ 4.31 |
HypotheticalA | $ 1,000.00 | $ 1,019.94 | $ 4.97 |
Software and Computer Services Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 956.60 | $ 4.18 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Technology Portfolio |
|
|
|
Actual | $ 1,000.00 | $ 853.20 | $ 4.10 |
HypotheticalA | $ 1,000.00 | $ 1,020.44 | $ 4.47 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Communications Equipment Portfolio | .93% |
Computers Portfolio | .91% |
Electronics Portfolio | .88% |
IT Services Portfolio | 1.06% |
Networking and Infrastructure Portfolio | .99% |
Software and Computer Services Portfolio | .86% |
Technology Portfolio | .89% |
Annual Report
Select Communications Equipment Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Communications Equipment Portfolio A | -5.52% | 14.22% | 4.58% |
A Prior to October 1, 2006, Select 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 Select Communications Equipment Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500 IndexSM(S&P 500®) performed over the same period.
Annual Report
Select Communications Equipment Portfolio
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Select Communications Equipment Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -5.52%, trailing the S&P 500® but beating the -8.02% loss of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Communications Equipment Index. Versus the MSCI index, stock selection in communications equipment aided the fund's performance, along with rewarding picks in consumer electronics, computer hardware and home entertainment software. Additionally, our foreign holdings were aided significantly by weakness in the U.S. dollar. Among individual holdings, a large position in Canada-based Research In Motion provided a huge boost to performance. The maker of the BlackBerry handheld messaging device continued to develop its core market of business users while rolling out new products aimed at the consumer market, along with pursuing opportunities overseas. A large underweighting in cellular handset maker and index component Motorola also proved timely. Taiwan-based High Tech Computer further boosted our results, as did Tele Atlas, a Dutch provider of digital map data. All the contributors I mentioned except for Motorola were out-of-index positions, and Tele Atlas and Motorola were sold by period end. Conversely, stock picking worked against us in semiconductors and in the Internet software and services group. An underweighted exposure to wireless technology provider QUALCOMM, a major index component whose stock managed a modest gain, detracted significantly. F5 Networks also worked against us, as did Powerwave Technologies, which makes equipment for wireless communications networks. A significant underweighting in major benchmark component Cisco Systems also hurt.
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
Select Communications Equipment Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 15.2 | 10.9 |
Research In Motion Ltd. | 14.3 | 14.9 |
Corning, Inc. | 7.8 | 6.8 |
Comverse Technology, Inc. | 6.7 | 4.3 |
High Tech Computer Corp. | 5.2 | 0.0 |
QUALCOMM, Inc. | 4.9 | 9.7 |
Juniper Networks, Inc. | 4.7 | 4.6 |
Nokia Corp. sponsored ADR | 3.5 | 0.0 |
Powerwave Technologies, Inc. | 2.6 | 4.7 |
Starent Networks Corp. | 2.3 | 0.0 |
| 67.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Communications Equipment | 80.3% |
|
| Computers & Peripherals | 5.3% |
|
| Semiconductors & Semiconductor Equipment | 4.4% |
|
| Software | 3.8% |
|
| Electronic Equipment & Instruments | 1.3% |
|
| All Others* | 4.9% |
|
 |
|
|
|
As of August 31, 2007 | |||
| Communications Equipment | 80.5% |
|
| Software | 8.1% |
|
| Semiconductors & Semiconductor Equipment | 5.2% |
|
| Computers & Peripherals | 1.5% |
|
| Household Durables | 1.5% |
|
| All Others* | 3.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Communications Equipment Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 95.7% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.4% | |||
Diversified Commercial & Professional Services - 0.4% | |||
China Security & Surveillance Technology, Inc. (a)(d) | 64,100 | $ 957,654 | |
COMMUNICATIONS EQUIPMENT - 80.0% | |||
Communications Equipment - 80.0% | |||
Acme Packet, Inc. (a) | 2,500 | 20,050 | |
ADC Telecommunications, Inc. (a) | 384,800 | 5,260,216 | |
Adtran, Inc. | 110,600 | 2,037,252 | |
ADVA AG Optical Networking (a)(d) | 246,763 | 749,172 | |
Airvana, Inc. (d) | 213,000 | 1,013,880 | |
Arris Group, Inc. (a) | 610,233 | 3,508,840 | |
Aruba Networks, Inc. | 4,200 | 23,562 | |
AudioCodes Ltd. (a) | 445,190 | 1,883,154 | |
Ceragon Networks Ltd. (a) | 4,100 | 35,506 | |
Cisco Systems, Inc. (a) | 1,504,931 | 36,675,169 | |
Comtech Group, Inc. (a) | 510,000 | 5,334,600 | |
Comverse Technology, Inc. (a) | 979,710 | 16,135,824 | |
Corning, Inc. (d) | 810,300 | 18,823,269 | |
F5 Networks, Inc. (a) | 106,900 | 2,368,904 | |
Finisar Corp. (a) | 86,500 | 139,265 | |
Foundry Networks, Inc. (a) | 212,100 | 2,517,627 | |
Foxconn International Holdings Ltd. (a) | 80,000 | 125,324 | |
Harris Stratex Networks, Inc. Class A (a) | 481,455 | 4,833,808 | |
Infinera Corp. | 41,874 | 489,088 | |
Ixia (a) | 151,737 | 1,139,545 | |
Juniper Networks, Inc. (a)(d) | 423,859 | 11,367,898 | |
Nokia Corp. sponsored ADR | 237,200 | 8,541,572 | |
Opnext, Inc. | 15,900 | 73,458 | |
Optium Corp. (a) | 900 | 6,174 | |
Polycom, Inc. (a) | 44,200 | 963,560 | |
Powerwave Technologies, Inc. (a)(d) | 2,163,100 | 6,186,466 | |
QUALCOMM, Inc. | 279,900 | 11,859,363 | |
Research In Motion Ltd. (a)(d) | 332,100 | 34,471,980 | |
Riverbed Technology, Inc. (a) | 72,700 | 1,458,362 | |
Sandvine Corp. (U.K.) (a) | 1,762,900 | 5,321,617 | |
Sonus Networks, Inc. (a)(d) | 900,296 | 2,988,983 | |
Starent Networks Corp. | 358,300 | 5,636,059 | |
Symmetricom, Inc. (a) | 262,355 | 897,254 | |
| 192,886,801 | ||
COMPUTERS & PERIPHERALS - 5.3% | |||
Computer Hardware - 5.3% | |||
Compal Electronics, Inc. | 248,865 | 224,297 | |
High Tech Computer Corp. | 612,000 | 12,633,952 | |
NEC Corp. sponsored ADR | 700 | 3,010 | |
| 12,861,259 | ||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 2,805 | |
TOTAL COMPUTERS & PERIPHERALS | 12,864,064 | ||
| |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.2% | |||
Alternative Carriers - 0.2% | |||
Level 3 Communications, Inc. (a)(d) | 223,600 | $ 498,628 | |
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.3% | |||
Electronic Equipment & Instruments - 1.0% | |||
Chi Mei Optoelectronics Corp. | 432,241 | 568,534 | |
HannStar Display Corp. (a) | 1,960,704 | 843,392 | |
Nippon Electric Glass Co. Ltd. | 72,000 | 1,043,876 | |
| 2,455,802 | ||
Electronic Manufacturing Services - 0.3% | |||
Trimble Navigation Ltd. (a) | 27,000 | 738,180 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 3,193,982 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. | 300 | 9,756 | |
INTERNET SOFTWARE & SERVICES - 0.3% | |||
Internet Software & Services - 0.3% | |||
DivX, Inc. (a) | 400 | 3,932 | |
RADVision Ltd. (a) | 112,250 | 834,018 | |
| 837,950 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.4% | |||
Semiconductors - 4.4% | |||
Actel Corp. (a) | 19,449 | 230,471 | |
AMIS Holdings, Inc. (a) | 226,200 | 1,542,684 | |
Applied Micro Circuits Corp. (a) | 106,642 | 792,350 | |
Broadcom Corp. Class A (a) | 40,100 | 758,291 | |
Conexant Systems, Inc. (a) | 432,400 | 229,172 | |
Exar Corp. (a) | 6,701 | 52,670 | |
Hittite Microwave Corp. (a) | 18,600 | 615,846 | |
Ikanos Communications, Inc. (a) | 1,700 | 7,752 | |
Marvell Technology Group Ltd. (a) | 188,000 | 2,126,280 | |
Mindspeed Technologies, Inc. (a) | 440,463 | 255,469 | |
MIPS Technologies, Inc. (a) | 48,602 | 180,313 | |
Pericom Semiconductor Corp. (a) | 58,100 | 774,473 | |
Pixelplus Co. Ltd. sponsored ADR (a) | 123,700 | 70,509 | |
PLX Technology, Inc. (a) | 48,400 | 312,664 | |
PMC-Sierra, Inc. (a) | 98,100 | 469,899 | |
Spreadtrum Communications, Inc. ADR (d) | 270,600 | 2,040,324 | |
Transmeta Corp. (a)(d) | 11,835 | 149,594 | |
| 10,608,761 | ||
SOFTWARE - 3.8% | |||
Application Software - 2.2% | |||
ECtel Ltd. (a) | 2,790 | 7,087 | |
Smith Micro Software, Inc. (a)(d) | 209,300 | 1,071,616 | |
Taleo Corp. Class A (a) | 1,800 | 34,308 | |
Ulticom, Inc. (a) | 608,678 | 4,260,746 | |
| 5,373,757 | ||
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Home Entertainment Software - 1.6% | |||
Ubisoft Entertainment SA (a) | 44,000 | $ 3,697,741 | |
Systems Software - 0.0% | |||
Allot Communications Ltd. (a) | 9,500 | 26,600 | |
TOTAL SOFTWARE | 9,098,098 | ||
TOTAL COMMON STOCKS (Cost $273,194,539) | 230,955,694 | ||
Convertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
COMMUNICATIONS EQUIPMENT - 0.3% | ||||
Communications Equipment - 0.3% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 700,000 | 608,760 | ||
Money Market Funds - 20.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 7,530,032 | $ 7,530,032 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 41,572,551 | 41,572,551 | |
TOTAL MONEY MARKET FUNDS (Cost $49,102,583) | 49,102,583 | ||
TOTAL INVESTMENT PORTFOLIO - 116.4% (Cost $322,997,122) | 280,667,037 | ||
NET OTHER ASSETS - (16.4)% | (39,453,893) | ||
NET ASSETS - 100% | $ 241,213,144 | ||
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. |
(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 | $ 198,124 |
Fidelity Securities Lending Cash Central Fund | 115,373 |
Total | $ 313,497 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 68.8% |
Canada | 16.5% |
Taiwan | 5.9% |
Finland | 3.5% |
France | 1.6% |
Israel | 1.1% |
Cayman Islands | 1.0% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $1,225,995,521 of which $865,500,593, $355,447,951 and $5,046,977 will expire on February 28, 2010, 2011 and February 29, 2016, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $38,519,460) - See accompanying schedule: Unaffiliated issuers (cost $273,894,539) | $ 231,564,454 |
|
Fidelity Central Funds (cost $49,102,583) | 49,102,583 |
|
Total Investments (cost $322,997,122) |
| $ 280,667,037 |
Receivable for investments sold | 656,753 | |
Receivable for fund shares sold | 1,874,763 | |
Dividends receivable | 79,701 | |
Interest receivable | 578 | |
Distributions receivable from Fidelity Central Funds | 22,545 | |
Prepaid expenses | 2,441 | |
Other receivables | 30,003 | |
Total assets | 283,333,821 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,377 | |
Payable for fund shares redeemed | 324,630 | |
Accrued management fee | 112,542 | |
Other affiliated payables | 71,767 | |
Other payables and accrued expenses | 37,810 | |
Collateral on securities loaned, | 41,572,551 | |
Total liabilities | 42,120,677 | |
|
|
|
Net Assets | $ 241,213,144 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,510,655,388 | |
Accumulated net investment loss | (555) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,227,111,604) | |
Net unrealized appreciation (depreciation) on investments | (42,330,085) | |
Net Assets, for 12,370,384 shares outstanding | $ 241,213,144 | |
Net Asset Value, offering price and redemption price per share ($241,213,144 ÷ 12,370,384 shares) | $ 19.50 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 877,618 |
Interest |
| 1,814 |
Income from Fidelity Central Funds (including $115,373 from security lending) |
| 313,497 |
Total income |
| 1,192,929 |
|
|
|
Expenses | ||
Management fee | $ 1,743,341 | |
Transfer agent fees | 938,383 | |
Accounting and security lending fees | 127,365 | |
Custodian fees and expenses | 19,934 | |
Independent trustees' compensation | 1,218 | |
Registration fees | 23,690 | |
Audit | 37,997 | |
Legal | 5,309 | |
Miscellaneous | 27,342 | |
Total expenses before reductions | 2,924,579 | |
Expense reductions | (13,603) | 2,910,976 |
Net investment income (loss) | (1,718,047) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,745,698 | |
Foreign currency transactions | (54,180) | |
Total net realized gain (loss) |
| 2,691,518 |
Change in net unrealized appreciation (depreciation) on investment securities | (11,315,128) | |
Net gain (loss) | (8,623,610) | |
Net increase (decrease) in net assets resulting from operations | $ (10,341,657) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Communications Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,718,047) | $ (2,539,952) |
Net realized gain (loss) | 2,691,518 | 13,976,011 |
Change in net unrealized appreciation (depreciation) | (11,315,128) | (37,736,850) |
Net increase (decrease) in net assets resulting from operations | (10,341,657) | (26,300,791) |
Share transactions | 50,343,117 | 126,757,651 |
Cost of shares redeemed | (120,763,143) | (258,665,244) |
Net increase (decrease) in net assets resulting from share transactions | (70,420,026) | (131,907,593) |
Redemption fees | 7,726 | 48,675 |
Total increase (decrease) in net assets | (80,753,957) | (158,159,709) |
|
|
|
Net Assets | ||
Beginning of period | 321,967,101 | 480,126,810 |
End of period (including accumulated net investment loss of $555 and accumulated net investment loss of $612, respectively) | $ 241,213,144 | $ 321,967,101 |
Other Information Shares | ||
Sold | 2,201,275 | 5,979,086 |
Redeemed | (5,427,281) | (12,536,844) |
Net increase (decrease) | (3,226,006) | (6,557,758) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 20.64 | $ 21.67 | $ 17.67 | $ 20.25 | $ 10.03 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.13) | (.09) | (.11) | (.13) |
Net realized and unrealized gain (loss) | (1.02) | (.90) | 4.09 | (2.48) | 10.34 |
Total from investment operations | (1.14) | (1.03) | 4.00 | (2.59) | 10.21 |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 19.50 | $ 20.64 | $ 21.67 | $ 17.67 | $ 20.25 |
Total Return A, B | (5.52)% | (4.75)% | 22.64% | (12.74)% | 101.89% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .93% | 1.01% | 1.06% | 1.07% | 1.37% |
Expenses net of fee waivers, if any | .93% | 1.01% | 1.06% | 1.07% | 1.37% |
Expenses net of all reductions | .93% | 1.00% | .94% | .89% | 1.23% |
Net investment income (loss) | (.55)% | (.63)% | (.48)% | (.64)% | (.87)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 241,213 | $ 321,967 | $ 480,127 | $ 511,210 | $ 940,061 |
Portfolio turnover rate E | 39% | 122% | 167% | 226% | 205% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Computers Portfolio | 2.47% | 12.48% | 4.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Computers Portfolio on February 28, 1998. 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
Management's Discussion of Fund Performance
Comments from Heather Lawrence, Portfolio Manager of Select Computers Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund returned 2.47%, compared with a gain of 12.36% for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Computers & Peripherals Index and a modest decline for the S&P 500®. The fund underperformed the MSCI index mainly due to unfavorable industry positioning, especially a significant underweighting in computer hardware, where more than 80% of the index is concentrated in a small handful of large-cap stocks. I underweighted the group because the fund's diversification constraints require that I not take such concentrated positions in so few stocks, and not owning large enough stakes in these major index components hurt, as many of them - industry icon International Business Machines (IBM), for example - did well during the period. Choosing instead to overweight computer storage/peripherals, the index's other component, also hurt some, as this group performed weakly, though good stock picking there helped offset some of that pain. Unfavorable security selection in the weak semiconductors group also hurt. Among the biggest detractors were Sun Microsystems, a large multi-product hardware company whose turnaround story had yet to materialize; Dell, the personal computer maker that stumbled after a weak late-period earnings report; disk-drive maker Seagate Technology; and flash-memory maker Spansion. On the upside, the fund's timely ownership of hardware makers Apple and Hewlett-Packard helped, as did our stake in disk-driver manufacturer Western Digital.
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
Select Computers Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Hewlett-Packard Co. | 24.2 | 4.9 |
International Business Machines Corp. | 16.5 | 4.8 |
Western Digital Corp. | 7.8 | 1.7 |
Dell, Inc. | 4.5 | 15.0 |
Nokia Corp. sponsored ADR | 4.0 | 0.0 |
Apple, Inc. | 3.3 | 23.9 |
EMC Corp. | 2.9 | 8.5 |
Sun Microsystems, Inc. | 2.4 | 5.0 |
Network Appliance, Inc. | 2.4 | 4.8 |
VMware, Inc. Class A | 2.1 | 1.1 |
| 70.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Computers & Peripherals | 74.0% |
|
| Communications Equipment | 7.0% |
|
| Semiconductors & Semiconductor Equipment | 6.8% |
|
| Software | 4.8% |
|
| Electronic Equipment & Instruments | 1.7% |
|
| All Others* | 5.7% |
|
 |
|
|
|
As of August 31, 2007 | |||
| Computers & Peripherals | 87.0% |
|
| Electronic Equipment & Instruments | 2.9% |
|
| Semiconductors & Semiconductor Equipment | 1.9% |
|
| Software | 1.5% |
|
| Diversified Telecommunication Services | 1.0% |
|
| All Others* | 5.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Computers Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 95.8% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Office Services & Supplies - 0.5% | |||
Pitney Bowes, Inc. | 56,500 | $ 2,021,570 | |
COMMUNICATIONS EQUIPMENT - 7.0% | |||
Communications Equipment - 7.0% | |||
Cisco Systems, Inc. (a) | 139,200 | 3,392,304 | |
Juniper Networks, Inc. (a) | 280,600 | 7,525,692 | |
Nokia Corp. sponsored ADR | 489,000 | 17,608,890 | |
QUALCOMM, Inc. | 52,000 | 2,203,240 | |
| 30,730,126 | ||
COMPUTERS & PERIPHERALS - 74.0% | |||
Computer Hardware - 54.7% | |||
3PAR, Inc. | 300,200 | 2,461,640 | |
Apple, Inc. (a)(d) | 116,000 | 14,502,320 | |
Dell, Inc. (a) | 989,278 | 19,637,168 | |
Diebold, Inc. (d) | 180,700 | 4,358,484 | |
Hewlett-Packard Co. | 2,214,500 | 105,786,666 | |
High Tech Computer Corp. | 358,000 | 7,390,449 | |
International Business Machines Corp. (d) | 635,050 | 72,306,793 | |
NCR Corp. (a) | 99,300 | 2,200,488 | |
Sun Microsystems, Inc. (a) | 643,625 | 10,555,450 | |
| 239,199,458 | ||
Computer Storage & Peripherals - 19.3% | |||
Brocade Communications Systems, Inc. (a) | 387,800 | 2,982,182 | |
Electronics for Imaging, Inc. (a)(d) | 60,100 | 905,106 | |
EMC Corp. (a) | 821,278 | 12,762,660 | |
Emulex Corp. (a) | 146,000 | 2,172,480 | |
Hutchinson Technology, Inc. (a)(d) | 194,400 | 3,265,920 | |
Intermec, Inc. (a) | 52,500 | 1,157,100 | |
Network Appliance, Inc. (a) | 480,600 | 10,390,572 | |
QLogic Corp. (a) | 207,000 | 3,280,950 | |
Quantum Corp. (a) | 453,200 | 1,133,000 | |
Rackable Systems, Inc. (a) | 123,000 | 1,136,520 | |
SanDisk Corp. (a)(d) | 173,100 | 4,076,505 | |
Seagate Technology (d) | 322,200 | 6,949,854 | |
Western Digital Corp. (a) | 1,107,500 | 34,188,525 | |
| 84,401,374 | ||
TOTAL COMPUTERS & PERIPHERALS | 323,600,832 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.0% | |||
Specialized Finance - 0.0% | |||
MSCI, Inc. Class A | 1,300 | 38,649 | |
| |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.7% | |||
Electronic Equipment & Instruments - 0.8% | |||
AU Optronics Corp. | 1,394,779 | $ 2,660,386 | |
AU Optronics Corp. sponsored ADR | 53,545 | 1,021,639 | |
| 3,682,025 | ||
Technology Distributors - 0.9% | |||
Bell Microproducts, Inc. (a) | 520,232 | 1,742,777 | |
Ingram Micro, Inc. Class A (a) | 128,500 | 1,962,195 | |
| 3,704,972 | ||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 7,386,997 | ||
IT SERVICES - 0.6% | |||
Data Processing & Outsourced Services - 0.6% | |||
Syntel, Inc. | 21,762 | 592,579 | |
The Western Union Co. | 104,000 | 2,163,200 | |
| 2,755,779 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.8% | |||
Semiconductor Equipment - 0.8% | |||
Applied Materials, Inc. | 171,500 | 3,287,655 | |
Semiconductors - 6.0% | |||
Broadcom Corp. Class A (a) | 172,300 | 3,258,193 | |
Marvell Technology Group Ltd. (a) | 180,900 | 2,045,979 | |
Micron Technology, Inc. (a)(d) | 309,600 | 2,328,192 | |
Samsung Electronics Co. Ltd. | 13,810 | 8,095,039 | |
Spansion, Inc. Class A (a) | 3,044,100 | 8,371,275 | |
Xilinx, Inc. | 100,100 | 2,238,236 | |
| 26,336,914 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 29,624,569 | ||
SOFTWARE - 4.8% | |||
Application Software - 0.9% | |||
Informatica Corp. (a) | 103,000 | 1,798,380 | |
Quest Software, Inc. (a) | 155,600 | 2,214,188 | |
| 4,012,568 | ||
Home Entertainment Software - 0.8% | |||
Electronic Arts, Inc. (a) | 70,800 | 3,348,132 | |
Systems Software - 3.1% | |||
McAfee, Inc. (a) | 66,000 | 2,195,820 | |
Oracle Corp. (a) | 118,200 | 2,222,160 | |
VMware, Inc. Class A (d) | 158,000 | 9,269,860 | |
| 13,687,840 | ||
TOTAL SOFTWARE | 21,048,540 | ||
Common Stocks - continued | |||
Shares | Value | ||
SPECIALTY RETAIL - 0.4% | |||
Computer & Electronics Retail - 0.4% | |||
Gamestop Corp. Class A (a) | 37,300 | $ 1,580,028 | |
TOTAL COMMON STOCKS (Cost $464,147,409) | 418,787,090 | ||
Money Market Funds - 9.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 18,474,216 | 18,474,216 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 23,038,425 | 23,038,425 | |
TOTAL MONEY MARKET FUNDS (Cost $41,512,641) | 41,512,641 | ||
TOTAL INVESTMENT PORTFOLIO - 105.3% (Cost $505,660,050) | 460,299,731 | ||
NET OTHER ASSETS - (5.3)% | (23,048,796) | ||
NET ASSETS - 100% | $ 437,250,935 | ||
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. |
(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 | $ 1,036,030 |
Fidelity Securities Lending Cash Central Fund | 336,224 |
Total | $ 1,372,254 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 89.5% |
Finland | 4.0% |
Taiwan | 2.5% |
Korea (South) | 1.9% |
Cayman Islands | 1.6% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $704,786,229 of which $453,006,030 and $251,780,199 will expire on February 28, 2010 and 2011, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $21,952,215) - See accompanying schedule: Unaffiliated issuers (cost $464,147,409) | $ 418,787,090 |
|
Fidelity Central Funds (cost $41,512,641) | 41,512,641 |
|
Total Investments (cost $505,660,050) |
| $ 460,299,731 |
Receivable for investments sold | 48,857,911 | |
Receivable for fund shares sold | 1,760,395 | |
Dividends receivable | 283,730 | |
Distributions receivable from Fidelity Central Funds | 99,291 | |
Prepaid expenses | 1,613 | |
Other receivables | 313,032 | |
Total assets | 511,615,703 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 49,583,789 | |
Payable for fund shares redeemed | 1,357,446 | |
Accrued management fee | 201,920 | |
Other affiliated payables | 133,113 | |
Other payables and accrued expenses | 50,075 | |
Collateral on securities loaned, at value | 23,038,425 | |
Total liabilities | 74,364,768 | |
|
|
|
Net Assets | $ 437,250,935 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,193,137,851 | |
Accumulated net investment loss | (739) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (710,524,042) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (45,362,135) | |
Net Assets, for 10,859,878 shares outstanding | $ 437,250,935 | |
Net Asset Value, offering price and redemption price per share ($437,250,935 ÷ 10,859,878 shares) | $ 40.26 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,960,748 |
Interest |
| 2,815 |
Income from Fidelity Central Funds (including $336,224 from security lending) |
| 1,372,254 |
Total income |
| 3,335,817 |
|
|
|
Expenses | ||
Management fee | $ 2,841,537 | |
Transfer agent fees | 1,477,078 | |
Accounting and security lending fees | 203,693 | |
Custodian fees and expenses | 51,482 | |
Independent trustees' compensation | 2,009 | |
Registration fees | 35,432 | |
Audit | 50,043 | |
Legal | 5,077 | |
Interest | 5,043 | |
Miscellaneous | 25,897 | |
Total expenses before reductions | 4,697,291 | |
Expense reductions | (36,791) | 4,660,500 |
Net investment income (loss) | (1,324,683) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(808)) | 63,095,509 | |
Investment not meeting investment restrictions | (487) | |
Foreign currency transactions | (110,338) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 487 | |
Total net realized gain (loss) |
| 62,985,171 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (54,254,444) | |
Assets and liabilities in foreign currencies | (2,771) | |
Total change in net unrealized appreciation (depreciation) |
| (54,257,215) |
Net gain (loss) | 8,727,956 | |
Net increase (decrease) in net assets resulting from operations | $ 7,403,273 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,324,683) | $ (1,360,221) |
Net realized gain (loss) | 62,985,171 | 30,288,913 |
Change in net unrealized appreciation (depreciation) | (54,257,215) | (13,399,780) |
Net increase (decrease) in net assets resulting from operations | 7,403,273 | 15,528,912 |
Share transactions | 250,889,123 | 239,589,680 |
Cost of shares redeemed | (281,603,085) | (326,372,795) |
Net increase (decrease) in net assets resulting from share transactions | (30,713,962) | (86,783,115) |
Redemption fees | 29,659 | 79,006 |
Total increase (decrease) in net assets | (23,281,030) | (71,175,197) |
|
|
|
Net Assets | ||
Beginning of period | 460,531,965 | 531,707,162 |
End of period (including accumulated net investment loss of $739 and accumulated net investment loss of $689, respectively) | $ 437,250,935 | $ 460,531,965 |
Other Information Shares | ||
Sold | 5,458,006 | 5,986,150 |
Redeemed | (6,319,547) | (8,425,910) |
Net increase (decrease) | (861,541) | (2,439,760) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.29 | $ 37.55 | $ 34.65 | $ 37.50 | $ 22.36 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.10) | (.20) | (.21) F | (.27) |
Net realized and unrealized gain (loss) | 1.09 | 1.83 | 3.10 | (2.64) | 15.40 |
Total from investment operations | .97 | 1.73 | 2.90 | (2.85) | 15.13 |
Redemption fees added to paid in capital C | - I | .01 | - I | - I | .01 |
Net asset value, end of period | $ 40.26 | $ 39.29 | $ 37.55 | $ 34.65 | $ 37.50 |
Total Return A, B | 2.47% | 4.63% | 8.37% | (7.60)% | 67.71% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .92% | 1.02% | 1.04% | 1.05% | 1.23% |
Expenses net of fee waivers, if any | .92% | 1.02% | 1.04% | 1.05% | 1.23% |
Expenses net of all reductions | .91% | 1.00% | .98% | .98% | 1.16% |
Net investment income (loss) | (.26)% | (.28)% | (.56)% | (.63)% F | (.85)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 437,251 | $ 460,532 | $ 531,707 | $ 667,801 | $ 999,708 |
Portfolio turnover rate E | 234% | 214% | 112% | 100% | 138% |
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 $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.69)%. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Electronics Portfolio | -18.95% | 8.49% | 3.92% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Electronics Portfolio on February 28, 1998. 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
Select Electronics Portfolio
Management's Discussion of Fund Performance
Comments from Christopher Lee and Paul Jackson, Co-Portfolio Managers of Select Electronics Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -18.95%, lagging the -12.66% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Semiconductors & Semiconductor Equipment Index. The fund also trailed the S&P 500®. Versus the MSCI index, the bulk of the fund's underperformance was traceable to unfavorable stock selection in the semiconductor segment. Surprising weakness in Asian electronics shares was a further negative, as those markets failed to "decouple" from the United States and resist a U.S. slowdown. At the stock level, the fund was hurt by underweighting Intel, by far the largest index component, which posted a small gain. The maker of semiconductors for the personal computer (PC) market benefited from relatively strong demand for PCs, especially laptops. Another underweighting that hurt was MEMC Electronic Materials, a supplier of silicon wafers for a variety of applications and a producer of polysilicon for solar cells and modules. The share price of chip maker Marvell Technology Group, a detractor we overweighted, declined because of the prospects for slower economic growth and delays in replacing the company's chief financial officer. Chip maker Maxim Integrated Products and Broadcom, a maker of semiconductors for wireless handsets, television set-top boxes and various other applications, further undermined performance. On the positive side, the fund's positioning in computer hardware and home entertainment software was beneficial. Among individual holdings, Finnish handset maker Nokia boosted our results, aided by cost-cutting and new products that were responsive to consumers' needs. Two solar stocks - First Solar and Evergreen Solar - also were high on our list of contributors, along with Japanese video-game maker Nintendo and Taiwan-based High Tech Computer. All five of the contributors I mentioned were out-of-index holdings. Additionally, currency fluctuations helped given the fund's significant foreign exposure.
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
Select Electronics Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 19.5 | 20.9 |
Applied Materials, Inc. | 7.8 | 4.8 |
Texas Instruments, Inc. | 7.2 | 4.3 |
Marvell Technology Group Ltd. | 4.1 | 4.7 |
MEMC Electronic Materials, Inc. | 3.9 | 1.2 |
Broadcom Corp. Class A | 3.6 | 6.0 |
Xilinx, Inc. | 3.2 | 2.2 |
Microchip Technology, Inc. | 2.3 | 0.4 |
Altera Corp. | 2.3 | 2.4 |
Varian Semiconductor Equipment Associates, Inc. | 2.2 | 1.7 |
| 56.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
| Semiconductors & Semiconductor Equipment | 78.9% |
|
| Communications Equipment | 5.4% |
|
| Computers & Peripherals | 3.5% |
|
| Electrical Equipment | 3.5% |
|
| Electronic Equipment & Instruments | 3.0% |
|
| All Others* | 5.7% |
|
 |
|
|
|
As of August 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 82.5% |
|
| Electronic Equipment & Instruments | 4.8% |
|
| Communications Equipment | 2.9% |
|
| Chemicals | 1.7% |
|
| Electrical Equipment | 1.7% |
|
| All Others* | 6.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Electronics Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.9% | |||
Shares | Value | ||
CAPITAL MARKETS - 0.8% | |||
Asset Management & Custody Banks - 0.4% | |||
Harris & Harris Group, Inc. (a)(d) | 691,460 | $ 4,632,782 | |
Diversified Capital Markets - 0.2% | |||
Indochina Capital Vietnam Holdings Ltd. | 341,100 | 2,822,603 | |
Investment Banking & Brokerage - 0.2% | |||
REXCAPITAL Financial Holdings Ltd. (a) | 18,475,000 | 2,450,244 | |
TOTAL CAPITAL MARKETS | 9,905,629 | ||
CHEMICALS - 1.0% | |||
Specialty Chemicals - 1.0% | |||
Nanophase Technologies Corp. (a)(d)(e) | 2,067,471 | 6,595,232 | |
Nitto Denko Corp. | 44,400 | 2,161,753 | |
Wacker Chemie AG | 14,200 | 3,029,027 | |
| 11,786,012 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.9% | |||
Diversified Commercial & Professional Services - 0.9% | |||
Arrowhead Research Corp. (a)(d)(e) | 2,919,200 | 7,122,848 | |
Arrowhead Research Corp. (a)(e)(f) | 1,303,469 | 3,180,464 | |
Arrowhead Research Corp. warrants 5/21/17 (a)(f) | 285,468 | 488,069 | |
| 10,791,381 | ||
COMMUNICATIONS EQUIPMENT - 5.4% | |||
Communications Equipment - 5.4% | |||
Alcatel-Lucent SA sponsored ADR (d) | 740,800 | 4,348,496 | |
China Techfaith Wireless Communication Technology Ltd. sponsored ADR (a)(d) | 1,131,975 | 6,678,653 | |
Cisco Systems, Inc. (a) | 500,000 | 12,185,000 | |
Nokia Corp. sponsored ADR | 677,100 | 24,382,371 | |
QUALCOMM, Inc. | 300,000 | 12,711,000 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 238,300 | 5,123,450 | |
| 65,428,970 | ||
COMPUTERS & PERIPHERALS - 3.5% | |||
Computer Hardware - 1.9% | |||
High Tech Computer Corp. | 1,100,000 | 22,708,084 | |
Computer Storage & Peripherals - 1.6% | |||
ASUSTeK Computer, Inc. | 2,999,618 | 8,281,187 | |
STEC, Inc. (a) | 542,674 | 3,950,667 | |
Synaptics, Inc. (a) | 260,823 | 6,987,448 | |
| 19,219,302 | ||
TOTAL COMPUTERS & PERIPHERALS | 41,927,386 | ||
ELECTRICAL EQUIPMENT - 3.5% | |||
Electrical Components & Equipment - 3.5% | |||
Evergreen Solar, Inc. (a)(d) | 300,000 | 2,883,000 | |
First Solar, Inc. (a) | 70,000 | 14,364,000 | |
JA Solar Holdings Co. Ltd. ADR | 300,000 | 4,287,000 | |
Neo-Neon Holdings Ltd. | 4,000,000 | 2,961,864 | |
| |||
Shares | Value | ||
Q-Cells AG (a)(d) | 60,000 | $ 4,820,334 | |
SolarWorld AG | 175,000 | 7,935,346 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 125,000 | 4,646,250 | |
| 41,897,794 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.0% | |||
Electronic Equipment & Instruments - 1.0% | |||
Ibiden Co. Ltd. | 18,200 | 869,064 | |
Motech Industries, Inc. | 877,427 | 5,920,612 | |
Nidec Corp. | 73,400 | 4,863,876 | |
Universal Display Corp. (a)(d) | 60,000 | 1,022,400 | |
| 12,675,952 | ||
Electronic Manufacturing Services - 2.0% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 3,942,200 | 23,519,639 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 36,195,591 | ||
MACHINERY - 0.1% | |||
Industrial Machinery - 0.1% | |||
NGK Insulators Ltd. | 43,000 | 976,440 | |
MEDIA - 0.1% | |||
Broadcasting & Cable TV - 0.1% | |||
JumpTV, Inc. | 1,431,300 | 1,163,599 | |
PHARMACEUTICALS - 0.0% | |||
Pharmaceuticals - 0.0% | |||
VODone Ltd. (a) | 1,766,000 | 215,918 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 78.9% | |||
Semiconductor Equipment - 19.7% | |||
Applied Materials, Inc. | 4,900,000 | 93,933,000 | |
ASML Holding NV: | 88,400 | 2,128,672 | |
(NY Shares) (a) | 300,000 | 7,224,000 | |
Cymer, Inc. (a) | 200,000 | 5,666,000 | |
FormFactor, Inc. (a) | 800,000 | 14,344,000 | |
Global Unichip Corp. | 400,000 | 2,238,658 | |
Greatek Electronics, Inc. | 2,479,040 | 3,094,049 | |
Lam Research Corp. (a) | 600,000 | 24,144,000 | |
MEMC Electronic Materials, Inc. (a) | 614,500 | 46,874,060 | |
Tessera Technologies, Inc. (a)(d) | 300,000 | 7,068,000 | |
Topco Scientific Co. Ltd. | 1,348,200 | 2,198,648 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 800,000 | 27,024,000 | |
| 235,937,087 | ||
Semiconductors - 59.2% | |||
Advanced Micro Devices, Inc. (a)(d) | 1,100,000 | 7,931,000 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR (d) | 2,708,349 | 12,512,572 | |
Altera Corp. | 1,600,000 | 27,376,000 | |
ARM Holdings PLC sponsored ADR (d) | 3,308,900 | 17,834,971 | |
Atheros Communications, Inc. (a) | 177,939 | 4,327,476 | |
Broadcom Corp. Class A (a) | 2,294,200 | 43,383,322 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Cavium Networks, Inc. | 354,311 | $ 5,038,302 | |
Ceva, Inc. (a) | 121,200 | 1,033,836 | |
Cypress Semiconductor Corp. (a) | 130,500 | 2,837,070 | |
Diodes, Inc. (a)(d) | 300,000 | 6,771,000 | |
Epistar Corp. | 1,999,593 | 5,986,809 | |
Global Mixed-mode Technology, Inc. | 800,000 | 4,478,165 | |
Himax Technologies, Inc. sponsored ADR | 1,339,900 | 7,208,662 | |
Hittite Microwave Corp. (a) | 302,900 | 10,029,019 | |
Infineon Technologies AG sponsored ADR (a) | 662,500 | 5,346,375 | |
Intel Corp. | 11,730,600 | 234,025,471 | |
Intersil Corp. Class A | 602,300 | 14,015,521 | |
Linear Technology Corp. (d) | 98,100 | 2,718,351 | |
Marvell Technology Group Ltd. (a) | 4,356,300 | 49,269,753 | |
Maxim Integrated Products, Inc. | 600,000 | 10,962,000 | |
MediaTek, Inc. | 719,000 | 8,063,955 | |
Microchip Technology, Inc. (d) | 895,800 | 27,572,724 | |
Monolithic Power Systems, Inc. (a) | 550,000 | 9,152,000 | |
National Semiconductor Corp. | 900,000 | 14,823,000 | |
NVIDIA Corp. (a)(d) | 545,350 | 11,665,037 | |
Powertech Technology, Inc. | 214,000 | 709,188 | |
Richtek Technology Corp. | 1,100,500 | 9,710,715 | |
Samsung Electronics Co. Ltd. | 16,000 | 9,378,756 | |
Silicon Laboratories, Inc. (a) | 300,000 | 9,285,000 | |
Soitec SA (a)(d) | 252,600 | 1,564,560 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 1,250,000 | 12,175,000 | |
Texas Instruments, Inc. (d) | 2,887,700 | 86,515,492 | |
Xilinx, Inc. (d) | 1,700,000 | 38,012,000 | |
| 711,713,102 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 947,650,189 | ||
SOFTWARE - 1.7% | |||
Home Entertainment Software - 1.7% | |||
Nintendo Co. Ltd. | 40,000 | 19,968,001 | |
TOTAL COMMON STOCKS (Cost $1,541,564,207) | 1,187,906,910 | ||
Money Market Funds - 7.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 18,043,702 | $ 18,043,702 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 72,222,353 | 72,222,353 | |
TOTAL MONEY MARKET FUNDS (Cost $90,266,055) | 90,266,055 | ||
TOTAL INVESTMENT PORTFOLIO - 106.4% (Cost $1,631,830,262) | 1,278,172,965 | ||
NET OTHER ASSETS - (6.4)% | (76,348,330) | ||
NET ASSETS - 100% | $ 1,201,824,635 | ||
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. |
(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 $3,668,533 or 0.3% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arrowhead Research Corp. | 5/18/07 - 2/22/08 | $ 6,179,515 |
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 | $ 888,360 |
Fidelity Securities Lending Cash Central Fund | 1,106,195 |
Total | $ 1,994,555 |
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, |
Arrowhead Research Corp. | $ - | $ 15,420,666 | $ 991,105 | $ - | $ 7,122,848 |
Arrowhead Research Corp. (restricted) | - | 6,179,515 | - | - | 3,180,464 |
Nanophase Technologies Corp. | - | 13,118,734 | 179,687 | - | 6,595,232 |
Total | $ - | $ 34,718,915 | $ 1,170,792 | $ - | $ 16,898,544 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 72.9% |
Taiwan | 10.2% |
Bermuda | 4.1% |
Japan | 2.4% |
Finland | 2.0% |
Germany | 1.8% |
Cayman Islands | 1.6% |
United Kingdom | 1.5% |
Others (individually less than 1%) | 3.5% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $2,386,596,566 of which $804,312,747, $1,514,779,921 and $67,503,898 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $107,668,803 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $68,269,219) - See accompanying schedule: Unaffiliated issuers (cost $1,508,469,660) | $ 1,171,008,366 |
|
Fidelity Central Funds (cost $90,266,055) | 90,266,055 |
|
Other affiliated issuers (cost $33,094,547) | 16,898,544 |
|
Total Investments (cost $1,631,830,262) |
| $ 1,278,172,965 |
Cash | 49,448 | |
Receivable for investments sold | 27,754,246 | |
Receivable for fund shares sold | 501,093 | |
Dividends receivable | 1,897,652 | |
Distributions receivable from Fidelity Central Funds | 94,633 | |
Prepaid expenses | 4,645 | |
Other receivables | 219,517 | |
Total assets | 1,308,694,199 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 31,670,655 | |
Payable for fund shares redeemed | 1,923,109 | |
Accrued management fee | 571,600 | |
Other affiliated payables | 341,567 | |
Other payables and accrued expenses | 140,280 | |
Collateral on securities loaned, at value | 72,222,353 | |
Total liabilities | 106,869,564 | |
|
|
|
Net Assets | $ 1,201,824,635 | |
Net Assets consist of: |
| |
Paid in capital | $ 4,058,991,215 | |
Distributions in excess of net investment income | (1,850,134) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,501,659,463) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (353,656,983) | |
Net Assets, for 32,333,383 shares outstanding | $ 1,201,824,635 | |
Net Asset Value, offering price and redemption price per share ($1,201,824,635 ÷ 32,333,383 shares) | $ 37.17 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,787,535 |
Interest |
| 81,485 |
Income from Fidelity Central Funds (including $1,106,195 from security lending) |
| 1,994,555 |
Total income |
| 20,863,575 |
|
|
|
Expenses | ||
Management fee | $ 9,587,282 | |
Transfer agent fees | 4,465,492 | |
Accounting and security lending fees | 563,647 | |
Custodian fees and expenses | 173,926 | |
Independent trustees' compensation | 6,540 | |
Appreciation in deferred trustee compensation account | 38 | |
Registration fees | 38,031 | |
Audit | 46,077 | |
Legal | 18,881 | |
Interest | 13,037 | |
Miscellaneous | 79,674 | |
Total expenses before reductions | 14,992,625 | |
Expense reductions | (242,923) | 14,749,702 |
Net investment income (loss) | 6,113,873 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 23,086,961 | |
Other affiliated issuers | (453,575) |
|
Foreign currency transactions | (462,225) | |
Total net realized gain (loss) |
| 22,171,161 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (302,268,419) | |
Assets and liabilities in foreign currencies | 89,757 | |
Total change in net unrealized appreciation (depreciation) |
| (302,178,662) |
Net gain (loss) | (280,007,501) | |
Net increase (decrease) in net assets resulting from operations | $ (273,893,628) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select 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) | $ 6,113,873 | $ 2,440,880 |
Net realized gain (loss) | 22,171,161 | 282,215,582 |
Change in net unrealized appreciation (depreciation) | (302,178,662) | (340,540,474) |
Net increase (decrease) in net assets resulting from operations | (273,893,628) | (55,884,012) |
Distributions to shareholders from net investment income | (5,736,828) | (1,472,341) |
Distributions to shareholders from net realized gain | (4,099,933) | - |
Total distributions | (9,836,761) | (1,472,341) |
Share transactions | 145,805,179 | 286,020,445 |
Reinvestment of distributions | 9,356,072 | 1,396,249 |
Cost of shares redeemed | (613,892,168) | (1,126,630,026) |
Net increase (decrease) in net assets resulting from share transactions | (458,730,917) | (839,213,332) |
Redemption fees | 63,102 | 222,511 |
Total increase (decrease) in net assets | (742,398,204) | (896,347,174) |
|
|
|
Net Assets | ||
Beginning of period | 1,944,222,839 | 2,840,570,013 |
End of period (including distributions in excess of net investment income of $1,850,134 and undistributed net investment income of $471,960, respectively) | $ 1,201,824,635 | $ 1,944,222,839 |
Other Information Shares | ||
Sold | 3,124,320 | 6,638,713 |
Issued in reinvestment of distributions | 199,414 | 31,411 |
Redeemed | (13,126,353) | (25,492,042) |
Net increase (decrease) | (9,802,619) | (18,821,918) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.14 | $ 46.60 | $ 38.93 | $ 43.67 | $ 24.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .17 | .05 | (.07) | (.17) | (.25) |
Net realized and unrealized gain (loss) | (8.85) | (.48) | 7.73 | (4.58) | 19.01 |
Total from investment operations | (8.68) | (.43) | 7.66 | (4.75) | 18.76 |
Distributions from net investment income | (.17) | (.03) | - | - | - |
Distributions from net realized gain | (.12) | - | - | - | - |
Total distributions | (.29) | (.03) | - | - | - |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 37.17 | $ 46.14 | $ 46.60 | $ 38.93 | $ 43.67 |
Total Return A, B | (18.95)% | (.92)% | 19.70% | (10.85)% | 75.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .87% | .91% | .95% | .96% | 1.08% |
Expenses net of fee waivers, if any | .87% | .91% | .95% | .96% | 1.08% |
Expenses net of all reductions | .86% | .89% | .88% | .89% | 1.06% |
Net investment income (loss) | .36% | .11% | (.17)% | (.45)% | (.70)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,201,825 | $ 1,944,223 | $ 2,840,570 | $ 2,797,324 | $ 4,110,073 |
Portfolio turnover rate E | 87% | 97% | 80% | 119% | 50% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 years |
Select IT Services Portfolio A | -2.94% | 14.06% | 8.31% |
A Prior to October 1, 2006, Select 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 Life of Fund
Let's say hypothetically that $10,000 was invested in Select IT Services Portfolio on February 28, 1998. 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
Select IT Services Portfolio
Management's Discussion of Fund Performance
Comments from Jane Liou, who became Portfolio Manager of Select IT Services Portfolio on November 1, 2007
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months that ended February 29, 2008, the fund lost 2.94%, which compared favorably with the 8.56% loss of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market IT Services Index and a modest decline for the S&P 500®. The fund's outperformance of its MSCI index was fueled primarily by strong stock picking within the data processing and outsourced services area, despite an overall underweighting in the space. A number of our holdings benefited from strong buyout activity during the first half of the period, including First Data and an out-of-index position in Authorize.Net Holdings. Other processors that performed well were Fiserv, MasterCard and CyberSource. Underweighting weak-performing index-component outsourcers Electronic Data Systems and Convergys - which was sold from the fund - enhanced returns relative to the benchmark as well. Underweighting the IT consulting area overall also paid off, although stakes in Cognizant Technology Solutions and Sapient within that area boosted relative performance. On the flip side, some weak out-of-index picks - USA Technologies and Hypercom in computer storage and peripherals, India-based outsourcer WNS Holdings and Fair Issac in application software - hurt performance. However, I sold these stocks after assuming the fund's management. The largest detractor by far was MoneyGram International, which suffered from liquidity problems arising from subprime mortgage securities in its investment portfolio, while Wright Express, a credit card processor for truck fleets, disappointed on concerns about potential credit defaults. Lastly, overweighting BearingPoint in IT consulting hurt when investors were unreceptive to a new CEO's strategy.
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
Select IT Services Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Accenture Ltd. Class A | 15.6 | 5.2 |
The Western Union Co. | 11.8 | 8.7 |
Fiserv, Inc. | 8.3 | 12.8 |
Paychex, Inc. | 6.7 | 4.3 |
Cognizant Technology Solutions Corp. Class A | 5.9 | 5.3 |
Affiliated Computer Services, Inc. Class A | 4.9 | 2.7 |
Automatic Data Processing, Inc. | 4.4 | 3.9 |
MasterCard, Inc. Class A | 4.2 | 15.1 |
Fidelity National Information Services, Inc. | 3.0 | 3.9 |
CyberSource Corp. | 2.8 | 2.8 |
| 67.6 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | IT Services | 85.5% |
|
 | Software | 5.0% |
|
 | Internet Software & Services | 3.2% |
|
 | Communications Equipment | 1.9% |
|
 | Commercial | 1.2% |
|
 | All Others* | 3.2% |
|
 |
|
|
|
As of August 31, 2007 | |||
| IT Services | 82.8% |
|
| Software | 6.4% |
|
| Internet Software & Services | 4.8% |
|
| Computers & Peripherals | 2.9% |
|
| Commercial | 0.3% |
|
| All Others* | 2.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select IT Services Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 1.2% | |||
Diversified Commercial & Professional Services - 1.2% | |||
IHS, Inc. Class A (a) | 7,300 | $ 450,045 | |
COMMUNICATIONS EQUIPMENT - 1.9% | |||
Communications Equipment - 1.9% | |||
Nice Systems Ltd. sponsored ADR (a) | 22,400 | 723,072 | |
COMPUTERS & PERIPHERALS - 1.0% | |||
Computer Hardware - 1.0% | |||
NCR Corp. (a) | 18,100 | 401,096 | |
DIVERSIFIED FINANCIAL SERVICES - 0.6% | |||
Specialized Finance - 0.6% | |||
MSCI, Inc. Class A | 7,900 | 234,867 | |
ELECTRICAL EQUIPMENT - 0.9% | |||
Electrical Components & Equipment - 0.9% | |||
Renewable Energy Corp. AS (a) | 15,100 | 369,301 | |
HEALTH CARE TECHNOLOGY - 0.6% | |||
Health Care Technology - 0.6% | |||
Cerner Corp. (a) | 5,800 | 252,010 | |
INTERNET SOFTWARE & SERVICES - 3.2% | |||
Internet Software & Services - 3.2% | |||
DealerTrack Holdings, Inc. (a) | 8,800 | 180,136 | |
Online Resources Corp. (a) | 102,700 | 1,051,648 | |
| 1,231,784 | ||
IT SERVICES - 85.5% | |||
Data Processing & Outsourced Services - 56.2% | |||
Affiliated Computer Services, Inc. | 37,600 | 1,908,200 | |
Alliance Data Systems Corp. (a) | 10,500 | 531,615 | |
Automatic Data Processing, Inc. | 42,400 | 1,693,880 | |
CyberSource Corp. (a) | 73,001 | 1,066,545 | |
Electronic Data Systems Corp. | 18,700 | 323,884 | |
Fidelity National Information Services, Inc. | 28,300 | 1,174,167 | |
Fiserv, Inc. (a) | 61,500 | 3,236,130 | |
Global Payments, Inc. | 11,100 | 440,337 | |
Heartland Payment Systems, Inc. (d) | 5,000 | 110,150 | |
Iron Mountain, Inc. (a) | 16,450 | 494,816 | |
MasterCard, Inc. Class A (d) | 8,500 | 1,615,000 | |
MoneyGram International, Inc. | 73,700 | 269,742 | |
Paychex, Inc. (d) | 82,587 | 2,598,187 | |
The Western Union Co. | 220,800 | 4,592,640 | |
TNS, Inc. | 27,100 | 483,735 | |
VeriFone Holdings, Inc. (a)(d) | 28,400 | 586,460 | |
Wright Express Corp. (a) | 23,600 | 682,984 | |
| 21,808,472 | ||
IT Consulting & Other Services - 29.3% | |||
Accenture Ltd. Class A | 171,500 | 6,045,376 | |
| |||
Shares | Value | ||
BearingPoint, Inc. (a) | 160,700 | $ 260,334 | |
Cognizant Technology Solutions Corp. Class A (a) | 75,416 | 2,278,317 | |
Perot Systems Corp. Class A (a) | 46,300 | 638,477 | |
Sapient Corp. (a) | 143,100 | 1,056,078 | |
Satyam Computer Services Ltd. sponsored ADR | 23,400 | 584,532 | |
Unisys Corp. (a) | 126,200 | 521,206 | |
| 11,384,320 | ||
TOTAL IT SERVICES | 33,192,792 | ||
SOFTWARE - 5.0% | |||
Application Software - 3.1% | |||
EPIQ Systems, Inc. (a) | 33,300 | 452,880 | |
Longtop Financial Technologies Ltd. ADR (d) | 9,600 | 186,240 | |
Nuance Communications, Inc. (a)(d) | 22,700 | 373,415 | |
Ultimate Software Group, Inc. (a) | 7,200 | 196,272 | |
| 1,208,807 | ||
Systems Software - 1.9% | |||
CommVault Systems, Inc. (a) | 52,800 | 739,200 | |
TOTAL SOFTWARE | 1,948,007 | ||
TOTAL COMMON STOCKS (Cost $40,856,380) | 38,802,974 | ||
Money Market Funds - 9.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 1,832 | 1,832 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 3,802,846 | 3,802,846 | |
TOTAL MONEY MARKET FUNDS (Cost $3,804,678) | 3,804,678 | ||
TOTAL INVESTMENT PORTFOLIO - 109.7% (Cost $44,661,058) | 42,607,652 | ||
NET OTHER ASSETS - (9.7)% | (3,765,305) | ||
NET ASSETS - 100% | $ 38,842,347 | ||
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. |
(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 | $ 69,504 |
Fidelity Securities Lending Cash Central Fund | 28,798 |
Total | $ 98,302 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.6% |
Bermuda | 15.6% |
Israel | 1.9% |
India | 1.5% |
Others (individually less than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $1,381,541 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $3,638,417) - Unaffiliated issuers (cost $40,856,380) | $ 38,802,974 |
|
Fidelity Central Funds (cost $3,804,678) | 3,804,678 |
|
Total Investments (cost $44,661,058) |
| $ 42,607,652 |
Receivable for investments sold | 114,739 | |
Receivable for fund shares sold | 12,435 | |
Dividends receivable | 1,385 | |
Distributions receivable from Fidelity Central Funds | 3,118 | |
Prepaid expenses | 132 | |
Other receivables | 10,904 | |
Total assets | 42,750,365 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 11,043 | |
Payable for fund shares redeemed | 34,619 | |
Accrued management fee | 18,655 | |
Other affiliated payables | 11,697 | |
Other payables and accrued expenses | 29,158 | |
Collateral on securities loaned, at value | 3,802,846 | |
Total liabilities | 3,908,018 | |
|
|
|
Net Assets | $ 38,842,347 | |
Net Assets consist of: |
| |
Paid in capital | $ 41,672,675 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (777,398) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (2,052,930) | |
Net Assets, for 2,630,658 shares outstanding | $ 38,842,347 | |
Net Asset Value, offering price and redemption price per share ($38,842,347 ÷ 2,630,658 shares) | $ 14.77 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 262,994 |
Interest |
| 53 |
Income from Fidelity Central Funds (including $28,798 from security lending) |
| 98,302 |
Total income |
| 361,349 |
|
|
|
Expenses | ||
Management fee | $ 271,166 | |
Transfer agent fees | 139,061 | |
Accounting and security lending fees | 20,314 | |
Custodian fees and expenses | 10,610 | |
Independent trustees' compensation | 177 | |
Registration fees | 21,190 | |
Audit | 50,115 | |
Legal | 387 | |
Miscellaneous | 2,936 | |
Total expenses before reductions | 515,956 | |
Expense reductions | (9) | 515,947 |
Net investment income (loss) | (154,598) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 2,932,296 | |
Foreign currency transactions | 6,184 | |
Total net realized gain (loss) |
| 2,938,480 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (6,523,565) | |
Assets and liabilities in foreign currencies | 459 | |
Total change in net unrealized appreciation (depreciation) |
| (6,523,106) |
Net gain (loss) | (3,584,626) | |
Net increase (decrease) in net assets resulting from operations | $ (3,739,224) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select IT 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) | $ (154,598) | $ (164,167) |
Net realized gain (loss) | 2,938,480 | 6,738,386 |
Change in net unrealized appreciation (depreciation) | (6,523,106) | (3,734,859) |
Net increase (decrease) in net assets resulting from operations | (3,739,224) | 2,839,360 |
Distributions to shareholders from net realized gain | (5,634,398) | (4,161,629) |
Share transactions | 55,191,810 | 37,449,369 |
Reinvestment of distributions | 5,422,390 | 4,021,459 |
Cost of shares redeemed | (46,509,564) | (45,459,398) |
Net increase (decrease) in net assets resulting from share transactions | 14,104,636 | (3,988,570) |
Redemption fees | 6,975 | 23,192 |
Total increase (decrease) in net assets | 4,737,989 | (5,287,647) |
|
|
|
Net Assets | ||
Beginning of period | 34,104,358 | 39,392,005 |
End of period | $ 38,842,347 | $ 34,104,358 |
Other Information Shares | ||
Sold | 3,017,956 | 2,181,067 |
Issued in reinvestment of distributions | 325,365 | 237,885 |
Redeemed | (2,673,018) | (2,717,993) |
Net increase (decrease) | 670,303 | (299,041) |
Financial Highlights
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.40 | $ 17.43 | $ 15.50 | $ 14.14 | $ 10.20 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.06) | (.07) | (.03) F | (.10) G | (.15) |
Net realized and unrealized gain (loss) | (.25) | 1.73 | 2.59 | 1.70 | 4.09 |
Total from investment operations | (.31) | 1.66 | 2.56 | 1.60 | 3.94 |
Distributions from net realized gain | (2.32) | (1.70) | (.63) | (.24) | - |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | - J |
Net asset value, end of period | $ 14.77 | $ 17.40 | $ 17.43 | $ 15.50 | $ 14.14 |
Total Return A,B | (2.94)% | 10.11% | 17.14% | 11.26% | 38.63% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.06% | 1.19% | 1.22% | 1.24% | 1.64% |
Expenses net of fee waivers, if any | 1.06% | 1.16% | 1.22% | 1.23% | 1.64% |
Expenses net of all reductions | 1.06% | 1.15% | 1.18% | 1.21% | 1.63% |
Net investment income (loss) | (.32)% | (.42)% | (.17)% F | (.66)% G | (1.17)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,842 | $ 34,104 | $ 39,392 | $ 37,165 | $ 35,068 |
Portfolio turnover rate E | 212% | 200% | 73% | 88% | 54% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.50)%. G Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.81)%. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Networking and Infrastructure Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Life of |
Select Networking and Infrastructure Portfolio | -20.88% | 5.32% | -19.61% |
A From September 21, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Select Networking and Infrastructure Portfolio on September 21, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Select Networking and Infrastructure Portfolio
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Select Networking and Infrastructure Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -20.88%, trailing the S&P 500® and also the -2.37% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index. This fund had a stiff head wind given its narrow focus on a segment of technology that generally underperformed the broader sector. Versus the MSCI index, the fund was hurt by unfavorable stock selection in the semiconductor space, weak picks in computer hardware, communications equipment and semiconductor equipment, and sizable underweightings in several strong-performing computer hardware stocks. A significant part of the fund's underperformance in semiconductors came from Marvell Technology Group. The company, which supplies chips for both personal computers and consumer electronics devices, reported a loss for its fiscal quarter ending October 27, 2007, and continued to restructure. Other semiconductor stocks that detracted were Broadcom and Mindspeed Technologies. Elsewhere, a significantly overweighted position in computer server maker Sun Microsystems fared poorly, as investors remained skeptical of the company's ability to compete with rivals International Business Machines (IBM) and Hewlett-Packard, two index components the fund didn't own that performed well and detracted versus the MSCI index as a result. I sold Sun Microsystems by period end. Chinese electronics component supplier Comtech further weighed down our results. On the positive side, stock picking in the Internet software and services group - largely a result of our significant position in Internet search and advertising provider Google - boosted our results. That said, the fund's top contributor was network equipment provider Juniper Networks, which benefited from some well-received new products and healthy spending by telecommunications carriers and cable companies to upgrade their networks. Canada-based Research In Motion (RIM) also bolstered performance, along with not owning cellular handset maker and index component Motorola, which did poorly.
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
Select Networking and Infrastructure Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 10.7 | 8.3 |
Google, Inc. Class A (sub. vtg.) | 8.0 | 11.0 |
Juniper Networks, Inc. | 7.0 | 5.9 |
Marvell Technology Group Ltd. | 6.0 | 6.1 |
Research In Motion Ltd. | 4.9 | 2.6 |
Comtech Group, Inc. | 4.1 | 3.4 |
EMC Corp. | 4.1 | 5.1 |
Network Appliance, Inc. | 4.1 | 3.2 |
Broadcom Corp. Class A | 3.6 | 4.5 |
Arris Group, Inc. | 3.6 | 0.0 |
| 56.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Communications Equipment | 50.5% |
|
 | Semiconductors & Semiconductor Equipment | 25.0% |
|
 | Computers & Peripherals | 8.4% |
|
 | Internet | 8.3% |
|
 | Software | 2.9% |
|
 | All Others* | 4.9% |
|
 |
|
|
|
As of August 31, 2007 | |||
| Communications Equipment | 42.9% |
|
| Semiconductors & Semiconductor Equipment | 21.0% |
|
| Computers & Peripherals | 15.7% |
|
| Internet | 11.5% |
|
| Software | 3.5% |
|
| All Others* | 5.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Networking and Infrastructure Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.5% | |||
Building Products - 0.5% | |||
Asahi Glass Co. Ltd. | 23,000 | $ 261,968 | |
COMMUNICATIONS EQUIPMENT - 50.1% | |||
Communications Equipment - 50.1% | |||
Acme Packet, Inc. (a) | 700 | 5,614 | |
ADC Telecommunications, Inc. (a) | 41,900 | 572,773 | |
Adtran, Inc. | 37,600 | 692,592 | |
ADVA AG Optical Networking (a)(d) | 108,636 | 329,819 | |
Airvana, Inc. | 43,500 | 207,060 | |
Arris Group, Inc. (a) | 300,900 | 1,730,175 | |
Aruba Networks, Inc. | 1,100 | 6,171 | |
Cisco Systems, Inc. (a) | 213,400 | 5,200,557 | |
Comtech Group, Inc. (a) | 192,600 | 2,014,596 | |
Comverse Technology, Inc. (a) | 48,700 | 802,089 | |
Corning, Inc. | 50,300 | 1,168,469 | |
DragonWave, Inc. (a) | 52,400 | 252,934 | |
F5 Networks, Inc. (a) | 49,400 | 1,094,704 | |
Finisar Corp. (a) | 289,500 | 466,095 | |
Foxconn International Holdings Ltd. (a) | 39,000 | 61,096 | |
Harmonic, Inc. (a) | 22,400 | 199,584 | |
Harris Stratex Networks, Inc. Class A (a) | 25,400 | 255,016 | |
Infinera Corp. | 11,300 | 131,984 | |
Juniper Networks, Inc. (a)(d) | 127,109 | 3,409,063 | |
Opnext, Inc. | 4,700 | 21,714 | |
Optium Corp. (a) | 200 | 1,372 | |
Powerwave Technologies, Inc. (a) | 122,500 | 350,350 | |
RADWARE Ltd. (a) | 6,500 | 79,495 | |
Research In Motion Ltd. (a) | 22,900 | 2,377,020 | |
Sandvine Corp. (a) | 166,900 | 498,639 | |
Sandvine Corp. (U.K.) (a) | 230,900 | 697,011 | |
Sonus Networks, Inc. (a) | 124,500 | 413,340 | |
Starent Networks Corp. | 70,900 | 1,115,257 | |
Symmetricom, Inc. (a) | 82,000 | 280,440 | |
| 24,435,029 | ||
COMPUTERS & PERIPHERALS - 8.4% | |||
Computer Storage & Peripherals - 8.4% | |||
EMC Corp. (a)(d) | 128,800 | 2,001,552 | |
Isilon Systems, Inc. (a) | 100 | 561 | |
Network Appliance, Inc. (a) | 91,700 | 1,982,554 | |
TPV Technology Ltd. | 158,000 | 94,692 | |
| 4,079,359 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.5% | |||
Electronic Equipment & Instruments - 1.3% | |||
Chi Mei Optoelectronics Corp. | 4,043 | 5,318 | |
Nippon Electric Glass Co. Ltd. | 26,000 | 376,955 | |
Orbotech Ltd. (a) | 12,400 | 224,316 | |
| 606,589 | ||
| |||
Shares | Value | ||
Electronic Manufacturing Services - 1.2% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 76,280 | $ 455,096 | |
SMART Modular Technologies (WWH), Inc. (a) | 22,400 | 148,736 | |
| 603,832 | ||
Technology Distributors - 0.0% | |||
Mellanox Technologies Ltd. | 100 | 1,530 | |
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 1,211,951 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. | 100 | 3,252 | |
HOUSEHOLD DURABLES - 0.4% | |||
Consumer Electronics - 0.4% | |||
Directed Electronics, Inc. (a) | 48,100 | 105,820 | |
Thomson SA | 11,800 | 90,637 | |
| 196,457 | ||
INTERNET SOFTWARE & SERVICES - 8.3% | |||
Internet Software & Services - 8.3% | |||
Constant Contact, Inc. | 100 | 1,780 | |
DivX, Inc. (a) | 100 | 983 | |
Google, Inc. Class A (sub. vtg.) (a) | 8,300 | 3,910,794 | |
Openwave Systems, Inc. | 54,200 | 111,652 | |
Switch & Data Facilities Co., Inc. | 300 | 3,135 | |
| 4,028,344 | ||
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
Gemstar-TV Guide International, Inc. (a) | 390 | 1,849 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 25.0% | |||
Semiconductor Equipment - 2.5% | |||
Credence Systems Corp. (a) | 127,500 | 181,050 | |
Tessera Technologies, Inc. (a)(d) | 44,500 | 1,048,420 | |
| 1,229,470 | ||
Semiconductors - 22.5% | |||
Advanced Semiconductor Engineering, Inc. sponsored ADR | 25,300 | 116,886 | |
Altera Corp. | 61,100 | 1,045,421 | |
AMIS Holdings, Inc. (a) | 23,000 | 156,860 | |
Applied Micro Circuits Corp. (a) | 51,450 | 382,274 | |
AuthenTec, Inc. | 1,800 | 18,270 | |
Broadcom Corp. Class A (a) | 92,150 | 1,742,557 | |
Cree, Inc. (a) | 2,700 | 83,430 | |
Cypress Semiconductor Corp. (a) | 32,800 | 713,072 | |
Lattice Semiconductor Corp. (a) | 34,500 | 89,010 | |
Marvell Technology Group Ltd. (a) | 257,080 | 2,907,575 | |
Maxim Integrated Products, Inc. | 6,900 | 126,063 | |
MediaTek, Inc. | 5,000 | 56,078 | |
Mindspeed Technologies, Inc. (a) | 692,133 | 401,437 | |
MIPS Technologies, Inc. (a) | 33,500 | 124,285 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
PMC-Sierra, Inc. (a) | 72,300 | $ 346,317 | |
Realtek Semiconductor Corp. | 19,000 | 56,290 | |
Richtek Technology Corp. | 7,000 | 61,767 | |
Silicon Laboratories, Inc. (a) | 26,100 | 807,795 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 14,100 | 115,338 | |
Spansion, Inc. Class A (a) | 46,200 | 127,050 | |
Spreadtrum Communications, Inc. ADR | 900 | 6,786 | |
Tower Semicondutor Ltd. (a) | 239,700 | 246,891 | |
Xilinx, Inc. | 54,500 | 1,218,620 | |
| 10,950,072 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 12,179,542 | ||
SOFTWARE - 2.9% | |||
Application Software - 1.7% | |||
BladeLogic, Inc. | 7,200 | 137,520 | |
Ulticom, Inc. (a) | 95,200 | 666,400 | |
| 803,920 | ||
Systems Software - 1.2% | |||
Allot Communications Ltd. (a) | 2,800 | 7,840 | |
Check Point Software Technologies Ltd. (a) | 21,300 | 466,896 | |
Double-Take Software, Inc. (a) | 12,200 | 126,758 | |
| 601,494 | ||
TOTAL SOFTWARE | 1,405,414 | ||
TOTAL COMMON STOCKS (Cost $64,909,676) | 47,803,165 | ||
Convertible Bonds - 0.4% | ||||
| Principal Amount | Value | ||
COMMUNICATIONS EQUIPMENT - 0.4% | ||||
Communications Equipment - 0.4% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 230,000 | $ 200,021 | ||
Money Market Funds - 17.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 3.24% (b) | 584,349 | 584,349 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 7,963,300 | 7,963,300 | |
TOTAL MONEY MARKET FUNDS (Cost $8,547,649) | 8,547,649 | ||
TOTAL INVESTMENT PORTFOLIO - 116.0% (Cost $73,687,325) | 56,550,835 | ||
NET OTHER ASSETS - (16.0)% | (7,792,712) | ||
NET ASSETS - 100% | $ 48,758,123 | ||
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. |
(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 | $ 59,879 |
Fidelity Securities Lending Cash Central Fund | 34,788 |
Total | $ 94,667 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.7% |
Canada | 7.8% |
Bermuda | 6.2% |
Israel | 2.1% |
Taiwan | 1.6% |
Japan | 1.3% |
Others (individually less than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $188,539,780 of which $99,728,449, $83,559,188, $3,347,694 and $1,904,449 will expire on February 28, 2010, 2011, 2013 and February 29, 2016, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Networking and Infrastructure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,420,821) - Unaffiliated issuers (cost $65,139,676) | $ 48,003,186 |
|
Fidelity Central Funds (cost $8,547,649) | 8,547,649 |
|
Total Investments (cost $73,687,325) |
| $ 56,550,835 |
Receivable for investments sold | 796,537 | |
Receivable for fund shares sold | 184,776 | |
Dividends receivable | 7,018 | |
Interest receivable | 190 | |
Distributions receivable from Fidelity Central Funds | 11,151 | |
Prepaid expenses | 195 | |
Other receivables | 2,059 | |
Total assets | 57,552,761 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,377 | |
Payable for fund shares redeemed | 759,692 | |
Accrued management fee | 24,374 | |
Other affiliated payables | 15,178 | |
Other payables and accrued expenses | 30,717 | |
Collateral on securities loaned, at value | 7,963,300 | |
Total liabilities | 8,794,638 | |
|
|
|
Net Assets | $ 48,758,123 | |
Net Assets consist of: |
| |
Paid in capital | $ 254,809,555 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (188,915,132) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (17,136,300) | |
Net Assets, for 24,741,410 shares outstanding | $ 48,758,123 | |
Net Asset Value, offering price and redemption price per share ($48,758,123 ÷ 24,741,410 shares) | $ 1.97 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 85,715 |
Interest |
| 649 |
Income from Fidelity Central Funds (including $34,788 from security lending) |
| 94,667 |
Total income |
| 181,031 |
|
|
|
Expenses | ||
Management fee | $ 397,879 | |
Transfer agent fees | 212,954 | |
Accounting and security lending fees | 29,227 | |
Custodian fees and expenses | 17,428 | |
Independent trustees' compensation | 276 | |
Registration fees | 25,119 | |
Audit | 36,783 | |
Legal | 1,044 | |
Miscellaneous | 5,045 | |
Total expenses before reductions | 725,755 | |
Expense reductions | (2,052) | 723,703 |
Net investment income (loss) | (542,672) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (1,133,122) | |
Foreign currency transactions | (1,364) | |
Total net realized gain (loss) |
| (1,134,486) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (10,930,424) | |
Assets and liabilities in foreign currencies | 185 | |
Total change in net unrealized appreciation (depreciation) |
| (10,930,239) |
Net gain (loss) | (12,064,725) | |
Net increase (decrease) in net assets resulting from operations | $ (12,607,397) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Networking and Infrastructure Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (542,672) | $ (981,804) |
Net realized gain (loss) | (1,134,486) | 8,840,687 |
Change in net unrealized appreciation (depreciation) | (10,930,239) | (15,162,537) |
Net increase (decrease) in net assets resulting from operations | (12,607,397) | (7,303,654) |
Share transactions | 30,151,708 | 146,060,492 |
Cost of shares redeemed | (59,927,418) | (173,089,291) |
Net increase (decrease) in net assets resulting from share transactions | (29,775,710) | (27,028,799) |
Redemption fees | 12,513 | 94,221 |
Total increase (decrease) in net assets | (42,370,594) | (34,238,232) |
|
|
|
Net Assets | ||
Beginning of period | 91,128,717 | 125,366,949 |
End of period | $ 48,758,123 | $ 91,128,717 |
Other Information Shares | ||
Sold | 12,045,121 | 57,517,022 |
Redeemed | (23,884,149) | (69,494,804) |
Net increase (decrease) | (11,839,028) | (11,977,782) |
Financial Highlights
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 2.49 | $ 2.58 | $ 2.14 | $ 2.66 | $ 1.52 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | (.02) | (.02) | (.02) | (.02) |
Net realized and unrealized gain (loss) | (.50) | (.07) | .46 | (.50) | 1.16 |
Total from investment operations | (.52) | (.09) | .44 | (.52) | 1.14 |
Redemption fees added to paid in capital C,H | - | - | - | - | - |
Net asset value, end of period | $ 1.97 | $ 2.49 | $ 2.58 | $ 2.14 | $ 2.66 |
Total Return A,B | (20.88)% | (3.49)% | 20.56% | (19.55)% | 75.00% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.02% | 1.09% | 1.14% | 1.17% | 1.43% |
Expenses net of fee waivers, if any | 1.02% | 1.09% | 1.14% | 1.17% | 1.43% |
Expenses net of all reductions | 1.01% | 1.08% | 1.02% | 1.07% | 1.39% |
Net investment income (loss) | (.76)% | (.84)% | (.84)% | (.89)% | (1.00)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 48,758 | $ 91,129 | $ 125,367 | $ 109,960 | $ 211,468 |
Portfolio turnover rate E | 37% | 136% | 201% | 160% | 57% |
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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Software and Computer Services Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Software and Computer Services Portfolio | 1.99% | 13.70% | 9.95% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Software and Computer Services Portfolio on February 28, 1998. 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
Select Software and Computer Services Portfolio
Management's Discussion of Fund Performance
Comments from Mayank Tandon, Portfolio Manager of Select Software and Computer Services Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund gained 1.99%, outperforming the 2.74% loss of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Software & Services Index. During the same 12-month period, the fund also outpaced the S&P 500®. The portfolio's overweighting and good selection among home entertainment software stocks contributed handsomely to gains relative to the MSCI index, while IT offshore outsourcing firms held back results overall. Currency movements also contributed significantly to the performance of the fund's foreign investments. Nintendo and Ubisoft Entertainment - two companies in the home entertainment software area and not in the benchmark - were the primary contributors to performance. Japan's Nintendo continued to benefit from its enormously successful Wii gaming system. France's Ubisoft offers a very strong lineup of games for popular gaming consoles including the Wii. Apple - another out-of-benchmark holding - benefited from the strong product cycle of its iPhone and new iMac computers, but I sold it when I felt it had become fully valued. MasterCard performed well due to increased global use of credit cards for consumer purchases. Looking at detractors, Cognizant, a leading India-based outsourcing firm, suffered from having an overvalued stock at a time of economic uncertainty, despite overall growth in its industry. Germany's Utimaco Safeware was hurt by execution problems. VMware, a leader in computer virtualization - meaning running multiple operating systems on a single computer - had a hard time meeting lofty expectations.
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
Select Software and Computer Services Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 14.0 | 15.5 |
Google, Inc. Class A (sub. vtg.) | 13.4 | 14.0 |
Cognizant Technology Solutions Corp. Class A | 8.9 | 8.8 |
Oracle Corp. | 7.2 | 7.4 |
Nintendo Co. Ltd. | 4.3 | 7.1 |
Yahoo!, Inc. | 3.8 | 3.7 |
MasterCard, Inc. Class A | 3.7 | 2.5 |
Satyam Computer Services Ltd. sponsored ADR | 3.5 | 3.1 |
Ubisoft Entertainment SA | 2.9 | 2.1 |
VMware, Inc. Class A | 2.4 | 0.9 |
| 64.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Software | 45.1% |
|
 | IT Services | 30.5% |
|
 | Internet | 20.1% |
|
 | All Others* | 4.3% |
|
 | |||
 | |||
As of August 31, 2007 | |||
| Software | 48.5% |
|
| IT Services | 27.0% |
|
| Internet | 21.5% |
|
| Computers & Peripherals | 2.9% |
|
| All Others* | 0.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Software and Computer Services Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 95.7% | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 20.1% | |||
Internet Software & Services - 20.1% | |||
Blinkx PLC | 437,400 | $ 153,471 | |
DealerTrack Holdings, Inc. (a) | 256,688 | 5,254,403 | |
eBay, Inc. (a) | 521,300 | 13,741,468 | |
Google, Inc. Class A (sub. vtg.) (a)(d) | 218,200 | 102,811,476 | |
Omniture, Inc. (a) | 145,423 | 3,341,821 | |
Yahoo!, Inc. (a) | 1,051,000 | 29,196,780 | |
| 154,499,419 | ||
IT SERVICES - 30.5% | |||
Data Processing & Outsourced Services - 13.3% | |||
Affiliated Computer Services, Inc. | 296,200 | 15,032,150 | |
ExlService Holdings, Inc. (a)(d) | 723,832 | 15,439,337 | |
Fiserv, Inc. (a) | 220,500 | 11,602,710 | |
Genpact Ltd. | 237,800 | 3,626,450 | |
MasterCard, Inc. Class A (d) | 150,300 | 28,557,000 | |
Paychex, Inc. (d) | 180,700 | 5,684,822 | |
Syntel, Inc. (d) | 245,200 | 6,676,796 | |
The Western Union Co. | 443,800 | 9,231,040 | |
WNS Holdings Ltd. ADR (a) | 432,650 | 6,424,853 | |
| 102,275,158 | ||
IT Consulting & Other Services - 17.2% | |||
Accenture Ltd. Class A | 256,600 | 9,045,150 | |
Cognizant Technology Solutions Corp. Class A (a) | 2,275,300 | 68,736,813 | |
HCL Technologies Ltd. | 892,065 | 6,103,086 | |
Infosys Technologies Ltd. sponsored ADR (d) | 415,200 | 16,159,584 | |
Patni Computer Systems Ltd. sponsored ADR (d) | 416,200 | 5,040,182 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 1,071,500 | 26,766,070 | |
| 131,850,885 | ||
TOTAL IT SERVICES | 234,126,043 | ||
SOFTWARE - 45.1% | |||
Application Software - 8.9% | |||
Absolute Software Corp. (a) | 257,000 | 3,277,628 | |
Ansys, Inc. (a)(d) | 392,700 | 14,675,199 | |
Autonomy Corp. PLC (a) | 400,100 | 7,442,170 | |
BladeLogic, Inc. | 67,367 | 1,286,710 | |
Epicor Software Corp. (a) | 456,600 | 5,054,562 | |
Informatica Corp. (a) | 689,700 | 12,042,162 | |
Nuance Communications, Inc. (a)(d) | 379,600 | 6,244,420 | |
| |||
Shares | Value | ||
Quest Software, Inc. (a) | 1,050,014 | $ 14,941,699 | |
Salesforce.com, Inc. (a) | 53,400 | 3,189,048 | |
| 68,153,598 | ||
Home Entertainment Software - 9.6% | |||
Activision, Inc. (a) | 443,800 | 12,093,550 | |
Gameloft (a) | 357,800 | 1,528,309 | |
Nintendo Co. Ltd. | 66,200 | 33,047,042 | |
THQ, Inc. (a) | 235,500 | 4,406,205 | |
Ubisoft Entertainment SA (a) | 267,568 | 22,486,302 | |
| 73,561,408 | ||
Systems Software - 26.6% | |||
Microsoft Corp. (d) | 3,951,600 | 107,562,550 | |
Novell, Inc. (a) | 952,736 | 7,097,883 | |
Oracle Corp. (a)(d) | 2,948,400 | 55,429,920 | |
Progress Software Corp. (a)(d) | 185,700 | 5,299,878 | |
Red Hat, Inc. (a) | 226,400 | 4,036,712 | |
Utimaco Safeware AG | 431,897 | 6,851,276 | |
VMware, Inc. Class A (d) | 308,200 | 18,082,094 | |
| 204,360,313 | ||
TOTAL SOFTWARE | 346,075,319 | ||
TOTAL COMMON STOCKS (Cost $693,504,906) | 734,700,781 | ||
Money Market Funds - 23.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 34,570,219 | 34,570,219 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 145,009,475 | 145,009,475 | |
TOTAL MONEY MARKET FUNDS (Cost $179,579,694) | 179,579,694 | ||
TOTAL INVESTMENT PORTFOLIO - 119.1% (Cost $873,084,600) | 914,280,475 | ||
NET OTHER ASSETS - (19.1)% | (146,503,685) | ||
NET ASSETS - 100% | $ 767,776,790 | ||
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. |
(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 | $ 577,921 |
Fidelity Securities Lending Cash Central Fund | 867,905 |
Total | $ 1,445,826 |
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 Income | Value, |
Utimaco Safeware AG | $ 21,847,289 | $ - | $ 9,284,769 | $ 83,277 | $ - |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 80.7% |
India | 7.1% |
Japan | 4.3% |
France | 3.1% |
United Kingdom | 1.8% |
Bermuda | 1.7% |
Others (individually less than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $10,982,618 all of which will expire on February 28, 2011. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $138,409,223) - Unaffiliated issuers (cost $693,504,906) | $ 734,700,781 |
|
Fidelity Central Funds (cost $179,579,694) | 179,579,694 |
|
Total Investments (cost $873,084,600) |
| $ 914,280,475 |
Receivable for fund shares sold | 677,089 | |
Dividends receivable | 441,253 | |
Distributions receivable from Fidelity Central Funds | 144,519 | |
Prepaid expenses | 2,302 | |
Other receivables | 230,905 | |
Total assets | 915,776,543 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 1,951,452 | |
Accrued management fee | 371,347 | |
Other affiliated payables | 201,643 | |
Other payables and accrued expenses | 465,836 | |
Collateral on securities loaned, at value | 145,009,475 | |
Total liabilities | 147,999,753 | |
|
|
|
Net Assets | $ 767,776,790 | |
Net Assets consist of: |
| |
Paid in capital | $ 741,402,592 | |
Accumulated net investment loss | (1,201) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (14,416,290) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 40,791,689 | |
Net Assets, for 11,498,852 shares outstanding | $ 767,776,790 | |
Net Asset Value, offering price and redemption price per share ($767,776,790 ÷ 11,498,852 shares) | $ 66.77 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $83,277 earned from other affiliated issuers) |
| $ 3,745,149 |
Interest |
| 17,907 |
Income from Fidelity Central Funds (including $867,905 from security lending) |
| 1,445,826 |
Total income |
| 5,208,882 |
|
|
|
Expenses | ||
Management fee | $ 4,928,167 | |
Transfer agent fees | 2,160,386 | |
Accounting and security lending fees | 324,467 | |
Custodian fees and expenses | 48,337 | |
Independent trustees' compensation | 3,501 | |
Registration fees | 56,273 | |
Audit | 60,637 | |
Legal | 7,030 | |
Interest | 8,362 | |
Miscellaneous | 35,894 | |
Total expenses before reductions | 7,633,054 | |
Expense reductions | (11,693) | 7,621,361 |
Net investment income (loss) | (2,412,479) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $1,316) | 56,128,503 | |
Other affiliated issuers | (3,259,657) |
|
Foreign currency transactions | 913 | |
Total net realized gain (loss) |
| 52,869,759 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $409,123) | (37,076,267) | |
Assets and liabilities in foreign currencies | 5,180 | |
Total change in net unrealized appreciation (depreciation) |
| (37,071,087) |
Net gain (loss) | 15,798,672 | |
Net increase (decrease) in net assets resulting from operations | $ 13,386,193 | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Software and Computer Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,412,479) | $ (2,493,666) |
Net realized gain (loss) | 52,869,759 | 40,502,392 |
Change in net unrealized appreciation (depreciation) | (37,071,087) | 103,313,497 |
Net increase (decrease) in net assets resulting from operations | 13,386,193 | 141,322,223 |
Share transactions | 321,624,565 | 732,164,444 |
Cost of shares redeemed | (491,985,679) | (512,701,886) |
Net increase (decrease) in net assets resulting from share transactions | (170,361,114) | 219,462,558 |
Redemption fees | 87,368 | 80,891 |
Total increase (decrease) in net assets | (156,887,553) | 360,865,672 |
|
|
|
Net Assets | ||
Beginning of period | 924,664,343 | 563,798,671 |
End of period (including accumulated net investment loss of $1,201 and accumulated net investment loss of $1,115, respectively) | $ 767,776,790 | $ 924,664,343 |
Other Information Shares | ||
Sold | 4,302,245 | 11,694,868 |
Redeemed | (6,927,231) | (8,023,777) |
Net increase (decrease) | (2,624,986) | 3,671,091 |
Financial Highlights
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 65.47 | $ 53.94 | $ 47.60 | $ 51.37 | $ 35.48 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.20) | (.21) | (.25) | .53 F | (.24) G |
Net realized and unrealized gain (loss) | 1.49 | 11.73 | 6.58 | (3.79) | 16.12 |
Total from investment operations | 1.29 | 11.52 | 6.33 | (3.26) | 15.88 |
Distributions from net investment income | - | - | - | (.51) | - |
Redemption fees added to paid in capital C | .01 | .01 | .01 | - J | .01 |
Net asset value, end of period | $ 66.77 | $ 65.47 | $ 53.94 | $ 47.60 | $ 51.37 |
Total Return A,B | 1.99% | 21.38% | 13.32% | (6.43)% | 44.79% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .86% | .92% | .96% | .98% | 1.09% |
Expenses net of fee waivers, if any | .86% | .92% | .96% | .98% | 1.09% |
Expenses net of all reductions | .86% | .91% | .91% | .92% | 1.06% |
Net investment income (loss) | (.27)% | (.34)% | (.49)% | 1.09% F | (.53)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 767,777 | $ 924,664 | $ 563,799 | $ 680,988 | $ 846,946 |
Portfolio turnover rate E | 38% | 139% | 59% | 94% | 81% |
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 $.76 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.48)%. G Investment income per share reflects a special dividend which amounted to $.03 per share. H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. I For the year ended February 29. J Amount represents less than $.01 per share. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Technology Portfolio | -4.57% | 11.69% | 5.78% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Technology Portfolio on February 28, 1998. 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
Select Technology Portfolio
Management's Discussion of Fund Performance
Comments from Charlie Chai, Portfolio Manager of Select Technology Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund returned -4.57%, trailing the S&P 500® and the -2.37% loss of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Information Technology Index. Versus the MSCI index, unfavorable stock selection in the semiconductor space - especially Marvell Technology Group and Advanced Micro Devices - had the biggest negative impact on our results. Marvell reported a loss for its fiscal quarter ending October 27, 2007, and continued to restructure. Secondarily, underweighting or not owning several large-cap computer hardware and systems software stocks - notably hardware names International Business Machines (IBM) and Hewlett-Packard - was detrimental. Other detractors included network equipment provider Cisco Systems and F5 Networks, a maker of software for application delivery networking. On the positive side, favorable stock selection and an overweighting in the home entertainment software group - paced by our position in Japanese video-game maker Nintendo - aided the fund's performance. Strong sales of the company's Wii game console drove the stock's gains. Solid picks in consumer electronics, electrical components and equipment, and communications equipment also helped, as did having significant foreign exposure amid continued weakness in the U.S. dollar. A sizable position in Canada-based Research In Motion provided the largest boost to our performance. The maker of the BlackBerry handheld messaging device continued to develop its core market of business users while rolling out new products aimed at the consumer market, along with pursuing potentially lucrative opportunities overseas. Other contributors were Tele Atlas, a Dutch provider of digital map data, and Finland-based cellular handset maker Nokia. All the contributors I mentioned were out-of-index positions, and Tele Atlas was 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
Select Technology Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 11.0 | 7.4 |
Nintendo Co. Ltd. | 8.3 | 2.2 |
High Tech Computer Corp. | 3.1 | 0.1 |
Marvell Technology Group Ltd. | 3.0 | 4.4 |
Hewlett-Packard Co. | 3.0 | 0.0 |
Nokia Corp. sponsored ADR | 3.0 | 0.8 |
Yahoo!, Inc. | 2.8 | 0.0 |
Mindray Medical International Ltd. sponsored ADR | 2.6 | 0.0 |
Research In Motion Ltd. | 2.4 | 3.4 |
Varian Semiconductor Equipment Associates, Inc. | 1.7 | 0.0 |
| 40.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Communications Equipment | 27.9% |
|
 | Semiconductors & Semiconductor Equipment | 21.1% |
|
 | Software | 16.8% |
|
 | Computers & Peripherals | 10.1% |
|
 | Internet Software & Services | 6.5% |
|
 | All Others* | 17.6% |
|
 |
|
|
|
As of August 31, 2007 | |||
| Semiconductors & Semiconductor Equipment | 26.1% |
|
| Communications Equipment | 25.6% |
|
| Computers & Peripherals | 11.9% |
|
| Software | 9.6% |
|
| Internet Software & Services | 8.9% |
|
| All Others* | 17.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Technology Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 96.8% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Diversified Commercial & Professional Services - 0.2% | |||
China Security & Surveillance Technology, Inc. (a)(d) | 166,500 | $ 2,487,510 | |
COMMUNICATIONS EQUIPMENT - 27.9% | |||
Communications Equipment - 27.9% | |||
ADVA AG Optical Networking (a) | 703,356 | 2,135,389 | |
Airvana, Inc. | 575,100 | 2,737,476 | |
Arris Group, Inc. (a) | 790,700 | 4,546,525 | |
Aruba Networks, Inc. | 164,500 | 922,845 | |
AudioCodes Ltd. (a) | 805,900 | 3,408,957 | |
Balda AG (a)(d) | 255,800 | 2,317,622 | |
Cisco Systems, Inc. (a) | 7,000,900 | 170,611,936 | |
Comtech Group, Inc. (a) | 1,166,480 | 12,201,381 | |
Comverse Technology, Inc. (a) | 965,800 | 15,906,726 | |
Corning, Inc. | 859,979 | 19,977,312 | |
Delta Networks, Inc. | 4,418,000 | 1,130,272 | |
F5 Networks, Inc. (a) | 293,400 | 6,501,744 | |
Finisar Corp. (a) | 1,441,600 | 2,320,976 | |
Foxconn International Holdings Ltd. (a) | 2,038,000 | 3,192,640 | |
Harris Stratex Networks, Inc. Class A (a) | 440,800 | 4,425,632 | |
Infinera Corp. | 276,900 | 3,234,192 | |
Juniper Networks, Inc. (a) | 644,500 | 17,285,490 | |
NETGEAR, Inc. (a) | 30,902 | 674,282 | |
Nokia Corp. sponsored ADR | 1,270,800 | 45,761,508 | |
Opnext, Inc. | 258,800 | 1,195,656 | |
Optium Corp. (a) | 197,300 | 1,353,478 | |
Powerwave Technologies, Inc. (a) | 2,852,700 | 8,158,722 | |
QUALCOMM, Inc. | 91,500 | 3,876,855 | |
Research In Motion Ltd. (a) | 364,700 | 37,855,860 | |
Riverbed Technology, Inc. (a) | 187,700 | 3,765,262 | |
Sandvine Corp. (a) | 3,186,800 | 9,521,053 | |
Sandvine Corp. (U.K.) (a) | 1,941,200 | 5,859,847 | |
Sonus Networks, Inc. (a)(d) | 5,978,879 | 19,849,878 | |
Starent Networks Corp. | 1,330,000 | 20,920,900 | |
| 431,650,416 | ||
COMPUTERS & PERIPHERALS - 10.1% | |||
Computer Hardware - 7.8% | |||
Apple, Inc. (a) | 118,100 | 14,764,862 | |
Foxconn Technology Co. Ltd. | 77,000 | 502,335 | |
Hewlett-Packard Co. | 986,500 | 47,125,105 | |
High Tech Computer Corp. | 2,289,500 | 47,263,780 | |
Palm, Inc. | 438,800 | 2,839,036 | |
Stratasys, Inc. (a) | 448,091 | 8,406,187 | |
| 120,901,305 | ||
Computer Storage & Peripherals - 2.3% | |||
ASUSTeK Computer, Inc. | 2,533,003 | 6,992,981 | |
Innolux Display Corp. | 1,655,051 | 4,566,871 | |
Netezza Corp. | 619,500 | 6,133,050 | |
| |||
Shares | Value | ||
Synaptics, Inc. (a)(d) | 596,930 | $ 15,991,755 | |
TPV Technology Ltd. | 3,000,000 | 1,797,950 | |
| 35,482,607 | ||
TOTAL COMPUTERS & PERIPHERALS | 156,383,912 | ||
DIVERSIFIED CONSUMER SERVICES - 1.5% | |||
Education Services - 1.5% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 382,600 | 23,855,110 | |
ELECTRICAL EQUIPMENT - 4.4% | |||
Electrical Components & Equipment - 4.2% | |||
First Solar, Inc. (a) | 104,800 | 21,504,960 | |
JA Solar Holdings Co. Ltd. ADR | 373,300 | 5,334,457 | |
Neo-Neon Holdings Ltd. | 12,776,000 | 9,460,195 | |
Seoul Semiconductor Co. Ltd. | 70,000 | 1,305,256 | |
SolarWorld AG (d) | 400,900 | 18,178,744 | |
Sunpower Corp. Class A (a) | 80,900 | 5,316,748 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 85,800 | 3,189,186 | |
| 64,289,546 | ||
Heavy Electrical Equipment - 0.2% | |||
Suzlon Energy Ltd. | 500,000 | 3,478,660 | |
TOTAL ELECTRICAL EQUIPMENT | 67,768,206 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.0% | |||
Electronic Equipment & Instruments - 0.5% | |||
Amphenol Corp. Class A | 150,000 | 5,545,500 | |
ENE Technology, Inc. | 156,000 | 416,516 | |
Motech Industries, Inc. GDR (a)(e) | 210,015 | 1,453,297 | |
| 7,415,313 | ||
Technology Distributors - 1.5% | |||
Ingram Micro, Inc. Class A (a) | 280,500 | 4,283,235 | |
Mellanox Technologies Ltd. | 411,800 | 6,300,540 | |
Mingyuan Medicare Development Co. Ltd. (d) | 67,600,000 | 12,132,902 | |
| 22,716,677 | ||
TOTAL ELECTRONIC EQUIPMENT & INSTRUMENTS | 30,131,990 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 2.7% | |||
Health Care Equipment - 2.7% | |||
Golden Meditech Co. Ltd. | 4,532,000 | 1,622,819 | |
Mindray Medical International Ltd. sponsored ADR (d) | 1,103,579 | 40,501,349 | |
| 42,124,168 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. (d) | 1,500 | 48,780 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE TECHNOLOGY - 0.1% | |||
Health Care Technology - 0.1% | |||
Allscripts Healthcare Solutions, Inc. (a) | 100,000 | $ 1,067,000 | |
HOTELS, RESTAURANTS & LEISURE - 2.3% | |||
Hotels, Resorts & Cruise Lines - 2.3% | |||
Ctrip.com International Ltd. sponsored ADR | 440,900 | 26,727,358 | |
Home Inns & Hotels Management, Inc. ADR (a)(d) | 348,800 | 9,480,384 | |
| 36,207,742 | ||
HOUSEHOLD DURABLES - 0.5% | |||
Consumer Electronics - 0.5% | |||
Harman International Industries, Inc. | 164,700 | 6,785,640 | |
TomTom Group BV (a)(d) | 32,200 | 1,508,839 | |
| 8,294,479 | ||
INTERNET & CATALOG RETAIL - 0.0% | |||
Catalog Retail - 0.0% | |||
Acorn International, Inc. sponsored ADR | 2,800 | 27,608 | |
INTERNET SOFTWARE & SERVICES - 6.5% | |||
Internet Software & Services - 6.5% | |||
Akamai Technologies, Inc. (a) | 449,600 | 15,807,936 | |
Alibaba.com Ltd. | 938,500 | 2,274,713 | |
Blinkx PLC | 500,000 | 175,435 | |
DealerTrack Holdings, Inc. (a) | 30,700 | 628,429 | |
Google, Inc. Class A (sub. vtg.) (a) | 32,500 | 15,313,350 | |
LivePerson, Inc. (a) | 717,300 | 2,445,993 | |
LoopNet, Inc. (a) | 150,000 | 1,795,500 | |
Omniture, Inc. (a) | 489,562 | 11,250,135 | |
Tencent Holdings Ltd. | 1,365,400 | 8,487,972 | |
Yahoo!, Inc. (a) | 1,551,000 | 43,086,780 | |
| 101,266,243 | ||
IT SERVICES - 0.7% | |||
Data Processing & Outsourced Services - 0.1% | |||
WNS Holdings Ltd. ADR (a) | 130,300 | 1,934,955 | |
IT Consulting & Other Services - 0.6% | |||
HCL Technologies Ltd. | 500,000 | 3,420,763 | |
RightNow Technologies, Inc. (a) | 437,461 | 5,000,179 | |
| 8,420,942 | ||
TOTAL IT SERVICES | 10,355,897 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 21.1% | |||
Semiconductor Equipment - 6.6% | |||
Aixtron AG (a) | 100,000 | 1,326,641 | |
Applied Materials, Inc. | 802,200 | 15,378,174 | |
ASML Holding NV (NY Shares) (a) | 492,105 | 11,849,888 | |
Cymer, Inc. (a) | 200,000 | 5,666,000 | |
FormFactor, Inc. (a) | 159,300 | 2,856,249 | |
Global Unichip Corp. | 895,000 | 5,008,997 | |
Lam Research Corp. (a) | 46,500 | 1,871,160 | |
| |||
Shares | Value | ||
LTX Corp. (a) | 953,485 | $ 3,098,826 | |
MEMC Electronic Materials, Inc. (a) | 38,300 | 2,921,524 | |
MEMSIC, Inc. | 188,000 | 1,389,320 | |
Tessera Technologies, Inc. (a) | 463,900 | 10,929,484 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 796,200 | 26,895,636 | |
Verigy Ltd. (a) | 633,200 | 12,727,320 | |
| 101,919,219 | ||
Semiconductors - 14.5% | |||
Advanced Analog Technology, Inc. | 580,390 | 1,944,373 | |
Advanced Micro Devices, Inc. (a)(d) | 1,021,900 | 7,367,899 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR (d) | 3,029,300 | 13,995,366 | |
AMIS Holdings, Inc. (a) | 776,800 | 5,297,776 | |
Anpec Electronics Corp. | 190,583 | 385,204 | |
Applied Micro Circuits Corp. (a) | 439,425 | 3,264,928 | |
Atheros Communications, Inc. (a) | 120,000 | 2,918,400 | |
AuthenTec, Inc. | 143,400 | 1,455,510 | |
Broadcom Corp. Class A (a) | 1,155,520 | 21,850,883 | |
Cavium Networks, Inc. | 1,128,093 | 16,041,482 | |
Cypress Semiconductor Corp. (a) | 807,400 | 17,552,876 | |
Diodes, Inc. (a) | 125,400 | 2,830,278 | |
Elan Microelectronics Corp. | 453,000 | 668,008 | |
Epistar Corp. | 3,888,041 | 11,640,848 | |
Faraday Technology Corp. | 539,000 | 1,049,331 | |
Formosa Epitaxy, Inc. (a) | 1,957,000 | 1,862,810 | |
Global Mixed-mode Technology, Inc. | 534,500 | 2,991,974 | |
Hittite Microwave Corp. (a) | 161,600 | 5,350,576 | |
Intersil Corp. Class A | 67,500 | 1,570,725 | |
Marvell Technology Group Ltd. (a) | 4,170,443 | 47,167,710 | |
MediaTek, Inc. | 233,000 | 2,613,215 | |
Mindspeed Technologies, Inc. (a) | 4,141,000 | 2,401,780 | |
National Semiconductor Corp. | 83,600 | 1,376,892 | |
Omnivision Technologies, Inc. (a)(d) | 544,400 | 8,634,184 | |
PMC-Sierra, Inc. (a) | 850,900 | 4,075,811 | |
Powertech Technology, Inc. | 839,000 | 2,780,414 | |
Richtek Technology Corp. | 1,282,500 | 11,316,667 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 1,407,100 | 11,510,078 | |
Spreadtrum Communications, Inc. ADR | 22,100 | 166,634 | |
Supertex, Inc. (a) | 43,700 | 904,590 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 10,278 | 20,079 | |
Xilinx, Inc. | 442,300 | 9,889,828 | |
Zoran Corp. (a) | 201,900 | 2,772,087 | |
| 225,669,216 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 327,588,435 | ||
SOFTWARE - 16.8% | |||
Application Software - 4.7% | |||
Ansys, Inc. (a) | 188,800 | 7,055,456 | |
Autonomy Corp. PLC (a) | 475,000 | 8,835,368 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
BladeLogic, Inc. | 239,406 | $ 4,572,655 | |
Callidus Software, Inc. (a) | 1,414,584 | 6,945,607 | |
Concur Technologies, Inc. (a) | 342,500 | 10,014,700 | |
Global Digital Creations Holdings Ltd. (a) | 23,458,000 | 2,347,895 | |
Intuit, Inc. (a) | 260,600 | 6,921,536 | |
Longtop Financial Technologies Ltd. ADR (d) | 272,000 | 5,276,800 | |
Mentor Graphics Corp. (a) | 99,700 | 907,270 | |
Salesforce.com, Inc. (a) | 147,400 | 8,802,728 | |
Smith Micro Software, Inc. (a)(d) | 1,233,582 | 6,315,940 | |
SuccessFactors, Inc. | 13,300 | 110,656 | |
Synopsys, Inc. (a) | 100,600 | 2,334,926 | |
Taleo Corp. Class A (a) | 83,300 | 1,587,698 | |
Ulticom, Inc. (a) | 100,000 | 700,000 | |
| 72,729,235 | ||
Home Entertainment Software - 9.9% | |||
Activision, Inc. (a) | 475,800 | 12,965,550 | |
Nintendo Co. Ltd. | 241,800 | 120,706,566 | |
Nintendo Co. Ltd. ADR | 131,500 | 8,205,600 | |
THQ, Inc. (a)(d) | 621,100 | 11,620,781 | |
| 153,498,497 | ||
Systems Software - 2.2% | |||
Moldflow Corp. (a) | 93,800 | 1,562,708 | |
Oracle Corp. (a) | 766,900 | 14,417,720 | |
Utimaco Safeware AG | 125,000 | 1,982,902 | |
VMware, Inc. Class A (d) | 266,300 | 15,623,821 | |
| 33,587,151 | ||
TOTAL SOFTWARE | 259,814,883 | ||
TOTAL COMMON STOCKS (Cost $1,793,395,265) | 1,499,072,379 | ||
Money Market Funds - 8.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 57,956,424 | 57,956,424 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 69,269,960 | 69,269,960 | |
TOTAL MONEY MARKET FUNDS (Cost $127,226,384) | 127,226,384 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% (Cost $1,920,621,649) | 1,626,298,763 | ||
NET OTHER ASSETS - (5.0)% | (76,799,571) | ||
NET ASSETS - 100% | $ 1,549,499,192 | ||
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. |
(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 $1,453,297 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 | $ 664,297 |
Fidelity Securities Lending Cash Central Fund | 1,690,005 |
Total | $ 2,354,302 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 58.8% |
Taiwan | 8.3% |
Japan | 8.3% |
Cayman Islands | 7.7% |
Bermuda | 4.1% |
Canada | 3.4% |
Finland | 3.0% |
Germany | 1.6% |
China | 1.2% |
Others (individually less than 1%) | 3.6% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $2,241,753,786 of which $1,463,303,298 and $778,450,488 will expire on February 28, 2010 and 2011, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $64,843,754) - See accompanying schedule: Unaffiliated issuers (cost $1,793,395,265) | $ 1,499,072,379 |
|
Fidelity Central Funds (cost $127,226,384) | 127,226,384 |
|
Total Investments (cost $1,920,621,649) |
| $ 1,626,298,763 |
Foreign currency held at value (cost $247) | 259 | |
Receivable for investments sold | 32,876,924 | |
Receivable for fund shares sold | 1,571,918 | |
Dividends receivable | 196,219 | |
Distributions receivable from Fidelity Central Funds | 243,242 | |
Prepaid expenses | 5,566 | |
Other receivables | 246,619 | |
Total assets | 1,661,439,510 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 37,815,793 | |
Payable for fund shares redeemed | 3,366,588 | |
Accrued management fee | 722,947 | |
Other affiliated payables | 445,953 | |
Other payables and accrued expenses | 319,077 | |
Collateral on securities loaned, at value | 69,269,960 | |
Total liabilities | 111,940,318 | |
|
|
|
Net Assets | $ 1,549,499,192 | |
Net Assets consist of: |
| |
Paid in capital | $ 4,090,904,686 | |
Accumulated net investment loss | (1,368) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,246,884,278) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (294,519,848) | |
Net Assets, for 23,247,993 shares outstanding | $ 1,549,499,192 | |
Net Asset Value, offering price and redemption price per share ($1,549,499,192 ÷ 23,247,993 shares) | $ 66.65 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,068,160 |
Special dividends |
| 1,097,137 |
Interest |
| 42,280 |
Income from Fidelity Central Funds (including $1,690,005 from security lending) |
| 2,354,302 |
Total income |
| 7,561,879 |
|
|
|
Expenses | ||
Management fee | $ 10,224,642 | |
Transfer agent fees | 5,086,968 | |
Accounting and security lending fees | 585,217 | |
Custodian fees and expenses | 198,124 | |
Independent trustees' compensation | 6,982 | |
Registration fees | 72,391 | |
Audit | 56,687 | |
Legal | 16,172 | |
Interest | 60,395 | |
Miscellaneous | 92,799 | |
Total expenses before reductions | 16,400,377 | |
Expense reductions | (278,294) | 16,122,083 |
Net investment income (loss) | (8,560,204) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 274,109,885 | |
Foreign currency transactions | (349,078) | |
Total net realized gain (loss) |
| 273,760,807 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $152,950) | (368,850,587) | |
Assets and liabilities in foreign currencies | 2,801 | |
Total change in net unrealized appreciation (depreciation) |
| (368,847,786) |
Net gain (loss) | (95,086,979) | |
Net increase (decrease) in net assets resulting from operations | $ (103,647,183) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Technology Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (8,560,204) | $ (4,136,710) |
Net realized gain (loss) | 273,760,807 | 114,380,512 |
Change in net unrealized appreciation (depreciation) | (368,847,786) | (853,622) |
Net increase (decrease) in net assets resulting from operations | (103,647,183) | 109,390,180 |
Share transactions | 635,529,129 | 329,179,074 |
Cost of shares redeemed | (678,928,628) | (665,608,727) |
Net increase (decrease) in net assets resulting from share transactions | (43,399,499) | (336,429,653) |
Redemption fees | 157,011 | 112,006 |
Total increase (decrease) in net assets | (146,889,671) | (226,927,467) |
|
|
|
Net Assets | ||
Beginning of period | 1,696,388,863 | 1,923,316,330 |
End of period (including accumulated net investment loss of $1,368 and distributions in excess of net investment income of $1,582, respectively) | $ 1,549,499,192 | $ 1,696,388,863 |
Other Information Shares | ||
Sold | 7,994,554 | 5,002,429 |
Redeemed | (9,035,987) | (10,193,730) |
Net increase (decrease) | (1,041,433) | (5,191,301) |
Financial Highlights
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.84 | $ 65.24 | $ 57.62 | $ 61.94 | $ 38.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.36) J | (.15) | (.27) | .11 F | (.42) |
Net realized and unrealized gain (loss) | (2.84) | 4.75 | 7.88 | (4.28) | 23.91 |
Total from investment operations | (3.20) | 4.60 | 7.61 | (4.17) | 23.49 |
Distributions from net investment income | - | - | - | (.16) | - |
Redemption fees added to paid in capital C | .01 | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 66.65 | $ 69.84 | $ 65.24 | $ 57.62 | $ 61.94 |
Total Return A,B | (4.57)% | 7.05% | 13.22% | (6.73)% | 61.13% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .89% | .95% | .99% | 1.01% | 1.19% |
Expenses net of fee waivers, if any | .89% | .95% | .99% | 1.01% | 1.19% |
Expenses net of all reductions | .88% | .95% | .93% | .94% | 1.14% |
Net investment income (loss) | (.47)% J | (.24)% | (.44)% | .20% F | (.80)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,549,499 | $ 1,696,389 | $ 1,923,316 | $ 1,954,017 | $ 2,599,172 |
Portfolio turnover rate E | 204% | 113% | 100% | 104% | 127% |
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 $.48 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.65)%. 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 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 $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Networking and Infrastructure 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 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 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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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. 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. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as available dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Electronics Portfolio, Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Funds' federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, Certain Funds will claim 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. For the Electronics and Software and Computer Services Portfolios, certain adjustments have been made to the accounts relating to prior periods. Collectively, these adjustments have no impact on the funds' 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, passive foreign investment companies (PFIC), deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each Fund:
| Cost for | Unrealized | Unrealized | Net Unrealized |
Communications Equipment Portfolio | $ 323,107,020 | $ 25,467,923 | $ (67,907,906) | $ (42,439,983) |
Computers Portfolio | 511,399,675 | 9,956,623 | (61,056,567) | (51,099,944) |
Electronics Portfolio | 1,641,030,830 | 43,028,394 | (405,886,259) | (362,857,865) |
IT Services Portfolio | 45,094,644 | 3,095,376 | (5,582,368) | (2,486,992) |
Networking and Infrastructure Portfolio | 74,062,486 | 2,419,152 | (19,930,803) | (17,511,651) |
Software and Computer Services Portfolio | 876,595,101 | 102,633,999 | (64,948,625) | 37,685,374 |
Technology Portfolio | 1,925,949,099 | 93,492,530 | (393,142,866) | (299,650,336) |
| Capital Loss |
Communications Equipment Portfolio | $ (1,225,995,521) |
Computers Portfolio | (704,786,229) |
Electronics Portfolio | (2,386,596,566) |
Networking and Infrastructure Portfolio | (188,539,780) |
Software and Computer Services Portfolio | (10,982,618) |
Technology Portfolio | (2,241,753,786) |
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 29, 2008 | Ordinary | Long-term | Total |
Electronics Portfolio | $ 9,836,761 | $ - | $ 9,836,761 |
IT Services Portfolio | 644,940 | 4,989,458 | 5,634,398 |
|
|
|
|
February 28, 2007 | Ordinary | Long-term | Total |
Electronics Portfolio | $ 1,472,341 | $ - | $ 1,472,341 |
IT Services Portfolio | 122,360 | 4,039,269 | 4,161,629 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 | 119,198,364 | 198,234,355 |
Computers Portfolio | 1,159,001,098 | 1,143,827,836 |
Electronics Portfolio | 1,479,422,519 | 1,932,486,306 |
IT Services Portfolio | 107,763,368 | 99,410,026 |
Networking and Infrastructure Portfolio | 25,859,367 | 56,612,508 |
Software and Computer Services Portfolio | 333,055,537 | 536,021,774 |
Technology Portfolio | 3,691,148,802 | 3,768,290,409 |
Computers 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 | Group | Total |
Communications Equipment Portfolio | .30% | .26% | .56% |
Computers Portfolio | .30% | .26% | .56% |
Electronics Portfolio | .30% | .26% | .56% |
IT Services Portfolio | .30% | .26% | .56% |
Networking and Infrastructure 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .30% |
Computers Portfolio | .29% |
Electronics Portfolio | .26% |
IT Services Portfolio | .29% |
Networking and Infrastructure Portfolio | .30% |
Software and Computer Services Portfolio | .24% |
Technology Portfolio | .28% |
Accounting and Security Lending Fees. FSC 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 | $ 4,177 |
Computers Portfolio | 15,970 |
Electronics Portfolio | 21,694 |
IT Services Portfolio | 2,579 |
Networking and Infrastructure Portfolio | 4,087 |
Software and Computer Services Portfolio | 9,919 |
Technology Portfolio | 81,442 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average | Weighted Average | Interest |
Computers Portfolio | Borrower | $ 6,453,500 | 4.69% | $ 5,043 |
Electronics Portfolio | Borrower | 8,694,364 | 4.91% | 13,037 |
Software and Computer Services Portfolio | Borrower | 7,401,600 | 4.07% | 8,362 |
Technology Portfolio | Borrower | 8,974,860 | 4.77% | 59,498 |
Annual Report
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Communications Equipment Portfolio | $ 732 |
Computers Portfolio | 1,201 |
Electronics Portfolio | 4,091 |
IT Services Portfolio | 107 |
Networking and Infrastructure Portfolio | 178 |
Software and Computer Services Portfolio | 2,085 |
Technology Portfolio | 4,191 |
During the period, there were no borrowings on this line of credit.
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Daily | Weighted Average Interest Rate | Interest |
Technology Portfolio | $ 6,543,000 | 4.94% | $ 897 |
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 and transfer agent, 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 | Transfer Agent |
|
|
|
|
Communications Equipment Portfolio | $ 8,445 | $ - | $ 5,074 |
Computers Portfolio | 29,714 | - | 6,971 |
Electronics Portfolio | 210,887 | - | 31,531 |
Networking and Infrastructure Portfolio | 1,162 | - | 865 |
Software and Computer Services Portfolio | 811 | - | 10,640 |
Technology Portfolio | 233,424 | 180 | 44,285 |
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts:
Communications Equipment Portfolio | $ 170,032 |
Computers Portfolio | 202,584 |
Electronics Portfolio | 463,183 |
IT Services Portfolio | 9,382 |
Networking and Infrastructure Portfolio | 30,418 |
Software and Computer Services Portfolio | 155,226 |
Technology Portfolio | 560,620 |
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
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, Networking and Infrastructure Portfolio, Software and Computer Services Portfolio and Technology Portfolio (the Funds)
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 Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Networking and Infrastructure Portfolio, Software and Computer Services Portfolio and Technology Portfolio (funds of Fidelity Select Portfolios) at February 29, 2008, 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006- |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002- |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002- |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 and 2000 Secretary of Select Communications Equipment Portfolio (1998), Select Computers Portfolio (1998), Select Electronics Portfolio (1998), Select IT Services Portfolio (1998), Select Networking and Infrastructure Portfolio (2000), Select Software and Computer Services Portfolio (1998), and Select Technology Portfolio (1998). He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007- |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Communications Equipment Portfolio, Select Computers Portfolio, Select Electronics Portfolio, Select IT Services Portfolio, Select Networking and Infrastructure Portfolio, Select Software and Computer Services Portfolio, and Select Technology Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select IT Services Portfolio | $2,873,396 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Electronics Portfolio | 100% | 100% |
Select IT Services Portfolio | 0% | 18% |
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 2007 | December 2007 |
Select Electronics Portfolio | 100% | 100% |
Select IT Services Portfolio | 0% | 26% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
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(U.K.) Inc.
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(U.K. Limited)
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Fidelity Distributors Corporation
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Fidelity®
Select Portfolios®
Telecommunications Services Sector
Select Telecommunications Portfolio
Select Wireless Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Telecommunications | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Wireless | 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 |
| |
Proxy Voting Results |
| |
|
|
|
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Select Telecommunications Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of Telecommunications' 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 29, 2008 | Past 1 | Past 5 | Past 10 |
Telecommunications | -15.30% | 13.58% | 1.01% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) Index performed over the same period.
Annual Report
Select Telecommunications Portfolio
Management's Discussion of Fund Performance
Comments from Gavin Baker, Portfolio Manager of Select Telecommunications Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12-month period ending February 29, 2008, Telecommunications returned -15.30%, underperforming the S&P 500® and the -12.23% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index. The fund was hurt by being heavily underweighted in integrated telecommunication services stocks AT&T and Verizon, which together represented about two-thirds of the index, at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. Though the fund had significant stakes in both of these companies - AT&T was its largest holding during the period - I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in AT&T and Verizon than these rules allowed me to during the period, which hurt as well. Poor stock selection in the integrated telecom services group also detracted. In addition, the fund was overweighted in the alternative carriers group, which underperformed. In terms of other individual detractors, alternative carrier Level 3 Communications hurt performance. Integrated telecom services company Qwest Communications International and Internet software and services stock SAVVIS held back the fund's return as well. On the other hand, we benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel, which performed poorly. Other stocks that contributed included broadcasting and cable TV company The DIRECTV Group, an out-of-benchmark position, and application software company Synchronoss Technologies, another out-of-benchmark holding.
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
Select Telecommunications Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 761.10 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 760.00 | $ 6.35 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 758.20 | $ 8.48 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 758.50 | $ 8.44 |
HypotheticalA | $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications |
|
|
|
Actual | $ 1,000.00 | $ 762.50 | $ 3.94 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 762.70 | $ 3.55 |
HypotheticalA | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.93% |
Telecommunications | .90% |
Institutional Class | .81% |
Annual Report
Select Telecommunications Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.1 | 24.2 |
Qwest Communications International, Inc. | 7.7 | 10.0 |
Global Crossing Ltd. | 7.7 | 0.5 |
Verizon Communications, Inc. | 7.3 | 7.2 |
Time Warner Telecom, Inc. Class A (sub. vtg.) | 6.1 | 4.6 |
Millicom International Cellular SA | 4.8 | 0.0 |
The DIRECTV Group, Inc. | 4.3 | 0.0 |
American Tower Corp. Class A | 4.1 | 3.1 |
Starent Networks Corp. | 4.0 | 1.7 |
Synchronoss Technologies, Inc. | 3.1 | 6.8 |
| 69.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Diversified Telecommunication Services | 55.0% |
|
 | Wireless Telecommunication Services | 27.3% |
|
 | Media | 6.0% |
|
 | Communications Equipment | 5.0% |
|
 | Software | 4.3% |
|
 | All Others* | 2.4% |
|
| |||
As of August 31, 2007 | |||
| Diversified Telecommunication Services | 60.8% |
|
| Wireless Telecommunication Services | 21.2% |
|
| Software | 10.7% |
|
| Internet Software & Services | 4.0% |
|
| Communications Equipment | 2.1% |
|
| All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Telecommunications Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 5.0% | |||
Communications Equipment - 5.0% | |||
Aruba Networks, Inc. | 109,692 | $ 615,372 | |
F5 Networks, Inc. (a) | 1,600 | 35,456 | |
Infinera Corp. | 71,400 | 833,952 | |
Juniper Networks, Inc. (a) | 56,100 | 1,504,602 | |
Polycom, Inc. (a) | 1,700 | 37,060 | |
Sandvine Corp. (a) | 3,200 | 9,560 | |
Sonus Networks, Inc. (a) | 56,800 | 188,576 | |
Starent Networks Corp. | 870,714 | 13,696,331 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 300 | 6,450 | |
| 16,927,359 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 2,805 | |
Network Appliance, Inc. (a) | 700 | 15,134 | |
Synaptics, Inc. (a) | 300 | 8,037 | |
| 25,976 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 55.0% | |||
Alternative Carriers - 15.4% | |||
Cable & Wireless PLC | 18,800 | 65,683 | |
Cogent Communications Group, Inc. (a) | 104,308 | 2,031,920 | |
Global Crossing Ltd. (a) | 1,353,407 | 26,134,289 | |
Iliad Group SA | 600 | 55,321 | |
Level 3 Communications, Inc. (a)(d) | 1,265,852 | 2,822,850 | |
PAETEC Holding Corp. (a) | 73,600 | 568,192 | |
Time Warner Telecom, Inc. Class A (sub. vtg.) (a) | 1,299,442 | 20,713,105 | |
| 52,391,360 | ||
Integrated Telecommunication Services - 39.6% | |||
AT&T, Inc. | 1,962,602 | 68,357,428 | |
BT Group PLC | 5,053 | 22,875 | |
Cbeyond, Inc. (a) | 125,962 | 2,064,517 | |
Cincinnati Bell, Inc. (a) | 299,100 | 1,160,508 | |
Embarq Corp. | 45,100 | 1,891,494 | |
FairPoint Communications, Inc. | 74,300 | 731,112 | |
NTELOS Holdings Corp. | 632 | 13,481 | |
PT Indosat Tbk | 1,778,000 | 1,298,499 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,773,400 | 3,977,255 | |
Qwest Communications International, Inc. (d) | 4,878,944 | 26,346,298 | |
Telefonica SA | 40,800 | 1,179,664 | |
Telefonica SA sponsored ADR | 8,500 | 737,290 | |
Telenor ASA | 50,000 | 1,023,804 | |
Telenor ASA sponsored ADR | 4,100 | 254,569 | |
Telkom SA Ltd. | 34,500 | 615,288 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 681,524 | $ 24,752,952 | |
Windstream Corp. | 40,308 | 474,022 | |
| 134,901,056 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION | 187,292,416 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% | |||
Electronic Manufacturing Services - 0.1% | |||
Trimble Navigation Ltd. (a) | 8,940 | 244,420 | |
INTERNET SOFTWARE & SERVICES - 2.1% | |||
Internet Software & Services - 2.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 42,406 | |
SAVVIS, Inc. (a)(d) | 357,800 | 6,952,054 | |
| 6,994,460 | ||
MEDIA - 6.0% | |||
Broadcasting & Cable TV - 6.0% | |||
Comcast Corp. Class A | 298,400 | 5,830,736 | |
Liberty Global, Inc. Class A (a) | 400 | 15,040 | |
The DIRECTV Group, Inc. (a) | 581,400 | 14,564,070 | |
Time Warner Cable, Inc. (a) | 1,200 | 32,760 | |
Virgin Media, Inc. | 1,400 | 21,000 | |
| 20,463,606 | ||
SOFTWARE - 4.3% | |||
Application Software - 3.1% | |||
Synchronoss Technologies, Inc. (a)(d) | 666,163 | 10,711,901 | |
Home Entertainment Software - 1.2% | |||
Gameloft (a)(d) | 694,986 | 2,968,566 | |
Glu Mobile, Inc. | 208,214 | 982,770 | |
| 3,951,336 | ||
TOTAL SOFTWARE | 14,663,237 | ||
WIRELESS TELECOMMUNICATION SERVICES - 27.3% | |||
Wireless Telecommunication Services - 27.3% | |||
America Movil SAB de CV Series L sponsored ADR | 153,600 | 9,286,656 | |
American Tower Corp. Class A (a) | 364,000 | 13,992,160 | |
Bharti Airtel Ltd. (a) | 225,784 | 4,613,014 | |
Centennial Communications Corp. Class A (a) | 107,300 | 565,471 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 105,800 | 7,894,796 | |
Clearwire Corp. (d) | 76,500 | 1,071,765 | |
Crown Castle International Corp. (a) | 230,000 | 8,300,700 | |
Leap Wireless International, Inc. (a) | 30,614 | 1,309,055 | |
MetroPCS Communications, Inc. | 59,900 | 955,405 | |
Millicom International Cellular SA (a) | 148,800 | 16,442,400 | |
MTN Group Ltd. | 41,500 | 649,964 | |
NII Holdings, Inc. (a) | 119,300 | 4,739,789 | |
OnMobile Global Ltd. | 8,904 | 141,066 | |
SBA Communications Corp. Class A (a) | 163,564 | 5,078,662 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Sprint Nextel Corp. | 1,061,113 | $ 7,544,513 | |
Syniverse Holdings, Inc. (a) | 36,468 | 618,133 | |
Telephone & Data Systems, Inc. | 17,541 | 822,673 | |
Virgin Mobile USA, Inc. Class A | 600 | 3,042 | |
Vodafone Group PLC sponsored ADR | 281,700 | 9,079,191 | |
| 93,108,455 | ||
TOTAL COMMON STOCKS (Cost $419,374,069) | 339,719,929 | ||
Money Market Funds - 10.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 310,331 | 310,331 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,799,540 | 34,799,540 | |
TOTAL MONEY MARKET FUNDS (Cost $35,109,871) | 35,109,871 | ||
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $454,483,940) | 374,829,800 | ||
NET OTHER ASSETS - (10.1)% | (34,304,752) | ||
NET ASSETS - 100% | $ 340,525,048 | ||
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. |
(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 | $ 280,924 |
Fidelity Securities Lending Cash Central Fund | 296,380 |
Total | $ 577,304 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.6% |
Bermuda | 7.7% |
Luxembourg | 4.8% |
Mexico | 2.7% |
United Kingdom | 2.7% |
Hong Kong | 2.3% |
Indonesia | 1.6% |
India | 1.4% |
Others (individually less than 1%) | 2.2% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $379,461,672 of which $205,830,514, $161,866,685 and $11,764,473 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $32,487,257) - See accompanying schedule: Unaffiliated issuers (cost $419,374,069) | $ 339,719,929 |
|
Fidelity Central Funds (cost $35,109,871) | 35,109,871 |
|
Total Investments (cost $454,483,940) |
| $ 374,829,800 |
Foreign currency held at value (cost $83,021) | 82,631 | |
Receivable for investments sold | 19,855,223 | |
Receivable for fund shares sold | 344,748 | |
Dividends receivable | 11,880 | |
Distributions receivable from Fidelity Central Funds | 37,457 | |
Prepaid expenses | 1,729 | |
Other receivables | 74,585 | |
Total assets | 395,238,053 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 18,245,145 | |
Payable for fund shares redeemed | 1,332,608 | |
Accrued management fee | 167,643 | |
Distribution fees payable | 2,814 | |
Other affiliated payables | 111,950 | |
Other payables and accrued expenses | 53,305 | |
Collateral on securities loaned, at value | 34,799,540 | |
Total liabilities | 54,713,005 | |
|
|
|
Net Assets | $ 340,525,048 | |
Net Assets consist of: |
| |
Paid in capital | $ 803,876,156 | |
Undistributed net investment income | 768,284 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (384,523,224) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (79,596,168) | |
Net Assets | $ 340,525,048 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 42.56 | |
|
|
|
Maximum offering price per share (100/94.25 of $42.56) | $ 45.16 | |
Class T: | $ 42.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $42.49) | $ 44.03 | |
Class B: | $ 42.42 | |
|
|
|
Class C: | $ 42.42 | |
|
|
|
|
|
|
Telecommunications: | $ 42.70 | |
|
|
|
Institutional Class: | $ 42.65 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,351,360 |
Interest |
| 2,137 |
Income from Fidelity Central Funds |
| 577,304 |
Total income |
| 9,930,801 |
|
|
|
Expenses | ||
Management fee | $ 3,281,900 | |
Transfer agent fees | 1,595,234 | |
Distribution fees | 35,596 | |
Accounting and security lending fees | 235,248 | |
Custodian fees and expenses | 54,668 | |
Independent trustees' compensation | 2,280 | |
Registration fees | 91,709 | |
Audit | 51,261 | |
Legal | 6,535 | |
Interest | 15,671 | |
Miscellaneous | 22,940 | |
Total expenses before reductions | 5,393,042 | |
Expense reductions | (66,753) | 5,326,289 |
Net investment income (loss) | 4,604,512 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $243,559) | 113,352,578 | |
Foreign currency transactions | 9,773 | |
Total net realized gain (loss) |
| 113,362,351 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $269,285) | (171,834,903) | |
Assets and liabilities in foreign currencies | (2,672) | |
Total change in net unrealized appreciation (depreciation) |
| (171,837,575) |
Net gain (loss) | (58,475,224) | |
Net increase (decrease) in net assets resulting from operations | $ (53,870,712) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,604,512 | $ 6,535,260 |
Net realized gain (loss) | 113,362,351 | 31,878,042 |
Change in net unrealized appreciation (depreciation) | (171,837,575) | 54,610,776 |
Net increase (decrease) in net assets resulting from operations | (53,870,712) | 93,024,078 |
Distributions to shareholders from net investment income | (4,987,721) | (5,987,382) |
Share transactions - net increase (decrease) | (227,033,730) | 136,866,943 |
Redemption fees | 35,395 | 144,270 |
Total increase (decrease) in net assets | (285,856,768) | 224,047,909 |
|
|
|
Net Assets | ||
Beginning of period | 626,381,816 | 402,333,907 |
End of period (including undistributed net investment income of $768,284 and undistributed net investment income of $1,385,280, respectively) | $ 340,525,048 | $ 626,381,816 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .26 | - K |
Net realized and unrealized gain (loss) | (8.08) | 3.15 |
Total from investment operations | (7.82) | 3.15 |
Distributions from net investment income | (.51) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.56 | $ 50.89 |
Total Return B, C, D | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.23% A |
Expenses net of all reductions | 1.19% | 1.22% A |
Net investment income (loss) | .49% | (.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 2,791 | $ 658 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .12 | (.02) |
Net realized and unrealized gain (loss) | (8.07) | 3.14 |
Total from investment operations | (7.95) | 3.12 |
Distributions from net investment income | (.42) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.49 | $ 50.86 |
Total Return B, C, D | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.46% | 1.54% A |
Expenses net of all reductions | 1.45% | 1.53% A |
Net investment income (loss) | .23% | (.24)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,270 | $ 560 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.05) |
Net realized and unrealized gain (loss) | (8.04) | 3.11 |
Total from investment operations | (8.18) | 3.06 |
Distributions from net investment income | (.20) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.80 |
Total Return B, C, D | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.05% A |
Expenses net of all reductions | 1.94% | 2.05% A |
Net investment income (loss) | (.26)% | (.49)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 741 | $ 291 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.07) |
Net realized and unrealized gain (loss) | (8.03) | 3.14 |
Total from investment operations | (8.17) | 3.07 |
Distributions from net investment income | (.22) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.81 |
Total Return B, C, D | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.95% | 2.07% A |
Expenses net of all reductions | 1.94% | 2.06% A |
Net investment income (loss) | (.26)% | (.65)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 902 | $ 332 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Telecommunications
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 | $ 23.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 | .61 F | .36 | .49 G | .08 |
Net realized and unrealized gain (loss) | (8.12) | 8.85 | 7.11 | (.96) | 12.13 |
Total from investment operations | (7.69) | 9.46 | 7.47 | (.47) | 12.21 |
Distributions from net investment income | (.52) | (.53) | (.33) | (.49) | (.05) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | .01 |
Net asset value, end of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Total Return A, B | (15.30)% | 22.69% | 21.54% | (1.40)% | 51.78% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .91% | .99% | 1.05% | 1.09% | 1.40% |
Expenses net of fee waivers, if any | .90% | .97% | 1.05% | 1.09% | 1.40% |
Expenses net of all reductions | .90% | .97% | .96% | 1.02% | 1.34% |
Net investment income (loss) | .79% | 1.34% F | .96% | 1.44% G | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 | $ 439,350 |
Portfolio turnover rate E | 134% | 162% | 148% | 56% | 98% |
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 Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..68%. 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 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. I For the year ended February 29. J Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .45 | .16 |
Net realized and unrealized gain (loss) | (8.09) | 3.01 |
Total from investment operations | (7.64) | 3.17 |
Distributions from net investment income | (.62) | - |
Redemption fees added to paid in capital D | - J | - J |
Net asset value, end of period | $ 42.65 | $ 50.91 |
Total Return B, C | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .83% | .98% A |
Expenses net of fee waivers, if any | .83% | .98% A |
Expenses net of all reductions | .83% | .97% A |
Net investment income (loss) | .86% | 1.52% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 256 | $ 114 |
Portfolio turnover rate F | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 5,270,613 |
|
Unrealized depreciation | (89,928,331) |
|
Net unrealized appreciation (depreciation) | (84,657,718) |
|
Undistributed ordinary income | 769,188 |
|
Capital loss carryforward | (379,461,672) |
|
|
|
|
Cost for federal income tax purposes | $ 459,487,518 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 4,987,721 | $ 5,987,382 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $772,122,381 and $982,539,013, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 7,757 | $ 1,222 |
Class T | .25% | .25% | 9,224 | 509 |
Class B | .75% | .25% | 8,516 | 6,658 |
Class C | .75% | .25% | 10,099 | 5,308 |
|
|
| $ 35,596 | $ 13,697 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 6,846 |
Class T | 1,522 |
Class B* | 3,132 |
Class C* | 288 |
| $ 11,788 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Telecommunications shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 9,513 | .31 |
Class T | 5,889 | .32 |
Class B | 2,638 | .31 |
Class C | 3,087 | .31 |
Telecommunications | 1,573,465 | .27 |
Institutional Class | 642 | .19 |
| $ 1,595,234 |
|
Accounting and Security Lending Fees. FSC 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 $17,606 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 |
Borrower | $ 8,152,429 | 4.94% | $ 15,671 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,339 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $296,380.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Telecommunications' operating expenses. During the period, this reimbursement reduced the class' expenses by $38,998.
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 $20,022 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Telecommunications | $ 7,614 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 34,959 | $ - |
Class T | 17,867 | - |
Class B | 3,199 | - |
Class C | 4,260 | - |
Telecommunications | 4,919,180 | 5,987,382 |
Institutional Class | 8,256 | - |
Total | $ 4,987,721 | $ 5,987,382 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 92,950 | 12,932 | $ 5,148,375 | $ 655,617 |
Reinvestment of distributions | 636 | - | 33,452 | - |
Shares redeemed | (40,941) | - | (2,000,467) | - |
Net increase (decrease) | 52,645 | 12,932 | $ 3,181,360 | $ 655,617 |
Class T |
|
|
|
|
Shares sold | 53,657 | 11,066 | $ 2,989,303 | $ 555,092 |
Reinvestment of distributions | 339 | - | 17,826 | - |
Shares redeemed | (35,109) | (60) | (1,688,606) | (3,110) |
Net increase (decrease) | 18,887 | 11,006 | $ 1,318,523 | $ 551,982 |
Class B |
|
|
|
|
Shares sold | 21,448 | 5,729 | $ 1,194,831 | $ 285,388 |
Reinvestment of distributions | 57 | - | 3,011 | - |
Shares redeemed | (9,753) | - | (488,017) | - |
Net increase (decrease) | 11,752 | 5,729 | $ 709,825 | $ 285,388 |
Class C |
|
|
|
|
Shares sold | 28,254 | 6,538 | $ 1,547,917 | $ 326,374 |
Reinvestment of distributions | 63 | - | 3,315 | - |
Shares redeemed | (13,594) | - | (674,972) | - |
Net increase (decrease) | 14,723 | 6,538 | $ 876,260 | $ 326,374 |
Telecommunications |
|
|
|
|
Shares sold | 3,678,807 | 12,699,449 | $ 202,863,624 | $ 581,140,315 |
Reinvestment of distributions | 89,389 | 124,102 | 4,711,340 | 5,727,266 |
Shares redeemed | (8,198,629) | (10,144,422) | (440,994,970) | (451,923,224) |
Net increase (decrease) | (4,430,433) | 2,679,129 | $ (233,420,006) | $ 134,944,357 |
Institutional Class |
|
|
|
|
Shares sold | 14,719 | 3,391 | $ 834,674 | $ 162,500 |
Reinvestment of distributions | 128 | - | 6,760 | - |
Shares redeemed | (11,092) | (1,150) | (541,126) | (59,275) |
Net increase (decrease) | 3,755 | 2,241 | $ 300,308 | $ 103,225 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Life of |
Select Wireless Portfolio | 4.71% | 26.79% | -3.05% |
A From September 21, 2000.
$10,000 Over Life of Fund
Let's say hypothetically that $10,000 was invested in Select Wireless Portfolio on September 21, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period.
Annual Report
Management's Discussion of Fund Performance
Comments from Gavin Baker, Portfolio Manager of Select Wireless Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
The fund returned 4.71% for the year ending February 29, 2008, compared with -10.78% for the Standard & Poor's® (S&P®) Custom Wireless Index, which became its supplemental benchmark on November 1, 2007. The new benchmark is a customized index created by S&P that reflects the specific investment policies of the fund and, thus, in Fidelity's view, will be a better benchmark for evaluating its performance over time. The fund also outperformed the -16.35% return of a blended index combining the returns of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index, with which the fund was compared through October, and the new S&P benchmark mentioned above, with which the fund was compared during the period's final four months.1 During the same 12-month period, the fund outperformed the S&P 500® as well. Relative to the blended index, the fund was helped by very strong performance results during the first six months of the period, which cushioned it during the past six months when wireless stocks were hard hit by the economic downturn. Overall, the fund outperformed the blended index during the 12-month period due mostly to outstanding security selection in communications equipment companies. Good stock selection in the wireless telecommunication services and computer hardware groups helped as well. Individual stocks that contributed to the fund's return were Canada's Research In Motion, U.K.-based wireless company Vodafone, and Nokia, a major cell phone maker based in Finland. The fund had sizable overweightings in all three stocks. Being underweighted in poor performers Sprint Nextel and Motorola later in the period also helped. The fund was hurt by heavily underweighting integrated telecommunication services stocks Verizon and AT&T at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in Verizon and AT&T than these rules allowed me to during the period, which hurt as well. Out-of-index communications equipment company Aruba Networks - which makes wireless local area network technology, or Wi-Fi, equipment - also dampened results.
1 The fund's blended index is a customized index developed by Fidelity for the limited purpose of discussing the fund's performance for the 12-month period ending February 29, 2008. From March 1, 2007, through October 31, 2007, the fund compared its performance with the MSCI US Investable Market Telecommunications Services index. On November 1, 2007, the fund began comparing its performance with a different index, the S&P Custom Wireless index. For the 12-month period ending February 29, 2008, the blended index (MSCI and S&P) returned -16.35%.
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Actual | $ 1,000.00 | $ 840.80 | $ 4.12 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
* Expenses are equal to the Fund's annualized expense ratio of .90%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Select Wireless Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Vodafone Group PLC sponsored ADR | 10.8 | 8.4 |
Nokia Corp. sponsored ADR | 9.7 | 8.9 |
Starent Networks Corp. | 6.9 | 3.2 |
Millicom International Cellular SA | 6.8 | 0.0 |
Research In Motion Ltd. | 5.7 | 14.7 |
American Tower Corp. Class A | 4.9 | 3.7 |
Crown Castle International Corp. | 3.7 | 3.6 |
Harris Corp. | 3.6 | 3.5 |
Synchronoss Technologies, Inc. | 3.5 | 4.4 |
NII Holdings, Inc. | 3.3 | 0.2 |
| 58.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Wireless Telecommunication Services | 53.7% |
|
 | Communications Equipment | 31.1% |
|
 | Diversified Telecommunication Services | 6.1% |
|
 | Software | 4.3% |
|
 | Semiconductors & Semiconductor Equipment | 3.7% |
|
 | All Others* | 1.1% |
|
| |||
As of August 31, 2007 | |||
| Communications Equipment | 46.5% |
|
| Wireless Telecommunication Services | 32.6% |
|
| Diversified Telecommunication Services | 7.1% |
|
| Software | 6.6% |
|
| Computers & Peripherals | 2.4% |
|
| All Others* | 4.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Wireless Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 31.1% | |||
Communications Equipment - 31.1% | |||
Aruba Networks, Inc. | 314,584 | $ 1,764,816 | |
Cisco Systems, Inc. (a) | 46,200 | 1,125,894 | |
Comverse Technology, Inc. (a) | 2,620 | 43,151 | |
Harris Corp. | 324,700 | 15,855,101 | |
Motorola, Inc. | 382,380 | 3,812,329 | |
Nokia Corp. sponsored ADR | 1,177,700 | 42,408,977 | |
Powerwave Technologies, Inc. (a) | 89,500 | 255,970 | |
QUALCOMM, Inc. | 247,050 | 10,467,509 | |
Research In Motion Ltd. (a) | 238,400 | 24,745,920 | |
Sandvine Corp. (a) | 10,900 | 32,565 | |
Starent Networks Corp. (d) | 1,918,312 | 30,175,048 | |
Tekelec (a) | 1,600 | 19,056 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 216,800 | 4,661,200 | |
| 135,367,536 | ||
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Storage & Peripherals - 0.1% | |||
Synaptics, Inc. (a) | 10,600 | 283,974 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 6.1% | |||
Integrated Telecommunication Services - 6.1% | |||
AT&T, Inc. | 235,197 | 8,191,912 | |
Cbeyond, Inc. (a) | 8,500 | 139,315 | |
NTELOS Holdings Corp. | 102,400 | 2,184,192 | |
PT Indosat Tbk | 4,351,500 | 3,177,963 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,347,000 | 3,527,819 | |
Telefonica SA sponsored ADR | 200 | 17,348 | |
Telenor ASA sponsored ADR | 100 | 6,209 | |
Telkom SA Ltd. | 47,000 | 838,218 | |
Verizon Communications, Inc. | 238,600 | 8,665,952 | |
| 26,748,928 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 1,000 | 27,340 | |
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
Openwave Systems, Inc. | 198,141 | 408,170 | |
SAVVIS, Inc. (a) | 6,200 | 120,466 | |
| 528,636 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.7% | |||
Semiconductors - 3.7% | |||
Atheros Communications, Inc. (a) | 97,200 | 2,363,904 | |
| |||
Shares | Value | ||
Cree, Inc. (a) | 25,200 | $ 778,680 | |
Marvell Technology Group Ltd. (a) | 563,600 | 6,374,316 | |
RF Micro Devices, Inc. (a)(d) | 504,600 | 1,589,490 | |
Skyworks Solutions, Inc. (a)(d) | 579,000 | 4,782,540 | |
| 15,888,930 | ||
SOFTWARE - 4.3% | |||
Application Software - 3.5% | |||
Nuance Communications, Inc. (a)(d) | 6,400 | 105,280 | |
Synchronoss Technologies, Inc. (a)(d) | 928,055 | 14,923,124 | |
| 15,028,404 | ||
Home Entertainment Software - 0.8% | |||
Gameloft (a) | 482,362 | 2,060,363 | |
Glu Mobile, Inc. (d) | 330,779 | 1,561,277 | |
| 3,621,640 | ||
TOTAL SOFTWARE | 18,650,044 | ||
WIRELESS TELECOMMUNICATION SERVICES - 53.7% | |||
Wireless Telecommunication Services - 53.7% | |||
America Movil SAB de CV Series L sponsored ADR | 175,400 | 10,604,684 | |
American Tower Corp. Class A (a) | 554,192 | 21,303,140 | |
Bharti Airtel Ltd. (a) | 521,935 | 10,663,703 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 123,700 | 9,230,494 | |
Clearwire Corp. (d) | 349,300 | 4,893,693 | |
Crown Castle International Corp. (a)(d) | 448,500 | 16,186,365 | |
InPhonic, Inc. (a) | 27,700 | 416 | |
KDDI Corp. | 1,298 | 7,886,032 | |
Leap Wireless International, Inc. (a) | 281,383 | 12,031,937 | |
MetroPCS Communications, Inc. (d) | 243,300 | 3,880,635 | |
Millicom International Cellular SA (a) | 266,400 | 29,437,200 | |
MTN Group Ltd. | 56,100 | 878,626 | |
NII Holdings, Inc. (a) | 363,500 | 14,441,855 | |
NTT DoCoMo, Inc. | 6,183 | 9,020,997 | |
OnMobile Global Ltd. | 12,342 | 195,534 | |
Orascom Telecom Holding SAE unit | 400 | 29,240 | |
Rogers Communications, Inc. Class B (non-vtg.) | 84,500 | 3,336,035 | |
SBA Communications Corp. Class A (a) | 462,300 | 14,354,415 | |
Sprint Nextel Corp. | 1,482,231 | 10,538,662 | |
Syniverse Holdings, Inc. (a) | 206,000 | 3,491,700 | |
Telephone & Data Systems, Inc. | 29,585 | 1,387,537 | |
U.S. Cellular Corp. (a) | 41,565 | 2,618,595 | |
Virgin Mobile USA, Inc. Class A (d) | 6,100 | 30,927 | |
Vodafone Group PLC sponsored ADR | 1,462,900 | 47,149,268 | |
| 233,591,690 | ||
TOTAL COMMON STOCKS (Cost $437,894,861) | 431,087,078 | ||
Money Market Funds - 9.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 2,906,674 | $ 2,906,674 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 37,094,625 | 37,094,625 | |
TOTAL MONEY MARKET FUNDS (Cost $40,001,299) | 40,001,299 | ||
TOTAL INVESTMENT PORTFOLIO - 108.3% (Cost $477,896,160) | 471,088,377 | ||
NET OTHER ASSETS - (8.3)% | (36,172,751) | ||
NET ASSETS - 100% | $ 434,915,626 | ||
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. |
(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 | $ 662,473 |
Fidelity Securities Lending Cash Central Fund | 380,836 |
Total | $ 1,043,309 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 50.2% |
United Kingdom | 10.8% |
Finland | 9.7% |
Luxembourg | 6.8% |
Canada | 6.5% |
Japan | 3.9% |
India | 2.6% |
Mexico | 2.4% |
Hong Kong | 2.1% |
Indonesia | 1.5% |
Bermuda | 1.5% |
Sweden | 1.1% |
Others (individually less than 1%) | 0.9% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2009 approximately $25,823,049 of losses recognized during the period November 1, 2007 to February 29, 2008. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $34,918,371) - See accompanying schedule: Unaffiliated issuers (cost $437,894,861) | $ 431,087,078 |
|
Fidelity Central Funds (cost $40,001,299) | 40,001,299 |
|
Total Investments (cost $477,896,160) |
| $ 471,088,377 |
Foreign currency held at value (cost $114,627) | 114,555 | |
Receivable for investments sold | 12,053,095 | |
Receivable for fund shares sold | 377,956 | |
Dividends receivable | 86,434 | |
Distributions receivable from Fidelity Central Funds | 53,498 | |
Prepaid expenses | 2,061 | |
Other receivables | 42,077 | |
Total assets | 483,818,053 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 9,075,015 | |
Payable for fund shares redeemed | 2,316,373 | |
Accrued management fee | 217,543 | |
Other affiliated payables | 143,822 | |
Other payables and accrued expenses | 55,049 | |
Collateral on securities loaned, at value | 37,094,625 | |
Total liabilities | 48,902,427 | |
|
|
|
Net Assets | $ 434,915,626 | |
Net Assets consist of: |
| |
Paid in capital | $ 470,267,506 | |
Distributions in excess of net investment income | (120,251) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (28,443,897) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (6,787,732) | |
Net Assets, for 60,117,096 shares outstanding | $ 434,915,626 | |
Net Asset Value, offering price and redemption price per share ($434,915,626 ÷ 60,117,096 shares) | $ 7.23 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,570,833 |
Special dividends |
| 653,849 |
Interest |
| 3,988 |
Income from Fidelity Central Funds (including $380,836 from security lending) |
| 1,043,309 |
Total income |
| 6,271,979 |
|
|
|
Expenses | ||
Management fee | $ 2,850,932 | |
Transfer agent fees | 1,378,160 | |
Accounting and security lending fees | 195,774 | |
Custodian fees and expenses | 43,092 | |
Independent trustees' compensation | 1,858 | |
Registration fees | 95,616 | |
Audit | 45,006 | |
Legal | 2,179 | |
Interest | 21,851 | |
Miscellaneous | 28,360 | |
Total expenses before reductions | 4,662,828 | |
Expense reductions | (17,840) | 4,644,988 |
Net investment income (loss) | 1,626,991 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $24,623) | (5,017,045) | |
Foreign currency transactions | (113,772) | |
Total net realized gain (loss) |
| (5,130,817) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $135,840) | (44,344,451) | |
Assets and liabilities in foreign currencies | (4,251) | |
Total change in net unrealized appreciation (depreciation) |
| (44,348,702) |
Net gain (loss) | (49,479,519) | |
Net increase (decrease) in net assets resulting from operations | $ (47,852,528) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Wireless Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,626,991 | $ 2,569,098 |
Net realized gain (loss) | (5,130,817) | 4,166,114 |
Change in net unrealized appreciation (depreciation) | (44,348,702) | (3,617,184) |
Net increase (decrease) in net assets resulting from operations | (47,852,528) | 3,118,028 |
Distributions to shareholders from net investment income | (2,415,450) | - |
Distributions to shareholders from net realized gain | (20,933,888) | (30,965,053) |
Total distributions | (23,349,338) | (30,965,053) |
Share transactions | 707,896,007 | 94,138,809 |
Reinvestment of distributions | 22,404,915 | 29,981,288 |
Cost of shares redeemed | (502,708,293) | (320,642,345) |
Net increase (decrease) in net assets resulting from share transactions | 227,592,629 | (196,522,248) |
Redemption fees | 153,910 | 37,734 |
Total increase (decrease) in net assets | 156,544,673 | (224,331,539) |
|
|
|
Net Assets | ||
Beginning of period | 278,370,953 | 502,702,492 |
End of period (including distributions in excess of net investment income of $120,251 and undistributed net investment income of $1,698,246, respectively) | $ 434,915,626 | $ 278,370,953 |
Other Information Shares | ||
Sold | 79,574,545 | 13,650,120 |
Issued in reinvestment of distributions | 2,523,076 | 4,216,778 |
Redeemed | (61,007,591) | (48,675,978) |
Net increase (decrease) | 21,090,030 | (30,809,080) |
Financial Highlights
Years ended February 28, | 2008 J | 2007 | 2006 | 2005 | 2004 J |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.13 | $ 7.20 | $ 5.69 | $ 4.85 | $ 2.42 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .03 F | .05 G | - K | (.01) | (.03) |
Net realized and unrealized gain (loss) | .36 H | .32 | 1.51 | .85 | 2.46 |
Total from investment operations | .39 | .37 | 1.51 | .84 | 2.43 |
Distributions from net investment income | (.03) | - | - | - | - |
Distributions from net realized gain | (.26) | (.44) | - | - | - |
Total distributions | (.29) | (.44) | - | - | - |
Redemption fees added to paid in capital C, K | - | - | - | - | - |
Net asset value, end of period | $ 7.23 | $ 7.13 | $ 7.20 | $ 5.69 | $ 4.85 |
Total Return A, B | 4.71% | 5.16% | 26.54% | 17.32% | 100.41% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | .91% | .97% | 1.00% | 1.04% | 1.55% |
Expenses net of fee waivers, if any | .91% | .97% | 1.00% | 1.04% | 1.55% |
Expenses net of all reductions | .91% | .96% | .89% | .97% | 1.43% |
Net investment income (loss) | .32% F | .69% G | .04% | (.27)% | (.77)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 434,916 | $ 278,371 | $ 502,702 | $ 372,705 | $ 283,040 |
Portfolio turnover rate E | 191% | 124% | 162% | 96% | 79% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .19%. G Investment income per share reflects a special dividend which amounted to $.03 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .30%. H 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, certain foreign taxes, partnerships and losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 48,289,321 |
|
Unrealized depreciation | (60,930,166) |
|
Net unrealized appreciation (depreciation) | (12,640,845) |
|
|
|
|
Cost for federal income tax purposes | $ 483,729,222 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 5,636,048 | $ 844,181 |
Long-term Capital Gains | 17,713,290 | 30,120,872 |
Total | $ 23,349,338 | $ 30,965,053 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,147,977,039 and $935,025,176, 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the Fund's transfer agent. For the period the transfer agent fees were equivalent to an annual rate of .27% of average net assets.
Accounting and Security Lending Fees. FSC 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 $21,851 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 | $ 7,791,174 | 4.39% | $ 21,851 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,081 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $11,381 for the period. In addition, through arrangements with the Fund's transfer agent, 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 transfer agent expenses by $6,387.
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $26,927.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
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 29, 2008, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 and 2000 Secretary of Select Telecommunications Portfolio (1998) and Select Wireless Portfolio (2000). He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (63) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Telecommunications Portfolio and Select Wireless Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Wireless Portfolio | $17,451,568 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Telecommunications Portfolio | 100% | 100% |
Select Wireless Portfolio | 0% | 26% |
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 2007 | December 2007 |
Select Telecommunications Portfolio | 100% | 100% |
Select Wireless Portfolio | 0% | 79% |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
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(U.K.) Inc.
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(U.K. Limited)
General Distributor
Fidelity Distributors Corporation
Boston, MA
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Corporate Headquarters
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The Fidelity Telephone Connection
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and Account Assistance 1-800-544-6666
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Fidelity®
Select Portfolios®
Utilities Sector
Select Utilities Growth Portfolio
Annual Report
February 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Performance |
| |
Management's Discussion |
| |
Shareholder Expense Example |
| |
Investment Changes |
| |
Investments |
| |
Financial Statements |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
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 (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Select Utilities Growth Portfolio
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Select Utilities Growth Portfolio A | -0.22% | 20.42% | 6.14% |
A Prior to October 1, 2006, Utilities Growth 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 Select Utilities Growth Portfolio on February 28, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Select Utilities Growth Portfolio
Management's Discussion of Fund Performance
Comments from Douglas Simmons, Portfolio Manager of Select Utilities Growth Portfolio
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund returned -0.22%, slightly underperforming the 0.26% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Utilities Index but outperforming the S&P 500®. Underweighting gas utilities stocks held back performance relative to the MSCI index, as did less-than-favorable stock selection among electric utilities and a disappointing out-of-index holding in oil and gas storage/transport. Carrying a modest cash position at times during the period also dampened returns. However, strong security selection and an underweighting in multi-utilities stocks bolstered relative performance, as did owning small out-of-benchmark stakes in coal/consumable fuels and construction/engineering. Detractors relative to the MSCI index included independent power producer AES, Houston-based gas utility Southern Union, underweighted positions in two electric utilities that outperformed - Florida-based FPL Group and Edison International, located in California - Michigan-based electric utility CMS Energy and untimely ownership of electric utility Duke Energy in North Carolina. Top contributors to the fund's relative performance were an underweighting in Virginia-based electric utility Dominion Resources, electric utility TXU - located in Texas - independent power producers/energy traders Constellation Energy Group from Maryland and NRG Energy in New Jersey, and not owning multi-utility and index component Consolidated Edison, headquartered in New York. Some of the stocks mentioned here 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
Select Utilities Growth Portfolio
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Actual | $ 1,000.00 | $ 984.10 | $ 4.24 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
* Expenses are equal to the Fund's annualized expense ratio of .86%; multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
Select Utilities Growth Portfolio
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Exelon Corp. | 10.2 | 8.6 |
PPL Corp. | 10.1 | 7.8 |
Constellation Energy Group, Inc. | 6.3 | 4.2 |
Entergy Corp. | 5.8 | 4.0 |
NRG Energy, Inc. | 5.7 | 4.4 |
FPL Group, Inc. | 5.7 | 1.1 |
Public Service Enterprise Group, Inc. | 5.1 | 3.7 |
FirstEnergy Corp. | 4.5 | 3.4 |
Dominion Resources, Inc. | 4.4 | 0.0 |
AES Corp. | 4.3 | 7.1 |
| 62.1 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Electric Utilities | 53.9% |
|
 | Independent Power Producers & Energy Traders | 20.2% |
|
 | Multi-Utilities | 19.8% |
|
 | Gas Utilities | 4.0% |
|
 | Oil, Gas & Consumable Fuels | 1.6% |
|
 | All Others* | 0.5% |
|
|
As of August 31, 2007 | |||
| Electric Utilities | 40.8% |
|
| Independent Power Producers & Energy Traders | 32.6% |
|
| Multi-Utilities | 18.4% |
|
| Gas Utilities | 6.2% |
|
| Construction & Engineering | 0.6% |
|
| All Others* | 1.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Utilities Growth Portfolio
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Other Diversifed Financial Services - 0.2% | |||
Hicks Acquisition Co. I, Inc. unit | 147,800 | $ 1,441,050 | |
ELECTRIC UTILITIES - 53.9% | |||
Electric Utilities - 53.9% | |||
Allegheny Energy, Inc. | 508,300 | 25,755,561 | |
American Electric Power Co., Inc. | 624,100 | 25,538,172 | |
Edison International | 352,600 | 17,418,440 | |
Electricite de France | 89,400 | 8,337,509 | |
Entergy Corp. | 340,600 | 34,993,244 | |
Exelon Corp. (d) | 823,600 | 61,646,461 | |
FirstEnergy Corp. | 408,500 | 27,610,515 | |
FPL Group, Inc. | 572,900 | 34,540,141 | |
Great Plains Energy, Inc. (d) | 86,100 | 2,189,523 | |
Pepco Holdings, Inc. | 524,400 | 13,251,588 | |
PPL Corp. (d) | 1,348,100 | 61,176,778 | |
Reliant Energy, Inc. (a) | 504,179 | 11,495,281 | |
Westar Energy, Inc. | 113,700 | 2,584,401 | |
| 326,537,614 | ||
GAS UTILITIES - 4.0% | |||
Gas Utilities - 4.0% | |||
Equitable Resources, Inc. | 131,600 | 8,109,192 | |
Questar Corp. | 197,300 | 10,900,825 | |
Southern Union Co. | 193,800 | 4,984,536 | |
| 23,994,553 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 20.2% | |||
Independent Power Producers & Energy Traders - 20.2% | |||
AES Corp. (a) | 1,442,798 | 25,941,508 | |
Constellation Energy Group, Inc. | 432,100 | 38,176,035 | |
Dynegy, Inc. Class A (a) | 966,000 | 7,148,400 | |
Mirant Corp. (a) | 452,400 | 16,738,800 | |
NRG Energy, Inc. (a)(d) | 837,700 | 34,571,879 | |
| 122,576,622 | ||
MULTI-UTILITIES - 19.8% | |||
Multi-Utilities - 19.8% | |||
CenterPoint Energy, Inc. (d) | 347,000 | 5,093,960 | |
| |||
Shares | Value | ||
CMS Energy Corp. (d) | 847,116 | $ 12,189,999 | |
Dominion Resources, Inc. | 666,600 | 26,624,004 | |
PG&E Corp. | 346,400 | 13,045,424 | |
PNM Resources, Inc. | 94,500 | 1,118,880 | |
Public Service Enterprise Group, Inc. | 695,600 | 30,675,960 | |
Sempra Energy | 481,700 | 25,592,721 | |
Wisconsin Energy Corp. | 134,300 | 5,858,166 | |
| 120,199,114 | ||
OIL, GAS & CONSUMABLE FUELS - 1.6% | |||
Oil & Gas Storage & Transport - 1.6% | |||
Spectra Energy Corp. | 413,600 | 9,558,296 | |
TOTAL COMMON STOCKS (Cost $573,652,277) | 604,307,249 | ||
Money Market Funds - 14.1% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 85,120,125 | 85,120,125 | |
TOTAL INVESTMENT PORTFOLIO - 113.8% (Cost $658,772,402) | 689,427,374 | |
NET OTHER ASSETS - (13.8)% | (83,344,023) | |
NET ASSETS - 100% | $ 606,083,351 | |
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. |
(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 | $ 1,392,036 |
Fidelity Securities Lending Cash Central Fund | 131,958 |
Total | $ 1,523,994 |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $15,561,006 all of which will expire on February 28, 2011. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Utilities Growth Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $81,536,129) - Unaffiliated issuers (cost $573,652,277) | $ 604,307,249 |
|
Fidelity Central Funds (cost $85,120,125) | 85,120,125 |
|
Total Investments (cost $658,772,402) |
| $ 689,427,374 |
Receivable for investments sold | 8,014,110 | |
Receivable for fund shares sold | 701,375 | |
Dividends receivable | 1,934,921 | |
Distributions receivable from Fidelity Central Funds | 21,237 | |
Prepaid expenses | 1,845 | |
Other receivables | 272 | |
Total assets | 700,101,134 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 4,576,279 | |
Payable for fund shares redeemed | 3,805,331 | |
Accrued management fee | 301,446 | |
Other affiliated payables | 168,342 | |
Other payables and accrued expenses | 46,260 | |
Collateral on securities loaned, at value | 85,120,125 | |
Total liabilities | 94,017,783 | |
|
|
|
Net Assets | $ 606,083,351 | |
Net Assets consist of: |
| |
Paid in capital | $ 596,928,636 | |
Distributions in excess of net investment income | (1,508) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (21,498,749) | |
Net unrealized appreciation (depreciation) on investments | 30,654,972 | |
Net Assets, for 10,616,488 shares outstanding | $ 606,083,351 | |
Net Asset Value, offering price and redemption price per share ($606,083,351 ÷ 10,616,488 shares) | $ 57.09 | |
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 17,825,852 |
Interest |
| 14,387 |
Income from Fidelity Central Funds |
| 1,523,994 |
Total income |
| 19,364,233 |
|
|
|
Expenses | ||
Management fee | $ 4,862,826 | |
Transfer agent fees | 2,136,407 | |
Accounting and security lending fees | 305,801 | |
Custodian fees and expenses | 19,282 | |
Independent trustees' compensation | 3,405 | |
Registration fees | 146,298 | |
Audit | 39,157 | |
Legal | 6,918 | |
Interest | 85,038 | |
Miscellaneous | 28,369 | |
Total expenses before reductions | 7,633,501 | |
Expense reductions | (17,943) | 7,615,558 |
Net investment income (loss) | 11,748,675 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 33,146,971 | |
Foreign currency transactions | 2,531 | |
Total net realized gain (loss) |
| 33,149,502 |
Change in net unrealized appreciation (depreciation) on investment securities | (52,646,534) | |
Net gain (loss) | (19,497,032) | |
Net increase (decrease) in net assets resulting from operations | $ (7,748,357) | |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Utilities Growth Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 11,748,675 | $ 9,098,002 |
Net realized gain (loss) | 33,149,502 | 46,405,596 |
Change in net unrealized appreciation (depreciation) | (52,646,534) | 69,980,819 |
Net increase (decrease) in net assets resulting from operations | (7,748,357) | 125,484,417 |
Distributions to shareholders from net investment income | (14,620,352) | (7,028,986) |
Share transactions | 945,541,927 | 682,796,377 |
Reinvestment of distributions | 14,004,559 | 6,723,035 |
Cost of shares redeemed | (1,126,946,948) | (310,802,961) |
Net increase (decrease) in net assets resulting from share transactions | (167,400,462) | 378,716,451 |
Redemption fees | 169,692 | 140,020 |
Total increase (decrease) in net assets | (189,599,479) | 497,311,902 |
|
|
|
Net Assets | ||
Beginning of period | 795,682,830 | 298,370,928 |
End of period (including distributions in excess of net investment income of $1,508 and undistributed net investment income of $2,448,226, respectively) | $ 606,083,351 | $ 795,682,830 |
Other Information Shares | ||
Sold | 15,015,476 | 13,101,641 |
Issued in reinvestment of distributions | 213,867 | 122,956 |
Redeemed | (18,268,427) | (5,993,779) |
Net increase (decrease) | (3,039,084) | 7,230,818 |
Financial Highlights
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.27 | $ 46.44 | $ 40.04 | $ 33.94 | $ 24.44 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .84 | 1.00 | .73 | .76 F, G | .43 |
Net realized and unrealized gain (loss) | (.82) | 11.45 | 6.59 | 5.95 | 9.46 |
Total from investment operations | .02 | 12.45 | 7.32 | 6.71 | 9.89 |
Distributions from net investment income | (1.21) | (.64) | (.93) | (.62) | (.40) |
Redemption fees added to paid in capital C | .01 | .02 | .01 | .01 | .01 |
Net asset value, end of period | $ 57.09 | $ 58.27 | $ 46.44 | $ 40.04 | $ 33.94 |
Total Return A, B | (.22)% | 26.95% | 18.48% | 19.90% | 40.71% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .88% | .93% | .97% | 1.02% | 1.23% |
Expenses net of fee waivers, if any | .88% | .93% | .97% | 1.02% | 1.23% |
Expenses net of all reductions | .87% | .93% | .92% | .99% | 1.19% |
Net investment income (loss) | 1.35% | 1.93% | 1.71% | 2.06% F, G | 1.44% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 606,083 | $ 795,683 | $ 298,371 | $ 324,732 | $ 207,044 |
Portfolio turnover rate E | 121% | 107% | 101% | 51% | 76% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Total returns do not include the effect of the former sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Investment income per share reflects a special dividend which amounted to $.22 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.47%.
G As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended February 29, 2004, net investment income per share and the ratio of net investment income to average net assets for the year ended February 28, 2005 have been reduced by $0.02 per share and .06%, respectively. The change in estimate has no impact on total net assets or total return of the class.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I For the year ended February 29.
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Utilities Growth 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 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, losses deferred due to wash sales, excise tax regulations and capital loss carryforwards.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 59,729,229 |
|
Unrealized depreciation | (29,418,445) |
|
Net unrealized appreciation (depreciation) | 30,310,784 |
|
Capital loss carryforward | (15,561,006) |
|
|
|
|
Cost for federal income tax purposes | $ 659,116,590 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 14,620,352 | $ 7,028,986 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,013,217,875 and $1,132,393,876, 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the Fund's transfer agent. For the period the transfer agent fees were equivalent to an annual rate of .24% of average net assets.
Accounting and Security Lending Fees. FSC maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $3,103 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 Loan Balance | Weighted Average | Interest |
Borrower | $ 10,348,049 | 5.16% | $ 60,777 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,937 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $131,958.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $11,272,857. The weighted average interest rate was 5.53%. The interest expense amounted to $24,261 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
10. Expense Reductions.
Through arrangements with the Fund's transfer agent, 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 transfer agent expenses by $17,806.
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $40,344.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Utilities Growth 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 Growth Portfolio (a fund of Fidelity Select Portfolios) at February 29, 2008, 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 Growth 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 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 22, 2008
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, and review the fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of Select Utilities Growth Portfolio. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of Select Utilities Growth Portfolio. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of Select Utilities Growth Portfolio. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Select Utilities Growth Portfolio. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of Select Utilities Growth Portfolio. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of Select Utilities Growth Portfolio. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Select Utilities Growth Portfolio. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Utilities Growth Portfolio. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of Select Utilities Growth Portfolio. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Utilities Growth Portfolio. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of Select Utilities Growth Portfolio. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of Select Utilities Growth Portfolio. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of Select Utilities Growth Portfolio. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
The fund designates 100%, of the dividends distributed in April 2007 and December 2007, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100%, of the dividends distributed in April 2007 and December 2007, 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 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of the shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
| # of | % of |
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
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Overnight Express
Fidelity Investments
Attn: Distribution Services
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Selling shares
Fidelity Investments
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Fidelity Investments
Attn: Distribution Services
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General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Annual Report
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For directions and hours,
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Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
401 North Michigan Avenue
Chicago, IL
One Skokie Valley Road
Highland Park, IL
1415 West 22nd Street
Oak Brook, IL
15105 S LaGrange Road
Orland Park, IL
1572 East Golf Road
Schaumburg, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
8480 Keystone Crossing
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7315 Wisconsin Avenue
Bethesda, MD
610 York Road
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
200 Endicott Street
Danvers, MA
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
Farmington Hills, MI
43420 Grand River Avenue
Novi, MI
Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
1800 Crocker Road
Westlake, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
10 Memorial Boulevard
Providence, RI
Tennessee
3018 Peoples Street
Johnson City, TN
7628 West Farmington Blvd.
Germantown, TN
2035 Mallory Lane
Franklin, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
1701 Lake Robbins Drive
The Woodlands, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
10500 NE 8th Street
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
16020 West Bluemound Road
Brookfield, WI
Annual Report
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
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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 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders | |
Consumer Staples | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
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 (search for "proxy voting guidelines") 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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Consumer Staples Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 years | Past 10 |
Class A (incl. 5.75% sales charge) A | 6.86% | 14.67% | 7.10% |
Class T (incl. 3.50% sales charge) B | 9.15% | 15.12% | 7.31% |
Class B (incl. contingent deferred sales charge) C | 7.53% | 15.57% | 7.63% |
Class C (incl. contingent deferred sales charge) D | 11.58% | 15.80% | 7.63% |
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, 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, 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, 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, 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, Consumer Staples 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, 1998, 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 Standard & Poor's 500SM Index (S&P 500®) performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Fund
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned 13.38%, 13.11%, 12.53% and 12.58%, respectively (excluding sales charges), significantly outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Staples Index, which rose 7.22%, as well as the S&P 500®. I'm pursuing three general themes in this fund: companies with exposure to faster-growth parts of the world; companies that benefit from consumers "trading up" to higher-quality brands; and companies whose stocks are attractively valued - i.e., selling at below-average prices for what I believe is above-average growth potential. Relative to the MSCI index, these themes played out particularly well for our holdings in packaged food companies, brewers, soft drink firms and tobacco companies. Our stake in Swiss food conglomerate Nestle benefited from all three of the portfolio's major themes: Profits were buoyed by strong sales in emerging markets; I bought the stock at an attractive valuation; and many of Nestle's brands benefit from strong consumer loyalty that makes them less exposed to price competition. British American Tobacco (BAT) was a similar story, purchased at an attractive valuation and propelled by robust sales growth in emerging markets. Strong performance by our holdings in Belgium-based InBev, one of the world's largest brewers, and Souza Cruz, the largest cigarette maker in Brazil, also was driven by increasing sales in emerging markets. Our shares in Coca-Cola Hellenic, a dominant soft drink distributor in southern and eastern Europe, appreciated sharply. I invested in Numico, a Dutch maker of infant and clinical nutrition products, when its shares dipped to an attractive price, and I sold our position at a healthy profit when another firm later made a buyout offer for Numico. None of the stocks just mentioned were components of the MSCI index. Since I have been focusing the fund on companies that conduct business in many international markets, the continued deterioration in the value of the U.S. dollar versus other currencies increased the value of those businesses as measured in U.S. dollars, which benefited relative performance as well. On the negative side, relative performance was hurt by holdings in related areas that were outside our consumer staples benchmark, notably restaurants and food technology. Key individual detractors included food technology firm Senomyx and Norway-headquartered Marine Harvest ASA, the world's largest fish farmer, whose shares declined when some of its farms were hit by disease. Brewer SABMiller detracted from results as well. SABMiller, Marine Harvest and Senomyx were not components of the sector benchmark. Underweighting tobacco conglomerate Altria, a large index component, hurt relative performance as its stock moved higher. I had underweighted Altria in favor of BAT and its subsidiary Souza Cruz, which I felt were better opportunities in tobacco, and they more than offset the drag from being underweighted in Altria.
For the 12 months ending February 29, 2008, the fund's Institutional Class shares returned 13.77%, significantly outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Staples Index, which rose 7.22%, as well as the S&P 500®. I'm pursuing three general themes in this fund: companies with exposure to faster-growth parts of the world; companies that benefit from consumers "trading up" to higher-quality brands; and companies whose stocks are attractively valued - i.e., selling at below-average prices for what I believe is above-average growth potential. Relative to the MSCI index, these themes played out particularly well for our holdings in packaged food companies, brewers, soft drink firms and tobacco companies. Our stake in Swiss food conglomerate Nestle benefited from all three of the portfolio's major themes: Profits were buoyed by strong sales in emerging markets; I bought the stock at an attractive valuation; and many of Nestle's brands benefit from strong consumer loyalty that makes them less exposed to price competition. British American Tobacco (BAT) was a similar story, purchased at an attractive valuation and propelled by robust sales growth in emerging markets. Strong performance by our holdings in Belgium-based InBev, one of the world's largest brewers, and Souza Cruz, the largest cigarette maker in Brazil, also was driven by increasing sales in emerging markets. Our shares in Coca-Cola Hellenic, a dominant soft drink distributor in southern and eastern Europe, appreciated sharply. I invested in Numico, a Dutch maker of infant and clinical nutrition products, when its shares dipped to an attractive price, and I sold our position at a healthy profit when another firm later made a buyout offer for Numico. None of the stocks just mentioned were components of the MSCI index. Since I have been focusing the fund on companies that conduct business in many international markets, the continued deterioration in the value of the U.S. dollar versus other currencies increased the value of those businesses as measured in U.S. dollars, which benefited relative performance as well. On the negative side, relative performance was hurt by holdings in related areas that were outside our consumer staples benchmark, notably restaurants and food technology. Key individual detractors included food technology firm Senomyx and Norway-headquartered Marine Harvest ASA, the world's largest fish farmer, whose shares declined when some of its farms were hit by disease. Brewer SABMiller detracted from results as well. SABMiller, Marine Harvest and Senomyx were not components of the sector benchmark. Underweighting tobacco conglomerate Altria, a large index component, hurt relative performance as its stock moved higher. I had underweighted Altria in favor of BAT and its subsidiary Souza Cruz, which I felt were better opportunities in tobacco, and they more than offset the drag from being underweighted in Altria.
Annual Report
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.
Portfolio
Shareholder Expense Example
Select Consumer Staples Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,037.60 | $ 5.93 |
HypotheticalA | $ 1,000.00 | $ 1,019.05 | $ 5.87 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,036.00 | $ 7.34 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,033.60 | $ 9.81 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,033.80 | $ 9.56 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Consumer Staples |
|
|
|
Actual | $ 1,000.00 | $ 1,039.00 | $ 4.51 |
HypotheticalA | $ 1,000.00 | $ 1,020.44 | $ 4.47 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,039.30 | $ 4.21 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.17% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.89% |
Consumer Staples | .89% |
Institutional Class | .83% |
Annual Report
Investment Changes
Select Consumer Staples Portfolio
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.5 | 16.3 |
The Coca-Cola Co. | 9.7 | 8.8 |
PepsiCo, Inc. | 7.8 | 7.8 |
CVS Caremark Corp. | 5.9 | 5.5 |
Nestle SA sponsored ADR | 5.0 | 4.1 |
Altria Group, Inc. | 4.1 | 4.4 |
British American Tobacco PLC sponsored ADR | 3.6 | 4.4 |
Colgate-Palmolive Co. | 3.4 | 4.0 |
Avon Products, Inc. | 3.0 | 1.9 |
Wal-Mart Stores, Inc. | 3.0 | 4.8 |
| 61.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Beverages | 31.0% |
|
 | Household Products | 19.7% |
|
 | Food & Staples Retailing | 17.4% |
|
 | Food Products | 15.9% |
|
 | Tobacco | 9.5% |
|
 | All Others* | 6.5% |
|
|
As of August 31, 2007 | |||
| Beverages | 26.4% |
|
| Household Products | 20.8% |
|
| Food & Staples Retailing | 20.4% |
|
| Food Products | 14.2% |
|
| Tobacco | 11.3% |
|
| All Others * | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Select Consumer Staples Portfolio
Common Stocks - 98.1% | |||
Shares | Value | ||
BEVERAGES - 31.0% | |||
Brewers - 6.5% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 172,759 | $ 1,939,204 | |
Boston Beer Co., Inc. Class A (a) | 100 | 3,566 | |
Carlsberg AS Series B | 15,000 | 1,864,119 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 100 | 8,148 | |
Grupo Modelo SA de CV Series C | 100 | 453 | |
Heineken NV (Bearer) | 173,600 | 9,790,155 | |
InBev SA | 124,200 | 11,224,232 | |
Molson Coors Brewing Co. Class B | 297,180 | 16,035,833 | |
SABMiller plc | 277,550 | 5,814,673 | |
| 46,680,383 | ||
Distillers & Vintners - 4.2% | |||
Brown-Forman Corp. Class B (non-vtg.) | 27,900 | 1,779,183 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 285,800 | 5,490,218 | |
Diageo PLC sponsored ADR | 129,000 | 10,590,900 | |
Pernod Ricard SA | 102,800 | 10,873,780 | |
Remy Cointreau SA | 29,000 | 1,821,817 | |
| 30,555,898 | ||
Soft Drinks - 20.3% | |||
Coca-Cola Amatil Ltd. | 208,000 | 1,846,198 | |
Coca-Cola Femsa SA de CV sponsored ADR | 110,600 | 5,799,864 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 119,100 | 5,191,569 | |
Coca-Cola Icecek AS | 182,000 | 1,789,431 | |
Cott Corp. (a) | 275,000 | 628,779 | |
Fomento Economico Mexicano SA de CV sponsored ADR | 118,000 | 4,720,000 | |
Hansen Natural Corp. (a) | 100 | 4,150 | |
Jones Soda Co. (a) | 1,000 | 5,330 | |
PepsiCo, Inc. | 810,000 | 56,343,600 | |
The Coca-Cola Co. | 1,194,100 | 69,807,086 | |
| 146,136,007 | ||
TOTAL BEVERAGES | 223,372,288 | ||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Senomyx, Inc. (a) | 201,300 | 1,368,840 | |
FOOD & STAPLES RETAILING - 17.4% | |||
Drug Retail - 8.5% | |||
CVS Caremark Corp. | 1,048,300 | 42,330,354 | |
Rite Aid Corp. (a)(d) | 463,400 | 1,237,278 | |
Walgreen Co. | 491,900 | 17,959,269 | |
| 61,526,901 | ||
| |||
Shares | Value | ||
Food Distributors - 1.6% | |||
Sysco Corp. | 355,400 | $ 9,972,524 | |
United Natural Foods, Inc. (a) | 72,900 | 1,233,468 | |
| 11,205,992 | ||
Food Retail - 4.3% | |||
Kroger Co. | 773,200 | 18,750,100 | |
Safeway, Inc. | 332,800 | 9,564,672 | |
SUPERVALU, Inc. | 106,500 | 2,795,625 | |
Tesco PLC | 100 | 790 | |
The Great Atlantic & Pacific Tea Co. (a) | 100 | 2,708 | |
| 31,113,895 | ||
Hypermarkets & Super Centers - 3.0% | |||
Wal-Mart Stores, Inc. (d) | 428,400 | 21,244,356 | |
TOTAL FOOD & STAPLES RETAILING | 125,091,144 | ||
FOOD PRODUCTS - 15.9% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. (d) | 309,100 | 13,940,410 | |
Bunge Ltd. | 65,100 | 7,215,684 | |
Corn Products International, Inc. | 39,700 | 1,457,387 | |
Nutreco Holding NV | 14,900 | 1,059,861 | |
| 23,673,342 | ||
Packaged Foods & Meats - 12.6% | |||
BioMar Holding AS | 13,800 | 508,433 | |
Cadbury Schweppes PLC sponsored ADR | 105,200 | 4,718,220 | |
Campbell Soup Co. | 45,000 | 1,453,050 | |
Chiquita Brands International, Inc. (a) | 54,500 | 1,115,615 | |
Dean Foods Co. | 65,800 | 1,416,016 | |
Groupe Danone | 101,200 | 7,767,100 | |
Hershey Co. | 100 | 3,708 | |
Industrias Bachoco SA de CV sponsored ADR | 100 | 2,930 | |
Kellogg Co. | 60,400 | 3,063,488 | |
Koninklijke Wessanen NV | 100 | 1,338 | |
Kraft Foods, Inc. Class A | 357,000 | 11,127,690 | |
Lindt & Spruengli AG | 59 | 2,096,917 | |
Marine Harvest ASA (a)(d) | 3,626,000 | 2,147,914 | |
Nestle SA sponsored ADR | 302,800 | 36,033,200 | |
Smithfield Foods, Inc. (a) | 100 | 2,755 | |
Tootsie Roll Industries, Inc. | 1 | 24 | |
TreeHouse Foods, Inc. (a) | 100 | 2,217 | |
Tyson Foods, Inc. Class A | 54,900 | 791,109 | |
Unilever NV (NY Shares) | 531,200 | 16,520,320 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR | 16,000 | 1,684,160 | |
| 90,456,204 | ||
TOTAL FOOD PRODUCTS | 114,129,546 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Panera Bread Co. Class A (a) | 100 | $ 3,737 | |
Starbucks Corp. (a) | 100 | 1,797 | |
| 5,534 | ||
HOUSEHOLD DURABLES - 0.0% | |||
Housewares & Specialties - 0.0% | |||
Tupperware Brands Corp. | 100 | 3,648 | |
HOUSEHOLD PRODUCTS - 19.7% | |||
Household Products - 19.7% | |||
Central Garden & Pet Co. | 1,000 | 4,930 | |
Colgate-Palmolive Co. | 325,800 | 24,790,122 | |
Kimberly-Clark Corp. | 85,600 | 5,579,408 | |
Procter & Gamble Co. | 1,689,897 | 111,837,383 | |
Pz Cussons PLC Class L | 100 | 351 | |
| 142,212,194 | ||
PERSONAL PRODUCTS - 3.9% | |||
Personal Products - 3.9% | |||
Avon Products, Inc. | 575,500 | 21,903,530 | |
Bare Escentuals, Inc. (a)(d) | 63,205 | 1,730,553 | |
Estee Lauder Companies, Inc. Class A | 42,000 | 1,788,360 | |
Herbalife Ltd. | 41,900 | 1,752,677 | |
Physicians Formula Holdings, Inc. (a) | 134,900 | 1,063,012 | |
| 28,238,132 | ||
PHARMACEUTICALS - 0.5% | |||
Pharmaceuticals - 0.5% | |||
Johnson & Johnson | 58,600 | 3,630,856 | |
TOBACCO - 9.5% | |||
Tobacco - 9.5% | |||
Altria Group, Inc. | 408,000 | 29,841,120 | |
| |||
Shares | Value | ||
British American Tobacco PLC sponsored ADR | 345,100 | $ 26,020,540 | |
Japan Tobacco, Inc. | 407 | 2,055,940 | |
KT&G Corp. | 41,000 | 3,382,763 | |
Loews Corp. - Carolina Group | 24,200 | 1,822,018 | |
Souza Cruz Industria Comerico | 181,800 | 5,315,194 | |
| 68,437,575 | ||
TOTAL COMMON STOCKS (Cost $646,297,183) | 706,489,757 | ||
Money Market Funds - 7.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 17,895,644 | 17,895,644 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,579,650 | 34,579,650 | |
TOTAL MONEY MARKET FUNDS (Cost $52,475,294) | 52,475,294 | ||
TOTAL INVESTMENT PORTFOLIO - 105.4% (Cost $698,772,477) | 758,965,051 | ||
NET OTHER ASSETS - (5.4)% | (38,587,793) | ||
NET ASSETS - 100% | $ 720,377,258 | ||
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. |
(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 | $ 620,233 |
Fidelity Securities Lending Cash Central Fund | 275,887 |
Total | $ 896,120 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 73.2% |
United Kingdom | 6.6% |
Switzerland | 5.3% |
Netherlands | 3.9% |
France | 2.8% |
Belgium | 1.5% |
Mexico | 1.5% |
Bermuda | 1.0% |
Others (individually less than 1%) | 4.2% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Select Consumer Staples Portfolio
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $32,445,761) - See accompanying schedule: Unaffiliated issuers (cost $646,297,183) | $ 706,489,757 |
|
Fidelity Central Funds (cost $52,475,294) | 52,475,294 |
|
Total Investments (cost $698,772,477) |
| $ 758,965,051 |
Receivable for investments sold | 6,723,906 | |
Receivable for fund shares sold | 3,206,800 | |
Dividends receivable | 514,558 | |
Distributions receivable from Fidelity Central Funds | 85,349 | |
Prepaid expenses | 1,386 | |
Other receivables | 3,365 | |
Total assets | 769,500,415 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 12,957,359 | |
Payable for fund shares redeemed | 1,007,196 | |
Accrued management fee | 326,546 | |
Distribution fees payable | 26,363 | |
Other affiliated payables | 161,746 | |
Other payables and accrued expenses | 64,297 | |
Collateral on securities loaned, at value | 34,579,650 | |
Total liabilities | 49,123,157 | |
|
|
|
Net Assets | $ 720,377,258 | |
Net Assets consist of: |
| |
Paid in capital | $ 659,839,070 | |
Undistributed net investment income | 1,685,304 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,342,192) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 60,195,076 | |
Net Assets | $ 720,377,258 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 63.13 | |
|
|
|
Maximum offering price per share (100/94.25 of $63.13) | $ 66.98 | |
Class T: | $ 62.93 | |
|
|
|
Maximum offering price per share (100/96.50 of $62.93) | $ 65.21 | |
Class B: | $ 62.69 | |
|
|
|
Class C: | $ 62.61 | |
|
|
|
Consumer Staples: | $ 63.25 | |
|
|
|
Institutional Class: | $ 63.22 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 9,388,271 |
Interest |
| 23,896 |
Income from Fidelity Central Funds |
| 896,120 |
Total income |
| 10,308,287 |
|
|
|
Expenses | ||
Management fee | $ 2,861,176 | |
Transfer agent fees | 1,298,752 | |
Distribution fees | 124,810 | |
Accounting and security lending fees | 197,163 | |
Custodian fees and expenses | 102,237 | |
Independent trustees' compensation | 1,896 | |
Registration fees | 127,212 | |
Audit | 42,064 | |
Legal | 2,244 | |
Miscellaneous | 23,088 | |
Total expenses before reductions | 4,780,642 | |
Expense reductions | (67,555) | 4,713,087 |
Net investment income (loss) | 5,595,200 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,797,471 | |
Foreign currency transactions | (16,225) | |
Total net realized gain (loss) |
| 16,781,246 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,841,625 | |
Assets and liabilities in foreign currencies | 2,450 | |
Total change in net unrealized appreciation (depreciation) |
| 23,844,075 |
Net gain (loss) | 40,625,321 | |
Net increase (decrease) in net assets resulting from operations | $ 46,220,521 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,595,200 | $ 2,292,472 |
Net realized gain (loss) | 16,781,246 | 23,009,399 |
Change in net unrealized appreciation (depreciation) | 23,844,075 | 13,327,382 |
Net increase (decrease) in net assets resulting from operations | 46,220,521 | 38,629,253 |
Distributions to shareholders from net investment income | (4,297,338) | (1,582,908) |
Distributions to shareholders from net realized gain | (21,936,184) | (15,661,672) |
Total distributions | (26,233,522) | (17,244,580) |
Share transactions - net increase (decrease) | 323,338,123 | 230,543,294 |
Redemption fees | 70,107 | 47,547 |
Total increase (decrease) in net assets | 343,395,229 | 251,975,514 |
|
|
|
Net Assets | ||
Beginning of period | 376,982,029 | 125,006,515 |
End of period (including undistributed net investment income of $1,685,304 and undistributed net investment income | $ 720,377,258 | $ 376,982,029 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.28 |
Total from investment operations | 7.82 | 1.27 |
Distributions from net investment income | (.42) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.86) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 63.13 | $ 58.16 |
Total Return B,C,D | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.29% A |
Expenses net of all reductions | 1.19% | 1.28% A |
Net investment income (loss) | .83% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 23,796 | $ 986 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.18 |
Total from investment operations | 7.65 | 1.17 |
Distributions from net investment income | (.35) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.79) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.93 | $ 58.06 |
Total Return B,C,D | 13.11% | 2.06% |
Ratios to Average Net AssetsF,I |
|
|
Expenses before reductions | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.60% A |
Net investment income (loss) | .56% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,298 | $ 529 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | (.07) |
Net realized and unrealized gain (loss) | 7.27 | 1.18 |
Total from investment operations | 7.31 | 1.11 |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.63) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.69 | $ 58.00 |
Total Return B,C,D | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 2.09% A |
Net investment income (loss) | .06% | (.59)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,884 | $ 226 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.28 | 1.18 |
Total from investment operations | 7.34 | 1.10 |
Distributions from net investment income | (.29) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.73) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.61 | $ 57.99 |
Total Return B,C,D | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 2.14% A |
Expenses net of all reductions | 1.92% | 2.14% A |
Net investment income (loss) | .09% | (.66)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 19,791 | $ 178 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Consumer Staples
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 | $ 35.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .71 | .56 | .50 | .29 | .22 |
Net realized and unrealized gain (loss) | 7.30 | 8.88 | 3.25 | 4.90 | 10.80 |
Total from investment operations | 8.01 | 9.44 | 3.75 | 5.19 | 11.02 |
Distributions from net investment income | (.46) | (.32) | (.44) | (.29) | (.24) |
Distributions from net realized gain | (2.44) | (3.18) | (2.56) | - | - |
Total distributions | (2.90) | (3.50) | (3.00) | (.29) | (.24) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Total Return A,B | 13.72% | 18.43% | 7.50% | 11.24% | 30.94% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.04% | 1.06% | 1.27% |
Expenses net of fee waivers, if any | .90% | .99% | 1.04% | 1.06% | 1.27% |
Expenses net of all reductions | .90% | .98% | 1.03% | 1.05% | 1.25% |
Net investment income (loss) | 1.12% | .99% | .97% | .61% | .55% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 | $ 104,436 |
Portfolio turnover rate E | 71% | 99% | 75% | 86% | 62% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .74 | .07 |
Net realized and unrealized gain (loss) | 7.30 | 1.16 |
Total from investment operations | 8.04 | 1.23 |
Distributions from net investment income | (.51) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.95) | - |
Redemption fees added to paid in capital D | .01 | - J |
Net asset value, end of period | $ 63.22 | $ 58.12 |
Total Return B,C | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
Expenses before reductions | .85% | 1.00% A |
Expenses net of fee waivers, if any | .85% | 1.00% A |
Expenses net of all reductions | .84% | 1.00% A |
Net investment income (loss) | 1.17% | .57% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,384 | $ 132 |
Portfolio turnover rate F | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 76,807,189 |
|
Unrealized depreciation | (19,342,868) |
|
Net unrealized appreciation (depreciation) | 57,464,321 |
|
Undistributed ordinary income | 416,885 |
|
|
|
|
Cost for federal income tax purposes | $ 701,500,730 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 15,086,000 | $ 1,582,908 |
Long-term Capital Gains | 11,147,522 | 15,661,672 |
Total | $ 26,233,522 | $ 17,244,580 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $662,284,483 and $360,615,711, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,277 | $ 2,025 |
Class T | .25% | .25% | 26,470 | 558 |
Class B | .75% | .25% | 19,856 | 15,168 |
Class C | .75% | .25% | 61,207 | 34,937 |
|
|
| $ 124,810 | $ 52,688 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 54,636 |
Class T | 8,439 |
Class B* | 2,863 |
Class C* | 1,508 |
| 67,446 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Consumer Staples shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,257 | .28 |
Class T | 15,907 | .30 |
Class B | 5,775 | .29 |
Class C | 15,235 | .25 |
Consumer Staples | 1,237,519 | .25 |
Institutional Class | 5,059 | .19 |
| $ 1,298,752 |
|
Accounting and Security Lending Fees. FSC maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,807 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,126 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $275,887.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Consumer Staples operating expenses. During the period, this reimbursement reduced the class' expenses by $40,354.
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 $19,534 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $3,122. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Class A | $ 5 |
|
Consumer Staples | 4,466 |
|
| $ 4,471 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 29, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 54,271 | $ - |
Class T | 42,873 | - |
Class B | 7,270 | - |
Class C | 46,840 | - |
Consumer Staples | 4,124,954 | 1,582,908 |
Institutional Class | 21,130 | - |
Total | $ 4,297,338 | $ 1,582,908 |
From net realized gain |
|
|
Class A | $ 279,894 | $ - |
Class T | 271,554 | - |
Class B | 90,489 | - |
Class C | 308,038 | - |
Consumer Staples | 20,893,023 | 15,661,672 |
Institutional Class | 93,186 | - |
Total | $ 21,936,184 | $ 15,661,672 |
A Distributions for Class A, Class T, Class B, Class C, and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Year ended February 29, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 394,208 | 17,300 | $ 25,121,582 | $ 1,017,780 |
Reinvestment of distributions | 4,833 | - | 319,149 | - |
Shares redeemed | (39,053) | (340) | (2,497,211) | (20,214) |
Net increase (decrease) | 359,988 | 16,960 | $ 22,943,520 | $ 997,566 |
Class T |
|
|
|
|
Shares sold | 195,158 | 9,119 | $ 12,251,985 | $ 531,803 |
Reinvestment of distributions | 4,490 | - | 296,489 | - |
Shares redeemed | (108,690) | - | (6,862,659) | - |
Net increase (decrease) | 90,958 | 9,119 | $ 5,685,815 | $ 531,803 |
Class B |
|
|
|
|
Shares sold | 76,823 | 3,902 | $ 4,855,507 | $ 225,744 |
Reinvestment of distributions | 1,410 | - | 92,490 | - |
Shares redeemed | (4,224) | - | (268,236) | - |
Net increase (decrease) | 74,009 | 3,902 | $ 4,679,761 | $ 225,744 |
Class C |
|
|
|
|
Shares sold | 328,900 | 3,073 | $ 21,121,099 | $ 177,350 |
Reinvestment of distributions | 4,849 | - | 319,529 | - |
Shares redeemed | (20,712) | - | (1,307,625) | - |
Net increase (decrease) | 313,037 | 3,073 | $ 20,133,003 | $ 177,350 |
Consumer Staples |
|
|
|
|
Shares sold | 8,600,962 | 6,369,570 | $ 555,032,219 | $ 359,958,201 |
Reinvestment of distributions | 360,932 | 292,584 | 23,544,138 | 16,482,463 |
Shares redeemed | (5,052,205) | (2,608,360) | (318,954,187) | (147,956,526) |
Net increase (decrease) | 3,909,689 | 4,053,794 | $ 259,622,170 | $ 228,484,138 |
Institutional Class |
|
|
|
|
Shares sold | 204,550 | 4,028 | $ 13,014,809 | $ 230,500 |
Reinvestment of distributions | 995 | - | 65,503 | - |
Shares redeemed | (43,560) | (1,758) | (2,806,458) | (103,807) |
Net increase (decrease) | 161,985 | 2,270 | $ 10,273,854 | $ 126,693 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Gold Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 36.28% | 24.69% | 16.73% |
Class T (incl. 3.50% sales charge) B | 39.40% | 25.23% | 16.98% |
Class B (incl. contingent deferred sales charge) C | 38.53% | 25.79% | 17.31% |
Class C (incl. contingent deferred sales charge) D | 42.49% | 25.93% | 17.30% |
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 Gold, 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, 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, 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, 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, 1998, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Management's Discussion of Fund Performance
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor Gold Fund
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, reducing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 44.59%, 44.45%, 43.53% and 43.49%, respectively (excluding sales charges), beating the S&P 500® and the 42.95% return of the Standard & Poor's®/Citigroup BMI Global Gold Index. Versus the S&P®/Citigroup index, solid stock picking in the fund's core universe of gold mining stocks drove performance. Australia-based Newcrest Mining, the fund's fourth-largest holding at period end, was its top contributor. The company was successful in improving its operations, projects and financial position, and was rewarded by the market for these achievements. Also aiding our results were Canadian holding Arizona Star Resource; Buenaventura, a Peruvian silver, gold and copper mining company; and West African gold producer Randgold Resources. Arizona Star Resource - whose sole asset was bought by Barrick Gold during the period - and Buenaventura were out-of-index positions. Underweighting major index component Newmont Mining was helpful as well. In absolute terms, the fund's return was bolstered by currency movements given its considerable foreign exposure. On the negative side, the fund's investments in the precious metals and minerals group and in the diversified metals and mining segment detracted from performance, as did its cash position. Underweighting Barrick Gold, the stock with the largest weighting in the S&P/Citigroup index, detracted from performance. Although I liked the company and it was one of the fund's largest positions, I didn't think it appropriate to carry the position at its benchmark weighting of approximately 18%. Diamond exploration company and out-of-index holding Shore Gold also weighed on our results, along with IAMGOLD. All the detractors I mentioned are based in Canada.
During the past year, the fund's Institutional Class shares returned 45.10%, beating the S&P 500® and the 42.95% return of the Standard & Poor's®/Citigroup BMI Global Gold Index. Versus the S&P®/Citigroup index, solid stock picking in the fund's core universe of gold mining stocks drove performance. Australia-based Newcrest Mining, the fund's fourth-largest holding at period end, was its top contributor. The company was successful in improving its operations, projects and financial position, and was rewarded by the market for these achievements. Also aiding our results were Canadian holding Arizona Star Resource; Buenaventura, a Peruvian silver, gold and copper mining company; and West African gold producer Randgold Resources. Arizona Star Resource - whose sole asset was bought by Barrick Gold during the period - and Buenaventura were out-of-index positions. Underweighting major index component Newmont Mining was helpful as well. On the negative side, the fund's investments in the precious metals and minerals group and in the diversified metals and mining segment detracted from performance, as did its cash position. Underweighting Barrick Gold, the stock with the largest weighting in the S&P/Citigroup index, detracted from performance. Although I liked the company and it was one of the fund's largest positions, I didn't think it appropriate to carry the position at its benchmark weighting of approximately 18%. Diamond exploration company and out-of-index holding Shore Gold also weighed on our results, along with IAMGOLD. All the detractors I mentioned are based in Canada.
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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,483.00 | $ 7.10 |
HypotheticalA | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,481.70 | $ 8.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,476.70 | $ 11.76 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,477.20 | $ 11.64 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Gold |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.19 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.13 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.15% |
Class T | 1.40% |
Class B | 1.91% |
Class C | 1.89% |
Gold | .84% |
Institutional Class | .83% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.5 | 8.1 |
Barrick Gold Corp. | 7.8 | 7.9 |
Newmont Mining Corp. | 7.1 | 5.0 |
Newcrest Mining Ltd. | 6.7 | 8.3 |
Kinross Gold Corp. | 5.8 | 4.9 |
Lihir Gold Ltd. | 5.8 | 7.3 |
Agnico-Eagle Mines Ltd. | 4.1 | 4.1 |
Yamana Gold, Inc. | 4.1 | 2.6 |
Gold Fields Ltd. sponsored ADR | 3.0 | 6.6 |
Randgold Resources Ltd. sponsored ADR | 3.0 | 3.4 |
| 55.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Gold | 77.9% |
|
 | Precious Metals & Minerals | 8.1% |
|
 | Diversified Metals & Mining | 3.6% |
|
 | Coal & Consumable Fuels | 1.9% |
|
 | Steel | 1.4% |
|
 | All Others* | 7.1% |
|
As of August 31, 2007 | |||
| Gold | 89.2% |
|
| Precious Metals & Minerals | 8.1% |
|
| Diversified Metals & Mining | 1.2% |
|
| Steel | 0.5% |
|
| All Others* | 1.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 90.2% | |||
Shares | Value | ||
Australia - 8.4% | |||
METALS & MINING - 8.2% | |||
Aluminum - 0.4% | |||
Alumina Ltd. | 1,552,508 | $ 9,147,074 | |
Gold - 7.8% | |||
Newcrest Mining Ltd. | 4,726,283 | 164,316,537 | |
Pan Australian Resources Ltd. (a) | 8,389,000 | 8,093,471 | |
Sino Gold Mining Ltd. (a)(d) | 1,787,441 | 12,500,064 | |
Troy Resources NL (a)(f) | 2,300,000 | 6,076,927 | |
| 190,986,999 | ||
TOTAL METALS & MINING | 200,134,073 | ||
OIL, GAS & CONSUMABLE FUELS - 0.2% | |||
Coal & Consumable Fuels - 0.2% | |||
Energy Resources of Australia Ltd. | 200,799 | 3,923,057 | |
TOTAL AUSTRALIA | 204,057,130 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Precious Metals & Minerals - 0.7% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,155,000 | 17,329,629 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce sponsored ADR | 51,200 | 1,783,808 | |
Canada - 46.3% | |||
METALS & MINING - 46.3% | |||
Diversified Metals & Mining - 1.4% | |||
Anatolia Minerals Development Ltd. (a) | 29,000 | 116,407 | |
First Quantum Minerals Ltd. | 107,600 | 9,985,298 | |
FNX Mining Co., Inc. (a) | 228,100 | 7,507,910 | |
Ivanhoe Mines Ltd. (a) | 550,500 | 7,177,394 | |
Kimber Resources, Inc. (a) | 16,100 | 14,234 | |
Lundin Mining Corp. (a) | 475,100 | 4,060,354 | |
Nautilus Minerals, Inc. (a) | 44,000 | 119,831 | |
Thompson Creek Metals Co., Inc. (a) | 305,000 | 6,229,866 | |
| 35,211,294 | ||
Gold - 41.8% | |||
Agnico-Eagle Mines Ltd. | 1,453,100 | 100,412,377 | |
Alamos Gold, Inc. (a) | 3,249,000 | 24,729,445 | |
Aquiline Resources, Inc. (a) | 875,500 | 9,484,101 | |
Aquiline Resources, Inc. (a)(f) | 1,024,600 | 11,099,269 | |
Aurelian Resources, Inc. (a) | 818,400 | 7,634,685 | |
Aurizon Mines Ltd. (a) | 547,900 | 2,522,216 | |
Barrick Gold Corp. | 3,637,000 | 189,232,661 | |
Centerra Gold, Inc. (a) | 377,200 | 5,642,380 | |
| |||
Shares | Value | ||
Coral Gold Resources Ltd. (a)(e) | 2,016,600 | $ 2,869,001 | |
Crystallex International Corp. (a) | 943,000 | 1,964,484 | |
Detour Gold Corp. warrants 6/21/08 (a)(f) | 615,000 | 10,844,449 | |
Eldorado Gold Corp. (a) | 4,287,200 | 29,756,187 | |
European Goldfields Ltd. (a) | 197,000 | 1,185,143 | |
Franco-Nevada Corp. | 210,900 | 4,847,882 | |
Gabriel Resources Ltd. (a) | 139,200 | 261,694 | |
Goldcorp, Inc. | 4,825,800 | 208,371,775 | |
Golden Star Resources Ltd. (a) | 4,009,769 | 16,543,531 | |
Great Basin Gold Ltd. (a) | 1,407,900 | 4,649,840 | |
Guyana Goldfields, Inc. (a) | 758,000 | 5,546,060 | |
High River Gold Mines Ltd. (a) | 1,512,800 | 5,180,769 | |
High River Gold Mines Ltd. (a)(f) | 1,300,000 | 4,452,010 | |
High River Gold Mines Ltd. warrants 11/8/10 (a)(f) | 650,000 | 693,562 | |
IAMGOLD Corp. | 7,762,100 | 62,787,781 | |
Jaguar Mining, Inc. (a) | 147,900 | 1,998,953 | |
Kinross Gold Corp. (a) | 5,710,300 | 141,299,533 | |
Kinross Gold Corp. warrants 9/7/11 (a) | 600,000 | 2,560,845 | |
Northgate Minerals Corp. (a) | 681,000 | 2,117,636 | |
Novagold Resources, Inc. (a) | 800,000 | 9,064,580 | |
Orezone Resources, Inc. Class A (a) | 8,870,700 | 15,775,342 | |
Peak Gold Ltd. (a)(f) | 5,857,000 | 3,868,757 | |
Peak Gold Ltd. warrants 4/3/12 (a)(f) | 2,928,500 | 550,554 | |
Red Back Mining, Inc. (a) | 1,420,800 | 12,575,751 | |
Red Back Mining, Inc. (a)(f) | 1,033,000 | 9,143,265 | |
US Gold Canadian Acquisition Corp. (a)(e) | 2,501,516 | 8,770,114 | |
Western Goldfields, Inc. (a) | 371,200 | 1,369,296 | |
Yamana Gold, Inc. | 5,497,000 | 98,929,800 | |
| 1,018,735,728 | ||
Precious Metals & Minerals - 3.1% | |||
B2Gold Corp. | 702,500 | 1,613,383 | |
Eastern Platinum Ltd. (a) | 600,000 | 2,164,524 | |
Etruscan Resources, Inc. (a) | 923,800 | 2,196,730 | |
Etruscan Resources, Inc. (a)(f) | 1,549,400 | 3,684,362 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(f) | 774,700 | 393,628 | |
Harry Winston Diamond Corp. | 471,990 | 12,350,737 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 12,676,185 | |
Pan American Silver Corp. (a) | 500,000 | 20,000,000 | |
Rockwell Diamonds, Inc. (a) | 319,000 | 168,569 | |
Shore Gold, Inc. (a) | 2,860,000 | 12,991,413 | |
Silver Standard Resources, Inc. (a) | 206,300 | 7,657,857 | |
Silvercorp Metals, Inc. | 60,000 | 603,628 | |
| 76,501,016 | ||
TOTAL METALS & MINING | 1,130,448,038 | ||
Common Stocks - continued | |||
Shares | Value | ||
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 35,714,000 | $ 47,174,585 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 99,800 | 7,586,796 | |
Papua New Guinea - 5.8% | |||
METALS & MINING - 5.8% | |||
Gold - 5.8% | |||
Lihir Gold Ltd. (a) | 36,363,877 | 140,827,682 | |
Peru - 1.3% | |||
METALS & MINING - 1.3% | |||
Precious Metals & Minerals - 1.3% | |||
Compania de Minas Buenaventura SA | 350,000 | 26,610,500 | |
Compania de Minas Buenaventura SA sponsored ADR | 50,000 | 3,801,500 | |
| 30,412,000 | ||
Russia - 0.0% | |||
METALS & MINING - 0.0% | |||
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) unit (a) | 39,000 | 347,100 | |
South Africa - 8.8% | |||
METALS & MINING - 8.8% | |||
Diversified Metals & Mining - 0.2% | |||
African Rainbow Minerals Ltd. | 234,859 | 6,062,905 | |
Gold - 6.2% | |||
Anglogold Ashanti Ltd. sponsored ADR (d) | 1,140,500 | 41,194,860 | |
Gold Fields Ltd. sponsored ADR | 5,216,300 | 74,019,297 | |
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | 18,804,860 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,375,000 | 16,692,500 | |
| 150,711,517 | ||
Precious Metals & Minerals - 2.4% | |||
Anglo Platinum Ltd. | 59,058 | 9,258,866 | |
Impala Platinum Holdings Ltd. | 1,179,212 | 48,760,416 | |
| 58,019,282 | ||
TOTAL METALS & MINING | 214,793,704 | ||
| |||
Shares | Value | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 1.0% | |||
Anglo American PLC (United Kingdom) | 193,300 | $ 12,269,093 | |
BHP Billiton PLC | 395,900 | 12,664,584 | |
| 24,933,677 | ||
Gold - 3.0% | |||
Randgold Resources Ltd. sponsored ADR | 1,409,274 | 72,774,909 | |
Precious Metals & Minerals - 0.6% | |||
Hochschild Mining PLC | 1,054,058 | 9,151,974 | |
Lonmin PLC | 76,000 | 4,958,381 | |
Mwana Africa PLC (a) | 2,850 | 2,113 | |
| 14,112,468 | ||
TOTAL METALS & MINING | 111,821,054 | ||
United States of America - 12.0% | |||
METALS & MINING - 10.3% | |||
Aluminum - 0.3% | |||
Alcoa, Inc. | 203,500 | 7,557,990 | |
Diversified Metals & Mining - 0.9% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 129,300 | 13,041,198 | |
Titanium Metals Corp. | 492,838 | 10,162,320 | |
| 23,203,518 | ||
Gold - 8.0% | |||
Newmont Mining Corp. | 3,402,000 | 174,080,340 | |
Royal Gold, Inc. (d) | 610,768 | 19,245,300 | |
US Gold Corp. (a) | 318,400 | 1,117,584 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 407,113 | |
| 194,850,337 | ||
Steel - 1.1% | |||
Nucor Corp. | 114,200 | 7,373,894 | |
Steel Dynamics, Inc. | 214,000 | 12,467,640 | |
United States Steel Corp. | 59,100 | 6,409,395 | |
| 26,250,929 | ||
TOTAL METALS & MINING | 251,862,774 | ||
OIL, GAS & CONSUMABLE FUELS - 1.7% | |||
Coal & Consumable Fuels - 1.7% | |||
CONSOL Energy, Inc. | 469,300 | $ 35,657,414 | |
Peabody Energy Corp. | 99,700 | 5,645,014 | |
| 41,302,428 | ||
TOTAL UNITED STATES OF AMERICA | 293,165,202 | ||
TOTAL COMMON STOCKS (Cost $1,511,332,409) | 2,199,746,728 | ||
Commodities - 3.4% | ||||
| Troy | Value | ||
Gold Bullion (a) | 84,500 | $ 82,253,568 | ||
Money Market Funds - 8.4% | |||
| Shares |
|
|
Fidelity Cash Central Fund, 3.24% (b) | 154,989,471 | 154,989,471 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 51,019,275 | 51,019,275 | |
TOTAL MONEY MARKET FUNDS (Cost $206,008,746) | 206,008,746 | ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $1,792,206,855) | 2,488,009,042 | ||
NET OTHER ASSETS - (2.0)% | (48,063,629) | ||
NET ASSETS - 100% | $ 2,439,945,413 | ||
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. |
(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 $50,806,783 or 1.9% of net assets. |
(g) 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 $407,113 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
US Gold Corp. warrants 2/22/11 | 2/8/06 | $ 179,112 |
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 | $ 4,483,468 |
Fidelity Securities Lending Cash Central Fund | 305,527 |
Total | $ 4,788,995 |
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, end of period |
Arizona Star Resource Corp. | $ 43,863,024 | $ - | $ 68,049,545 | $ - | $ - |
Central Asia Gold Ltd. | 5,874,969 | - | 6,765,535 | - | - |
Coral Gold Resources Ltd. | 2,034,618 | - | - | - | 2,869,001 |
IAMGOLD Corp. | 83,536,403 | 37,756,426 | 52,681,280 | 396,893 | - |
Meridian Gold, Inc. | 141,535,462 | 11,114,622 | 175,519,189 | - | - |
Minefinders Corp. Ltd. | 33,742,038 | - | 22,728,120 | - | - |
Orezone Resources, Inc. Class A | 18,041,127 | - | 2,037,688 | - | - |
Tone Resources Ltd. | 2,366,021 | - | 2,654,193 | - | - |
US Gold Canadian Acquisition Corp. | - | 12,695,730 | - | - | 8,770,114 |
White Knight Resources Ltd. | 6,087,418 | - | 7,050,424 | - | - |
Total | $ 337,081,080 | $ 61,566,778 | $ 337,485,974 | $ 396,893 | $ 11,639,115 |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select Gold Cayman Ltd. | $ - | $ 74,865,700 | $ - | $ - | $ 82,233,978 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investments, at value (including securities loaned of $48,929,231) - See accompanying schedule: Unaffiliated issuers (cost $1,496,489,449) | $ 2,188,107,613 |
|
Fidelity Central Funds (cost $206,008,746) | 206,008,746 |
|
Other affiliated issuers (cost $14,842,960) | 11,639,115 |
|
Commodities | 82,253,568 |
|
Total Investments (cost $1,792,206,855) |
| $ 2,488,009,042 |
Receivable for fund shares sold | 28,409,170 | |
Dividends receivable | 715,366 | |
Distributions receivable from Fidelity Central Funds | 330,523 | |
Prepaid expenses | 4,242 | |
Receivable from investment advisor for expense reductions | 16,771 | |
Other receivables | 53,844 | |
Total assets | 2,517,538,958 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,222,702 | |
Payable for fund shares redeemed | 5,738,698 | |
Accrued management fee | 1,032,070 | |
Distribution fees payable | 20,939 | |
Other affiliated payables | 439,944 | |
Other payables and accrued expenses | 119,917 | |
Collateral on securities loaned, at value | 51,019,275 | |
Total liabilities | 77,593,545 | |
|
|
|
Net Assets | $ 2,439,945,413 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,772,662,139 | |
Accumulated net investment loss | (3,177) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (28,479,034) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 695,765,485 | |
Net Assets | $ 2,439,945,413 | |
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.19 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.19) | $ 49.01 | |
Class T: | $ 46.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.17) | $ 47.84 | |
Class B: | $ 45.97 | |
|
|
|
Class C: | $ 45.85 | |
|
|
|
|
|
|
Gold: | $ 46.37 | |
|
|
|
Institutional Class: | $ 46.34 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Gold Portfolio
Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $396,893 earned from other affiliated issuers) |
| $ 7,214,916 |
Interest |
| 36,516 |
Income from Fidelity Central Funds |
| 4,788,995 |
Total income |
| 12,040,427 |
|
|
|
Expenses | ||
Management fee | $ 8,843,447 | |
Transfer agent fees | 3,480,684 | |
Distribution fees | 84,461 | |
Accounting and security lending fees | 523,529 | |
Custodian fees and expenses | 210,565 | |
Independent trustees' compensation | 6,241 | |
Registration fees | 150,943 | |
Audit | 44,995 | |
Legal | 83,632 | |
Miscellaneous | 77,106 | |
Total expenses before reductions | 13,505,603 | |
Expense reductions | (602,121) | 12,903,482 |
Net investment income (loss) | (863,055) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 90,039,584 | |
Other affiliated issuers | 97,820,563 |
|
Foreign currency transactions | 1,653,116 | |
Total net realized gain (loss) |
| 189,513,263 |
Change in net unrealized appreciation (depreciation) on: Investments | 426,676,495 | |
Assets and liabilities in foreign currencies | 3,916 | |
Total change in net unrealized appreciation (depreciation) |
| 426,680,411 |
Net gain (loss) | 616,193,674 | |
Net increase (decrease) in net assets resulting from operations | $ 615,330,619 | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (863,055) | $ 9,095,705 |
Net realized gain (loss) | 189,513,263 | 107,242,792 |
Change in net unrealized appreciation (depreciation) | 426,680,411 | 60,139,115 |
Net increase (decrease) in net assets resulting from operations | 615,330,619 | 176,477,612 |
Distributions to shareholders from net investment income | (7,077,865) | (754,152) |
Distributions to shareholders from net realized gain | (201,157,130) | (195,955,908) |
Total distributions | (208,234,995) | (196,710,060) |
Share transactions - net increase (decrease) | 554,230,717 | 170,798,657 |
Redemption fees | 544,215 | 1,843,164 |
Total increase (decrease) in net assets | 961,870,556 | 152,409,373 |
|
|
|
Net Assets | ||
Beginning of period | 1,478,074,857 | 1,325,665,484 |
End of period (including accumulated net investment loss of $3,177 and undistributed net investment income of $9,093,033, respectively) | $ 2,439,945,413 | $ 1,478,074,857 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.00 | (.07) H |
Total from investment operations | 14.85 | (.08) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.01) | - |
Total distributions | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.19 | $ 36.53 |
Total Return B, C, D | 44.59% | (.19)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.17% | 1.13% A |
Expenses net of all reductions | 1.13% | 1.10% A |
Net investment income (loss) | (.37)% | (.18)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.05 | (.09) H |
Total from investment operations | 14.80 | (.12) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.97) | - |
Total distributions | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.17 | $ 36.49 |
Total Return B, C, D | 44.45% | (.30)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.42% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.46% A |
Expenses net of all reductions | 1.39% | 1.43% A |
Net investment income (loss) | (.63)% | (.40)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.95 | (.08) H |
Total from investment operations | 14.50 | (.15) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.84) | - |
Total distributions | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.97 | $ 36.46 |
Total Return B, C, D | 43.53% | (.38)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.93% | 1.96% A |
Expenses net of all reductions | 1.90% | 1.93% A |
Net investment income (loss) | (1.14)% | (.93)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,869 | $ 902 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.91 | (.10) H |
Total from investment operations | 14.46 | (.17) |
Distributions from net investment income | (.17) | - |
Distributions from net realized gain | (4.89) | - |
Total distributions | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.85 | $ 36.44 |
Total Return B, C, D | 43.49% | (.44)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.99% A |
Net investment income (loss) | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,835 | $ 437 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Gold
| |||||
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 | $ 22.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | .22 F | .04 | .02 G | (.01) |
Net realized and unrealized gain (loss) | 15.05 | 5.49 | 12.21 | .18 | 5.85 |
Total from investment operations | 15.03 | 5.71 | 12.25 | .20 | 5.84 |
Distributions from net investment income | (.18) | (.02) | (.02) | - | (1.42) |
Distributions from net realized gain | (5.03) | (5.10) | (3.84) | - | - |
Total distributions | (5.21) | (5.12) | (3.86) | - | (1.42) |
Redemption fees added to paid in capital C | .01 | .04 | .06 | .05 | .06 |
Net asset value, end of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Total Return A, B | 45.10% | 16.19% | 48.84% | .92% | 26.79% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of fee waivers, if any | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of all reductions | .81% | .87% | .82% | .89% | 1.04% |
Net investment income (loss) | (.05)% | .62% F | .13% | .07% G | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 | $ 735,744 |
Portfolio turnover rate E | 55% | 85% | 108% | 79% | 41% |
A Total 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%. GInvestment 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 (.08)%. 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 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. I For the year ended February 29. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) D | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.03 | (.08) G |
Total from investment operations | 15.02 | (.07) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.04) | - |
Total distributions | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 46.34 | $ 36.54 |
Total Return B, C | 45.10% | (.16)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | .83% | .94% A |
Expenses net of fee waivers, if any | .83% | .94% A |
Expenses net of all reductions | .79% | .91% A |
Net investment income (loss) | (.03)% | .12% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,174 | $ 385 |
Portfolio turnover rate F | 55% | 85% |
A Annualized 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. GThe 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Consolidated Financial Statements
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in Fidelity Select Gold Cayman Ltd., a wholly-owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities, consistent with the investment objective of the fund. As of February 29, 2008, the Fund held $82,233,978 in the Subsidiary, representing 3.4% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include the accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.
The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 681,289,657 |
|
Unrealized depreciation | (36,971,788) |
|
Net unrealized appreciation (depreciation) | 644,317,869 |
|
Undistributed long-term capital gain | 9,018,404 |
|
|
|
|
Cost for federal income tax purposes | $ 1,843,691,173 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 81,662,441 | $ 72,402,616 |
Long-term Capital Gains | 126,572,554 | 124,307,444 |
Total | $ 208,234,995 | $ 196,710,060 |
Annual Report
4. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
5. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term investments, aggregated $1,165,131,181 and $832,255,722, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at an annual rate of .30% of its net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period FMR reimbursed the Fund $24,300.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,836 | $ 936 |
Class T | .25% | .25% | 15,486 | 570 |
Class B | .75% | .25% | 23,737 | 18,077 |
Class C | .75% | .25% | 27,402 | 14,204 |
|
|
| $ 84,461 | $ 33,787 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 45,888 |
Class T | 8,502 |
Class B* | 2,182 |
Class C* | 3,616 |
| $ 60,188 |
* 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the sub-transfer agent for all Fund shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 20,029 | .28 |
Class T | 8,862 | .29 |
Class B | 6,928 | .29 |
Class C | 7,528 | .28 |
Gold | 3,434,145 | .22 |
Institutional Class | 3,192 | .20 |
| $ 3,480,684 |
|
Accounting and Security Lending Fees. FSC 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 $1,784 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $3,655 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $305,527.
Annual Report
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 $475,444 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $33,396. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Gold | $ 27,814 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 13,831 | $ - |
Class T | 6,353 | - |
Class B | 4,260 | - |
Class C | 3,734 | - |
Gold | 7,042,946 | 754,152 |
Institutional Class | 6,741 | - |
Total | $ 7,077,865 | $ 754,152 |
From net realized gain |
|
|
Class A | $ 955,695 | $ - |
Class T | 425,795 | - |
Class B | 289,226 | - |
Class C | 343,986 | - |
Gold | 198,940,407 | 195,955,908 |
Institutional Class | 202,021 | - |
Total | $ 201,157,130 | $ 195,955,908 |
Annual Report
Notes to Consolidated Financial Statements - continued
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 567,655 | 52,274 | $ 23,751,338 | $ 1,914,223 |
Reinvestment of distributions | 25,125 | - | 945,727 | - |
Shares redeemed | (67,262) | (1,428) | (2,616,226) | (52,108) |
Net increase (decrease) | 525,518 | 50,846 | $ 22,080,839 | $ 1,862,115 |
Class T |
|
|
|
|
Shares sold | 245,988 | 29,954 | $ 10,279,473 | $ 1,097,866 |
Reinvestment of distributions | 11,403 | - | 428,815 | - |
Shares redeemed | (41,858) | - | (1,666,054) | - |
Net increase (decrease) | 215,533 | 29,954 | $ 9,042,234 | $ 1,097,866 |
Class B |
|
|
|
|
Shares sold | 138,954 | 24,802 | $ 5,690,539 | $ 903,324 |
Reinvestment of distributions | 7,385 | - | 276,855 | - |
Shares redeemed | (21,658) | (60) | (874,114) | (2,269) |
Net increase (decrease) | 124,681 | 24,742 | $ 5,093,280 | $ 901,055 |
Class C |
|
|
|
|
Shares sold | 253,353 | 12,002 | $ 10,551,196 | $ 438,523 |
Reinvestment of distributions | 8,652 | - | 324,140 | - |
Shares redeemed | (37,666) | - | (1,511,191) | - |
Net increase (decrease) | 224,339 | 12,002 | $ 9,364,145 | $ 438,523 |
Gold |
|
|
|
|
Shares sold | 30,095,254 | 37,990,378 | $ 1,246,042,833 | $ 1,364,967,296 |
Reinvestment of distributions | 5,273,633 | 5,102,742 | 197,489,804 | 188,386,905 |
Shares redeemed | (24,338,085) | (39,683,634) | (937,121,869) | (1,387,242,690) |
Net increase (decrease) | 11,030,802 | 3,409,486 | $ 506,410,768 | $ 166,111,511 |
Institutional Class |
|
|
|
|
Shares sold | 128,523 | 11,934 | $ 5,080,204 | $ 438,322 |
Reinvestment of distributions | 4,588 | - | 171,536 | - |
Shares redeemed | (75,163) | (1,395) | (3,012,289) | (50,735) |
Net increase (decrease) | 57,948 | 10,539 | $ 2,239,451 | $ 387,587 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Materials Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 10.08% | 22.68% | 10.61% |
Class T (incl. 3.50% sales charge) B | 12.37% | 23.13% | 10.81% |
Class B (incl. contingent deferred sales charge) C | 10.89% | 23.68% | 11.14% |
Class C (incl. contingent deferred sales charge) D | 14.87% | 23.85% | 11.14% |
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, 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, 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, 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, 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, Materials 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, 1998, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Comments from Tobias Welo, who became Portfolio Manager of Fidelity Advisor Materials Fund on January 9, 2008
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the year ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned 16.79%, 16.45%, 15.89% and 15.87% respectively (excluding sales charges), outpacing the S&P 500® and the 14.89% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Strong industry selection played a key role in the fund's outperformance of its MSCI benchmark. For example, underweightings in weak-performing industries such as construction materials, paper products and paper packaging aided results, as did solid stock picking within the first two areas. In addition, good stock selection and an underweighting in the lagging diversified chemicals group helped. Given the fund's exposure to foreign stocks, currency fluctuations further enhanced the fund's return. Among individual holdings, an out-of-benchmark position in Rio Tinto was the top contributor. A diversified metals and mining company, Rio Tinto was boosted by strong metals prices and multiple takeover offers from Australian mining concern BHP Billiton. Also boosting performance was out-of-index holding Agrium, a Canadian fertilizer company that benefited from strong demand for crops and favorable market reaction to its purchase of UAP Holding, an agricultural products distributor. Not owning lagging paper-related names in the index, such as Canadian pulp and paper producer Domtar, aided results as well. Among detractors, the fund's slight underweighting in fertilizers and agricultural chemicals hurt, including an underweighting in fertilizer company CF Industries. In addition, the fund's overweighting in Titanium Metals disappointed, as the firm struggled through sluggish earnings announcements and construction delays among its end-users. Certain stock picks within the specialty and commodity chemicals areas also detracted, as did the fund's overall positioning in the steel industry over the course of the period. Some of the stocks I've mentioned in this review were sold by period end.
For the year ending February 29, 2008, the fund's Institutional Class shares returned 17.08%, outpacing the S&P 500® and the 14.89% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Strong industry selection played a key role in the fund's outperformance of its MSCI benchmark. For example, underweightings in weak-performing industries such as construction materials, paper products and paper packaging aided results, as did solid stock picking within the first two areas. In addition, good stock selection and an underweighting in the lagging diversified chemicals group helped. Given the fund's exposure to foreign stocks, currency fluctuations further enhanced the fund's return. Among individual holdings, an out-of-benchmark position in Rio Tinto was the top contributor. A diversified metals and mining company, Rio Tinto was boosted by strong metals prices and multiple takeover offers from Australian mining concern BHP Billiton. Also boosting performance was out-of-index holding Agrium, a Canadian fertilizer company that benefited from strong demand for crops and favorable market reaction to its purchase of UAP Holding, an agricultural products distributor. Not owning lagging paper-related names in the index, such as Canadian pulp and paper producer Domtar, aided results as well. Among detractors, the fund's slight underweighting in fertilizers and agricultural chemicals hurt, including an underweighting in fertilizer company CF Industries. In addition, the fund's overweighting in Titanium Metals disappointed, as the firm struggled through sluggish earnings announcements and construction delays among its end-users. Certain stock picks within the specialty and commodity chemicals areas also detracted, as did the fund's overall positioning in the steel industry over the course of the period. Some of the stocks I've mentioned in this review 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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,065.30 | $ 6.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,063.90 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Materials |
|
|
|
Actual | $ 1,000.00 | $ 1,067.00 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,066.70 | $ 4.62 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.94% |
Materials | .88% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 10.7 | 7.2 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 7.4 | 4.8 |
Alcoa, Inc. | 5.6 | 4.3 |
E.I. du Pont de Nemours & Co. | 5.3 | 8.3 |
Praxair, Inc. | 4.8 | 3.9 |
Nucor Corp. | 3.9 | 2.8 |
Newmont Mining Corp. | 3.6 | 1.6 |
The Mosaic Co. | 3.4 | 1.7 |
Dow Chemical Co. | 3.2 | 4.7 |
Weyerhaeuser Co. | 2.5 | 2.1 |
| 50.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Chemicals | 52.0% |
|
 | Metals & Mining | 32.6% |
|
 | Containers & Packaging | 6.9% |
|
 | Paper & Forest Products | 3.6% |
|
 | Oil, Gas & Consumable Fuels | 1.3% |
|
 | All Others* | 3.6% |
|
As of August 31, 2007 | |||
| Chemicals | 53.8% |
|
| Metals & Mining | 28.0% |
|
| Paper & Forest Products | 5.2% |
|
| Containers & Packaging | 4.4% |
|
| Industrial Conglomerates | 3.0% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
CHEMICALS - 52.0% | |||
Commodity Chemicals - 3.4% | |||
Celanese Corp. Class A | 250,500 | $ 9,744,450 | |
Spartech Corp. | 156,220 | 2,213,637 | |
Tronox, Inc. Class A | 250,900 | 1,121,523 | |
| 13,079,610 | ||
Diversified Chemicals - 14.5% | |||
Dow Chemical Co. | 325,300 | 12,260,557 | |
E.I. du Pont de Nemours & Co. | 446,200 | 20,712,604 | |
FMC Corp. | 97,600 | 5,525,136 | |
Hercules, Inc. | 264,695 | 4,849,212 | |
Huntsman Corp. | 108,300 | 2,613,279 | |
Olin Corp. | 99,929 | 1,920,635 | |
PPG Industries, Inc. | 136,900 | 8,485,062 | |
| 56,366,485 | ||
Fertilizers & Agricultural Chemicals - 14.7% | |||
Monsanto Co. | 359,844 | 41,626,754 | |
Potash Corp. of Saskatchewan, Inc. | 14,400 | 2,288,160 | |
The Mosaic Co. (a) | 118,638 | 13,204,409 | |
| 57,119,323 | ||
Industrial Gases - 6.6% | |||
Air Products & Chemicals, Inc. | 39,500 | 3,607,535 | |
Airgas, Inc. | 69,600 | 3,381,864 | |
Praxair, Inc. | 231,800 | 18,608,904 | |
| 25,598,303 | ||
Specialty Chemicals - 12.8% | |||
Albemarle Corp. | 142,752 | 5,416,011 | |
Cytec Industries, Inc. | 56,100 | 3,213,408 | |
Ecolab, Inc. | 159,000 | 7,439,610 | |
H.B. Fuller Co. | 113,508 | 2,582,307 | |
Innospec, Inc. | 214,262 | 4,015,270 | |
Minerals Technologies, Inc. | 40,980 | 2,470,274 | |
Nalco Holding Co. | 285,918 | 6,175,829 | |
OMNOVA Solutions, Inc. (a) | 615,568 | 2,400,715 | |
Rockwood Holdings, Inc. (a) | 152,700 | 4,686,363 | |
Rohm & Haas Co. (d) | 120,350 | 6,451,964 | |
Valspar Corp. | 110,200 | 2,390,238 | |
W.R. Grace & Co. (a) | 103,100 | 2,188,813 | |
| 49,430,802 | ||
TOTAL CHEMICALS | 201,594,523 | ||
CONSTRUCTION MATERIALS - 0.5% | |||
Construction Materials - 0.5% | |||
Polaris Minerals Corp. (a) | 38,700 | 377,149 | |
Polaris Minerals Corp. (a)(e) | 151,600 | 1,477,409 | |
| 1,854,558 | ||
| |||
Shares | Value | ||
CONTAINERS & PACKAGING - 6.9% | |||
Metal & Glass Containers - 5.0% | |||
Ball Corp. | 88,979 | $ 3,923,974 | |
Crown Holdings, Inc. (a) | 208,600 | 5,196,226 | |
Greif, Inc. Class A | 42,700 | 2,792,153 | |
Owens-Illinois, Inc. (a) | 131,200 | 7,406,240 | |
| 19,318,593 | ||
Paper Packaging - 1.9% | |||
Packaging Corp. of America | 67,500 | 1,538,325 | |
Smurfit-Stone Container Corp. (a) | 385,500 | 3,064,725 | |
Temple-Inland, Inc. | 207,500 | 2,848,975 | |
| 7,452,025 | ||
TOTAL CONTAINERS & PACKAGING | 26,770,618 | ||
MACHINERY - 0.5% | |||
Industrial Machinery - 0.5% | |||
ITT Corp. | 37,400 | 2,103,376 | |
METALS & MINING - 32.6% | |||
Aluminum - 5.6% | |||
Alcoa, Inc. | 579,400 | 21,518,916 | |
Diversified Metals & Mining - 9.2% | |||
Compass Minerals International, Inc. | 20,100 | 1,144,092 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 283,428 | 28,586,548 | |
Rio Tinto PLC sponsored ADR | 4,400 | 1,999,580 | |
Titanium Metals Corp. (d) | 181,800 | 3,748,716 | |
| 35,478,936 | ||
Gold - 5.8% | |||
Goldcorp, Inc. | 116,100 | 5,013,047 | |
Lihir Gold Ltd. (a) | 632,145 | 2,448,130 | |
Newmont Mining Corp. | 275,400 | 14,092,218 | |
Royal Gold, Inc. (d) | 32,300 | 1,017,773 | |
| 22,571,168 | ||
Precious Metals & Minerals - 0.7% | |||
Impala Platinum Holdings Ltd. | 43,700 | 1,806,995 | |
Pan American Silver Corp. (a) | 22,800 | 912,000 | |
| 2,718,995 | ||
Steel - 11.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 54,000 | 4,105,080 | |
Carpenter Technology Corp. | 67,000 | 4,209,610 | |
Nucor Corp. | 232,000 | 14,980,240 | |
Reliance Steel & Aluminum Co. | 79,100 | 4,386,886 | |
Steel Dynamics, Inc. | 116,600 | 6,793,116 | |
United States Steel Corp. | 87,400 | 9,478,530 | |
| 43,953,462 | ||
TOTAL METALS & MINING | 126,241,477 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 1.3% | |||
Coal & Consumable Fuels - 1.3% | |||
Alpha Natural Resources, Inc. (a) | 47,200 | $ 1,913,488 | |
Peabody Energy Corp. | 53,800 | 3,046,156 | |
| 4,959,644 | ||
PAPER & FOREST PRODUCTS - 3.6% | |||
Forest Products - 2.7% | |||
Louisiana-Pacific Corp. | 57,500 | 625,600 | |
Weyerhaeuser Co. | 161,700 | 9,896,040 | |
| 10,521,640 | ||
Paper Products - 0.9% | |||
Glatfelter | 164,656 | 2,168,520 | |
Wausau-Mosinee Paper Corp. | 144,877 | 1,135,836 | |
| 3,304,356 | ||
TOTAL PAPER & FOREST PRODUCTS | 13,825,996 | ||
TOTAL COMMON STOCKS (Cost $323,637,947) | 377,350,192 | ||
Money Market Funds - 4.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 8,391,028 | $ 8,391,028 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 8,915,050 | 8,915,050 | |
TOTAL MONEY MARKET FUNDS (Cost $17,306,078) | 17,306,078 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $340,944,025) | 394,656,270 |
NET OTHER ASSETS - (1.9)% | (7,362,526) | ||
NET ASSETS - 100% | $ 387,293,744 | ||
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. |
(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 $1,477,409 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 | $ 808,183 |
Fidelity Securities Lending Cash Central Fund | 107,174 |
Total | $ 915,357 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,959,182) - See accompanying schedule: Unaffiliated issuers (cost $323,637,947) | $ 377,350,192 |
|
Fidelity Central Funds (cost $17,306,078) | 17,306,078 |
|
Total Investments (cost $340,944,025) |
| $ 394,656,270 |
Receivable for fund shares sold | 2,356,858 | |
Dividends receivable | 444,913 | |
Distributions receivable from Fidelity Central Funds | 24,558 | |
Prepaid expenses | 1,024 | |
Other receivables | 4,129 | |
Total assets | 397,487,752 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 246,439 | |
Payable for fund shares redeemed | 711,324 | |
Accrued management fee | 172,900 | |
Distribution fees payable | 15,068 | |
Other affiliated payables | 90,706 | |
Other payables and accrued expenses | 42,521 | |
Collateral on securities loaned, at value | 8,915,050 | |
Total liabilities | 10,194,008 | |
|
|
|
Net Assets | $ 387,293,744 | |
Net Assets consist of: |
| |
Paid in capital | $ 330,122,002 | |
Undistributed net investment income | 1,848,037 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,611,755 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 53,711,950 | |
Net Assets | $ 387,293,744 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 57.00 | |
|
|
|
Maximum offering price per share (100/94.25 of $57.00) | $ 60.48 | |
Class T: | $ 56.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $56.80) | $ 58.86 | |
Class B: | $ 56.59 | |
|
|
|
Class C: | $ 56.50 | |
|
|
|
|
|
|
Materials: | $ 57.01 | |
|
|
|
Institutional Class: | $ 57.00 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,345,845 |
Interest |
| 1,926 |
Income from Fidelity Central Funds |
| 915,357 |
Total income |
| 7,263,128 |
|
|
|
Expenses | ||
Management fee | $ 1,996,306 | |
Transfer agent fees | 904,639 | |
Distribution fees | 106,827 | |
Accounting and security lending fees | 141,588 | |
Custodian fees and expenses | 15,698 | |
Independent trustees' compensation | 1,257 | |
Registration fees | 123,862 | |
Audit | 40,881 | |
Legal | 1,692 | |
Interest | 10,195 | |
Miscellaneous | 18,085 | |
Total expenses before reductions | 3,361,030 | |
Expense reductions | (51,841) | 3,309,189 |
Net investment income (loss) | 3,953,939 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,067,113 | |
Foreign currency transactions | 10,689 | |
Total net realized gain (loss) |
| 16,077,802 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,233,296 | |
Assets and liabilities in foreign currencies | (582) | |
Total change in net unrealized appreciation (depreciation) |
| 23,232,714 |
Net gain (loss) | 39,310,516 | |
Net increase (decrease) in net assets resulting from operations | $ 43,264,455 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,953,939 | $ 1,709,789 |
Net realized gain (loss) | 16,077,802 | 18,867,189 |
Change in net unrealized appreciation (depreciation) | 23,232,714 | 2,128,067 |
Net increase (decrease) in net assets resulting from operations | 43,264,455 | 22,705,045 |
Distributions to shareholders from net investment income | (2,382,687) | (1,721,356) |
Distributions to shareholders from net realized gain | (14,617,568) | (17,315,347) |
Total distributions | (17,000,255) | (19,036,703) |
Share transactions - net increase (decrease) | 127,763,307 | 59,771,650 |
Redemption fees | 66,997 | 236,747 |
Total increase (decrease) in net assets | 154,094,504 | 63,676,739 |
|
|
|
Net Assets | ||
Beginning of period | 233,199,240 | 169,522,501 |
End of period (including undistributed net investment income of $1,848,037 and undistributed net investment income of $276,784, respectively) | $ 387,293,744 | $ 233,199,240 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .46 | .17 |
Net realized and unrealized gain (loss) | 8.05 | 3.93 |
Total from investment operations | 8.51 | 4.10 |
Distributions from net investment income | (.32) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.53) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 51.01 |
Total Return B, C, D | 16.79% | 8.76% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.40% A |
Expenses net of all reductions | 1.21% | 1.38% A |
Net investment income (loss) | .83% | 1.76% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .32 | .11 |
Net realized and unrealized gain (loss) | 8.00 | 3.87 |
Total from investment operations | 8.32 | 3.98 |
Distributions from net investment income | (.21) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.42) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.80 | $ 50.89 |
Total Return B, C, D | 16.45% | 8.51% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.62% A |
Net investment income (loss) | .57% | 1.18% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,850 | $ 707 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .06 |
Net realized and unrealized gain (loss) | 7.98 | 3.84 |
Total from investment operations | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.25) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.59 | $ 50.81 |
Total Return B, C, D | 15.89% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.97% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.12% A |
Net investment income (loss) | .07% | .60% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,173 | $ 662 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .09 |
Net realized and unrealized gain (loss) | 7.97 | 3.81 |
Total from investment operations | 8.01 | 3.90 |
Distributions from net investment income | (.12) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.33) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.50 | $ 50.81 |
Total Return B, C, D | 15.87% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.96% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.13% A |
Net investment income (loss) | .07% | .89% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 8,743 | $ 547 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Materials
| |||||
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 | $ 23.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .42 | .32 | .15 | .13 F |
Net realized and unrealized gain (loss) | 8.01 | 9.36 | 6.40 | 5.47 | 12.07 |
Total from investment operations | 8.65 | 9.78 | 6.72 | 5.62 | 12.20 |
Distributions from net investment income | (.36) | (.48) | (.25) | (.12) | (.12) |
Distributions from net realized gain | (2.21) | (4.79) | (.93) | (.74) | - |
Total distributions | (2.57) | (5.27) | (1.18) | (.86) | (.12) |
Redemption fees added to paid in capital C | .01 | .06 | .03 | .03 | .08 |
Net asset value, end of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Total Return A, B | 17.10% | 22.29% | 17.01% | 16.09% | 51.73% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.05% | 1.06% | 1.31% |
Expenses net of fee waivers, if any | .90% | .98% | 1.05% | 1.06% | 1.31% |
Expenses net of all reductions | .89% | .96% | 1.01% | 1.02% | 1.17% |
Net investment income (loss) | 1.14% | .87% | .78% | .42% | .43% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 | $ 135,131 |
Portfolio turnover rate E | 77% | 185% | 124% | 89% | 175% |
A Total 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 $.07 per share. 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 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. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .64 | .08 |
Net realized and unrealized gain (loss) | 8.00 | 3.92 |
Total from investment operations | 8.64 | 4.00 |
Distributions from net investment income | (.36) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.56) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 50.91 |
Total Return B, C | 17.08% | 8.55% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .89% | 1.06% A |
Expenses net of fee waivers, if any | .89% | 1.06% A |
Expenses net of all reductions | .89% | 1.04% A |
Net investment income (loss) | 1.14% | .79% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,820 | $ 119 |
Portfolio turnover rate F | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 67,533,814 |
|
Unrealized depreciation | (17,166,142) |
|
Net unrealized appreciation (depreciation) | 50,367,672 |
|
|
|
|
Cost for federal income tax purposes | $ 344,288,598 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 7,456,139 | $ 4,275,377 |
Long-term Capital Gains | 9,544,116 | 14,761,326 |
Total | $ 17,000,255 | $ 19,036,703 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 $380,491,263 and $262,508,222, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 16,083 | $ 2,093 |
Class T | .25% | .25% | 20,380 | 588 |
Class B | .75% | .25% | 26,889 | 20,448 |
Class C | .75% | .25% | 43,475 | 26,842 |
|
|
| $ 106,827 | $ 49,971 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,085 |
Class T | 10,621 |
Class B* | 2,770 |
Class C* | 2,046 |
| $ 52,522 |
* 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
6. 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Materials shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,154 | .30 |
Class T | 12,304 | .30 |
Class B | 8,106 | .30 |
Class C | 12,868 | .30 |
Materials | 848,933 | .25 |
Institutional Class | 3,274 | .24 |
| $ 904,639 |
|
Accounting and Security Lending Fees. FSC 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 $4,847 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. 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 | $ 7,843,800 | 4.68% | $ 10,195 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $743 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $107,174.
Annual Report
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 $6,824 for the period In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 2,634 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 49,508 | $ - |
Class T | 17,252 | - |
Class B | 2,017 | - |
Class C | 11,702 | - |
Materials | 2,291,825 | 1,721,356 |
Institutional Class | 10,383 | - |
Total | $ 2,382,687 | $ 1,721,356 |
From net realized gain |
|
|
Class A | $ 297,274 | $ - |
Class T | 171,986 | - |
Class B | 120,699 | - |
Class C | 203,194 | - |
Materials | 13,774,394 | 17,315,347 |
Institutional Class | 50,021 | - |
Total | $ 14,617,568 | $ 17,315,347 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 264,311 | 19,960 | $ 14,817,528 | $ 1,010,235 |
Reinvestment of distributions | 5,853 | - | 336,777 | - |
Shares redeemed | (70,440) | - | (3,880,036) | - |
Net increase (decrease) | 199,724 | 19,960 | $ 11,274,269 | $ 1,010,235 |
Class T |
|
|
|
|
Shares sold | 146,420 | 13,890 | $ 8,122,926 | $ 703,837 |
Reinvestment of distributions | 2,954 | - | 169,021 | - |
Shares redeemed | (42,653) | - | (2,369,950) | - |
Net increase (decrease) | 106,721 | 13,890 | $ 5,921,997 | $ 703,837 |
Class B |
|
|
|
|
Shares sold | 83,153 | 13,022 | $ 4,611,263 | $ 643,438 |
Reinvestment of distributions | 2,052 | - | 116,729 | - |
Shares redeemed | (24,486) | - | (1,341,792) | - |
Net increase (decrease) | 60,719 | 13,022 | $ 3,386,200 | $ 643,438 |
Class C |
|
|
|
|
Shares sold | 171,703 | 10,758 | $ 9,620,121 | $ 546,127 |
Reinvestment of distributions | 3,133 | - | 178,976 | - |
Shares redeemed | (30,841) | - | (1,682,683) | - |
Net increase (decrease) | 143,995 | 10,758 | $ 8,116,414 | $ 546,127 |
Materials |
|
|
|
|
Shares sold | 7,472,335 | 6,290,426 | $ 416,206,078 | $ 311,961,345 |
Reinvestment of distributions | 270,946 | 378,787 | 15,331,841 | 18,026,752 |
Shares redeemed | (6,067,742) | (5,806,915) | (334,236,130) | (273,224,056) |
Net increase (decrease) | 1,675,539 | 862,298 | $ 97,301,789 | $ 56,764,041 |
Institutional Class |
|
|
|
|
Shares sold | 88,023 | 4,445 | $ 5,168,897 | $ 210,000 |
Reinvestment of distributions | 963 | - | 55,576 | - |
Shares redeemed | (59,388) | (2,112) | (3,461,835) | (106,028) |
Net increase (decrease) | 29,598 | 2,333 | $ 1,762,638 | $ 103,972 |
A Share transactions for Class A, Class T, Class B and Institutional Class are for the period December 12,2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Telecommunications Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -20.41% | 12.17% | 0.38% |
Class T (incl. 3.50% sales charge) B | -18.73% | 12.62% | 0.58% |
Class B (incl. contingent deferred sales charge) C | -20.36% | 13.05% | 0.88% |
Class C (incl. contingent deferred sales charge) D | -17.00% | 13.30% | 0.88% |
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, 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, 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, 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, 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, 1998, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Comments from Gavin Baker, Portfolio Manager of Fidelity Advisor Telecommunications Fund
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned -15.55%, -15.78%, -16.18% and -16.17%, respectively (excluding sales charges), underperforming the S&P 500® and the -12.23% return for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index. The fund was hurt by being heavily underweighted in integrated telecommunication services stocks AT&T and Verizon, which together represented about two-thirds of the index, at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. Though the fund had significant stakes in both of these companies - AT&T was its largest holding during the period - I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in AT&T and Verizon than these rules allowed me to during the period, which hurt as well. Poor stock selection in the integrated telecom services group also detracted. In addition, the fund was overweighted in the alternative carriers group, which underperformed. In terms of other individual detractors, alternative carrier Level 3 Communications hurt performance. Integrated telecom services company Qwest Communications International and Internet software and services stock SAVVIS held back the fund's return as well. On the other hand, we benefited from strong stock selection in the wireless telecommunication services group. Specifically, it was helped by underweighting Sprint Nextel, which performed poorly. Other stocks that contributed included broadcasting and cable TV company The DIRECTV Group, an out-of-benchmark position, and application software company Synchronoss Technologies, another out-of-benchmark holding.
For the 12 months ending February 29, 2008, the fund's Institutional Class shares returned -15.23%, underperforming the S&P 500® and the -12.23% return for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index. The fund was hurt by being heavily underweighted in integrated telecommunication services stocks AT&T and Verizon, which together represented about two-thirds of the index, at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. Though the fund had significant stakes in both of these companies - AT&T was its largest holding during the period - I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in AT&T and Verizon than these rules allowed me to during the period, which hurt as well. Poor stock selection in the integrated telecom services group also detracted. In addition, the fund was overweighted in the alternative carriers group, which underperformed. In terms of other individual detractors, alternative carrier Level 3 Communications hurt performance. Integrated telecom services company Qwest Communications International and Internet software and services stock SAVVIS held back the fund's return as well. On the other hand, we benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel, which performed poorly. Other stocks that contributed included broadcasting and cable TV company The DIRECTV Group, an out-of-benchmark position, and application software company Synchronoss Technologies, another out-of-benchmark holding.
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
Select Telecommunications Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 761.10 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 760.00 | $ 6.35 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 758.20 | $ 8.48 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 758.50 | $ 8.44 |
HypotheticalA | $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications |
|
|
|
Actual | $ 1,000.00 | $ 762.50 | $ 3.94 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 762.70 | $ 3.55 |
HypotheticalA | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.93% |
Telecommunications | .90% |
Institutional Class | .81% |
Annual Report
Investment Changes
Select Telecommunications Portfolio
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.1 | 24.2 |
Qwest Communications International, Inc. | 7.7 | 10.0 |
Global Crossing Ltd. | 7.7 | 0.5 |
Verizon Communications, Inc. | 7.3 | 7.2 |
Time Warner Telecom, Inc. Class A (sub. vtg.) | 6.1 | 4.6 |
Millicom International Cellular SA | 4.8 | 0.0 |
The DIRECTV Group, Inc. | 4.3 | 0.0 |
American Tower Corp. Class A | 4.1 | 3.1 |
Starent Networks Corp. | 4.0 | 1.7 |
Synchronoss Technologies, Inc. | 3.1 | 6.8 |
| 69.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Diversified Telecommunication Services | 55.0% |
|
 | Wireless Telecommunication Services | 27.3% |
|
 | Media | 6.0% |
|
 | Communications Equipment | 5.0% |
|
 | Software | 4.3% |
|
 | All Others* | 2.4% |
|
| |||
As of August 31, 2007 | |||
| Diversified Telecommunication Services | 60.8% |
|
| Wireless Telecommunication Services | 21.2% |
|
| Software | 10.7% |
|
| Internet Software & Services | 4.0% |
|
| Communications Equipment | 2.1% |
|
| All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Select Telecommunications Portfolio
Common Stocks - 99.8% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 5.0% | |||
Communications Equipment - 5.0% | |||
Aruba Networks, Inc. | 109,692 | $ 615,372 | |
F5 Networks, Inc. (a) | 1,600 | 35,456 | |
Infinera Corp. | 71,400 | 833,952 | |
Juniper Networks, Inc. (a) | 56,100 | 1,504,602 | |
Polycom, Inc. (a) | 1,700 | 37,060 | |
Sandvine Corp. (a) | 3,200 | 9,560 | |
Sonus Networks, Inc. (a) | 56,800 | 188,576 | |
Starent Networks Corp. | 870,714 | 13,696,331 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 300 | 6,450 | |
| 16,927,359 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 2,805 | |
Network Appliance, Inc. (a) | 700 | 15,134 | |
Synaptics, Inc. (a) | 300 | 8,037 | |
| 25,976 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 55.0% | |||
Alternative Carriers - 15.4% | |||
Cable & Wireless PLC | 18,800 | 65,683 | |
Cogent Communications Group, Inc. (a) | 104,308 | 2,031,920 | |
Global Crossing Ltd. (a) | 1,353,407 | 26,134,289 | |
Iliad Group SA | 600 | 55,321 | |
Level 3 Communications, Inc. (a)(d) | 1,265,852 | 2,822,850 | |
PAETEC Holding Corp. (a) | 73,600 | 568,192 | |
Time Warner Telecom, Inc. Class A (sub. vtg.) (a) | 1,299,442 | 20,713,105 | |
| 52,391,360 | ||
Integrated Telecommunication Services - 39.6% | |||
AT&T, Inc. | 1,962,602 | 68,357,428 | |
BT Group PLC | 5,053 | 22,875 | |
Cbeyond, Inc. (a) | 125,962 | 2,064,517 | |
Cincinnati Bell, Inc. (a) | 299,100 | 1,160,508 | |
Embarq Corp. | 45,100 | 1,891,494 | |
FairPoint Communications, Inc. | 74,300 | 731,112 | |
NTELOS Holdings Corp. | 632 | 13,481 | |
PT Indosat Tbk | 1,778,000 | 1,298,499 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,773,400 | 3,977,255 | |
Qwest Communications International, Inc. (d) | 4,878,944 | 26,346,298 | |
Telefonica SA | 40,800 | 1,179,664 | |
Telefonica SA sponsored ADR | 8,500 | 737,290 | |
Telenor ASA | 50,000 | 1,023,804 | |
Telenor ASA sponsored ADR | 4,100 | 254,569 | |
Telkom SA Ltd. | 34,500 | 615,288 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 681,524 | $ 24,752,952 | |
Windstream Corp. | 40,308 | 474,022 | |
| 134,901,056 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION | 187,292,416 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% | |||
Electronic Manufacturing Services - 0.1% | |||
Trimble Navigation Ltd. (a) | 8,940 | 244,420 | |
INTERNET SOFTWARE & SERVICES - 2.1% | |||
Internet Software & Services - 2.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 42,406 | |
SAVVIS, Inc. (a)(d) | 357,800 | 6,952,054 | |
| 6,994,460 | ||
MEDIA - 6.0% | |||
Broadcasting & Cable TV - 6.0% | |||
Comcast Corp. Class A | 298,400 | 5,830,736 | |
Liberty Global, Inc. Class A (a) | 400 | 15,040 | |
The DIRECTV Group, Inc. (a) | 581,400 | 14,564,070 | |
Time Warner Cable, Inc. (a) | 1,200 | 32,760 | |
Virgin Media, Inc. | 1,400 | 21,000 | |
| 20,463,606 | ||
SOFTWARE - 4.3% | |||
Application Software - 3.1% | |||
Synchronoss Technologies, Inc. (a)(d) | 666,163 | 10,711,901 | |
Home Entertainment Software - 1.2% | |||
Gameloft (a)(d) | 694,986 | 2,968,566 | |
Glu Mobile, Inc. | 208,214 | 982,770 | |
| 3,951,336 | ||
TOTAL SOFTWARE | 14,663,237 | ||
WIRELESS TELECOMMUNICATION SERVICES - 27.3% | |||
Wireless Telecommunication Services - 27.3% | |||
America Movil SAB de CV Series L sponsored ADR | 153,600 | 9,286,656 | |
American Tower Corp. Class A (a) | 364,000 | 13,992,160 | |
Bharti Airtel Ltd. (a) | 225,784 | 4,613,014 | |
Centennial Communications Corp. Class A (a) | 107,300 | 565,471 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 105,800 | 7,894,796 | |
Clearwire Corp. (d) | 76,500 | 1,071,765 | |
Crown Castle International Corp. (a) | 230,000 | 8,300,700 | |
Leap Wireless International, Inc. (a) | 30,614 | 1,309,055 | |
MetroPCS Communications, Inc. | 59,900 | 955,405 | |
Millicom International Cellular SA (a) | 148,800 | 16,442,400 | |
MTN Group Ltd. | 41,500 | 649,964 | |
NII Holdings, Inc. (a) | 119,300 | 4,739,789 | |
OnMobile Global Ltd. | 8,904 | 141,066 | |
SBA Communications Corp. Class A (a) | 163,564 | 5,078,662 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Sprint Nextel Corp. | 1,061,113 | $ 7,544,513 | |
Syniverse Holdings, Inc. (a) | 36,468 | 618,133 | |
Telephone & Data Systems, Inc. | 17,541 | 822,673 | |
Virgin Mobile USA, Inc. Class A | 600 | 3,042 | |
Vodafone Group PLC sponsored ADR | 281,700 | 9,079,191 | |
| 93,108,455 | ||
TOTAL COMMON STOCKS (Cost $419,374,069) | 339,719,929 | ||
Money Market Funds - 10.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 310,331 | 310,331 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,799,540 | 34,799,540 | |
TOTAL MONEY MARKET FUNDS (Cost $35,109,871) | 35,109,871 | ||
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $454,483,940) | 374,829,800 | ||
NET OTHER ASSETS - (10.1)% | (34,304,752) | ||
NET ASSETS - 100% | $ 340,525,048 | ||
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. |
(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 | $ 280,924 |
Fidelity Securities Lending Cash Central Fund | 296,380 |
Total | $ 577,304 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.6% |
Bermuda | 7.7% |
Luxembourg | 4.8% |
Mexico | 2.7% |
United Kingdom | 2.7% |
Hong Kong | 2.3% |
Indonesia | 1.6% |
India | 1.4% |
Others (individually less than 1%) | 2.2% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $379,461,672 of which $205,830,514, $161,866,685 and $11,764,473 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Select Telecommunications Portfolio
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $32,487,257) - See accompanying schedule: Unaffiliated issuers (cost $419,374,069) | $ 339,719,929 |
|
Fidelity Central Funds (cost $35,109,871) | 35,109,871 |
|
Total Investments (cost $454,483,940) |
| $ 374,829,800 |
Foreign currency held at value (cost $83,021) | 82,631 | |
Receivable for investments sold | 19,855,223 | |
Receivable for fund shares sold | 344,748 | |
Dividends receivable | 11,880 | |
Distributions receivable from Fidelity Central Funds | 37,457 | |
Prepaid expenses | 1,729 | |
Other receivables | 74,585 | |
Total assets | 395,238,053 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 18,245,145 | |
Payable for fund shares redeemed | 1,332,608 | |
Accrued management fee | 167,643 | |
Distribution fees payable | 2,814 | |
Other affiliated payables | 111,950 | |
Other payables and accrued expenses | 53,305 | |
Collateral on securities loaned, at value | 34,799,540 | |
Total liabilities | 54,713,005 | |
|
|
|
Net Assets | $ 340,525,048 | |
Net Assets consist of: |
| |
Paid in capital | $ 803,876,156 | |
Undistributed net investment income | 768,284 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (384,523,224) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (79,596,168) | |
Net Assets | $ 340,525,048 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 42.56 | |
|
|
|
Maximum offering price per share (100/94.25 of $42.56) | $ 45.16 | |
Class T: | $ 42.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $42.49) | $ 44.03 | |
Class B: | $ 42.42 | |
|
|
|
Class C: | $ 42.42 | |
|
|
|
|
|
|
Telecommunications: | $ 42.70 | |
|
|
|
Institutional Class: | $ 42.65 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,351,360 |
Interest |
| 2,137 |
Income from Fidelity Central Funds |
| 577,304 |
Total income |
| 9,930,801 |
|
|
|
Expenses | ||
Management fee | $ 3,281,900 | |
Transfer agent fees | 1,595,234 | |
Distribution fees | 35,596 | |
Accounting and security lending fees | 235,248 | |
Custodian fees and expenses | 54,668 | |
Independent trustees' compensation | 2,280 | |
Registration fees | 91,709 | |
Audit | 51,261 | |
Legal | 6,535 | |
Interest | 15,671 | |
Miscellaneous | 22,940 | |
Total expenses before reductions | 5,393,042 | |
Expense reductions | (66,753) | 5,326,289 |
Net investment income (loss) | 4,604,512 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $243,559) | 113,352,578 | |
Foreign currency transactions | 9,773 | |
Total net realized gain (loss) |
| 113,362,351 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $269,285) | (171,834,903) | |
Assets and liabilities in foreign currencies | (2,672) | |
Total change in net unrealized appreciation (depreciation) |
| (171,837,575) |
Net gain (loss) | (58,475,224) | |
Net increase (decrease) in net assets resulting from operations | $ (53,870,712) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,604,512 | $ 6,535,260 |
Net realized gain (loss) | 113,362,351 | 31,878,042 |
Change in net unrealized appreciation (depreciation) | (171,837,575) | 54,610,776 |
Net increase (decrease) in net assets resulting from operations | (53,870,712) | 93,024,078 |
Distributions to shareholders from net investment income | (4,987,721) | (5,987,382) |
Share transactions - net increase (decrease) | (227,033,730) | 136,866,943 |
Redemption fees | 35,395 | 144,270 |
Total increase (decrease) in net assets | (285,856,768) | 224,047,909 |
|
|
|
Net Assets | ||
Beginning of period | 626,381,816 | 402,333,907 |
End of period (including undistributed net investment income of $768,284 and undistributed net investment income of $1,385,280, respectively) | $ 340,525,048 | $ 626,381,816 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .26 | - K |
Net realized and unrealized gain (loss) | (8.08) | 3.15 |
Total from investment operations | (7.82) | 3.15 |
Distributions from net investment income | (.51) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.56 | $ 50.89 |
Total Return B, C, D | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.23% A |
Expenses net of all reductions | 1.19% | 1.22% A |
Net investment income (loss) | .49% | (.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 2,791 | $ 658 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .12 | (.02) |
Net realized and unrealized gain (loss) | (8.07) | 3.14 |
Total from investment operations | (7.95) | 3.12 |
Distributions from net investment income | (.42) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.49 | $ 50.86 |
Total Return B, C, D | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.46% | 1.54% A |
Expenses net of all reductions | 1.45% | 1.53% A |
Net investment income (loss) | .23% | (.24)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,270 | $ 560 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.05) |
Net realized and unrealized gain (loss) | (8.04) | 3.11 |
Total from investment operations | (8.18) | 3.06 |
Distributions from net investment income | (.20) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.80 |
Total Return B, C, D | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.05% A |
Expenses net of all reductions | 1.94% | 2.05% A |
Net investment income (loss) | (.26)% | (.49)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 741 | $ 291 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.07) |
Net realized and unrealized gain (loss) | (8.03) | 3.14 |
Total from investment operations | (8.17) | 3.07 |
Distributions from net investment income | (.22) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.81 |
Total Return B, C, D | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.95% | 2.07% A |
Expenses net of all reductions | 1.94% | 2.06% A |
Net investment income (loss) | (.26)% | (.65)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 902 | $ 332 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Telecommunications
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 | $ 23.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 | .61 F | .36 | .49 G | .08 |
Net realized and unrealized gain (loss) | (8.12) | 8.85 | 7.11 | (.96) | 12.13 |
Total from investment operations | (7.69) | 9.46 | 7.47 | (.47) | 12.21 |
Distributions from net investment income | (.52) | (.53) | (.33) | (.49) | (.05) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | .01 |
Net asset value, end of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Total Return A, B | (15.30)% | 22.69% | 21.54% | (1.40)% | 51.78% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .91% | .99% | 1.05% | 1.09% | 1.40% |
Expenses net of fee waivers, if any | .90% | .97% | 1.05% | 1.09% | 1.40% |
Expenses net of all reductions | .90% | .97% | .96% | 1.02% | 1.34% |
Net investment income (loss) | .79% | 1.34% F | .96% | 1.44% G | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 | $ 439,350 |
Portfolio turnover rate E | 134% | 162% | 148% | 56% | 98% |
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 Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..68%. 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 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. I For the year ended February 29. J Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .45 | .16 |
Net realized and unrealized gain (loss) | (8.09) | 3.01 |
Total from investment operations | (7.64) | 3.17 |
Distributions from net investment income | (.62) | - |
Redemption fees added to paid in capital D | - J | - J |
Net asset value, end of period | $ 42.65 | $ 50.91 |
Total Return B, C | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .83% | .98% A |
Expenses net of fee waivers, if any | .83% | .98% A |
Expenses net of all reductions | .83% | .97% A |
Net investment income (loss) | .86% | 1.52% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 256 | $ 114 |
Portfolio turnover rate F | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 5,270,613 |
|
Unrealized depreciation | (89,928,331) |
|
Net unrealized appreciation (depreciation) | (84,657,718) |
|
Undistributed ordinary income | 769,188 |
|
Capital loss carryforward | (379,461,672) |
|
|
|
|
Cost for federal income tax purposes | $ 459,487,518 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 4,987,721 | $ 5,987,382 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $772,122,381 and $982,539,013, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 7,757 | $ 1,222 |
Class T | .25% | .25% | 9,224 | 509 |
Class B | .75% | .25% | 8,516 | 6,658 |
Class C | .75% | .25% | 10,099 | 5,308 |
|
|
| $ 35,596 | $ 13,697 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 6,846 |
Class T | 1,522 |
Class B* | 3,132 |
Class C* | 288 |
| $ 11,788 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Telecommunications shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 9,513 | .31 |
Class T | 5,889 | .32 |
Class B | 2,638 | .31 |
Class C | 3,087 | .31 |
Telecommunications | 1,573,465 | .27 |
Institutional Class | 642 | .19 |
| $ 1,595,234 |
|
Accounting and Security Lending Fees. FSC 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 $17,606 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 |
Borrower | $ 8,152,429 | 4.94% | $ 15,671 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,339 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $296,380.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Telecommunications' operating expenses. During the period, this reimbursement reduced the class' expenses by $38,998.
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 $20,022 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Telecommunications | $ 7,614 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 34,959 | $ - |
Class T | 17,867 | - |
Class B | 3,199 | - |
Class C | 4,260 | - |
Telecommunications | 4,919,180 | 5,987,382 |
Institutional Class | 8,256 | - |
Total | $ 4,987,721 | $ 5,987,382 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 92,950 | 12,932 | $ 5,148,375 | $ 655,617 |
Reinvestment of distributions | 636 | - | 33,452 | - |
Shares redeemed | (40,941) | - | (2,000,467) | - |
Net increase (decrease) | 52,645 | 12,932 | $ 3,181,360 | $ 655,617 |
Class T |
|
|
|
|
Shares sold | 53,657 | 11,066 | $ 2,989,303 | $ 555,092 |
Reinvestment of distributions | 339 | - | 17,826 | - |
Shares redeemed | (35,109) | (60) | (1,688,606) | (3,110) |
Net increase (decrease) | 18,887 | 11,006 | $ 1,318,523 | $ 551,982 |
Class B |
|
|
|
|
Shares sold | 21,448 | 5,729 | $ 1,194,831 | $ 285,388 |
Reinvestment of distributions | 57 | - | 3,011 | - |
Shares redeemed | (9,753) | - | (488,017) | - |
Net increase (decrease) | 11,752 | 5,729 | $ 709,825 | $ 285,388 |
Class C |
|
|
|
|
Shares sold | 28,254 | 6,538 | $ 1,547,917 | $ 326,374 |
Reinvestment of distributions | 63 | - | 3,315 | - |
Shares redeemed | (13,594) | - | (674,972) | - |
Net increase (decrease) | 14,723 | 6,538 | $ 876,260 | $ 326,374 |
Telecommunications |
|
|
|
|
Shares sold | 3,678,807 | 12,699,449 | $ 202,863,624 | $ 581,140,315 |
Reinvestment of distributions | 89,389 | 124,102 | 4,711,340 | 5,727,266 |
Shares redeemed | (8,198,629) | (10,144,422) | (440,994,970) | (451,923,224) |
Net increase (decrease) | (4,430,433) | 2,679,129 | $ (233,420,006) | $ 134,944,357 |
Institutional Class |
|
|
|
|
Shares sold | 14,719 | 3,391 | $ 834,674 | $ 162,500 |
Reinvestment of distributions | 128 | - | 6,760 | - |
Shares redeemed | (11,092) | (1,150) | (541,126) | (59,275) |
Net increase (decrease) | 3,755 | 2,241 | $ 300,308 | $ 103,225 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
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 statement of changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) and Gold Portfolio's wholly owned subsidiary at February 29, 2008, the results of their operations for the year then ended , the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers, LLP
Boston, Massachusetts
April 23, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of the funds. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of the funds. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of the funds. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the funds. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of the funds. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of the funds. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the funds. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the funds. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the funds. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the funds. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the funds. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the funds. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the funds. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Consumer Staples Portfolio |
|
|
|
|
Class A | 04/14/08 | 04/11/08 | $0.000 | $0.024 |
Class T | 04/14/08 | 04/11/08 | $0.000 | $0.000 |
Class B | 04/14/08 | 04/11/08 | $0.000 | $0.000 |
Class C | 04/14/08 | 04/11/08 | $0.000 | $0.000 |
Select Gold Portfolio |
|
|
|
|
Class A | 04/14/08 | 04/11/08 | $0.000 | $0.170 |
Class T | 04/14/08 | 04/11/08 | $0.000 | $0.170 |
Class B | 04/14/08 | 04/11/08 | $0.000 | $0.170 |
Class C | 04/14/08 | 04/11/08 | $0.000 | $0.170 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Consumer Staples Portfolio | $ 8,761,249 |
Select Gold Portfolio | $ 114,223,721 |
Select Materials Portfolio | $ 6,623,467 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Consumer Staples Portfolio |
|
|
Class A | 58% | 44% |
Class T | 58% | 47% |
Class B | 62% | 53% |
Class C | 66% | 47% |
Select Gold Portfolio |
|
|
Class A | 0% | 2% |
Class T | 0% | 3% |
Class B | 0% | 3% |
Class C | 0% | 3% |
Select Materials Portfolio |
|
|
Class A | 100% | 74% |
Class T | 100% | 83% |
Class B | 100% | 99% |
Class C | 100% | 90% |
Select 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.
Annual Report
Distributions - continued
| April 2007 | December 2007 |
Select Consumer Staples Portfolio |
|
|
Class A | 70% | 56% |
Class T | 70% | 60% |
Class B | 74% | 68% |
Class C | 79% | 60% |
Select Gold Portfolio |
|
|
Class A | 14% | 10% |
Class T | 14% | 10% |
Class B | 14% | 11% |
Class C | 14% | 11% |
Select Materials Portfolio |
|
|
Class A | 100% | 67% |
Class T | 100% | 76% |
Class B | 100% | 90% |
Class C | 100% | 82% |
Select 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 |
Select Gold Portfolio |
|
|
|
Class A | 04/16/07 | $0.202 | $0.0022 |
| 12/17/07 | $0.074 | $0.0086 |
Class T | 04/16/07 | $0.197 | $0.0022 |
| 12/17/07 | $0.071 | $0.0086 |
Class B | 04/16/07 | $0.197 | $0.0022 |
| 12/17/07 | $0.063 | $0.0086 |
Class C | 04/16/07 | $0.199 | $0.0022 |
| 12/17/07 | $0.066 | $0.0086 |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. 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
ASGMT-UANN-0408
1.845779.101
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 29, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders | |
Consumer Staples | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Gold | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Telecommunications | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Proxy Voting Results |
|
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 (search for "proxy voting guidelines") 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.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
Continuation of a credit squeeze, flat consumer spending and a potential recession weighed heavily on stocks in the opening months of 2008, though positive results in investment-grade bonds and money markets offered some comfort to investors. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical 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 are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. 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 investment 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 unconstructive "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 over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Fidelity Advisor Consumer Staples Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 13.77% | 16.10% | 7.77% |
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, the original class of the fund.
Prior to October 1, 2006, Consumer Staples 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, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) 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
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Fund
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned 13.38%, 13.11%, 12.53% and 12.58%, respectively (excluding sales charges), significantly outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Staples Index, which rose 7.22%, as well as the S&P 500®. I'm pursuing three general themes in this fund: companies with exposure to faster-growth parts of the world; companies that benefit from consumers "trading up" to higher-quality brands; and companies whose stocks are attractively valued - i.e., selling at below-average prices for what I believe is above-average growth potential. Relative to the MSCI index, these themes played out particularly well for our holdings in packaged food companies, brewers, soft drink firms and tobacco companies. Our stake in Swiss food conglomerate Nestle benefited from all three of the portfolio's major themes: Profits were buoyed by strong sales in emerging markets; I bought the stock at an attractive valuation; and many of Nestle's brands benefit from strong consumer loyalty that makes them less exposed to price competition. British American Tobacco (BAT) was a similar story, purchased at an attractive valuation and propelled by robust sales growth in emerging markets. Strong performance by our holdings in Belgium-based InBev, one of the world's largest brewers, and Souza Cruz, the largest cigarette maker in Brazil, also was driven by increasing sales in emerging markets. Our shares in Coca-Cola Hellenic, a dominant soft drink distributor in southern and eastern Europe, appreciated sharply. I invested in Numico, a Dutch maker of infant and clinical nutrition products, when its shares dipped to an attractive price, and I sold our position at a healthy profit when another firm later made a buyout offer for Numico. None of the stocks just mentioned were components of the MSCI index. Since I have been focusing the fund on companies that conduct business in many international markets, the continued deterioration in the value of the U.S. dollar versus other currencies increased the value of those businesses as measured in U.S. dollars, which benefited relative performance as well. On the negative side, relative performance was hurt by holdings in related areas that were outside our consumer staples benchmark, notably restaurants and food technology. Key individual detractors included food technology firm Senomyx and Norway-headquartered Marine Harvest ASA, the world's largest fish farmer, whose shares declined when some of its farms were hit by disease. Brewer SABMiller detracted from results as well. SABMiller, Marine Harvest and Senomyx were not components of the sector benchmark. Underweighting tobacco conglomerate Altria, a large index component, hurt relative performance as its stock moved higher. I had underweighted Altria in favor of BAT and its subsidiary Souza Cruz, which I felt were better opportunities in tobacco, and they more than offset the drag from being underweighted in Altria.
For the 12 months ending February 29, 2008, the fund's Institutional Class shares returned 13.77%, significantly outpacing the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Consumer Staples Index, which rose 7.22%, as well as the S&P 500®. I'm pursuing three general themes in this fund: companies with exposure to faster-growth parts of the world; companies that benefit from consumers "trading up" to higher-quality brands; and companies whose stocks are attractively valued - i.e., selling at below-average prices for what I believe is above-average growth potential. Relative to the MSCI index, these themes played out particularly well for our holdings in packaged food companies, brewers, soft drink firms and tobacco companies. Our stake in Swiss food conglomerate Nestle benefited from all three of the portfolio's major themes: Profits were buoyed by strong sales in emerging markets; I bought the stock at an attractive valuation; and many of Nestle's brands benefit from strong consumer loyalty that makes them less exposed to price competition. British American Tobacco (BAT) was a similar story, purchased at an attractive valuation and propelled by robust sales growth in emerging markets. Strong performance by our holdings in Belgium-based InBev, one of the world's largest brewers, and Souza Cruz, the largest cigarette maker in Brazil, also was driven by increasing sales in emerging markets. Our shares in Coca-Cola Hellenic, a dominant soft drink distributor in southern and eastern Europe, appreciated sharply. I invested in Numico, a Dutch maker of infant and clinical nutrition products, when its shares dipped to an attractive price, and I sold our position at a healthy profit when another firm later made a buyout offer for Numico. None of the stocks just mentioned were components of the MSCI index. Since I have been focusing the fund on companies that conduct business in many international markets, the continued deterioration in the value of the U.S. dollar versus other currencies increased the value of those businesses as measured in U.S. dollars, which benefited relative performance as well. On the negative side, relative performance was hurt by holdings in related areas that were outside our consumer staples benchmark, notably restaurants and food technology. Key individual detractors included food technology firm Senomyx and Norway-headquartered Marine Harvest ASA, the world's largest fish farmer, whose shares declined when some of its farms were hit by disease. Brewer SABMiller detracted from results as well. SABMiller, Marine Harvest and Senomyx were not components of the sector benchmark. Underweighting tobacco conglomerate Altria, a large index component, hurt relative performance as its stock moved higher. I had underweighted Altria in favor of BAT and its subsidiary Souza Cruz, which I felt were better opportunities in tobacco, and they more than offset the drag from being underweighted in Altria.
Annual Report
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.
Portfolio
Shareholder Expense Example
Select Consumer Staples Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,037.60 | $ 5.93 |
HypotheticalA | $ 1,000.00 | $ 1,019.05 | $ 5.87 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,036.00 | $ 7.34 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,033.60 | $ 9.81 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,033.80 | $ 9.56 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Consumer Staples |
|
|
|
Actual | $ 1,000.00 | $ 1,039.00 | $ 4.51 |
HypotheticalA | $ 1,000.00 | $ 1,020.44 | $ 4.47 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,039.30 | $ 4.21 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.17% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.89% |
Consumer Staples | .89% |
Institutional Class | .83% |
Annual Report
Investment Changes
Select Consumer Staples Portfolio
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.5 | 16.3 |
The Coca-Cola Co. | 9.7 | 8.8 |
PepsiCo, Inc. | 7.8 | 7.8 |
CVS Caremark Corp. | 5.9 | 5.5 |
Nestle SA sponsored ADR | 5.0 | 4.1 |
Altria Group, Inc. | 4.1 | 4.4 |
British American Tobacco PLC sponsored ADR | 3.6 | 4.4 |
Colgate-Palmolive Co. | 3.4 | 4.0 |
Avon Products, Inc. | 3.0 | 1.9 |
Wal-Mart Stores, Inc. | 3.0 | 4.8 |
| 61.0 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Beverages | 31.0% |
|
 | Household Products | 19.7% |
|
 | Food & Staples Retailing | 17.4% |
|
 | Food Products | 15.9% |
|
 | Tobacco | 9.5% |
|
 | All Others* | 6.5% |
|
|
As of August 31, 2007 | |||
| Beverages | 26.4% |
|
| Household Products | 20.8% |
|
| Food & Staples Retailing | 20.4% |
|
| Food Products | 14.2% |
|
| Tobacco | 11.3% |
|
| All Others * | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Select Consumer Staples Portfolio
Common Stocks - 98.1% | |||
Shares | Value | ||
BEVERAGES - 31.0% | |||
Brewers - 6.5% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 172,759 | $ 1,939,204 | |
Boston Beer Co., Inc. Class A (a) | 100 | 3,566 | |
Carlsberg AS Series B | 15,000 | 1,864,119 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 100 | 8,148 | |
Grupo Modelo SA de CV Series C | 100 | 453 | |
Heineken NV (Bearer) | 173,600 | 9,790,155 | |
InBev SA | 124,200 | 11,224,232 | |
Molson Coors Brewing Co. Class B | 297,180 | 16,035,833 | |
SABMiller plc | 277,550 | 5,814,673 | |
| 46,680,383 | ||
Distillers & Vintners - 4.2% | |||
Brown-Forman Corp. Class B (non-vtg.) | 27,900 | 1,779,183 | |
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 285,800 | 5,490,218 | |
Diageo PLC sponsored ADR | 129,000 | 10,590,900 | |
Pernod Ricard SA | 102,800 | 10,873,780 | |
Remy Cointreau SA | 29,000 | 1,821,817 | |
| 30,555,898 | ||
Soft Drinks - 20.3% | |||
Coca-Cola Amatil Ltd. | 208,000 | 1,846,198 | |
Coca-Cola Femsa SA de CV sponsored ADR | 110,600 | 5,799,864 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 119,100 | 5,191,569 | |
Coca-Cola Icecek AS | 182,000 | 1,789,431 | |
Cott Corp. (a) | 275,000 | 628,779 | |
Fomento Economico Mexicano SA de CV sponsored ADR | 118,000 | 4,720,000 | |
Hansen Natural Corp. (a) | 100 | 4,150 | |
Jones Soda Co. (a) | 1,000 | 5,330 | |
PepsiCo, Inc. | 810,000 | 56,343,600 | |
The Coca-Cola Co. | 1,194,100 | 69,807,086 | |
| 146,136,007 | ||
TOTAL BEVERAGES | 223,372,288 | ||
BIOTECHNOLOGY - 0.2% | |||
Biotechnology - 0.2% | |||
Senomyx, Inc. (a) | 201,300 | 1,368,840 | |
FOOD & STAPLES RETAILING - 17.4% | |||
Drug Retail - 8.5% | |||
CVS Caremark Corp. | 1,048,300 | 42,330,354 | |
Rite Aid Corp. (a)(d) | 463,400 | 1,237,278 | |
Walgreen Co. | 491,900 | 17,959,269 | |
| 61,526,901 | ||
| |||
Shares | Value | ||
Food Distributors - 1.6% | |||
Sysco Corp. | 355,400 | $ 9,972,524 | |
United Natural Foods, Inc. (a) | 72,900 | 1,233,468 | |
| 11,205,992 | ||
Food Retail - 4.3% | |||
Kroger Co. | 773,200 | 18,750,100 | |
Safeway, Inc. | 332,800 | 9,564,672 | |
SUPERVALU, Inc. | 106,500 | 2,795,625 | |
Tesco PLC | 100 | 790 | |
The Great Atlantic & Pacific Tea Co. (a) | 100 | 2,708 | |
| 31,113,895 | ||
Hypermarkets & Super Centers - 3.0% | |||
Wal-Mart Stores, Inc. (d) | 428,400 | 21,244,356 | |
TOTAL FOOD & STAPLES RETAILING | 125,091,144 | ||
FOOD PRODUCTS - 15.9% | |||
Agricultural Products - 3.3% | |||
Archer Daniels Midland Co. (d) | 309,100 | 13,940,410 | |
Bunge Ltd. | 65,100 | 7,215,684 | |
Corn Products International, Inc. | 39,700 | 1,457,387 | |
Nutreco Holding NV | 14,900 | 1,059,861 | |
| 23,673,342 | ||
Packaged Foods & Meats - 12.6% | |||
BioMar Holding AS | 13,800 | 508,433 | |
Cadbury Schweppes PLC sponsored ADR | 105,200 | 4,718,220 | |
Campbell Soup Co. | 45,000 | 1,453,050 | |
Chiquita Brands International, Inc. (a) | 54,500 | 1,115,615 | |
Dean Foods Co. | 65,800 | 1,416,016 | |
Groupe Danone | 101,200 | 7,767,100 | |
Hershey Co. | 100 | 3,708 | |
Industrias Bachoco SA de CV sponsored ADR | 100 | 2,930 | |
Kellogg Co. | 60,400 | 3,063,488 | |
Koninklijke Wessanen NV | 100 | 1,338 | |
Kraft Foods, Inc. Class A | 357,000 | 11,127,690 | |
Lindt & Spruengli AG | 59 | 2,096,917 | |
Marine Harvest ASA (a)(d) | 3,626,000 | 2,147,914 | |
Nestle SA sponsored ADR | 302,800 | 36,033,200 | |
Smithfield Foods, Inc. (a) | 100 | 2,755 | |
Tootsie Roll Industries, Inc. | 1 | 24 | |
TreeHouse Foods, Inc. (a) | 100 | 2,217 | |
Tyson Foods, Inc. Class A | 54,900 | 791,109 | |
Unilever NV (NY Shares) | 531,200 | 16,520,320 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR | 16,000 | 1,684,160 | |
| 90,456,204 | ||
TOTAL FOOD PRODUCTS | 114,129,546 | ||
Common Stocks - continued | |||
Shares | Value | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Panera Bread Co. Class A (a) | 100 | $ 3,737 | |
Starbucks Corp. (a) | 100 | 1,797 | |
| 5,534 | ||
HOUSEHOLD DURABLES - 0.0% | |||
Housewares & Specialties - 0.0% | |||
Tupperware Brands Corp. | 100 | 3,648 | |
HOUSEHOLD PRODUCTS - 19.7% | |||
Household Products - 19.7% | |||
Central Garden & Pet Co. | 1,000 | 4,930 | |
Colgate-Palmolive Co. | 325,800 | 24,790,122 | |
Kimberly-Clark Corp. | 85,600 | 5,579,408 | |
Procter & Gamble Co. | 1,689,897 | 111,837,383 | |
Pz Cussons PLC Class L | 100 | 351 | |
| 142,212,194 | ||
PERSONAL PRODUCTS - 3.9% | |||
Personal Products - 3.9% | |||
Avon Products, Inc. | 575,500 | 21,903,530 | |
Bare Escentuals, Inc. (a)(d) | 63,205 | 1,730,553 | |
Estee Lauder Companies, Inc. Class A | 42,000 | 1,788,360 | |
Herbalife Ltd. | 41,900 | 1,752,677 | |
Physicians Formula Holdings, Inc. (a) | 134,900 | 1,063,012 | |
| 28,238,132 | ||
PHARMACEUTICALS - 0.5% | |||
Pharmaceuticals - 0.5% | |||
Johnson & Johnson | 58,600 | 3,630,856 | |
TOBACCO - 9.5% | |||
Tobacco - 9.5% | |||
Altria Group, Inc. | 408,000 | 29,841,120 | |
| |||
Shares | Value | ||
British American Tobacco PLC sponsored ADR | 345,100 | $ 26,020,540 | |
Japan Tobacco, Inc. | 407 | 2,055,940 | |
KT&G Corp. | 41,000 | 3,382,763 | |
Loews Corp. - Carolina Group | 24,200 | 1,822,018 | |
Souza Cruz Industria Comerico | 181,800 | 5,315,194 | |
| 68,437,575 | ||
TOTAL COMMON STOCKS (Cost $646,297,183) | 706,489,757 | ||
Money Market Funds - 7.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 17,895,644 | 17,895,644 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,579,650 | 34,579,650 | |
TOTAL MONEY MARKET FUNDS (Cost $52,475,294) | 52,475,294 | ||
TOTAL INVESTMENT PORTFOLIO - 105.4% (Cost $698,772,477) | 758,965,051 | ||
NET OTHER ASSETS - (5.4)% | (38,587,793) | ||
NET ASSETS - 100% | $ 720,377,258 | ||
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. |
(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 | $ 620,233 |
Fidelity Securities Lending Cash Central Fund | 275,887 |
Total | $ 896,120 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 73.2% |
United Kingdom | 6.6% |
Switzerland | 5.3% |
Netherlands | 3.9% |
France | 2.8% |
Belgium | 1.5% |
Mexico | 1.5% |
Bermuda | 1.0% |
Others (individually less than 1%) | 4.2% |
| 100.0% |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Select Consumer Staples Portfolio
Statement of Assets and Liabilities
| February 29, 2008 | |
Assets | ||
Investment in securities, at value (including securities loaned of $32,445,761) - See accompanying schedule: Unaffiliated issuers (cost $646,297,183) | $ 706,489,757 |
|
Fidelity Central Funds (cost $52,475,294) | 52,475,294 |
|
Total Investments (cost $698,772,477) |
| $ 758,965,051 |
Receivable for investments sold | 6,723,906 | |
Receivable for fund shares sold | 3,206,800 | |
Dividends receivable | 514,558 | |
Distributions receivable from Fidelity Central Funds | 85,349 | |
Prepaid expenses | 1,386 | |
Other receivables | 3,365 | |
Total assets | 769,500,415 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 12,957,359 | |
Payable for fund shares redeemed | 1,007,196 | |
Accrued management fee | 326,546 | |
Distribution fees payable | 26,363 | |
Other affiliated payables | 161,746 | |
Other payables and accrued expenses | 64,297 | |
Collateral on securities loaned, at value | 34,579,650 | |
Total liabilities | 49,123,157 | |
|
|
|
Net Assets | $ 720,377,258 | |
Net Assets consist of: |
| |
Paid in capital | $ 659,839,070 | |
Undistributed net investment income | 1,685,304 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,342,192) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 60,195,076 | |
Net Assets | $ 720,377,258 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
Calculation of Maximum Offering Price Class A: | $ 63.13 | |
|
|
|
Maximum offering price per share (100/94.25 of $63.13) | $ 66.98 | |
Class T: | $ 62.93 | |
|
|
|
Maximum offering price per share (100/96.50 of $62.93) | $ 65.21 | |
Class B: | $ 62.69 | |
|
|
|
Class C: | $ 62.61 | |
|
|
|
Consumer Staples: | $ 63.25 | |
|
|
|
Institutional Class: | $ 63.22 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
Investment Income |
|
|
Dividends |
| $ 9,388,271 |
Interest |
| 23,896 |
Income from Fidelity Central Funds |
| 896,120 |
Total income |
| 10,308,287 |
|
|
|
Expenses | ||
Management fee | $ 2,861,176 | |
Transfer agent fees | 1,298,752 | |
Distribution fees | 124,810 | |
Accounting and security lending fees | 197,163 | |
Custodian fees and expenses | 102,237 | |
Independent trustees' compensation | 1,896 | |
Registration fees | 127,212 | |
Audit | 42,064 | |
Legal | 2,244 | |
Miscellaneous | 23,088 | |
Total expenses before reductions | 4,780,642 | |
Expense reductions | (67,555) | 4,713,087 |
Net investment income (loss) | 5,595,200 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,797,471 | |
Foreign currency transactions | (16,225) | |
Total net realized gain (loss) |
| 16,781,246 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,841,625 | |
Assets and liabilities in foreign currencies | 2,450 | |
Total change in net unrealized appreciation (depreciation) |
| 23,844,075 |
Net gain (loss) | 40,625,321 | |
Net increase (decrease) in net assets resulting from operations | $ 46,220,521 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,595,200 | $ 2,292,472 |
Net realized gain (loss) | 16,781,246 | 23,009,399 |
Change in net unrealized appreciation (depreciation) | 23,844,075 | 13,327,382 |
Net increase (decrease) in net assets resulting from operations | 46,220,521 | 38,629,253 |
Distributions to shareholders from net investment income | (4,297,338) | (1,582,908) |
Distributions to shareholders from net realized gain | (21,936,184) | (15,661,672) |
Total distributions | (26,233,522) | (17,244,580) |
Share transactions - net increase (decrease) | 323,338,123 | 230,543,294 |
Redemption fees | 70,107 | 47,547 |
Total increase (decrease) in net assets | 343,395,229 | 251,975,514 |
|
|
|
Net Assets | ||
Beginning of period | 376,982,029 | 125,006,515 |
End of period (including undistributed net investment income of $1,685,304 and undistributed net investment income | $ 720,377,258 | $ 376,982,029 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .53 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.28 |
Total from investment operations | 7.82 | 1.27 |
Distributions from net investment income | (.42) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.86) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 63.13 | $ 58.16 |
Total Return B,C,D | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.29% A |
Expenses net of all reductions | 1.19% | 1.28% A |
Net investment income (loss) | .83% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 23,796 | $ 986 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | (.01) |
Net realized and unrealized gain (loss) | 7.29 | 1.18 |
Total from investment operations | 7.65 | 1.17 |
Distributions from net investment income | (.35) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.79) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.93 | $ 58.06 |
Total Return B,C,D | 13.11% | 2.06% |
Ratios to Average Net AssetsF,I |
|
|
Expenses before reductions | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.60% A |
Net investment income (loss) | .56% | (.11)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,298 | $ 529 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | (.07) |
Net realized and unrealized gain (loss) | 7.27 | 1.18 |
Total from investment operations | 7.31 | 1.11 |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.63) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.69 | $ 58.00 |
Total Return B,C,D | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 2.09% A |
Net investment income (loss) | .06% | (.59)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,884 | $ 226 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .06 | (.08) |
Net realized and unrealized gain (loss) | 7.28 | 1.18 |
Total from investment operations | 7.34 | 1.10 |
Distributions from net investment income | (.29) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.73) | - |
Redemption fees added to paid in capital E | .01 | - K |
Net asset value, end of period | $ 62.61 | $ 57.99 |
Total Return B,C,D | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
Expenses before reductions | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 2.14% A |
Expenses net of all reductions | 1.92% | 2.14% A |
Net investment income (loss) | .09% | (.66)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 19,791 | $ 178 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Consumer Staples
Years ended February 28, | 2008 G | 2007 | 2006 | 2005 | 2004 G |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 | $ 35.71 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .71 | .56 | .50 | .29 | .22 |
Net realized and unrealized gain (loss) | 7.30 | 8.88 | 3.25 | 4.90 | 10.80 |
Total from investment operations | 8.01 | 9.44 | 3.75 | 5.19 | 11.02 |
Distributions from net investment income | (.46) | (.32) | (.44) | (.29) | (.24) |
Distributions from net realized gain | (2.44) | (3.18) | (2.56) | - | - |
Total distributions | (2.90) | (3.50) | (3.00) | (.29) | (.24) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Total Return A,B | 13.72% | 18.43% | 7.50% | 11.24% | 30.94% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.04% | 1.06% | 1.27% |
Expenses net of fee waivers, if any | .90% | .99% | 1.04% | 1.06% | 1.27% |
Expenses net of all reductions | .90% | .98% | 1.03% | 1.05% | 1.25% |
Net investment income (loss) | 1.12% | .99% | .97% | .61% | .55% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 | $ 104,436 |
Portfolio turnover rate E | 71% | 99% | 75% | 86% | 62% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G For the year ended February 29. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .74 | .07 |
Net realized and unrealized gain (loss) | 7.30 | 1.16 |
Total from investment operations | 8.04 | 1.23 |
Distributions from net investment income | (.51) | - |
Distributions from net realized gain | (2.44) | - |
Total distributions | (2.95) | - |
Redemption fees added to paid in capital D | .01 | - J |
Net asset value, end of period | $ 63.22 | $ 58.12 |
Total Return B,C | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
Expenses before reductions | .85% | 1.00% A |
Expenses net of fee waivers, if any | .85% | 1.00% A |
Expenses net of all reductions | .84% | 1.00% A |
Net investment income (loss) | 1.17% | .57% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,384 | $ 132 |
Portfolio turnover rate F | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 76,807,189 |
|
Unrealized depreciation | (19,342,868) |
|
Net unrealized appreciation (depreciation) | 57,464,321 |
|
Undistributed ordinary income | 416,885 |
|
|
|
|
Cost for federal income tax purposes | $ 701,500,730 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 15,086,000 | $ 1,582,908 |
Long-term Capital Gains | 11,147,522 | 15,661,672 |
Total | $ 26,233,522 | $ 17,244,580 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $662,284,483 and $360,615,711, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,277 | $ 2,025 |
Class T | .25% | .25% | 26,470 | 558 |
Class B | .75% | .25% | 19,856 | 15,168 |
Class C | .75% | .25% | 61,207 | 34,937 |
|
|
| $ 124,810 | $ 52,688 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 54,636 |
Class T | 8,439 |
Class B* | 2,863 |
Class C* | 1,508 |
| 67,446 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Consumer Staples shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,257 | .28 |
Class T | 15,907 | .30 |
Class B | 5,775 | .29 |
Class C | 15,235 | .25 |
Consumer Staples | 1,237,519 | .25 |
Institutional Class | 5,059 | .19 |
| $ 1,298,752 |
|
Accounting and Security Lending Fees. FSC maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,807 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,126 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $275,887.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Consumer Staples operating expenses. During the period, this reimbursement reduced the class' expenses by $40,354.
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 $19,534 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $3,122. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Class A | $ 5 |
|
Consumer Staples | 4,466 |
|
| $ 4,471 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 29, | 2008 | 2007A |
From net investment income |
|
|
Class A | $ 54,271 | $ - |
Class T | 42,873 | - |
Class B | 7,270 | - |
Class C | 46,840 | - |
Consumer Staples | 4,124,954 | 1,582,908 |
Institutional Class | 21,130 | - |
Total | $ 4,297,338 | $ 1,582,908 |
From net realized gain |
|
|
Class A | $ 279,894 | $ - |
Class T | 271,554 | - |
Class B | 90,489 | - |
Class C | 308,038 | - |
Consumer Staples | 20,893,023 | 15,661,672 |
Institutional Class | 93,186 | - |
Total | $ 21,936,184 | $ 15,661,672 |
A Distributions for Class A, Class T, Class B, Class C, and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Year ended February 29, | 2008 | 2007A | 2008 | 2007A |
Class A |
|
|
|
|
Shares sold | 394,208 | 17,300 | $ 25,121,582 | $ 1,017,780 |
Reinvestment of distributions | 4,833 | - | 319,149 | - |
Shares redeemed | (39,053) | (340) | (2,497,211) | (20,214) |
Net increase (decrease) | 359,988 | 16,960 | $ 22,943,520 | $ 997,566 |
Class T |
|
|
|
|
Shares sold | 195,158 | 9,119 | $ 12,251,985 | $ 531,803 |
Reinvestment of distributions | 4,490 | - | 296,489 | - |
Shares redeemed | (108,690) | - | (6,862,659) | - |
Net increase (decrease) | 90,958 | 9,119 | $ 5,685,815 | $ 531,803 |
Class B |
|
|
|
|
Shares sold | 76,823 | 3,902 | $ 4,855,507 | $ 225,744 |
Reinvestment of distributions | 1,410 | - | 92,490 | - |
Shares redeemed | (4,224) | - | (268,236) | - |
Net increase (decrease) | 74,009 | 3,902 | $ 4,679,761 | $ 225,744 |
Class C |
|
|
|
|
Shares sold | 328,900 | 3,073 | $ 21,121,099 | $ 177,350 |
Reinvestment of distributions | 4,849 | - | 319,529 | - |
Shares redeemed | (20,712) | - | (1,307,625) | - |
Net increase (decrease) | 313,037 | 3,073 | $ 20,133,003 | $ 177,350 |
Consumer Staples |
|
|
|
|
Shares sold | 8,600,962 | 6,369,570 | $ 555,032,219 | $ 359,958,201 |
Reinvestment of distributions | 360,932 | 292,584 | 23,544,138 | 16,482,463 |
Shares redeemed | (5,052,205) | (2,608,360) | (318,954,187) | (147,956,526) |
Net increase (decrease) | 3,909,689 | 4,053,794 | $ 259,622,170 | $ 228,484,138 |
Institutional Class |
|
|
|
|
Shares sold | 204,550 | 4,028 | $ 13,014,809 | $ 230,500 |
Reinvestment of distributions | 995 | - | 65,503 | - |
Shares redeemed | (43,560) | (1,758) | (2,806,458) | (103,807) |
Net increase (decrease) | 161,985 | 2,270 | $ 10,273,854 | $ 126,693 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Gold Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 45.10% | 26.28% | 17.47% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Gold, 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, 1998. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Management's Discussion of Fund Performance
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor Gold Fund
It was a disappointing year for U.S. equity investors, as a credit freeze and a growing awareness of the problems facing the U.S. consumer led to negative returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, reducing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
During the past year, the fund's Class A, Class T, Class B and Class C shares returned 44.59%, 44.45%, 43.53% and 43.49%, respectively (excluding sales charges), beating the S&P 500® and the 42.95% return of the Standard & Poor's®/Citigroup BMI Global Gold Index. Versus the S&P®/Citigroup index, solid stock picking in the fund's core universe of gold mining stocks drove performance. Australia-based Newcrest Mining, the fund's fourth-largest holding at period end, was its top contributor. The company was successful in improving its operations, projects and financial position, and was rewarded by the market for these achievements. Also aiding our results were Canadian holding Arizona Star Resource; Buenaventura, a Peruvian silver, gold and copper mining company; and West African gold producer Randgold Resources. Arizona Star Resource - whose sole asset was bought by Barrick Gold during the period - and Buenaventura were out-of-index positions. Underweighting major index component Newmont Mining was helpful as well. In absolute terms, the fund's return was bolstered by currency movements given its considerable foreign exposure. On the negative side, the fund's investments in the precious metals and minerals group and in the diversified metals and mining segment detracted from performance, as did its cash position. Underweighting Barrick Gold, the stock with the largest weighting in the S&P/Citigroup index, detracted from performance. Although I liked the company and it was one of the fund's largest positions, I didn't think it appropriate to carry the position at its benchmark weighting of approximately 18%. Diamond exploration company and out-of-index holding Shore Gold also weighed on our results, along with IAMGOLD. All the detractors I mentioned are based in Canada.
During the past year, the fund's Institutional Class shares returned 45.10%, beating the S&P 500® and the 42.95% return of the Standard & Poor's®/Citigroup BMI Global Gold Index. Versus the S&P®/Citigroup index, solid stock picking in the fund's core universe of gold mining stocks drove performance. Australia-based Newcrest Mining, the fund's fourth-largest holding at period end, was its top contributor. The company was successful in improving its operations, projects and financial position, and was rewarded by the market for these achievements. Also aiding our results were Canadian holding Arizona Star Resource; Buenaventura, a Peruvian silver, gold and copper mining company; and West African gold producer Randgold Resources. Arizona Star Resource - whose sole asset was bought by Barrick Gold during the period - and Buenaventura were out-of-index positions. Underweighting major index component Newmont Mining was helpful as well. On the negative side, the fund's investments in the precious metals and minerals group and in the diversified metals and mining segment detracted from performance, as did its cash position. Underweighting Barrick Gold, the stock with the largest weighting in the S&P/Citigroup index, detracted from performance. Although I liked the company and it was one of the fund's largest positions, I didn't think it appropriate to carry the position at its benchmark weighting of approximately 18%. Diamond exploration company and out-of-index holding Shore Gold also weighed on our results, along with IAMGOLD. All the detractors I mentioned are based in Canada.
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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,483.00 | $ 7.10 |
HypotheticalA | $ 1,000.00 | $ 1,019.14 | $ 5.77 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,481.70 | $ 8.64 |
HypotheticalA | $ 1,000.00 | $ 1,017.90 | $ 7.02 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,476.70 | $ 11.76 |
HypotheticalA | $ 1,000.00 | $ 1,015.37 | $ 9.57 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,477.20 | $ 11.64 |
HypotheticalA | $ 1,000.00 | $ 1,015.47 | $ 9.47 |
Gold |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.19 |
HypotheticalA | $ 1,000.00 | $ 1,020.69 | $ 4.22 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,485.10 | $ 5.13 |
HypotheticalA | $ 1,000.00 | $ 1,020.74 | $ 4.17 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.15% |
Class T | 1.40% |
Class B | 1.91% |
Class C | 1.89% |
Gold | .84% |
Institutional Class | .83% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.5 | 8.1 |
Barrick Gold Corp. | 7.8 | 7.9 |
Newmont Mining Corp. | 7.1 | 5.0 |
Newcrest Mining Ltd. | 6.7 | 8.3 |
Kinross Gold Corp. | 5.8 | 4.9 |
Lihir Gold Ltd. | 5.8 | 7.3 |
Agnico-Eagle Mines Ltd. | 4.1 | 4.1 |
Yamana Gold, Inc. | 4.1 | 2.6 |
Gold Fields Ltd. sponsored ADR | 3.0 | 6.6 |
Randgold Resources Ltd. sponsored ADR | 3.0 | 3.4 |
| 55.9 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Gold | 77.9% |
|
 | Precious Metals & Minerals | 8.1% |
|
 | Diversified Metals & Mining | 3.6% |
|
 | Coal & Consumable Fuels | 1.9% |
|
 | Steel | 1.4% |
|
 | All Others* | 7.1% |
|
As of August 31, 2007 | |||
| Gold | 89.2% |
|
| Precious Metals & Minerals | 8.1% |
|
| Diversified Metals & Mining | 1.2% |
|
| Steel | 0.5% |
|
| All Others* | 1.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 90.2% | |||
Shares | Value | ||
Australia - 8.4% | |||
METALS & MINING - 8.2% | |||
Aluminum - 0.4% | |||
Alumina Ltd. | 1,552,508 | $ 9,147,074 | |
Gold - 7.8% | |||
Newcrest Mining Ltd. | 4,726,283 | 164,316,537 | |
Pan Australian Resources Ltd. (a) | 8,389,000 | 8,093,471 | |
Sino Gold Mining Ltd. (a)(d) | 1,787,441 | 12,500,064 | |
Troy Resources NL (a)(f) | 2,300,000 | 6,076,927 | |
| 190,986,999 | ||
TOTAL METALS & MINING | 200,134,073 | ||
OIL, GAS & CONSUMABLE FUELS - 0.2% | |||
Coal & Consumable Fuels - 0.2% | |||
Energy Resources of Australia Ltd. | 200,799 | 3,923,057 | |
TOTAL AUSTRALIA | 204,057,130 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Precious Metals & Minerals - 0.7% | |||
Aquarius Platinum Ltd. (United Kingdom) | 1,155,000 | 17,329,629 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce sponsored ADR | 51,200 | 1,783,808 | |
Canada - 46.3% | |||
METALS & MINING - 46.3% | |||
Diversified Metals & Mining - 1.4% | |||
Anatolia Minerals Development Ltd. (a) | 29,000 | 116,407 | |
First Quantum Minerals Ltd. | 107,600 | 9,985,298 | |
FNX Mining Co., Inc. (a) | 228,100 | 7,507,910 | |
Ivanhoe Mines Ltd. (a) | 550,500 | 7,177,394 | |
Kimber Resources, Inc. (a) | 16,100 | 14,234 | |
Lundin Mining Corp. (a) | 475,100 | 4,060,354 | |
Nautilus Minerals, Inc. (a) | 44,000 | 119,831 | |
Thompson Creek Metals Co., Inc. (a) | 305,000 | 6,229,866 | |
| 35,211,294 | ||
Gold - 41.8% | |||
Agnico-Eagle Mines Ltd. | 1,453,100 | 100,412,377 | |
Alamos Gold, Inc. (a) | 3,249,000 | 24,729,445 | |
Aquiline Resources, Inc. (a) | 875,500 | 9,484,101 | |
Aquiline Resources, Inc. (a)(f) | 1,024,600 | 11,099,269 | |
Aurelian Resources, Inc. (a) | 818,400 | 7,634,685 | |
Aurizon Mines Ltd. (a) | 547,900 | 2,522,216 | |
Barrick Gold Corp. | 3,637,000 | 189,232,661 | |
Centerra Gold, Inc. (a) | 377,200 | 5,642,380 | |
| |||
Shares | Value | ||
Coral Gold Resources Ltd. (a)(e) | 2,016,600 | $ 2,869,001 | |
Crystallex International Corp. (a) | 943,000 | 1,964,484 | |
Detour Gold Corp. warrants 6/21/08 (a)(f) | 615,000 | 10,844,449 | |
Eldorado Gold Corp. (a) | 4,287,200 | 29,756,187 | |
European Goldfields Ltd. (a) | 197,000 | 1,185,143 | |
Franco-Nevada Corp. | 210,900 | 4,847,882 | |
Gabriel Resources Ltd. (a) | 139,200 | 261,694 | |
Goldcorp, Inc. | 4,825,800 | 208,371,775 | |
Golden Star Resources Ltd. (a) | 4,009,769 | 16,543,531 | |
Great Basin Gold Ltd. (a) | 1,407,900 | 4,649,840 | |
Guyana Goldfields, Inc. (a) | 758,000 | 5,546,060 | |
High River Gold Mines Ltd. (a) | 1,512,800 | 5,180,769 | |
High River Gold Mines Ltd. (a)(f) | 1,300,000 | 4,452,010 | |
High River Gold Mines Ltd. warrants 11/8/10 (a)(f) | 650,000 | 693,562 | |
IAMGOLD Corp. | 7,762,100 | 62,787,781 | |
Jaguar Mining, Inc. (a) | 147,900 | 1,998,953 | |
Kinross Gold Corp. (a) | 5,710,300 | 141,299,533 | |
Kinross Gold Corp. warrants 9/7/11 (a) | 600,000 | 2,560,845 | |
Northgate Minerals Corp. (a) | 681,000 | 2,117,636 | |
Novagold Resources, Inc. (a) | 800,000 | 9,064,580 | |
Orezone Resources, Inc. Class A (a) | 8,870,700 | 15,775,342 | |
Peak Gold Ltd. (a)(f) | 5,857,000 | 3,868,757 | |
Peak Gold Ltd. warrants 4/3/12 (a)(f) | 2,928,500 | 550,554 | |
Red Back Mining, Inc. (a) | 1,420,800 | 12,575,751 | |
Red Back Mining, Inc. (a)(f) | 1,033,000 | 9,143,265 | |
US Gold Canadian Acquisition Corp. (a)(e) | 2,501,516 | 8,770,114 | |
Western Goldfields, Inc. (a) | 371,200 | 1,369,296 | |
Yamana Gold, Inc. | 5,497,000 | 98,929,800 | |
| 1,018,735,728 | ||
Precious Metals & Minerals - 3.1% | |||
B2Gold Corp. | 702,500 | 1,613,383 | |
Eastern Platinum Ltd. (a) | 600,000 | 2,164,524 | |
Etruscan Resources, Inc. (a) | 923,800 | 2,196,730 | |
Etruscan Resources, Inc. (a)(f) | 1,549,400 | 3,684,362 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(f) | 774,700 | 393,628 | |
Harry Winston Diamond Corp. | 471,990 | 12,350,737 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 12,676,185 | |
Pan American Silver Corp. (a) | 500,000 | 20,000,000 | |
Rockwell Diamonds, Inc. (a) | 319,000 | 168,569 | |
Shore Gold, Inc. (a) | 2,860,000 | 12,991,413 | |
Silver Standard Resources, Inc. (a) | 206,300 | 7,657,857 | |
Silvercorp Metals, Inc. | 60,000 | 603,628 | |
| 76,501,016 | ||
TOTAL METALS & MINING | 1,130,448,038 | ||
Common Stocks - continued | |||
Shares | Value | ||
China - 1.9% | |||
METALS & MINING - 1.9% | |||
Gold - 1.9% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 35,714,000 | $ 47,174,585 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 99,800 | 7,586,796 | |
Papua New Guinea - 5.8% | |||
METALS & MINING - 5.8% | |||
Gold - 5.8% | |||
Lihir Gold Ltd. (a) | 36,363,877 | 140,827,682 | |
Peru - 1.3% | |||
METALS & MINING - 1.3% | |||
Precious Metals & Minerals - 1.3% | |||
Compania de Minas Buenaventura SA | 350,000 | 26,610,500 | |
Compania de Minas Buenaventura SA sponsored ADR | 50,000 | 3,801,500 | |
| 30,412,000 | ||
Russia - 0.0% | |||
METALS & MINING - 0.0% | |||
Precious Metals & Minerals - 0.0% | |||
Polymetal JSC GDR (Reg. S) unit (a) | 39,000 | 347,100 | |
South Africa - 8.8% | |||
METALS & MINING - 8.8% | |||
Diversified Metals & Mining - 0.2% | |||
African Rainbow Minerals Ltd. | 234,859 | 6,062,905 | |
Gold - 6.2% | |||
Anglogold Ashanti Ltd. sponsored ADR (d) | 1,140,500 | 41,194,860 | |
Gold Fields Ltd. sponsored ADR | 5,216,300 | 74,019,297 | |
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | 18,804,860 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,375,000 | 16,692,500 | |
| 150,711,517 | ||
Precious Metals & Minerals - 2.4% | |||
Anglo Platinum Ltd. | 59,058 | 9,258,866 | |
Impala Platinum Holdings Ltd. | 1,179,212 | 48,760,416 | |
| 58,019,282 | ||
TOTAL METALS & MINING | 214,793,704 | ||
| |||
Shares | Value | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 1.0% | |||
Anglo American PLC (United Kingdom) | 193,300 | $ 12,269,093 | |
BHP Billiton PLC | 395,900 | 12,664,584 | |
| 24,933,677 | ||
Gold - 3.0% | |||
Randgold Resources Ltd. sponsored ADR | 1,409,274 | 72,774,909 | |
Precious Metals & Minerals - 0.6% | |||
Hochschild Mining PLC | 1,054,058 | 9,151,974 | |
Lonmin PLC | 76,000 | 4,958,381 | |
Mwana Africa PLC (a) | 2,850 | 2,113 | |
| 14,112,468 | ||
TOTAL METALS & MINING | 111,821,054 | ||
United States of America - 12.0% | |||
METALS & MINING - 10.3% | |||
Aluminum - 0.3% | |||
Alcoa, Inc. | 203,500 | 7,557,990 | |
Diversified Metals & Mining - 0.9% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 129,300 | 13,041,198 | |
Titanium Metals Corp. | 492,838 | 10,162,320 | |
| 23,203,518 | ||
Gold - 8.0% | |||
Newmont Mining Corp. | 3,402,000 | 174,080,340 | |
Royal Gold, Inc. (d) | 610,768 | 19,245,300 | |
US Gold Corp. (a) | 318,400 | 1,117,584 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 407,113 | |
| 194,850,337 | ||
Steel - 1.1% | |||
Nucor Corp. | 114,200 | 7,373,894 | |
Steel Dynamics, Inc. | 214,000 | 12,467,640 | |
United States Steel Corp. | 59,100 | 6,409,395 | |
| 26,250,929 | ||
TOTAL METALS & MINING | 251,862,774 | ||
OIL, GAS & CONSUMABLE FUELS - 1.7% | |||
Coal & Consumable Fuels - 1.7% | |||
CONSOL Energy, Inc. | 469,300 | $ 35,657,414 | |
Peabody Energy Corp. | 99,700 | 5,645,014 | |
| 41,302,428 | ||
TOTAL UNITED STATES OF AMERICA | 293,165,202 | ||
TOTAL COMMON STOCKS (Cost $1,511,332,409) | 2,199,746,728 | ||
Commodities - 3.4% | ||||
| Troy | Value | ||
Gold Bullion (a) | 84,500 | $ 82,253,568 | ||
Money Market Funds - 8.4% | |||
| Shares |
|
|
Fidelity Cash Central Fund, 3.24% (b) | 154,989,471 | 154,989,471 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 51,019,275 | 51,019,275 | |
TOTAL MONEY MARKET FUNDS (Cost $206,008,746) | 206,008,746 | ||
TOTAL INVESTMENT PORTFOLIO - 102.0% (Cost $1,792,206,855) | 2,488,009,042 | ||
NET OTHER ASSETS - (2.0)% | (48,063,629) | ||
NET ASSETS - 100% | $ 2,439,945,413 | ||
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. |
(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 $50,806,783 or 1.9% of net assets. |
(g) 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 $407,113 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
US Gold Corp. warrants 2/22/11 | 2/8/06 | $ 179,112 |
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 | $ 4,483,468 |
Fidelity Securities Lending Cash Central Fund | 305,527 |
Total | $ 4,788,995 |
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, end of period |
Arizona Star Resource Corp. | $ 43,863,024 | $ - | $ 68,049,545 | $ - | $ - |
Central Asia Gold Ltd. | 5,874,969 | - | 6,765,535 | - | - |
Coral Gold Resources Ltd. | 2,034,618 | - | - | - | 2,869,001 |
IAMGOLD Corp. | 83,536,403 | 37,756,426 | 52,681,280 | 396,893 | - |
Meridian Gold, Inc. | 141,535,462 | 11,114,622 | 175,519,189 | - | - |
Minefinders Corp. Ltd. | 33,742,038 | - | 22,728,120 | - | - |
Orezone Resources, Inc. Class A | 18,041,127 | - | 2,037,688 | - | - |
Tone Resources Ltd. | 2,366,021 | - | 2,654,193 | - | - |
US Gold Canadian Acquisition Corp. | - | 12,695,730 | - | - | 8,770,114 |
White Knight Resources Ltd. | 6,087,418 | - | 7,050,424 | - | - |
Total | $ 337,081,080 | $ 61,566,778 | $ 337,485,974 | $ 396,893 | $ 11,639,115 |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select Gold Cayman Ltd. | $ - | $ 74,865,700 | $ - | $ - | $ 82,233,978 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investments, at value (including securities loaned of $48,929,231) - See accompanying schedule: Unaffiliated issuers (cost $1,496,489,449) | $ 2,188,107,613 |
|
Fidelity Central Funds (cost $206,008,746) | 206,008,746 |
|
Other affiliated issuers (cost $14,842,960) | 11,639,115 |
|
Commodities | 82,253,568 |
|
Total Investments (cost $1,792,206,855) |
| $ 2,488,009,042 |
Receivable for fund shares sold | 28,409,170 | |
Dividends receivable | 715,366 | |
Distributions receivable from Fidelity Central Funds | 330,523 | |
Prepaid expenses | 4,242 | |
Receivable from investment advisor for expense reductions | 16,771 | |
Other receivables | 53,844 | |
Total assets | 2,517,538,958 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 19,222,702 | |
Payable for fund shares redeemed | 5,738,698 | |
Accrued management fee | 1,032,070 | |
Distribution fees payable | 20,939 | |
Other affiliated payables | 439,944 | |
Other payables and accrued expenses | 119,917 | |
Collateral on securities loaned, at value | 51,019,275 | |
Total liabilities | 77,593,545 | |
|
|
|
Net Assets | $ 2,439,945,413 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,772,662,139 | |
Accumulated net investment loss | (3,177) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (28,479,034) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 695,765,485 | |
Net Assets | $ 2,439,945,413 | |
Consolidated Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 46.19 | |
|
|
|
Maximum offering price per share (100/94.25 of $46.19) | $ 49.01 | |
Class T: | $ 46.17 | |
|
|
|
Maximum offering price per share (100/96.50 of $46.17) | $ 47.84 | |
Class B: | $ 45.97 | |
|
|
|
Class C: | $ 45.85 | |
|
|
|
|
|
|
Gold: | $ 46.37 | |
|
|
|
Institutional Class: | $ 46.34 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Gold Portfolio
Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends (including $396,893 earned from other affiliated issuers) |
| $ 7,214,916 |
Interest |
| 36,516 |
Income from Fidelity Central Funds |
| 4,788,995 |
Total income |
| 12,040,427 |
|
|
|
Expenses | ||
Management fee | $ 8,843,447 | |
Transfer agent fees | 3,480,684 | |
Distribution fees | 84,461 | |
Accounting and security lending fees | 523,529 | |
Custodian fees and expenses | 210,565 | |
Independent trustees' compensation | 6,241 | |
Registration fees | 150,943 | |
Audit | 44,995 | |
Legal | 83,632 | |
Miscellaneous | 77,106 | |
Total expenses before reductions | 13,505,603 | |
Expense reductions | (602,121) | 12,903,482 |
Net investment income (loss) | (863,055) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | 90,039,584 | |
Other affiliated issuers | 97,820,563 |
|
Foreign currency transactions | 1,653,116 | |
Total net realized gain (loss) |
| 189,513,263 |
Change in net unrealized appreciation (depreciation) on: Investments | 426,676,495 | |
Assets and liabilities in foreign currencies | 3,916 | |
Total change in net unrealized appreciation (depreciation) |
| 426,680,411 |
Net gain (loss) | 616,193,674 | |
Net increase (decrease) in net assets resulting from operations | $ 615,330,619 | |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (863,055) | $ 9,095,705 |
Net realized gain (loss) | 189,513,263 | 107,242,792 |
Change in net unrealized appreciation (depreciation) | 426,680,411 | 60,139,115 |
Net increase (decrease) in net assets resulting from operations | 615,330,619 | 176,477,612 |
Distributions to shareholders from net investment income | (7,077,865) | (754,152) |
Distributions to shareholders from net realized gain | (201,157,130) | (195,955,908) |
Total distributions | (208,234,995) | (196,710,060) |
Share transactions - net increase (decrease) | 554,230,717 | 170,798,657 |
Redemption fees | 544,215 | 1,843,164 |
Total increase (decrease) in net assets | 961,870,556 | 152,409,373 |
|
|
|
Net Assets | ||
Beginning of period | 1,478,074,857 | 1,325,665,484 |
End of period (including accumulated net investment loss of $3,177 and undistributed net investment income of $9,093,033, respectively) | $ 2,439,945,413 | $ 1,478,074,857 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.15) | (.01) |
Net realized and unrealized gain (loss) | 15.00 | (.07) H |
Total from investment operations | 14.85 | (.08) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.01) | - |
Total distributions | (5.20) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.19 | $ 36.53 |
Total Return B, C, D | 44.59% | (.19)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.17% | 1.13% A |
Expenses net of all reductions | 1.13% | 1.10% A |
Net investment income (loss) | (.37)% | (.18)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.25) | (.03) |
Net realized and unrealized gain (loss) | 15.05 | (.09) H |
Total from investment operations | 14.80 | (.12) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.97) | - |
Total distributions | (5.13) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 46.17 | $ 36.49 |
Total Return B, C, D | 44.45% | (.30)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.42% | 1.46% A |
Expenses net of fee waivers, if any | 1.42% | 1.46% A |
Expenses net of all reductions | 1.39% | 1.43% A |
Net investment income (loss) | (.63)% | (.40)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.95 | (.08) H |
Total from investment operations | 14.50 | (.15) |
Distributions from net investment income | (.16) | - |
Distributions from net realized gain | (4.84) | - |
Total distributions | (5.00) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.97 | $ 36.46 |
Total Return B, C, D | 43.53% | (.38)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.93% | 1.96% A |
Expenses net of all reductions | 1.90% | 1.93% A |
Net investment income (loss) | (1.14)% | (.93)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,869 | $ 902 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 K | 2007 I |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.45) | (.07) |
Net realized and unrealized gain (loss) | 14.91 | (.10) H |
Total from investment operations | 14.46 | (.17) |
Distributions from net investment income | (.17) | - |
Distributions from net realized gain | (4.89) | - |
Total distributions | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 45.85 | $ 36.44 |
Total Return B, C, D | 43.49% | (.44)% |
Ratios to Average Net Assets F, J |
|
|
Expenses before reductions | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.99% A |
Net investment income (loss) | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 10,835 | $ 437 |
Portfolio turnover rate G | 55% | 85% |
A Annualized 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. HThe 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. 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K For the year ended February 29. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Gold
| |||||
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 | $ 22.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | .22 F | .04 | .02 G | (.01) |
Net realized and unrealized gain (loss) | 15.05 | 5.49 | 12.21 | .18 | 5.85 |
Total from investment operations | 15.03 | 5.71 | 12.25 | .20 | 5.84 |
Distributions from net investment income | (.18) | (.02) | (.02) | - | (1.42) |
Distributions from net realized gain | (5.03) | (5.10) | (3.84) | - | - |
Total distributions | (5.21) | (5.12) | (3.86) | - | (1.42) |
Redemption fees added to paid in capital C | .01 | .04 | .06 | .05 | .06 |
Net asset value, end of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Total Return A, B | 45.10% | 16.19% | 48.84% | .92% | 26.79% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of fee waivers, if any | .85% | .90% | .97% | 1.00% | 1.12% |
Expenses net of all reductions | .81% | .87% | .82% | .89% | 1.04% |
Net investment income (loss) | (.05)% | .62% F | .13% | .07% G | (.03)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 | $ 735,744 |
Portfolio turnover rate E | 55% | 85% | 108% | 79% | 41% |
A Total 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%. GInvestment 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 (.08)%. 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 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. I For the year ended February 29. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
Net investment income (loss) D | (.01) | .01 |
Net realized and unrealized gain (loss) | 15.03 | (.08) G |
Total from investment operations | 15.02 | (.07) |
Distributions from net investment income | (.19) | - |
Distributions from net realized gain | (5.04) | - |
Total distributions | (5.23) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 46.34 | $ 36.54 |
Total Return B, C | 45.10% | (.16)% |
Ratios to Average Net Assets E, I |
|
|
Expenses before reductions | .83% | .94% A |
Expenses net of fee waivers, if any | .83% | .94% A |
Expenses net of all reductions | .79% | .91% A |
Net investment income (loss) | (.03)% | .12% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 3,174 | $ 385 |
Portfolio turnover rate F | 55% | 85% |
A Annualized 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. GThe 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. 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Consolidated Financial Statements
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary.
The Fund may invest in certain precious metals through its investment in Fidelity Select Gold Cayman Ltd., a wholly-owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities, consistent with the investment objective of the fund. As of February 29, 2008, the Fund held $82,233,978 in the Subsidiary, representing 3.4% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
4. Significant Accounting Policies.
The financial statements have been consolidated and include the accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.
The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
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.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 681,289,657 |
|
Unrealized depreciation | (36,971,788) |
|
Net unrealized appreciation (depreciation) | 644,317,869 |
|
Undistributed long-term capital gain | 9,018,404 |
|
|
|
|
Cost for federal income tax purposes | $ 1,843,691,173 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 81,662,441 | $ 72,402,616 |
Long-term Capital Gains | 126,572,554 | 124,307,444 |
Total | $ 208,234,995 | $ 196,710,060 |
Annual Report
4. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
5. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term investments, aggregated $1,165,131,181 and $832,255,722, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at an annual rate of .30% of its net assets. FMR has agreed to reimburse the Fund's management fee in an amount equal to the management fee of the Subsidiary. For the period FMR reimbursed the Fund $24,300.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 17,836 | $ 936 |
Class T | .25% | .25% | 15,486 | 570 |
Class B | .75% | .25% | 23,737 | 18,077 |
Class C | .75% | .25% | 27,402 | 14,204 |
|
|
| $ 84,461 | $ 33,787 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
Sales Load - continued
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 45,888 |
Class T | 8,502 |
Class B* | 2,182 |
Class C* | 3,616 |
| $ 60,188 |
* 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR, was the sub-transfer agent for all Fund shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 20,029 | .28 |
Class T | 8,862 | .29 |
Class B | 6,928 | .29 |
Class C | 7,528 | .28 |
Gold | 3,434,145 | .22 |
Institutional Class | 3,192 | .20 |
| $ 3,480,684 |
|
Accounting and Security Lending Fees. FSC 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 $1,784 for the period.
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $3,655 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $305,527.
Annual Report
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 $475,444 for the period. In addition, through arrangements with the Fund's custodian and each class' transfer agent, 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 $33,396. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Gold | $ 27,814 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 13,831 | $ - |
Class T | 6,353 | - |
Class B | 4,260 | - |
Class C | 3,734 | - |
Gold | 7,042,946 | 754,152 |
Institutional Class | 6,741 | - |
Total | $ 7,077,865 | $ 754,152 |
From net realized gain |
|
|
Class A | $ 955,695 | $ - |
Class T | 425,795 | - |
Class B | 289,226 | - |
Class C | 343,986 | - |
Gold | 198,940,407 | 195,955,908 |
Institutional Class | 202,021 | - |
Total | $ 201,157,130 | $ 195,955,908 |
Annual Report
Notes to Consolidated Financial Statements - continued
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 567,655 | 52,274 | $ 23,751,338 | $ 1,914,223 |
Reinvestment of distributions | 25,125 | - | 945,727 | - |
Shares redeemed | (67,262) | (1,428) | (2,616,226) | (52,108) |
Net increase (decrease) | 525,518 | 50,846 | $ 22,080,839 | $ 1,862,115 |
Class T |
|
|
|
|
Shares sold | 245,988 | 29,954 | $ 10,279,473 | $ 1,097,866 |
Reinvestment of distributions | 11,403 | - | 428,815 | - |
Shares redeemed | (41,858) | - | (1,666,054) | - |
Net increase (decrease) | 215,533 | 29,954 | $ 9,042,234 | $ 1,097,866 |
Class B |
|
|
|
|
Shares sold | 138,954 | 24,802 | $ 5,690,539 | $ 903,324 |
Reinvestment of distributions | 7,385 | - | 276,855 | - |
Shares redeemed | (21,658) | (60) | (874,114) | (2,269) |
Net increase (decrease) | 124,681 | 24,742 | $ 5,093,280 | $ 901,055 |
Class C |
|
|
|
|
Shares sold | 253,353 | 12,002 | $ 10,551,196 | $ 438,523 |
Reinvestment of distributions | 8,652 | - | 324,140 | - |
Shares redeemed | (37,666) | - | (1,511,191) | - |
Net increase (decrease) | 224,339 | 12,002 | $ 9,364,145 | $ 438,523 |
Gold |
|
|
|
|
Shares sold | 30,095,254 | 37,990,378 | $ 1,246,042,833 | $ 1,364,967,296 |
Reinvestment of distributions | 5,273,633 | 5,102,742 | 197,489,804 | 188,386,905 |
Shares redeemed | (24,338,085) | (39,683,634) | (937,121,869) | (1,387,242,690) |
Net increase (decrease) | 11,030,802 | 3,409,486 | $ 506,410,768 | $ 166,111,511 |
Institutional Class |
|
|
|
|
Shares sold | 128,523 | 11,934 | $ 5,080,204 | $ 438,322 |
Reinvestment of distributions | 4,588 | - | 171,536 | - |
Shares redeemed | (75,163) | (1,395) | (3,012,289) | (50,735) |
Net increase (decrease) | 57,948 | 10,539 | $ 2,239,451 | $ 387,587 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Materials Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 17.08% | 24.16% | 11.27% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Materials, the original class of the fund.
Prior to October 1, 2006, Materials 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, 1998. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Comments from Tobias Welo, who became Portfolio Manager of Fidelity Advisor Materials Fund on January 9, 2008
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the year ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned 16.79%, 16.45%, 15.89% and 15.87% respectively (excluding sales charges), outpacing the S&P 500® and the 14.89% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Strong industry selection played a key role in the fund's outperformance of its MSCI benchmark. For example, underweightings in weak-performing industries such as construction materials, paper products and paper packaging aided results, as did solid stock picking within the first two areas. In addition, good stock selection and an underweighting in the lagging diversified chemicals group helped. Given the fund's exposure to foreign stocks, currency fluctuations further enhanced the fund's return. Among individual holdings, an out-of-benchmark position in Rio Tinto was the top contributor. A diversified metals and mining company, Rio Tinto was boosted by strong metals prices and multiple takeover offers from Australian mining concern BHP Billiton. Also boosting performance was out-of-index holding Agrium, a Canadian fertilizer company that benefited from strong demand for crops and favorable market reaction to its purchase of UAP Holding, an agricultural products distributor. Not owning lagging paper-related names in the index, such as Canadian pulp and paper producer Domtar, aided results as well. Among detractors, the fund's slight underweighting in fertilizers and agricultural chemicals hurt, including an underweighting in fertilizer company CF Industries. In addition, the fund's overweighting in Titanium Metals disappointed, as the firm struggled through sluggish earnings announcements and construction delays among its end-users. Certain stock picks within the specialty and commodity chemicals areas also detracted, as did the fund's overall positioning in the steel industry over the course of the period. Some of the stocks I've mentioned in this review were sold by period end.
For the year ending February 29, 2008, the fund's Institutional Class shares returned 17.08%, outpacing the S&P 500® and the 14.89% return of the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Materials Index. Strong industry selection played a key role in the fund's outperformance of its MSCI benchmark. For example, underweightings in weak-performing industries such as construction materials, paper products and paper packaging aided results, as did solid stock picking within the first two areas. In addition, good stock selection and an underweighting in the lagging diversified chemicals group helped. Given the fund's exposure to foreign stocks, currency fluctuations further enhanced the fund's return. Among individual holdings, an out-of-benchmark position in Rio Tinto was the top contributor. A diversified metals and mining company, Rio Tinto was boosted by strong metals prices and multiple takeover offers from Australian mining concern BHP Billiton. Also boosting performance was out-of-index holding Agrium, a Canadian fertilizer company that benefited from strong demand for crops and favorable market reaction to its purchase of UAP Holding, an agricultural products distributor. Not owning lagging paper-related names in the index, such as Canadian pulp and paper producer Domtar, aided results as well. Among detractors, the fund's slight underweighting in fertilizers and agricultural chemicals hurt, including an underweighting in fertilizer company CF Industries. In addition, the fund's overweighting in Titanium Metals disappointed, as the firm struggled through sluggish earnings announcements and construction delays among its end-users. Certain stock picks within the specialty and commodity chemicals areas also detracted, as did the fund's overall positioning in the steel industry over the course of the period. Some of the stocks I've mentioned in this review 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, 2007 to February 29, 2008).
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.
|
|
| Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 1,065.30 | $ 6.11 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 1,063.90 | $ 7.44 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 1,061.40 | $ 9.94 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Materials |
|
|
|
Actual | $ 1,000.00 | $ 1,067.00 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.49 | $ 4.42 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 1,066.70 | $ 4.62 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.94% |
Materials | .88% |
Institutional Class | .90% |
Annual Report
Investment Changes
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 10.7 | 7.2 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 7.4 | 4.8 |
Alcoa, Inc. | 5.6 | 4.3 |
E.I. du Pont de Nemours & Co. | 5.3 | 8.3 |
Praxair, Inc. | 4.8 | 3.9 |
Nucor Corp. | 3.9 | 2.8 |
Newmont Mining Corp. | 3.6 | 1.6 |
The Mosaic Co. | 3.4 | 1.7 |
Dow Chemical Co. | 3.2 | 4.7 |
Weyerhaeuser Co. | 2.5 | 2.1 |
| 50.4 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Chemicals | 52.0% |
|
 | Metals & Mining | 32.6% |
|
 | Containers & Packaging | 6.9% |
|
 | Paper & Forest Products | 3.6% |
|
 | Oil, Gas & Consumable Fuels | 1.3% |
|
 | All Others* | 3.6% |
|
As of August 31, 2007 | |||
| Chemicals | 53.8% |
|
| Metals & Mining | 28.0% |
|
| Paper & Forest Products | 5.2% |
|
| Containers & Packaging | 4.4% |
|
| Industrial Conglomerates | 3.0% |
|
| All Others* | 5.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
CHEMICALS - 52.0% | |||
Commodity Chemicals - 3.4% | |||
Celanese Corp. Class A | 250,500 | $ 9,744,450 | |
Spartech Corp. | 156,220 | 2,213,637 | |
Tronox, Inc. Class A | 250,900 | 1,121,523 | |
| 13,079,610 | ||
Diversified Chemicals - 14.5% | |||
Dow Chemical Co. | 325,300 | 12,260,557 | |
E.I. du Pont de Nemours & Co. | 446,200 | 20,712,604 | |
FMC Corp. | 97,600 | 5,525,136 | |
Hercules, Inc. | 264,695 | 4,849,212 | |
Huntsman Corp. | 108,300 | 2,613,279 | |
Olin Corp. | 99,929 | 1,920,635 | |
PPG Industries, Inc. | 136,900 | 8,485,062 | |
| 56,366,485 | ||
Fertilizers & Agricultural Chemicals - 14.7% | |||
Monsanto Co. | 359,844 | 41,626,754 | |
Potash Corp. of Saskatchewan, Inc. | 14,400 | 2,288,160 | |
The Mosaic Co. (a) | 118,638 | 13,204,409 | |
| 57,119,323 | ||
Industrial Gases - 6.6% | |||
Air Products & Chemicals, Inc. | 39,500 | 3,607,535 | |
Airgas, Inc. | 69,600 | 3,381,864 | |
Praxair, Inc. | 231,800 | 18,608,904 | |
| 25,598,303 | ||
Specialty Chemicals - 12.8% | |||
Albemarle Corp. | 142,752 | 5,416,011 | |
Cytec Industries, Inc. | 56,100 | 3,213,408 | |
Ecolab, Inc. | 159,000 | 7,439,610 | |
H.B. Fuller Co. | 113,508 | 2,582,307 | |
Innospec, Inc. | 214,262 | 4,015,270 | |
Minerals Technologies, Inc. | 40,980 | 2,470,274 | |
Nalco Holding Co. | 285,918 | 6,175,829 | |
OMNOVA Solutions, Inc. (a) | 615,568 | 2,400,715 | |
Rockwood Holdings, Inc. (a) | 152,700 | 4,686,363 | |
Rohm & Haas Co. (d) | 120,350 | 6,451,964 | |
Valspar Corp. | 110,200 | 2,390,238 | |
W.R. Grace & Co. (a) | 103,100 | 2,188,813 | |
| 49,430,802 | ||
TOTAL CHEMICALS | 201,594,523 | ||
CONSTRUCTION MATERIALS - 0.5% | |||
Construction Materials - 0.5% | |||
Polaris Minerals Corp. (a) | 38,700 | 377,149 | |
Polaris Minerals Corp. (a)(e) | 151,600 | 1,477,409 | |
| 1,854,558 | ||
| |||
Shares | Value | ||
CONTAINERS & PACKAGING - 6.9% | |||
Metal & Glass Containers - 5.0% | |||
Ball Corp. | 88,979 | $ 3,923,974 | |
Crown Holdings, Inc. (a) | 208,600 | 5,196,226 | |
Greif, Inc. Class A | 42,700 | 2,792,153 | |
Owens-Illinois, Inc. (a) | 131,200 | 7,406,240 | |
| 19,318,593 | ||
Paper Packaging - 1.9% | |||
Packaging Corp. of America | 67,500 | 1,538,325 | |
Smurfit-Stone Container Corp. (a) | 385,500 | 3,064,725 | |
Temple-Inland, Inc. | 207,500 | 2,848,975 | |
| 7,452,025 | ||
TOTAL CONTAINERS & PACKAGING | 26,770,618 | ||
MACHINERY - 0.5% | |||
Industrial Machinery - 0.5% | |||
ITT Corp. | 37,400 | 2,103,376 | |
METALS & MINING - 32.6% | |||
Aluminum - 5.6% | |||
Alcoa, Inc. | 579,400 | 21,518,916 | |
Diversified Metals & Mining - 9.2% | |||
Compass Minerals International, Inc. | 20,100 | 1,144,092 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 283,428 | 28,586,548 | |
Rio Tinto PLC sponsored ADR | 4,400 | 1,999,580 | |
Titanium Metals Corp. (d) | 181,800 | 3,748,716 | |
| 35,478,936 | ||
Gold - 5.8% | |||
Goldcorp, Inc. | 116,100 | 5,013,047 | |
Lihir Gold Ltd. (a) | 632,145 | 2,448,130 | |
Newmont Mining Corp. | 275,400 | 14,092,218 | |
Royal Gold, Inc. (d) | 32,300 | 1,017,773 | |
| 22,571,168 | ||
Precious Metals & Minerals - 0.7% | |||
Impala Platinum Holdings Ltd. | 43,700 | 1,806,995 | |
Pan American Silver Corp. (a) | 22,800 | 912,000 | |
| 2,718,995 | ||
Steel - 11.3% | |||
ArcelorMittal SA (NY Reg.) Class A | 54,000 | 4,105,080 | |
Carpenter Technology Corp. | 67,000 | 4,209,610 | |
Nucor Corp. | 232,000 | 14,980,240 | |
Reliance Steel & Aluminum Co. | 79,100 | 4,386,886 | |
Steel Dynamics, Inc. | 116,600 | 6,793,116 | |
United States Steel Corp. | 87,400 | 9,478,530 | |
| 43,953,462 | ||
TOTAL METALS & MINING | 126,241,477 | ||
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 1.3% | |||
Coal & Consumable Fuels - 1.3% | |||
Alpha Natural Resources, Inc. (a) | 47,200 | $ 1,913,488 | |
Peabody Energy Corp. | 53,800 | 3,046,156 | |
| 4,959,644 | ||
PAPER & FOREST PRODUCTS - 3.6% | |||
Forest Products - 2.7% | |||
Louisiana-Pacific Corp. | 57,500 | 625,600 | |
Weyerhaeuser Co. | 161,700 | 9,896,040 | |
| 10,521,640 | ||
Paper Products - 0.9% | |||
Glatfelter | 164,656 | 2,168,520 | |
Wausau-Mosinee Paper Corp. | 144,877 | 1,135,836 | |
| 3,304,356 | ||
TOTAL PAPER & FOREST PRODUCTS | 13,825,996 | ||
TOTAL COMMON STOCKS (Cost $323,637,947) | 377,350,192 | ||
Money Market Funds - 4.5% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 3.24% (b) | 8,391,028 | $ 8,391,028 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 8,915,050 | 8,915,050 | |
TOTAL MONEY MARKET FUNDS (Cost $17,306,078) | 17,306,078 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $340,944,025) | 394,656,270 |
NET OTHER ASSETS - (1.9)% | (7,362,526) | ||
NET ASSETS - 100% | $ 387,293,744 | ||
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. |
(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 $1,477,409 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 | $ 808,183 |
Fidelity Securities Lending Cash Central Fund | 107,174 |
Total | $ 915,357 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $7,959,182) - See accompanying schedule: Unaffiliated issuers (cost $323,637,947) | $ 377,350,192 |
|
Fidelity Central Funds (cost $17,306,078) | 17,306,078 |
|
Total Investments (cost $340,944,025) |
| $ 394,656,270 |
Receivable for fund shares sold | 2,356,858 | |
Dividends receivable | 444,913 | |
Distributions receivable from Fidelity Central Funds | 24,558 | |
Prepaid expenses | 1,024 | |
Other receivables | 4,129 | |
Total assets | 397,487,752 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 246,439 | |
Payable for fund shares redeemed | 711,324 | |
Accrued management fee | 172,900 | |
Distribution fees payable | 15,068 | |
Other affiliated payables | 90,706 | |
Other payables and accrued expenses | 42,521 | |
Collateral on securities loaned, at value | 8,915,050 | |
Total liabilities | 10,194,008 | |
|
|
|
Net Assets | $ 387,293,744 | |
Net Assets consist of: |
| |
Paid in capital | $ 330,122,002 | |
Undistributed net investment income | 1,848,037 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 1,611,755 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 53,711,950 | |
Net Assets | $ 387,293,744 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 57.00 | |
|
|
|
Maximum offering price per share (100/94.25 of $57.00) | $ 60.48 | |
Class T: | $ 56.80 | |
|
|
|
Maximum offering price per share (100/96.50 of $56.80) | $ 58.86 | |
Class B: | $ 56.59 | |
|
|
|
Class C: | $ 56.50 | |
|
|
|
|
|
|
Materials: | $ 57.01 | |
|
|
|
Institutional Class: | $ 57.00 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Select Materials Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,345,845 |
Interest |
| 1,926 |
Income from Fidelity Central Funds |
| 915,357 |
Total income |
| 7,263,128 |
|
|
|
Expenses | ||
Management fee | $ 1,996,306 | |
Transfer agent fees | 904,639 | |
Distribution fees | 106,827 | |
Accounting and security lending fees | 141,588 | |
Custodian fees and expenses | 15,698 | |
Independent trustees' compensation | 1,257 | |
Registration fees | 123,862 | |
Audit | 40,881 | |
Legal | 1,692 | |
Interest | 10,195 | |
Miscellaneous | 18,085 | |
Total expenses before reductions | 3,361,030 | |
Expense reductions | (51,841) | 3,309,189 |
Net investment income (loss) | 3,953,939 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 16,067,113 | |
Foreign currency transactions | 10,689 | |
Total net realized gain (loss) |
| 16,077,802 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 23,233,296 | |
Assets and liabilities in foreign currencies | (582) | |
Total change in net unrealized appreciation (depreciation) |
| 23,232,714 |
Net gain (loss) | 39,310,516 | |
Net increase (decrease) in net assets resulting from operations | $ 43,264,455 | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,953,939 | $ 1,709,789 |
Net realized gain (loss) | 16,077,802 | 18,867,189 |
Change in net unrealized appreciation (depreciation) | 23,232,714 | 2,128,067 |
Net increase (decrease) in net assets resulting from operations | 43,264,455 | 22,705,045 |
Distributions to shareholders from net investment income | (2,382,687) | (1,721,356) |
Distributions to shareholders from net realized gain | (14,617,568) | (17,315,347) |
Total distributions | (17,000,255) | (19,036,703) |
Share transactions - net increase (decrease) | 127,763,307 | 59,771,650 |
Redemption fees | 66,997 | 236,747 |
Total increase (decrease) in net assets | 154,094,504 | 63,676,739 |
|
|
|
Net Assets | ||
Beginning of period | 233,199,240 | 169,522,501 |
End of period (including undistributed net investment income of $1,848,037 and undistributed net investment income of $276,784, respectively) | $ 387,293,744 | $ 233,199,240 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .46 | .17 |
Net realized and unrealized gain (loss) | 8.05 | 3.93 |
Total from investment operations | 8.51 | 4.10 |
Distributions from net investment income | (.32) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.53) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 51.01 |
Total Return B, C, D | 16.79% | 8.76% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.40% A |
Expenses net of all reductions | 1.21% | 1.38% A |
Net investment income (loss) | .83% | 1.76% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class T
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .32 | .11 |
Net realized and unrealized gain (loss) | 8.00 | 3.87 |
Total from investment operations | 8.32 | 3.98 |
Distributions from net investment income | (.21) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.42) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.80 | $ 50.89 |
Total Return B, C, D | 16.45% | 8.51% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.62% A |
Net investment income (loss) | .57% | 1.18% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 6,850 | $ 707 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .06 |
Net realized and unrealized gain (loss) | 7.98 | 3.84 |
Total from investment operations | 8.02 | 3.90 |
Distributions from net investment income | (.04) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.25) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.59 | $ 50.81 |
Total Return B, C, D | 15.89% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.97% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.12% A |
Net investment income (loss) | .07% | .60% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 4,173 | $ 662 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
Financial Highlights - Class C
| ||
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .04 | .09 |
Net realized and unrealized gain (loss) | 7.97 | 3.81 |
Total from investment operations | 8.01 | 3.90 |
Distributions from net investment income | (.12) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.33) | - |
Redemption fees added to paid in capital E | .01 | .01 |
Net asset value, end of period | $ 56.50 | $ 50.81 |
Total Return B, C, D | 15.87% | 8.34% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.96% | 2.15% A |
Expenses net of all reductions | 1.96% | 2.13% A |
Net investment income (loss) | .07% | .89% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 8,743 | $ 547 |
Portfolio turnover rate G | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Materials
| |||||
Years ended February 28, | 2008 H | 2007 | 2006 | 2005 | 2004 H |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 | $ 23.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .64 | .42 | .32 | .15 | .13 F |
Net realized and unrealized gain (loss) | 8.01 | 9.36 | 6.40 | 5.47 | 12.07 |
Total from investment operations | 8.65 | 9.78 | 6.72 | 5.62 | 12.20 |
Distributions from net investment income | (.36) | (.48) | (.25) | (.12) | (.12) |
Distributions from net realized gain | (2.21) | (4.79) | (.93) | (.74) | - |
Total distributions | (2.57) | (5.27) | (1.18) | (.86) | (.12) |
Redemption fees added to paid in capital C | .01 | .06 | .03 | .03 | .08 |
Net asset value, end of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Total Return A, B | 17.10% | 22.29% | 17.01% | 16.09% | 51.73% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .91% | 1.01% | 1.05% | 1.06% | 1.31% |
Expenses net of fee waivers, if any | .90% | .98% | 1.05% | 1.06% | 1.31% |
Expenses net of all reductions | .89% | .96% | 1.01% | 1.02% | 1.17% |
Net investment income (loss) | 1.14% | .87% | .78% | .42% | .43% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 | $ 135,131 |
Portfolio turnover rate E | 77% | 185% | 124% | 89% | 175% |
A Total 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 $.07 per share. 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 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. |
Financial Highlights - Institutional Class
| ||
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .64 | .08 |
Net realized and unrealized gain (loss) | 8.00 | 3.92 |
Total from investment operations | 8.64 | 4.00 |
Distributions from net investment income | (.36) | - |
Distributions from net realized gain | (2.21) | - |
Total distributions | (2.56) | - |
Redemption fees added to paid in capital D | .01 | .01 |
Net asset value, end of period | $ 57.00 | $ 50.91 |
Total Return B, C | 17.08% | 8.55% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .89% | 1.06% A |
Expenses net of fee waivers, if any | .89% | 1.06% A |
Expenses net of all reductions | .89% | 1.04% A |
Net investment income (loss) | 1.14% | .79% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,820 | $ 119 |
Portfolio turnover rate F | 77% | 185% |
A Annualized 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
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 for processing shareholder transactions 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. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim 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, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 67,533,814 |
|
Unrealized depreciation | (17,166,142) |
|
Net unrealized appreciation (depreciation) | 50,367,672 |
|
|
|
|
Cost for federal income tax purposes | $ 344,288,598 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 7,456,139 | $ 4,275,377 |
Long-term Capital Gains | 9,544,116 | 14,761,326 |
Total | $ 17,000,255 | $ 19,036,703 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
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 $380,491,263 and $262,508,222, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 16,083 | $ 2,093 |
Class T | .25% | .25% | 20,380 | 588 |
Class B | .75% | .25% | 26,889 | 20,448 |
Class C | .75% | .25% | 43,475 | 26,842 |
|
|
| $ 106,827 | $ 49,971 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 37,085 |
Class T | 10,621 |
Class B* | 2,770 |
Class C* | 2,046 |
| $ 52,522 |
* 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
6. 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 pay for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Materials shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 19,154 | .30 |
Class T | 12,304 | .30 |
Class B | 8,106 | .30 |
Class C | 12,868 | .30 |
Materials | 848,933 | .25 |
Institutional Class | 3,274 | .24 |
| $ 904,639 |
|
Accounting and Security Lending Fees. FSC 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 $4,847 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. 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 | $ 7,843,800 | 4.68% | $ 10,195 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $743 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $107,174.
Annual Report
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 $6,824 for the period In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 2,634 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 49,508 | $ - |
Class T | 17,252 | - |
Class B | 2,017 | - |
Class C | 11,702 | - |
Materials | 2,291,825 | 1,721,356 |
Institutional Class | 10,383 | - |
Total | $ 2,382,687 | $ 1,721,356 |
From net realized gain |
|
|
Class A | $ 297,274 | $ - |
Class T | 171,986 | - |
Class B | 120,699 | - |
Class C | 203,194 | - |
Materials | 13,774,394 | 17,315,347 |
Institutional Class | 50,021 | - |
Total | $ 14,617,568 | $ 17,315,347 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 264,311 | 19,960 | $ 14,817,528 | $ 1,010,235 |
Reinvestment of distributions | 5,853 | - | 336,777 | - |
Shares redeemed | (70,440) | - | (3,880,036) | - |
Net increase (decrease) | 199,724 | 19,960 | $ 11,274,269 | $ 1,010,235 |
Class T |
|
|
|
|
Shares sold | 146,420 | 13,890 | $ 8,122,926 | $ 703,837 |
Reinvestment of distributions | 2,954 | - | 169,021 | - |
Shares redeemed | (42,653) | - | (2,369,950) | - |
Net increase (decrease) | 106,721 | 13,890 | $ 5,921,997 | $ 703,837 |
Class B |
|
|
|
|
Shares sold | 83,153 | 13,022 | $ 4,611,263 | $ 643,438 |
Reinvestment of distributions | 2,052 | - | 116,729 | - |
Shares redeemed | (24,486) | - | (1,341,792) | - |
Net increase (decrease) | 60,719 | 13,022 | $ 3,386,200 | $ 643,438 |
Class C |
|
|
|
|
Shares sold | 171,703 | 10,758 | $ 9,620,121 | $ 546,127 |
Reinvestment of distributions | 3,133 | - | 178,976 | - |
Shares redeemed | (30,841) | - | (1,682,683) | - |
Net increase (decrease) | 143,995 | 10,758 | $ 8,116,414 | $ 546,127 |
Materials |
|
|
|
|
Shares sold | 7,472,335 | 6,290,426 | $ 416,206,078 | $ 311,961,345 |
Reinvestment of distributions | 270,946 | 378,787 | 15,331,841 | 18,026,752 |
Shares redeemed | (6,067,742) | (5,806,915) | (334,236,130) | (273,224,056) |
Net increase (decrease) | 1,675,539 | 862,298 | $ 97,301,789 | $ 56,764,041 |
Institutional Class |
|
|
|
|
Shares sold | 88,023 | 4,445 | $ 5,168,897 | $ 210,000 |
Reinvestment of distributions | 963 | - | 55,576 | - |
Shares redeemed | (59,388) | (2,112) | (3,461,835) | (106,028) |
Net increase (decrease) | 29,598 | 2,333 | $ 1,762,638 | $ 103,972 |
A Share transactions for Class A, Class T, Class B and Institutional Class are for the period December 12,2006 (commencement of sale of shares) to February 28, 2007.
Annual Report
Fidelity Advisor Telecommunications Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 29, 2008 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -15.23% | 13.60% | 1.02% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006 are those of Telecommunications, 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, 1998. 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
Comments from Gavin Baker, Portfolio Manager of Fidelity Advisor Telecommunications Fund
It was a winter of discontent for U.S. equity investors, as a credit freeze led to subzero returns for many stock market benchmarks during the 12-month period ending February 29, 2008. In addition to the subprime mortgage market crisis, which severely constrained the availability of credit, a flurry of other issues afflicted investor sentiment - particularly in the final three months of the period - including a major housing market slowdown, rising inflation, a potential recession and oil prices that topped $100 per barrel. The Federal Reserve Board aggressively intervened in an effort to ease the credit crunch, slashing the federal funds target rate five times since September. Despite the central bank's efforts, the Standard & Poor's 500SM Index fell 3.60% for the year overall and lost nearly 10% in the December-February time frame alone. The bellwether, blue-chip Dow Jones Industrial AverageSM managed a modest increase of 2.32% over the past 12 months, but the small-cap-oriented Russell 2000® Index declined 12.44%. Elsewhere, the technology-heavy NASDAQ Composite® Index fell 5.34%.
For the 12 months ending February 29, 2008, the fund's Class A, Class T, Class B and Class C shares returned -15.55%, -15.78%, -16.18% and -16.17%, respectively (excluding sales charges), underperforming the S&P 500® and the -12.23% return for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index. The fund was hurt by being heavily underweighted in integrated telecommunication services stocks AT&T and Verizon, which together represented about two-thirds of the index, at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. Though the fund had significant stakes in both of these companies - AT&T was its largest holding during the period - I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in AT&T and Verizon than these rules allowed me to during the period, which hurt as well. Poor stock selection in the integrated telecom services group also detracted. In addition, the fund was overweighted in the alternative carriers group, which underperformed. In terms of other individual detractors, alternative carrier Level 3 Communications hurt performance. Integrated telecom services company Qwest Communications International and Internet software and services stock SAVVIS held back the fund's return as well. On the other hand, we benefited from strong stock selection in the wireless telecommunication services group. Specifically, it was helped by underweighting Sprint Nextel, which performed poorly. Other stocks that contributed included broadcasting and cable TV company The DIRECTV Group, an out-of-benchmark position, and application software company Synchronoss Technologies, another out-of-benchmark holding.
For the 12 months ending February 29, 2008, the fund's Institutional Class shares returned -15.23%, underperforming the S&P 500® and the -12.23% return for the Morgan Stanley Capital InternationalSM (MSCI®) US Investable Market Telecommunications Services Index. The fund was hurt by being heavily underweighted in integrated telecommunication services stocks AT&T and Verizon, which together represented about two-thirds of the index, at a time when economic uncertainty was making these stable, large-capitalization companies very attractive to investors. Though the fund had significant stakes in both of these companies - AT&T was its largest holding during the period - I was limited by how much of them I could own because of Fidelity's policies related to concentration of assets in just a handful of holdings. That said, I held smaller positions in AT&T and Verizon than these rules allowed me to during the period, which hurt as well. Poor stock selection in the integrated telecom services group also detracted. In addition, the fund was overweighted in the alternative carriers group, which underperformed. In terms of other individual detractors, alternative carrier Level 3 Communications hurt performance. Integrated telecom services company Qwest Communications International and Internet software and services stock SAVVIS held back the fund's return as well. On the other hand, we benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel, which performed poorly. Other stocks that contributed included broadcasting and cable TV company The DIRECTV Group, an out-of-benchmark position, and application software company Synchronoss Technologies, another out-of-benchmark holding.
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
Select Telecommunications Portfolio
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, 2007 to February 29, 2008).
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.
| Beginning | Ending | Expenses Paid |
Class A |
|
|
|
Actual | $ 1,000.00 | $ 761.10 | $ 5.21 |
HypotheticalA | $ 1,000.00 | $ 1,018.95 | $ 5.97 |
Class T |
|
|
|
Actual | $ 1,000.00 | $ 760.00 | $ 6.35 |
HypotheticalA | $ 1,000.00 | $ 1,017.65 | $ 7.27 |
Class B |
|
|
|
Actual | $ 1,000.00 | $ 758.20 | $ 8.48 |
HypotheticalA | $ 1,000.00 | $ 1,015.22 | $ 9.72 |
Class C |
|
|
|
Actual | $ 1,000.00 | $ 758.50 | $ 8.44 |
HypotheticalA | $ 1,000.00 | $ 1,015.27 | $ 9.67 |
Telecommunications |
|
|
|
Actual | $ 1,000.00 | $ 762.50 | $ 3.94 |
HypotheticalA | $ 1,000.00 | $ 1,020.39 | $ 4.52 |
Institutional Class |
|
|
|
Actual | $ 1,000.00 | $ 762.70 | $ 3.55 |
HypotheticalA | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Annual Report
| Annualized |
Class A | 1.19% |
Class T | 1.45% |
Class B | 1.94% |
Class C | 1.93% |
Telecommunications | .90% |
Institutional Class | .81% |
Annual Report
Investment Changes
Select Telecommunications Portfolio
Top Ten Stocks as of February 29, 2008 | ||
| % of fund's | % of fund's net assets |
AT&T, Inc. | 20.1 | 24.2 |
Qwest Communications International, Inc. | 7.7 | 10.0 |
Global Crossing Ltd. | 7.7 | 0.5 |
Verizon Communications, Inc. | 7.3 | 7.2 |
Time Warner Telecom, Inc. Class A (sub. vtg.) | 6.1 | 4.6 |
Millicom International Cellular SA | 4.8 | 0.0 |
The DIRECTV Group, Inc. | 4.3 | 0.0 |
American Tower Corp. Class A | 4.1 | 3.1 |
Starent Networks Corp. | 4.0 | 1.7 |
Synchronoss Technologies, Inc. | 3.1 | 6.8 |
| 69.2 | |
Top Industries (% of fund's net assets) | |||
As of February 29, 2008 | |||
 | Diversified Telecommunication Services | 55.0% |
|
 | Wireless Telecommunication Services | 27.3% |
|
 | Media | 6.0% |
|
 | Communications Equipment | 5.0% |
|
 | Software | 4.3% |
|
 | All Others* | 2.4% |
|
| |||
As of August 31, 2007 | |||
| Diversified Telecommunication Services | 60.8% |
|
| Wireless Telecommunication Services | 21.2% |
|
| Software | 10.7% |
|
| Internet Software & Services | 4.0% |
|
| Communications Equipment | 2.1% |
|
| All Others* | 1.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 29, 2008
Showing Percentage of Net Assets
Select Telecommunications Portfolio
Common Stocks - 99.8% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 5.0% | |||
Communications Equipment - 5.0% | |||
Aruba Networks, Inc. | 109,692 | $ 615,372 | |
F5 Networks, Inc. (a) | 1,600 | 35,456 | |
Infinera Corp. | 71,400 | 833,952 | |
Juniper Networks, Inc. (a) | 56,100 | 1,504,602 | |
Polycom, Inc. (a) | 1,700 | 37,060 | |
Sandvine Corp. (a) | 3,200 | 9,560 | |
Sonus Networks, Inc. (a) | 56,800 | 188,576 | |
Starent Networks Corp. | 870,714 | 13,696,331 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 300 | 6,450 | |
| 16,927,359 | ||
COMPUTERS & PERIPHERALS - 0.0% | |||
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 2,805 | |
Network Appliance, Inc. (a) | 700 | 15,134 | |
Synaptics, Inc. (a) | 300 | 8,037 | |
| 25,976 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 55.0% | |||
Alternative Carriers - 15.4% | |||
Cable & Wireless PLC | 18,800 | 65,683 | |
Cogent Communications Group, Inc. (a) | 104,308 | 2,031,920 | |
Global Crossing Ltd. (a) | 1,353,407 | 26,134,289 | |
Iliad Group SA | 600 | 55,321 | |
Level 3 Communications, Inc. (a)(d) | 1,265,852 | 2,822,850 | |
PAETEC Holding Corp. (a) | 73,600 | 568,192 | |
Time Warner Telecom, Inc. Class A (sub. vtg.) (a) | 1,299,442 | 20,713,105 | |
| 52,391,360 | ||
Integrated Telecommunication Services - 39.6% | |||
AT&T, Inc. | 1,962,602 | 68,357,428 | |
BT Group PLC | 5,053 | 22,875 | |
Cbeyond, Inc. (a) | 125,962 | 2,064,517 | |
Cincinnati Bell, Inc. (a) | 299,100 | 1,160,508 | |
Embarq Corp. | 45,100 | 1,891,494 | |
FairPoint Communications, Inc. | 74,300 | 731,112 | |
NTELOS Holdings Corp. | 632 | 13,481 | |
PT Indosat Tbk | 1,778,000 | 1,298,499 | |
PT Telkomunikasi Indonesia Tbk Series B | 3,773,400 | 3,977,255 | |
Qwest Communications International, Inc. (d) | 4,878,944 | 26,346,298 | |
Telefonica SA | 40,800 | 1,179,664 | |
Telefonica SA sponsored ADR | 8,500 | 737,290 | |
Telenor ASA | 50,000 | 1,023,804 | |
Telenor ASA sponsored ADR | 4,100 | 254,569 | |
Telkom SA Ltd. | 34,500 | 615,288 | |
| |||
Shares | Value | ||
Verizon Communications, Inc. | 681,524 | $ 24,752,952 | |
Windstream Corp. | 40,308 | 474,022 | |
| 134,901,056 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION | 187,292,416 | ||
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% | |||
Electronic Manufacturing Services - 0.1% | |||
Trimble Navigation Ltd. (a) | 8,940 | 244,420 | |
INTERNET SOFTWARE & SERVICES - 2.1% | |||
Internet Software & Services - 2.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 42,406 | |
SAVVIS, Inc. (a)(d) | 357,800 | 6,952,054 | |
| 6,994,460 | ||
MEDIA - 6.0% | |||
Broadcasting & Cable TV - 6.0% | |||
Comcast Corp. Class A | 298,400 | 5,830,736 | |
Liberty Global, Inc. Class A (a) | 400 | 15,040 | |
The DIRECTV Group, Inc. (a) | 581,400 | 14,564,070 | |
Time Warner Cable, Inc. (a) | 1,200 | 32,760 | |
Virgin Media, Inc. | 1,400 | 21,000 | |
| 20,463,606 | ||
SOFTWARE - 4.3% | |||
Application Software - 3.1% | |||
Synchronoss Technologies, Inc. (a)(d) | 666,163 | 10,711,901 | |
Home Entertainment Software - 1.2% | |||
Gameloft (a)(d) | 694,986 | 2,968,566 | |
Glu Mobile, Inc. | 208,214 | 982,770 | |
| 3,951,336 | ||
TOTAL SOFTWARE | 14,663,237 | ||
WIRELESS TELECOMMUNICATION SERVICES - 27.3% | |||
Wireless Telecommunication Services - 27.3% | |||
America Movil SAB de CV Series L sponsored ADR | 153,600 | 9,286,656 | |
American Tower Corp. Class A (a) | 364,000 | 13,992,160 | |
Bharti Airtel Ltd. (a) | 225,784 | 4,613,014 | |
Centennial Communications Corp. Class A (a) | 107,300 | 565,471 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 105,800 | 7,894,796 | |
Clearwire Corp. (d) | 76,500 | 1,071,765 | |
Crown Castle International Corp. (a) | 230,000 | 8,300,700 | |
Leap Wireless International, Inc. (a) | 30,614 | 1,309,055 | |
MetroPCS Communications, Inc. | 59,900 | 955,405 | |
Millicom International Cellular SA (a) | 148,800 | 16,442,400 | |
MTN Group Ltd. | 41,500 | 649,964 | |
NII Holdings, Inc. (a) | 119,300 | 4,739,789 | |
OnMobile Global Ltd. | 8,904 | 141,066 | |
SBA Communications Corp. Class A (a) | 163,564 | 5,078,662 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Sprint Nextel Corp. | 1,061,113 | $ 7,544,513 | |
Syniverse Holdings, Inc. (a) | 36,468 | 618,133 | |
Telephone & Data Systems, Inc. | 17,541 | 822,673 | |
Virgin Mobile USA, Inc. Class A | 600 | 3,042 | |
Vodafone Group PLC sponsored ADR | 281,700 | 9,079,191 | |
| 93,108,455 | ||
TOTAL COMMON STOCKS (Cost $419,374,069) | 339,719,929 | ||
Money Market Funds - 10.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 3.24% (b) | 310,331 | 310,331 | |
Fidelity Securities Lending Cash Central Fund, 3.25% (b)(c) | 34,799,540 | 34,799,540 | |
TOTAL MONEY MARKET FUNDS (Cost $35,109,871) | 35,109,871 | ||
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $454,483,940) | 374,829,800 | ||
NET OTHER ASSETS - (10.1)% | (34,304,752) | ||
NET ASSETS - 100% | $ 340,525,048 | ||
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. |
(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 | $ 280,924 |
Fidelity Securities Lending Cash Central Fund | 296,380 |
Total | $ 577,304 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 74.6% |
Bermuda | 7.7% |
Luxembourg | 4.8% |
Mexico | 2.7% |
United Kingdom | 2.7% |
Hong Kong | 2.3% |
Indonesia | 1.6% |
India | 1.4% |
Others (individually less than 1%) | 2.2% |
| 100.0% |
Income Tax Information |
At February 29, 2008, the fund had a capital loss carryforward of approximately $379,461,672 of which $205,830,514, $161,866,685 and $11,764,473 will expire on February 28, 2010, 2011 and February 29, 2012, respectively. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Select Telecommunications Portfolio
Statement of Assets and Liabilities
| February 29, 2008 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $32,487,257) - See accompanying schedule: Unaffiliated issuers (cost $419,374,069) | $ 339,719,929 |
|
Fidelity Central Funds (cost $35,109,871) | 35,109,871 |
|
Total Investments (cost $454,483,940) |
| $ 374,829,800 |
Foreign currency held at value (cost $83,021) | 82,631 | |
Receivable for investments sold | 19,855,223 | |
Receivable for fund shares sold | 344,748 | |
Dividends receivable | 11,880 | |
Distributions receivable from Fidelity Central Funds | 37,457 | |
Prepaid expenses | 1,729 | |
Other receivables | 74,585 | |
Total assets | 395,238,053 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 18,245,145 | |
Payable for fund shares redeemed | 1,332,608 | |
Accrued management fee | 167,643 | |
Distribution fees payable | 2,814 | |
Other affiliated payables | 111,950 | |
Other payables and accrued expenses | 53,305 | |
Collateral on securities loaned, at value | 34,799,540 | |
Total liabilities | 54,713,005 | |
|
|
|
Net Assets | $ 340,525,048 | |
Net Assets consist of: |
| |
Paid in capital | $ 803,876,156 | |
Undistributed net investment income | 768,284 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (384,523,224) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (79,596,168) | |
Net Assets | $ 340,525,048 | |
Statement of Assets and Liabilities - continued
| February 29, 2008 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 42.56 | |
|
|
|
Maximum offering price per share (100/94.25 of $42.56) | $ 45.16 | |
Class T: | $ 42.49 | |
|
|
|
Maximum offering price per share (100/96.50 of $42.49) | $ 44.03 | |
Class B: | $ 42.42 | |
|
|
|
Class C: | $ 42.42 | |
|
|
|
|
|
|
Telecommunications: | $ 42.70 | |
|
|
|
Institutional Class: | $ 42.65 | |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
Annual Report
See accompanying notes which are an integral part of the financial statements.
Fund Name
Financial Statements - continued
Statement of Operations
| Year ended February 29, 2008 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,351,360 |
Interest |
| 2,137 |
Income from Fidelity Central Funds |
| 577,304 |
Total income |
| 9,930,801 |
|
|
|
Expenses | ||
Management fee | $ 3,281,900 | |
Transfer agent fees | 1,595,234 | |
Distribution fees | 35,596 | |
Accounting and security lending fees | 235,248 | |
Custodian fees and expenses | 54,668 | |
Independent trustees' compensation | 2,280 | |
Registration fees | 91,709 | |
Audit | 51,261 | |
Legal | 6,535 | |
Interest | 15,671 | |
Miscellaneous | 22,940 | |
Total expenses before reductions | 5,393,042 | |
Expense reductions | (66,753) | 5,326,289 |
Net investment income (loss) | 4,604,512 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $243,559) | 113,352,578 | |
Foreign currency transactions | 9,773 | |
Total net realized gain (loss) |
| 113,362,351 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $269,285) | (171,834,903) | |
Assets and liabilities in foreign currencies | (2,672) | |
Total change in net unrealized appreciation (depreciation) |
| (171,837,575) |
Net gain (loss) | (58,475,224) | |
Net increase (decrease) in net assets resulting from operations | $ (53,870,712) | |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,604,512 | $ 6,535,260 |
Net realized gain (loss) | 113,362,351 | 31,878,042 |
Change in net unrealized appreciation (depreciation) | (171,837,575) | 54,610,776 |
Net increase (decrease) in net assets resulting from operations | (53,870,712) | 93,024,078 |
Distributions to shareholders from net investment income | (4,987,721) | (5,987,382) |
Share transactions - net increase (decrease) | (227,033,730) | 136,866,943 |
Redemption fees | 35,395 | 144,270 |
Total increase (decrease) in net assets | (285,856,768) | 224,047,909 |
|
|
|
Net Assets | ||
Beginning of period | 626,381,816 | 402,333,907 |
End of period (including undistributed net investment income of $768,284 and undistributed net investment income of $1,385,280, respectively) | $ 340,525,048 | $ 626,381,816 |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class A
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .26 | - K |
Net realized and unrealized gain (loss) | (8.08) | 3.15 |
Total from investment operations | (7.82) | 3.15 |
Distributions from net investment income | (.51) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.56 | $ 50.89 |
Total Return B, C, D | (15.55)% | 6.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.20% | 1.23% A |
Expenses net of all reductions | 1.19% | 1.22% A |
Net investment income (loss) | .49% | (.03)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 2,791 | $ 658 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class T
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .12 | (.02) |
Net realized and unrealized gain (loss) | (8.07) | 3.14 |
Total from investment operations | (7.95) | 3.12 |
Distributions from net investment income | (.42) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.49 | $ 50.86 |
Total Return B, C, D | (15.78)% | 6.54% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.46% | 1.54% A |
Expenses net of all reductions | 1.45% | 1.53% A |
Net investment income (loss) | .23% | (.24)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 1,270 | $ 560 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Class B
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.05) |
Net realized and unrealized gain (loss) | (8.04) | 3.11 |
Total from investment operations | (8.18) | 3.06 |
Distributions from net investment income | (.20) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.80 |
Total Return B, C, D | (16.18)% | 6.41% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.95% | 2.05% A |
Expenses net of all reductions | 1.94% | 2.05% A |
Net investment income (loss) | (.26)% | (.49)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 741 | $ 291 |
Portfolio turnover rate G | 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 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. |
Financial Highlights - Class C
Years ended February 28, | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) E | (.14) | (.07) |
Net realized and unrealized gain (loss) | (8.03) | 3.14 |
Total from investment operations | (8.17) | 3.07 |
Distributions from net investment income | (.22) | - |
Redemption fees added to paid in capital E | - K | - K |
Net asset value, end of period | $ 42.42 | $ 50.81 |
Total Return B, C, D | (16.17)% | 6.43% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.95% | 2.07% A |
Expenses net of all reductions | 1.94% | 2.06% A |
Net investment income (loss) | (.26)% | (.65)% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 902 | $ 332 |
Portfolio turnover rate G | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
Financial Highlights - Telecommunications
Years ended February 28, | 2008 I | 2007 | 2006 | 2005 | 2004 I |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 | $ 23.62 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .43 | .61 F | .36 | .49 G | .08 |
Net realized and unrealized gain (loss) | (8.12) | 8.85 | 7.11 | (.96) | 12.13 |
Total from investment operations | (7.69) | 9.46 | 7.47 | (.47) | 12.21 |
Distributions from net investment income | (.52) | (.53) | (.33) | (.49) | (.05) |
Redemption fees added to paid in capital C | - J | .01 | - J | - J | .01 |
Net asset value, end of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Total Return A, B | (15.30)% | 22.69% | 21.54% | (1.40)% | 51.78% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .91% | .99% | 1.05% | 1.09% | 1.40% |
Expenses net of fee waivers, if any | .90% | .97% | 1.05% | 1.09% | 1.40% |
Expenses net of all reductions | .90% | .97% | .96% | 1.02% | 1.34% |
Net investment income (loss) | .79% | 1.34% F | .96% | 1.44% G | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 | $ 439,350 |
Portfolio turnover rate E | 134% | 162% | 148% | 56% | 98% |
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 Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been ..68%. 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 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. I For the year ended February 29. J Amount represents less than $.01 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .45 | .16 |
Net realized and unrealized gain (loss) | (8.09) | 3.01 |
Total from investment operations | (7.64) | 3.17 |
Distributions from net investment income | (.62) | - |
Redemption fees added to paid in capital D | - J | - J |
Net asset value, end of period | $ 42.65 | $ 50.91 |
Total Return B, C | (15.23)% | 6.64% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .83% | .98% A |
Expenses net of fee waivers, if any | .83% | .98% A |
Expenses net of all reductions | .83% | .97% A |
Net investment income (loss) | .86% | 1.52% A |
Supplemental Data |
|
|
Net assets, end of period (000 omitted) | $ 256 | $ 114 |
Portfolio turnover rate F | 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 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. |
Annual Report
See accompanying notes which are an integral part of the financial statements.
For the period ended February 29, 2008
Notes to Financial Statements
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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 list of holdings for each Fidelity Central Fund is available upon request or at the SEC's 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's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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. 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. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
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 for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48), on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 5,270,613 |
|
Unrealized depreciation | (89,928,331) |
|
Net unrealized appreciation (depreciation) | (84,657,718) |
|
Undistributed ordinary income | 769,188 |
|
Capital loss carryforward | (379,461,672) |
|
|
|
|
Cost for federal income tax purposes | $ 459,487,518 |
|
The tax character of distributions paid was as follows:
| February 29, 2008 | February 28, 2007 |
Ordinary Income | $ 4,987,721 | $ 5,987,382 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $772,122,381 and $982,539,013, 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.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 7,757 | $ 1,222 |
Class T | .25% | .25% | 9,224 | 509 |
Class B | .75% | .25% | 8,516 | 6,658 |
Class C | .75% | .25% | 10,099 | 5,308 |
|
|
| $ 35,596 | $ 13,697 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 6,846 |
Class T | 1,522 |
Class B* | 3,132 |
Class C* | 288 |
| $ 11,788 |
* 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
6. 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. Prior to January 1, 2008, Fidelity Service Company, Inc. (FSC), also an affiliate of FMR was the sub-transfer agent for Telecommunications shares. For the period, each class paid the following transfer agent fees:
| Amount | % of |
Class A | $ 9,513 | .31 |
Class T | 5,889 | .32 |
Class B | 2,638 | .31 |
Class C | 3,087 | .31 |
Telecommunications | 1,573,465 | .27 |
Institutional Class | 642 | .19 |
| $ 1,595,234 |
|
Accounting and Security Lending Fees. FSC 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 $17,606 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 |
Borrower | $ 8,152,429 | 4.94% | $ 15,671 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 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 $1,339 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $296,380.
Annual Report
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Telecommunications' operating expenses. During the period, this reimbursement reduced the class' expenses by $38,998.
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 $20,022 for the period. In addition, through arrangements with each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Telecommunications | $ 7,614 |
|
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.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds. FMR also reimbursed the related legal expenses, which are recorded in the accompanying Statement of Operations as an expense reduction.
Subsequent to period end, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 34,959 | $ - |
Class T | 17,867 | - |
Class B | 3,199 | - |
Class C | 4,260 | - |
Telecommunications | 4,919,180 | 5,987,382 |
Institutional Class | 8,256 | - |
Total | $ 4,987,721 | $ 5,987,382 |
Annual Report
Notes to Financial Statements - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class A |
|
|
|
|
Shares sold | 92,950 | 12,932 | $ 5,148,375 | $ 655,617 |
Reinvestment of distributions | 636 | - | 33,452 | - |
Shares redeemed | (40,941) | - | (2,000,467) | - |
Net increase (decrease) | 52,645 | 12,932 | $ 3,181,360 | $ 655,617 |
Class T |
|
|
|
|
Shares sold | 53,657 | 11,066 | $ 2,989,303 | $ 555,092 |
Reinvestment of distributions | 339 | - | 17,826 | - |
Shares redeemed | (35,109) | (60) | (1,688,606) | (3,110) |
Net increase (decrease) | 18,887 | 11,006 | $ 1,318,523 | $ 551,982 |
Class B |
|
|
|
|
Shares sold | 21,448 | 5,729 | $ 1,194,831 | $ 285,388 |
Reinvestment of distributions | 57 | - | 3,011 | - |
Shares redeemed | (9,753) | - | (488,017) | - |
Net increase (decrease) | 11,752 | 5,729 | $ 709,825 | $ 285,388 |
Class C |
|
|
|
|
Shares sold | 28,254 | 6,538 | $ 1,547,917 | $ 326,374 |
Reinvestment of distributions | 63 | - | 3,315 | - |
Shares redeemed | (13,594) | - | (674,972) | - |
Net increase (decrease) | 14,723 | 6,538 | $ 876,260 | $ 326,374 |
Telecommunications |
|
|
|
|
Shares sold | 3,678,807 | 12,699,449 | $ 202,863,624 | $ 581,140,315 |
Reinvestment of distributions | 89,389 | 124,102 | 4,711,340 | 5,727,266 |
Shares redeemed | (8,198,629) | (10,144,422) | (440,994,970) | (451,923,224) |
Net increase (decrease) | (4,430,433) | 2,679,129 | $ (233,420,006) | $ 134,944,357 |
Institutional Class |
|
|
|
|
Shares sold | 14,719 | 3,391 | $ 834,674 | $ 162,500 |
Reinvestment of distributions | 128 | - | 6,760 | - |
Shares redeemed | (11,092) | (1,150) | (541,126) | (59,275) |
Net increase (decrease) | 3,755 | 2,241 | $ 300,308 | $ 103,225 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period December 12, 2006 (commencement of sale of shares) to February 28, 2007.
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 statement of changes in net assets for Gold Portfolio) and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio, and Telecommunications Portfolio (funds of Fidelity Select Portfolios) and Gold Portfolio's wholly owned subsidiary at February 29, 2008, the results of their operations for the year then ended , the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 29, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers, LLP
Boston, Massachusetts
April 23, 2008
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, and review each fund's performance. Except for James C. Curvey, each of the Trustees oversees 376 funds advised by FMR or an affiliate. Mr. Curvey oversees 371 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board 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.
Each fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
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 Occupation | |
Edward C. Johnson 3d (77) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as President (2006-present), Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001-present) and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Mr. Edward C. Johnson 3d and Mr. Arthur E. Johnson are not related. |
James C. Curvey (72) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) or Member of the Advisory Board (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. Mr. Curvey joined Fidelity in 1982 and served in numerous senior management positions, including President and Chief Operating Officer of FMR LLC (1997-2000) and President of Fidelity Strategic Investments (2000-2002). In addition, he serves as a member of the Board of Directors of Geerlings & Wade, Inc. (wine distribution). |
* 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. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
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 Occupation | |
Dennis J. Dirks (59) | |
| 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) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005-present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Albert R. Gamper, Jr. (65) | |
| Year of Election or Appointment: 2006 Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987-1989; 1999-2001; 2002-2004), Chief Executive Officer (1987-2004), and President (1989-2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001-present), Chairman of the Board of Governors, Rutgers University (2004-present), and Chairman of the Board of Saint Barnabas Health Care System. |
George H. Heilmeier (71) | |
| Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004-present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002), Compaq (1994-2002), Automatic Data Processing, Inc. (ADP) (technology-based business outsourcing, 1995-2002), INET Technologies Inc. (telecommunications network surveillance, 2001-2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display, and a member of the Consumer Electronics Hall of Fame. |
James H. Keyes (67) | |
| Year of Election or Appointment: 2007 Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993-2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002-present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions). |
Marie L. Knowles (61) | |
| Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002-present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California. |
Ned C. Lautenbach (64) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Sony Corporation (2006-present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. |
Cornelia M. Small (63) | |
| Year of Election or Appointment: 2005 Ms. Small is a member (2000-present) and Chairperson (2002-present) of the Investment Committee, and a member (2002-present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990-1997) and Scudder Kemper Investments (1997-1999). In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. |
William S. Stavropoulos (68) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), and Chairman of the Executive Committee (2000-2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002-present), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science. |
Kenneth L. Wolfe (69) | |
| Year of Election or Appointment: 2005 Mr. Wolfe is Chairman and a Director of Hershey Foods Corporation (2007-present), where prior to his retirement in 2001, he was Chairman and Chief Executive Officer. Mr. Wolfe currently serves as a member of the board of Revlon Inc. (2004-present). Previously, Mr. Wolfe served as a member of the boards of Adelphia Communications Corporation (2003-2006) and Bausch & Lomb, Inc. (1993-2007). |
Advisory Board Members and Executive Officers**:
Correspondence intended for Mr. Mauriello, Mr. Thomas, Mr. Wiley, Mr. Lacy, and Mr. Arthur Johnson may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Arthur E. Johnson (61) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Johnson serves as Senior Vice President of Corporate Strategic Development of Lockheed Martin Corporation (defense contractor). In addition, Mr. Johnson serves as a member of the Board of Directors of AGL Resources, Inc. (holding company, 2002-present), and IKON Office Solutions, Inc. (document management systems and services). Mr. Arthur E. Johnson and Mr. Edward C. Johnson 3d are not related. |
Alan J. Lacy (54) | |
| Year of Election or Appointment: 2008 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Vice Chairman and Chief Executive Officer of Sears Holdings Corporation and Sears, Roebuck and Co. (retail, 2005-2006; 2000-2005). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Peter S. Lynch (64) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. |
Joseph Mauriello (63) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
David M. Thomas (58) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. 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 holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (57) | |
| Year of Election or Appointment: 2007 Member of the Advisory Board of Fidelity Select Portfolios. Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Kimberley H. Monasterio (44) | |
| Year of Election or Appointment: 2007 President and Treasurer of the funds. Ms. Monasterio also serves as President and Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2004-present). Previously, Ms. Monasterio served as Deputy Treasurer of the Fidelity funds (2004-2006). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000-2004) and Chief Financial Officer (2002-2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000-2004). |
Brian B. Hogan (43) | |
| Year of Election or Appointment: 2007 Vice President of the funds. Mr. Hogan also serves as Vice President of Sector Funds (2007-present). Mr. Hogan is Senior Vice President of Equity Research (2006-present). Mr. Hogan also serves as Vice President of FMR and FMR Co., Inc. Previously, Mr. Hogan served as a portfolio manager. |
Eric D. Roiter (59) | |
| Year of Election or Appointment: 1998 Secretary of the funds. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001-present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001-present), Fidelity Research & Analysis Company (2001-present), and Fidelity Investments Money Management, Inc. (2001-present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003-present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998-2005). |
John B. McGinty, Jr. (45) | |
| Year of Election or Appointment: 2008 Assistant Secretary of the funds. Mr. McGinty also serves as Assistant Secretary of other Fidelity funds (2008-present) and is an employee of FMR LLC (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of FDC (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
R. Stephen Ganis (41) | |
| Year of Election or Appointment: 2006 Anti-Money Laundering (AML) officer of the funds. Mr. Ganis also serves as AML officer of other Fidelity funds (2006-present) and FMR LLC (2003-present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000-2002). |
Joseph B. Hollis (59) | |
| Year of Election or Appointment: 2006 Chief Financial Officer of the funds. Mr. Hollis also serves as Chief Financial Officer of other Fidelity funds. Mr. Hollis is President of Fidelity Pricing and Cash Management Services (FPCMS) (2005-present). Mr. Hollis also serves as President and Director of Fidelity Service Company, Inc. (2006-present). Previously, Mr. Hollis served as Senior Vice President of Cash Management Services (1999-2002) and Investment Management Operations (2002-2005). |
Kenneth A. Rathgeber (60) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of the funds. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004-present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002-present). He is Chief Compliance Officer of 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), and Strategic Advisers, Inc. (2005-present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998-2002). |
Bryan A. Mehrmann (46) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the funds. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Kenneth B. Robins (38) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the funds. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004) and a Senior Manager (1999-2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000-2002). |
Robert G. Byrnes (41) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the funds. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) | |
| Year of Election or Appointment: 2004 Assistant Treasurer of the funds. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR. |
Paul M. Murphy (60) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the funds. Mr. Murphy also serves as Assistant Treasurer of other Fidelity funds (2007-present) and is an employee of FMR (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS) (1994-2007). |
Gary W. Ryan (49) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the funds. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005-present) and is an employee of FMR (2005-present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
Distributions
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 |
Select Consumer Staples Portfolio |
|
|
|
|
Institutional Class | 04/14/08 | 04/11/08 | $0.016 | $0.025 |
Select Gold Portfolio |
|
|
|
|
Institutional Class | 04/14/08 | 04/11/08 | $0.000 | $0.170 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 29, 2008, or, if subsequently determined to be different, the net capital gain of such year.
Select Consumer Staples Portfolio | $ 8,761,249 |
Select Gold Portfolio | $ 114,223,721 |
Select Materials Portfolio | $ 6,623,467 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2007 | December 2007 |
Select Consumer Staples Portfolio |
|
|
Institutional Class | 57% | 41% |
Select Gold Portfolio |
|
|
Institutional Class | 0% | 2% |
Select Materials Portfolio |
|
|
Institutional Class | 100% | 69% |
Select 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 2007 | December 2007 |
Select Consumer Staples Portfolio |
|
|
Institutional Class | 68% | 53% |
Select Gold Portfolio |
|
|
Institutional Class | 14% | 9% |
Select Materials Portfolio |
|
|
Institutional Class | 100% | 63% |
Select Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes |
Select Gold Portfolio |
|
|
|
Institutional Class | 04/16/07 | $0.203 | $0.0022 |
| 12/17/07 | $0.076 | $0.0086 |
The funds will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
Proxy Voting Results
A special meeting of each fund's shareholders was held on March 19, 2008. 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 elect a Board of Trustees.A | ||
| # of | % of |
James C. Curvey | ||
Affirmative | 13,113,976,696.73 | 94.453 |
Withheld | 770,153,401.43 | 5.547 |
TOTAL | 13,884,130,098.16 | 100.000 |
Dennis J. Dirks | ||
Affirmative | 13,168,641,748.82 | 94.847 |
Withheld | 715,488,349.34 | 5.153 |
TOTAL | 13,884,130,098.16 | 100.000 |
Edward C. Johnson 3d | ||
Affirmative | 13,067,153,008.01 | 94.116 |
Withheld | 816,977,090.15 | 5.884 |
TOTAL | 13,884,130,098.16 | 100.000 |
Alan J. Lacy | ||
Affirmative | 13,157,857,950.99 | 94.769 |
Withheld | 726,272,147.17 | 5.231 |
TOTAL | 13,884,130,098.16 | 100.000 |
Ned C. Lautenbach | ||
Affirmative | 13,143,644,424.95 | 94.667 |
Withheld | 740,485,673.21 | 5.333 |
TOTAL | 13,884,130,098.16 | 100.000 |
Joseph Mauriello | ||
Affirmative | 13,154,116,065.58 | 94.742 |
Withheld | 730,014,032.58 | 5.258 |
TOTAL | 13,884,130,098.16 | 100.000 |
Cornelia M. Small | ||
Affirmative | 13,156,092,259.88 | 94.756 |
Withheld | 728,037,838.28 | 5.244 |
TOTAL | 13,884,130,098.16 | 100.000 |
William S. Stavropoulos | ||
Affirmative | 13,112,639,067.26 | 94.443 |
Withheld | 771,491,030.90 | 5.557 |
TOTAL | 13,884,130,098.16 | 100.000 |
David M. Thomas | ||
Affirmative | 13,162,301,260.43 | 94.801 |
Withheld | 721,828,837.73 | 5.199 |
TOTAL | 13,884,130,098.16 | 100.000 |
Michael E. Wiley | ||
Affirmative | 13,161,946,104.44 | 94.798 |
Withheld | 722,183,993.72 | 5.202 |
TOTAL | 13,884,130,098.16 | 100.000 |
PROPOSAL 2 | ||
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A | ||
Affirmative | 9,888,405,498.50 | 71.221 |
Against | 2,171,839,353.81 | 15.643 |
Abstain | 699,607,061.81 | 5.039 |
Broker Non-Votes | 1,124,278,184.04 | 8.097 |
TOTAL | 13,884,130,098.16 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K. 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
ASGMTI-UANN-0408
1.845768.101
Item 2. Code of Ethics
As of the end of the period, February 29, 2008, 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 Marie L. Knowles is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees.
For the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for the Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environmental Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Home Finance Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Networking and Infrastructure Portfolio, Paper and Forest Products Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Software and Computer Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Growth Portfolio and Wireless Portfolio (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2008A | 2007A |
Air Transportation Portfolio | $31,000 | $30,000 |
Automotive Portfolio | $31,000 | $30,000 |
Banking Portfolio | $31,000 | $31,000 |
Biotechnology Portfolio | $33,000 | $34,000 |
Brokerage and Investment Management Portfolio | $33,000 | $33,000 |
Chemicals Portfolio | $31,000 | $30,000 |
Communications Equipment Portfolio | $31,000 | $31,000 |
Computers Portfolio | $32,000 | $31,000 |
Construction and Housing Portfolio | $31,000 | $30,000 |
Consumer Discretionary Portfolio | $31,000 | $30,000 |
Consumer Staples Portfolio | $35,000 | $32,000 |
Defense and Aerospace Portfolio | $33,000 | $32,000 |
Electronics Portfolio | $34,000 | $36,000 |
Energy Portfolio | $36,000 | $37,000 |
Energy Service Portfolio | $34,000 | $34,000 |
Environmental Portfolio | $31,000 | $30,000 |
Financial Services Portfolio | $32,000 | $31,000 |
Gold Portfolio | $37,000 | $35,000 |
Health Care Portfolio | $35,000 | $35,000 |
Home Finance Portfolio | $31,000 | $30,000 |
Industrial Equipment Portfolio | $35,000 | $30,000 |
Industrials Portfolio | $31,000 | $30,000 |
Insurance Portfolio | $31,000 | $30,000 |
IT Services Portfolio | $31,000 | $30,000 |
Leisure Portfolio | $31,000 | $30,000 |
Materials Portfolio | $35,000 | $32,000 |
Medical Delivery Portfolio | $32,000 | $32,000 |
Medical Equipment and Systems Portfolio | $32,000 | $32,000 |
Multimedia Portfolio | $32,000 | $30,000 |
Natural Gas Portfolio | $33,000 | $33,000 |
Natural Resources Portfolio | $34,000 | $33,000 |
Networking and Infrastructure Portfolio | $31,000 | $30,000 |
Paper and Forest Products Portfolio | $31,000 | $30,000 |
Pharmaceuticals Portfolio | $31,000 | $30,000 |
Retailing Portfolio | $31,000 | $30,000 |
Software and Computer Services Portfolio | $33,000 | $31,000 |
Technology Portfolio | $34,000 | $34,000 |
Telecommunications Portfolio | $36,000 | $33,000 |
Transportation Portfolio | $31,000 | $30,000 |
Utilities Growth Portfolio | $33,000 | $31,000 |
Wireless Portfolio | $32,000 | $31,000 |
All funds in the Fidelity Group of Funds audited by PwC | $14,100,000 | $14,100,000 |
A | Aggregate amounts may reflect rounding. |
(b) Audit-Related Fees.
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2008A | 2007A |
Air Transportation Portfolio | $0 | $0 |
Automotive Portfolio | $0 | $0 |
Banking Portfolio | $0 | $0 |
Biotechnology Portfolio | $0 | $0 |
Brokerage and Investment Management Portfolio | $0 | $0 |
Chemicals Portfolio | $0 | $0 |
Communications Equipment Portfolio | $0 | $0 |
Computers Portfolio | $0 | $0 |
Construction and Housing Portfolio | $0 | $0 |
Consumer Discretionary Portfolio | $0 | $0 |
Consumer Staples Portfolio | $0 | $0 |
Defense and Aerospace Portfolio | $0 | $0 |
Electronics Portfolio | $0 | $0 |
Energy Portfolio | $0 | $0 |
Energy Service Portfolio | $0 | $0 |
Environmental Portfolio | $0 | $0 |
Financial Services Portfolio | $0 | $0 |
Gold Portfolio | $0 | $0 |
Health Care Portfolio | $0 | $0 |
Home Finance Portfolio | $0 | $0 |
Industrial Equipment Portfolio | $0 | $0 |
Industrials Portfolio | $0 | $0 |
Insurance Portfolio | $0 | $0 |
IT Services Portfolio | $0 | $0 |
Leisure Portfolio | $0 | $0 |
Materials Portfolio | $0 | $0 |
Medical Delivery Portfolio | $0 | $0 |
Medical Equipment and Systems Portfolio | $0 | $0 |
Multimedia Portfolio | $0 | $0 |
Natural Gas Portfolio | $0 | $0 |
Natural Resources Portfolio | $0 | $0 |
Networking and Infrastructure Portfolio | $0 | $0 |
Paper and Forest Products Portfolio | $0 | $0 |
Pharmaceuticals Portfolio | $0 | $0 |
Retailing Portfolio | $0 | $0 |
Software and Computer Services Portfolio | $0 | $0 |
Technology Portfolio | $0 | $0 |
Telecommunications Portfolio | $0 | $0 |
Transportation Portfolio | $0 | $0 |
Utilities Growth Portfolio | $0 | $0 |
Wireless Portfolio | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Audit-Related Fees that were billed by PwC that were required to be approved by the Audit Committee for services 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") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2008A | 2007A |
PwC | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2008A | 2007A |
Air Transportation Portfolio | $2,600 | $2,100 |
Automotive Portfolio | $2,600 | $2,100 |
Banking Portfolio | $2,600 | $2,100 |
Biotechnology Portfolio | $2,600 | $2,100 |
Brokerage and Investment Management Portfolio | $2,600 | $2,100 |
Chemicals Portfolio | $2,600 | $2,100 |
Communications Equipment Portfolio | $2,600 | $2,100 |
Computers Portfolio | $2,600 | $2,100 |
Construction and Housing Portfolio | $2,600 | $2,100 |
Consumer Discretionary Portfolio | $2,600 | $2,100 |
Consumer Staples Portfolio | $2,600 | $2,100 |
Defense and Aerospace Portfolio | $2,600 | $2,100 |
Electronics Portfolio | $2,600 | $2,100 |
Energy Portfolio | $2,600 | $2,100 |
Energy Service Portfolio | $2,600 | $2,100 |
Environmental Portfolio | $2,600 | $2,100 |
Financial Services Portfolio | $2,600 | $2,100 |
Gold Portfolio | $2,600 | $2,100 |
Health Care Portfolio | $2,600 | $2,100 |
Home Finance Portfolio | $2,600 | $2,100 |
Industrial Equipment Portfolio | $2,600 | $2,100 |
Industrials Portfolio | $2,600 | $2,100 |
Insurance Portfolio | $2,600 | $2,100 |
IT Services Portfolio | $2,600 | $2,100 |
Leisure Portfolio | $2,600 | $2,100 |
Materials Portfolio | $2,600 | $2,100 |
Medical Delivery Portfolio | $2,600 | $2,100 |
Medical Equipment and Systems Portfolio | $2,600 | $2,100 |
Multimedia Portfolio | $2,600 | $2,100 |
Natural Gas Portfolio | $2,600 | $2,100 |
Natural Resources Portfolio | $2,600 | $2,100 |
Networking and Infrastructure Portfolio | $2,600 | $2,100 |
Paper and Forest Products Portfolio | $2,600 | $2,100 |
Pharmaceuticals Portfolio | $2,600 | $2,100 |
Retailing Portfolio | $2,600 | $2,100 |
Software and Computer Services Portfolio | $2,600 | $2,100 |
Technology Portfolio | $2,600 | $2,100 |
Telecommunications Portfolio | $2,600 | $2,100 |
Transportation Portfolio | $2,600 | $2,100 |
Utilities Growth Portfolio | $2,600 | $2,100 |
Wireless Portfolio | $2,600 | $2,100 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Tax Fees billed by PwC that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2008A | 2007A |
Air Transportation Portfolio | $1,100 | $1,100 |
Automotive Portfolio | $1,100 | $1,100 |
Banking Portfolio | $1,300 | $1,300 |
Biotechnology Portfolio | $1,900 | $2,000 |
Brokerage and Investment Management Portfolio | $1,700 | $1,700 |
Chemicals Portfolio | $1,200 | $1,100 |
Communications Equipment Portfolio | $1,300 | $1,300 |
Computers Portfolio | $1,400 | $1,300 |
Construction and Housing Portfolio | $1,200 | $1,200 |
Consumer Discretionary Portfolio | $1,100 | $1,100 |
Consumer Staples Portfolio | $1,400 | $1,200 |
Defense and Aerospace Portfolio | $1,800 | $1,600 |
Electronics Portfolio | $2,100 | $2,500 |
Energy Portfolio | $2,600 | $2,600 |
Energy Service Portfolio | $2,100 | $2,100 |
Environmental Portfolio | $1,100 | $1,100 |
Financial Services Portfolio | $1,400 | $1,300 |
Gold Portfolio | $2,000 | $1,900 |
Health Care Portfolio | $2,300 | $2,400 |
Home Finance Portfolio | $1,200 | $1,200 |
Industrial Equipment Portfolio | $1,200 | $1,100 |
Industrials Portfolio | $1,100 | $1,100 |
Insurance Portfolio | $1,200 | $1,200 |
IT Services Portfolio | $1,100 | $1,100 |
Leisure Portfolio | $1,200 | $1,200 |
Materials Portfolio | $1,300 | $1,200 |
Medical Delivery Portfolio | $1,500 | $1,600 |
Medical Equipment and Systems Portfolio | $1,600 | $1,600 |
Multimedia Portfolio | $1,100 | $1,100 |
Natural Gas Portfolio | $1,800 | $1,900 |
Natural Resources Portfolio | $2,000 | $1,700 |
Networking and Infrastructure Portfolio | $1,100 | $1,100 |
Paper and Forest Products Portfolio | $1,100 | $1,100 |
Pharmaceuticals Portfolio | $1,200 | $1,100 |
Retailing Portfolio | $1,100 | $1,100 |
Software and Computer Services Portfolio | $1,600 | $1,400 |
Technology Portfolio | $2,100 | $2,100 |
Telecommunications Portfolio | $1,400 | $1,300 |
Transportation Portfolio | $1,100 | $1,100 |
Utilities Growth Portfolio | $1,600 | $1,300 |
Wireless Portfolio | $1,300 | $1,300 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate Other Fees billed by PwC that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2008A | 2007A |
PwC | $220,000 | $125,000 |
A | Aggregate amounts may reflect rounding. |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. 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 trust's 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. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, 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. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: |
Audit-Related Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended February 29, 2008 and February 28, 2007 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended February 29, 2008 and February 28, 2007, the aggregate fees billed by PwC of $1,680,000A and $1,400,000A for non-audit services rendered on behalf of 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 Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
2008A | 2007A | |
Covered Services | $385,000 | $270,000 |
Non-Covered Services | $1,295,000 | $1,130,000 |
A | Aggregate amounts may reflect rounding. |
(h) The trust's Audit Committee has considered Non-Covered 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 Independence Standards Board Standard No.1, regarding its independence from the funds and their related entities.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
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/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | April 29, 2008 |
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/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | April 29, 2008 |
By: | /s/Joseph B. Hollis |
Joseph B. Hollis | |
Chief Financial Officer | |
Date: | April 29, 2008 |