UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | February 28 |
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Date of reporting period: | February 28, 2009 |
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 28, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
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Shareholder Expense Example |
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Fund Updates* |
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Consumer Discretionary Sector |
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Automotive |
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Construction and Housing |
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Consumer Discretionary |
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Leisure |
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Multimedia |
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Retailing |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Proxy Voting Results |
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* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Automotive Portfolio | 1.15% |
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|
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Actual |
| $ 1,000.00 | $ 362.10 | $ 3.88 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Construction and Housing Portfolio | 1.01% |
|
|
|
Actual |
| $ 1,000.00 | $ 560.20 | $ 3.91 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.79 | $ 5.06 |
Consumer Discretionary Portfolio | 1.15% |
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|
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Actual |
| $ 1,000.00 | $ 606.70 | $ 4.58 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Leisure Portfolio | .94% |
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Actual |
| $ 1,000.00 | $ 702.30 | $ 3.97 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
Multimedia Portfolio | 1.09% |
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|
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Actual |
| $ 1,000.00 | $ 551.70 | $ 4.19 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.39 | $ 5.46 |
Retailing Portfolio | 1.06% |
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|
|
Actual |
| $ 1,000.00 | $ 687.40 | $ 4.43 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Automotive 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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Automotive Portfolio | -69.99% | -19.93% | -7.52% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Automotive Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500's market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Michael Weaver, who became Portfolio Manager of Select Automotive Portfolio on February 28, 2009: During the past year, the fund declined 69.99%, outperforming the -73.18% result of its benchmark, the MSCI® US Investable Market Automobiles & Components Index, but trailing the S&P 500. Relative to the MSCI index, stock selection among automobile manufacturers added the most. Stock selection among tire and rubber companies - most notably underweighting Goodyear, which underperformed the index significantly - as well as a slightly underweighted position in this industry segment also boosted results. Given the industry's difficulties during this period, having an average cash allocation of approximately 1.5% helped as well and was a factor in positioning the fund defensively. In terms of other individual holdings, a substantially underweighted position in General Motors (GM) was the biggest contributor to relative performance. GM's stock lagged the index by a wide margin amid plunging worldwide sales. The company teetered on the brink of bankruptcy before receiving financial support from the U.S. Treasury. Several out-of-benchmark investments also bolstered results, including auto parts manufacturer Federal-Mogul, Japanese auto makers Honda and Toyota and German auto maker BMW. An overweighted position in Gentex - which makes auto-dimming mirrors and rear-camera display products - rounded out the top contributors for the period. GM was sold from the fund prior to period end. The top detractor was an out-of-benchmark investment in French auto maker Renault. Underweighted holdings in Ford Motor Company and automotive suppliers BorgWarner and Johnson Controls, all of which performed better than the benchmark, also dampened results.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Automotive Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Johnson Controls, Inc. | 24.0 | 24.3 |
Harley-Davidson, Inc. | 9.2 | 11.7 |
Gentex Corp. | 7.6 | 4.7 |
BorgWarner, Inc. | 7.1 | 4.9 |
Ford Motor Co. | 4.9 | 8.8 |
Autoliv, Inc. | 4.5 | 4.6 |
The Goodyear Tire & Rubber Co. | 3.7 | 4.8 |
Renault SA | 3.1 | 1.7 |
WABCO Holdings, Inc. | 2.7 | 4.0 |
Daimler AG | 2.1 | 1.7 |
| 68.9 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Auto Components | 63.8% |
| |
Automobiles | 27.2% |
| |
Machinery | 1.3% |
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Distributors | 0.7% |
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Electrical Equipment | 0.5% |
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All Others* | 6.5% |
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As of August 31, 2008 | |||
Auto Components | 60.9% |
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Automobiles | 35.7% |
| |
Machinery | 1.3% |
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Road & Rail | 0.5% |
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Metals & Mining | 0.3% |
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All Others* | 1.3% |
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* Includes short-term investments and net other assets. |
Annual Report
Select Automotive Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 92.3% | |||
Shares | Value | ||
AUTO COMPONENTS - 63.8% | |||
Auto Parts & Equipment - 58.0% | |||
American Axle & Manufacturing Holdings, Inc. | 146,149 | $ 135,919 | |
Amerigon, Inc. (a) | 36,800 | 105,616 | |
ArvinMeritor, Inc. | 66,300 | 41,769 | |
Autoliv, Inc. | 22,800 | 339,264 | |
Bharat Forge Ltd. | 158 | 289 | |
BorgWarner, Inc. (d) | 31,300 | 539,925 | |
Dana Holding Corp. (a) | 80,325 | 28,917 | |
Denso Corp. | 900 | 17,085 | |
Drew Industries, Inc. (a) | 6,700 | 41,607 | |
Exide Technologies (a) | 30,500 | 99,430 | |
Federal-Mogul Corp. Class A (a) | 20,300 | 131,341 | |
Fuel Systems Solutions, Inc. (a)(d) | 4,400 | 87,164 | |
Gentex Corp. | 72,100 | 576,800 | |
Hyundai Mobis | 620 | 29,773 | |
Johnson Controls, Inc. | 159,870 | 1,819,321 | |
Lear Corp. (a) | 48,000 | 28,800 | |
Modine Manufacturing Co. | 10,900 | 12,317 | |
Raser Technologies, Inc. (a)(d) | 10,300 | 33,887 | |
Superior Industries International, Inc. | 7,600 | 77,444 | |
Tenneco, Inc. (a) | 34,580 | 47,029 | |
WABCO Holdings, Inc. | 20,300 | 205,436 | |
| 4,399,133 | ||
Tires & Rubber - 5.8% | |||
Cooper Tire & Rubber Co. | 23,900 | 108,745 | |
Michelin SA (Compagnie Generale des Etablissements) Series B | 700 | 22,568 | |
Nokian Tyres PLC | 2,599 | 30,608 | |
The Goodyear Tire & Rubber Co. (a) | 62,100 | 275,724 | |
| 437,645 | ||
TOTAL AUTO COMPONENTS | 4,836,778 | ||
AUTOMOBILES - 25.4% | |||
Automobile Manufacturers - 16.2% | |||
Bayerische Motoren Werke AG (BMW) | 4,500 | 111,635 | |
Daimler AG | 7,200 | 162,864 | |
Fiat SpA | 18,600 | 83,171 | |
Ford Motor Co. (a)(d) | 185,961 | 371,922 | |
Honda Motor Co. Ltd. sponsored ADR | 700 | 16,541 | |
Maruti Suzuki India Ltd. | 76 | 994 | |
Monaco Coach Corp. | 400 | 184 | |
Nissan Motor Co. Ltd. sponsored ADR | 7,300 | 44,238 | |
| |||
Shares | Value | ||
Renault SA | 16,200 | $ 232,574 | |
Thor Industries, Inc. | 12,300 | 131,733 | |
Tofas Turk Otomobil Fabrikasi AS | 28,424 | 20,564 | |
Toyota Motor Corp. sponsored ADR | 300 | 18,942 | |
Winnebago Industries, Inc. | 9,100 | 36,855 | |
| 1,232,217 | ||
Motorcycle Manufacturers - 9.2% | |||
Bajaj Auto Ltd. | 5 | 52 | |
Harley-Davidson, Inc. (d) | 68,800 | 694,880 | |
| 694,932 | ||
TOTAL AUTOMOBILES | 1,927,149 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.3% | |||
Diversified Support Services - 0.3% | |||
ATC Technology Corp. (a) | 2,500 | 26,025 | |
DISTRIBUTORS - 0.7% | |||
Distributors - 0.7% | |||
LKQ Corp. (a) | 3,800 | 51,300 | |
DIVERSIFIED FINANCIAL SERVICES - 0.0% | |||
Multi-Sector Holdings - 0.0% | |||
Bajaj Holdings & Investment Ltd. | 5 | 23 | |
ELECTRICAL EQUIPMENT - 0.5% | |||
Electrical Components & Equipment - 0.5% | |||
Ener1, Inc. (a) | 10,800 | 33,804 | |
INSURANCE - 0.0% | |||
Multi-Line Insurance - 0.0% | |||
Bajaj Finserv Ltd. | 5 | 15 | |
MACHINERY - 1.3% | |||
Construction & Farm Machinery & Heavy Trucks - 1.3% | |||
Accuride Corp. (a) | 67,856 | 18,321 | |
CNH Global NV | 3,200 | 23,360 | |
Cummins, Inc. | 1,400 | 29,120 | |
Navistar International Corp. (a) | 1,000 | 28,200 | |
| 99,001 | ||
ROAD & RAIL - 0.3% | |||
Trucking - 0.3% | |||
Hertz Global Holdings, Inc. (a) | 7,400 | 23,384 | |
TOTAL COMMON STOCKS (Cost $23,014,101) | 6,997,479 | ||
Nonconvertible Preferred Stocks - 1.8% | |||
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|
|
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AUTOMOBILES - 1.8% | |||
Automobile Manufacturers - 1.8% | |||
Fiat SpA | 52,000 | 134,274 | |
Money Market Funds - 27.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 367,137 | $ 367,137 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 1,733,037 | 1,733,037 | |
TOTAL MONEY MARKET FUNDS (Cost $2,100,174) | 2,100,174 | ||
TOTAL INVESTMENT PORTFOLIO - 121.8% (Cost $25,444,035) | 9,231,927 | ||
NET OTHER ASSETS - (21.8)% | (1,650,895) | ||
NET ASSETS - 100% | $ 7,581,032 |
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 | $ 3,584 |
Fidelity Securities Lending Cash Central Fund | 82,801 |
Total | $ 86,385 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 9,231,927 | $ 8,568,866 | $ 663,061 | $ - |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 98,928 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (98,928) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ - |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.5% |
Germany | 3.6% |
France | 3.4% |
Italy | 2.9% |
Japan | 1.2% |
Others (individually less than 1%) | 1.4% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $8,962,656 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $2,275,857 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,638,197) - See accompanying schedule: Unaffiliated issuers (cost $23,343,861) | $ 7,131,753 |
|
Fidelity Central Funds (cost $2,100,174) | 2,100,174 |
|
Total Investments (cost $25,444,035) |
| $ 9,231,927 |
Receivable for investments sold | 84,360 | |
Receivable for fund shares sold | 22,689 | |
Dividends receivable | 6,009 | |
Distributions receivable from Fidelity Central Funds | 7,444 | |
Prepaid expenses | 100 | |
Receivable from investment adviser for expense reductions | 3,414 | |
Other receivables | 3,567 | |
Total assets | 9,359,510 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 9,434 | |
Accrued management fee | 3,934 | |
Other affiliated payables | 2,754 | |
Other payables and accrued expenses | 29,319 | |
Collateral on securities loaned, at value | 1,733,037 | |
Total liabilities | 1,778,478 | |
|
|
|
Net Assets | $ 7,581,032 | |
Net Assets consist of: |
| |
Paid in capital | $ 37,093,876 | |
Undistributed net investment income | 66,298 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (13,366,378) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,212,764) | |
Net Assets, for 753,163 shares outstanding | $ 7,581,032 | |
Net Asset Value, offering price and redemption price per share ($7,581,032 ÷ 753,163 shares) | $ 10.07 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 322,332 |
Interest |
| 17,580 |
Income from Fidelity Central Funds (including $82,801 from security lending) |
| 86,385 |
Total income |
| 426,297 |
|
|
|
Expenses | ||
Management fee | $ 82,626 | |
Transfer agent fees | 44,818 | |
Accounting and security lending fees | 6,333 | |
Custodian fees and expenses | 21,321 | |
Independent trustees' compensation | (59) | |
Registration fees | 17,324 | |
Audit | 43,280 | |
Legal | 155 | |
Miscellaneous | 1,588 | |
Total expenses before reductions | 217,386 | |
Expense reductions | (46,917) | 170,469 |
Net investment income (loss) | 255,828 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (6,822,668) | |
Foreign currency transactions | 6,466 | |
Total net realized gain (loss) |
| (6,816,202) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (7,680,776) | |
Assets and liabilities in foreign currencies | (1,083) | |
Total change in net unrealized appreciation (depreciation) |
| (7,681,859) |
Net gain (loss) | (14,498,061) | |
Net increase (decrease) in net assets resulting from operations | $ (14,242,233) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 255,828 | $ 180,709 |
Net realized gain (loss) | (6,816,202) | (2,457,985) |
Change in net unrealized appreciation (depreciation) | (7,681,859) | (8,070,240) |
Net increase (decrease) in net assets resulting from operations | (14,242,233) | (10,347,516) |
Distributions to shareholders from net investment income | (188,395) | (127,140) |
Distributions to shareholders from net realized gain | (6,728) | (1,085,579) |
Total distributions | (195,123) | (1,212,719) |
Share transactions | 14,431,650 | 94,968,201 |
Reinvestment of distributions | 185,758 | 1,178,198 |
Cost of shares redeemed | (18,426,076) | (106,496,383) |
Net increase (decrease) in net assets resulting from share transactions | (3,808,668) | (10,349,984) |
Redemption fees | 4,272 | 25,460 |
Total increase (decrease) in net assets | (18,241,752) | (21,884,759) |
|
|
|
Net Assets | ||
Beginning of period | 25,822,784 | 47,707,543 |
End of period (including undistributed net investment income of $66,298 and undistributed net investment income of $53,329, respectively) | $ 7,581,032 | $ 25,822,784 |
Other Information Shares | ||
Sold | 682,736 | 2,141,928 |
Issued in reinvestment of distributions | 12,936 | 31,562 |
Redeemed | (696,837) | (2,604,749) |
Net increase (decrease) | (1,165) | (431,259) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 34.23 | $ 40.24 | $ 34.35 | $ 34.10 | $ 32.36 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .42 | .18 | .06 | .06 | (.11) |
Net realized and unrealized gain (loss) | (24.30) | (4.98) | 5.85 | .21 | 1.81 |
Total from investment operations | (23.88) | (4.80) | 5.91 | .27 | 1.70 |
Distributions from net investment income | (.28) | (.13) | (.06) | (.07) | - |
Distributions from net realized gain | (.01) | (1.11) | - | - | - |
Total distributions | (.29) | (1.24) | (.06) | (.07) | - |
Redemption fees added to paid in capital C | .01 | .03 | .04 | .05 | .04 |
Net asset value, end of period | $ 10.07 | $ 34.23 | $ 40.24 | $ 34.35 | $ 34.10 |
Total Return A,B | (69.99)% | (12.11)% | 17.33% | .94% | 5.38% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.47% | 1.19% | 1.58% | 1.59% | 1.64% |
Expenses net of fee waivers, if any | 1.15% | 1.15% | 1.22% | 1.25% | 1.58% |
Expenses net of all reductions | 1.15% | 1.15% | 1.21% | 1.19% | 1.56% |
Net investment income (loss) | 1.73% | .44% | .16% | .17% | (.34)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,581 | $ 25,823 | $ 47,708 | $ 15,361 | $ 16,954 |
Portfolio turnover rate E | 156% | 258% | 256% | 206% | 188% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Construction and Housing Portfolio | -43.68% | -7.15% | 1.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Construction and Housing Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Daniel Kelley, Portfolio Manager of Select Construction and Housing Portfolio: The fund returned -43.68% for the 12 months ending February 28, 2009, in line with its industry benchmark, the MSCI® US Investable Market Construction & Housing Custom Index, which declined 43.22%, and also closely tracking the S&P 500. Stock selection in the homebuilding group was the top contributor versus the MSCI index, as several companies held in the fund succeeded in strengthening their balance sheets, thereby increasing investor confidence in their survival and recovery. Another boost came from real estate development, where timely trading in a single holding, Forestar Group, produced results that far exceeded both overall fund performance and the group benchmark. Being underweighted in building products as well as in residential real estate investment trusts (REITs) also helped performance, although stock selection hurt in both instances. An untimely commitment to retail REITs, an out-of-index group, hurt results as well. Also detracting were an overweighting in real estate services and a combination of stock selection and an underweighting in home improvement retail. In the latter group, the fund overweighted Lowe's, believing it would outperform Home Depot - which was underweighted - but Lowe's turned in weaker results during the period, although still outperforming the benchmark. Overweighting Granite Construction, a leading road and infrastructure contractor, helped fund performance, as it stood to benefit from the federal government's economic stimulus program. Chicago Bridge & Iron, an out-of-benchmark holding, was the fund's biggest detractor, followed by commercial real estate broker CB Richard Ellis.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Home Depot, Inc. | 23.1 | 14.8 |
Lowe's Companies, Inc. | 19.4 | 16.3 |
Sherwin-Williams Co. | 3.9 | 1.3 |
Equity Residential (SBI) | 3.1 | 2.8 |
KBR, Inc. | 2.6 | 2.7 |
Pulte Homes, Inc. | 2.4 | 3.7 |
Foster Wheeler AG | 2.2 | 2.6 |
Centex Corp. | 2.1 | 2.2 |
Masco Corp. | 2.0 | 2.4 |
D.R. Horton, Inc. | 2.0 | 1.5 |
| 62.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Specialty Retail | 46.4% |
| |
Construction & Engineering | 15.9% |
| |
Household Durables | 14.8% |
| |
Real Estate Investment Trusts | 10.9% |
| |
Building Products | 3.2% |
| |
All Others* | 8.8% |
|
As of August 31, 2008 | |||
Specialty Retail | 32.4% |
| |
Construction & Engineering | 22.3% |
| |
Household Durables | 13.6% |
| |
Real Estate Investment Trusts | 13.4% |
| |
Real Estate Management & Development | 5.5% |
| |
All Others* | 12.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Construction and Housing Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
BUILDING PRODUCTS - 3.2% | |||
Building Products - 3.2% | |||
Masco Corp. | 319,300 | $ 1,644,395 | |
NCI Building Systems, Inc. (a) | 38,500 | 194,810 | |
Owens Corning (a) | 90,000 | 751,500 | |
| 2,590,705 | ||
COMMERCIAL SERVICES & SUPPLIES - 0.5% | |||
Environmental & Facility Services - 0.5% | |||
EnergySolutions, Inc. | 62,600 | 403,770 | |
CONSTRUCTION & ENGINEERING - 15.9% | |||
Construction & Engineering - 15.9% | |||
Chicago Bridge & Iron Co. NV (NY Shares) | 27,200 | 164,016 | |
EMCOR Group, Inc. (a) | 55,400 | 853,714 | |
Fluor Corp. | 44,000 | 1,463,000 | |
Foster Wheeler AG (a) | 121,500 | 1,827,360 | |
Granite Construction, Inc. | 25,200 | 896,616 | |
Jacobs Engineering Group, Inc. (a) | 34,600 | 1,167,404 | |
KBR, Inc. (d) | 166,200 | 2,094,120 | |
MasTec, Inc. (a) | 81,700 | 772,882 | |
Perini Corp. (a) | 14,800 | 226,736 | |
Quanta Services, Inc. (a) | 66,475 | 1,169,960 | |
Shaw Group, Inc. (a) | 41,600 | 970,944 | |
URS Corp. (a) | 46,171 | 1,427,607 | |
| 13,034,359 | ||
CONSTRUCTION MATERIALS - 3.0% | |||
Construction Materials - 3.0% | |||
Eagle Materials, Inc. | 25,800 | 492,006 | |
Martin Marietta Materials, Inc. (d) | 11,700 | 895,752 | |
Vulcan Materials Co. (d) | 26,100 | 1,080,801 | |
| 2,468,559 | ||
CONTAINERS & PACKAGING - 1.2% | |||
Paper Packaging - 1.2% | |||
Temple-Inland, Inc. | 213,100 | 1,012,225 | |
HOUSEHOLD DURABLES - 14.8% | |||
Homebuilding - 14.8% | |||
Centex Corp. | 282,752 | 1,755,890 | |
D.R. Horton, Inc. | 190,366 | 1,608,593 | |
KB Home (d) | 120,600 | 1,073,340 | |
Lennar Corp. Class A (d) | 84,500 | 564,460 | |
M.D.C. Holdings, Inc. | 43,600 | 1,100,028 | |
Meritage Homes Corp. (a) | 105,800 | 1,049,536 | |
| |||
Shares | Value | ||
NVR, Inc. (a) | 1,650 | $ 549,071 | |
Pulte Homes, Inc. | 212,500 | 1,950,750 | |
Ryland Group, Inc. | 70,930 | 1,002,241 | |
Toll Brothers, Inc. (a) | 94,184 | 1,492,816 | |
| 12,146,725 | ||
INDUSTRIAL CONGLOMERATES - 1.8% | |||
Industrial Conglomerates - 1.8% | |||
McDermott International, Inc. (a) | 124,800 | 1,471,392 | |
REAL ESTATE INVESTMENT TRUSTS - 10.9% | |||
Office REITs - 0.3% | |||
SL Green Realty Corp. | 23,127 | 268,736 | |
Residential REITs - 9.3% | |||
Apartment Investment & Management Co. Class A | 87,271 | 455,555 | |
AvalonBay Communities, Inc. | 20,219 | 857,690 | |
Camden Property Trust (SBI) | 67,200 | 1,262,688 | |
Equity Residential (SBI) | 143,400 | 2,523,840 | |
Essex Property Trust, Inc. | 900 | 48,960 | |
Home Properties, Inc. | 50,700 | 1,345,578 | |
UDR, Inc. | 144,538 | 1,143,296 | |
| 7,637,607 | ||
Retail REITs - 1.3% | |||
CBL & Associates Properties, Inc. (d) | 168,500 | 522,350 | |
Developers Diversified Realty Corp. | 95,500 | 281,725 | |
Simon Property Group, Inc. | 7,500 | 248,250 | |
| 1,052,325 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 8,958,668 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.9% | |||
Diversified Real Estate Activities - 1.0% | |||
The St. Joe Co. (a)(d) | 45,700 | 840,423 | |
Real Estate Development - 0.5% | |||
Forestar Group, Inc. (a) | 52,900 | 397,808 | |
Real Estate Services - 0.4% | |||
CB Richard Ellis Group, Inc. Class A (a) | 126,500 | 365,585 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 1,603,816 | ||
SPECIALTY RETAIL - 46.4% | |||
Home Improvement Retail - 46.4% | |||
Home Depot, Inc. (d) | 908,400 | 18,976,475 | |
Lowe's Companies, Inc. | 1,008,400 | 15,973,056 | |
Sherwin-Williams Co. | 70,000 | 3,216,500 | |
| 38,166,031 | ||
TOTAL COMMON STOCKS (Cost $125,939,535) | 81,856,250 | ||
Money Market Funds - 19.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 472,462 | $ 472,462 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 15,485,600 | 15,485,600 | |
TOTAL MONEY MARKET FUNDS (Cost $15,958,062) | 15,958,062 | ||
TOTAL INVESTMENT PORTFOLIO - 119.0% (Cost $141,897,597) | 97,814,312 | ||
NET OTHER ASSETS - (19.0)% | (15,595,463) | ||
NET ASSETS - 100% | $ 82,218,849 |
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 | $ 28,588 |
Fidelity Securities Lending Cash Central Fund | 232,240 |
Total | $ 260,828 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 97,814,312 | $ 97,814,312 | $ - | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $8,111,449 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $3,686,932 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $15,027,006) - See accompanying schedule: Unaffiliated issuers (cost $125,939,535) | $ 81,856,250 |
|
Fidelity Central Funds (cost $15,958,062) | 15,958,062 |
|
Total Investments (cost $141,897,597) |
| $ 97,814,312 |
Receivable for investments sold | 346,779 | |
Receivable for fund shares sold | 315,694 | |
Dividends receivable | 70,443 | |
Distributions receivable from Fidelity Central Funds | 12,219 | |
Prepaid expenses | 666 | |
Other receivables | 1 | |
Total assets | 98,560,114 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 251,124 | |
Payable for fund shares redeemed | 500,976 | |
Accrued management fee | 43,941 | |
Other affiliated payables | 28,202 | |
Other payables and accrued expenses | 31,422 | |
Collateral on securities loaned, at value | 15,485,600 | |
Total liabilities | 16,341,265 | |
|
|
|
Net Assets | $ 82,218,849 | |
Net Assets consist of: |
| |
Paid in capital | $ 142,163,375 | |
Undistributed net investment income | 62,009 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (15,922,841) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (44,083,694) | |
Net Assets, for 4,564,172 shares outstanding | $ 82,218,849 | |
Net Asset Value, offering price and redemption price per share ($82,218,849 ÷ 4,564,172 shares) | $ 18.01 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 1,509,200 |
Interest |
| 3,491 |
Income from Fidelity Central Funds (including $232,240 from security lending) |
| 260,828 |
Total income |
| 1,773,519 |
|
|
|
Expenses | ||
Management fee | $ 461,415 | |
Transfer agent fees | 252,386 | |
Accounting and security lending fees | 35,135 | |
Custodian fees and expenses | 20,681 | |
Independent trustees' compensation | 427 | |
Registration fees | 26,762 | |
Audit | 36,817 | |
Legal | 421 | |
Miscellaneous | 10,120 | |
Total expenses before reductions | 844,164 | |
Expense reductions | (4,168) | 839,996 |
Net investment income (loss) | 933,523 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (14,818,948) | |
Foreign currency transactions | (16,372) | |
Total net realized gain (loss) |
| (14,835,320) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (38,400,654) | |
Assets and liabilities in foreign currencies | 276 | |
Total change in net unrealized appreciation (depreciation) |
| (38,400,378) |
Net gain (loss) | (53,235,698) | |
Net increase (decrease) in net assets resulting from operations | $ (52,302,175) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 933,523 | $ 662,118 |
Net realized gain (loss) | (14,835,320) | 14,432,707 |
Change in net unrealized appreciation (depreciation) | (38,400,378) | (35,263,126) |
Net increase (decrease) in net assets resulting from operations | (52,302,175) | (20,168,301) |
Distributions to shareholders from net investment income | (984,426) | (364,617) |
Distributions to shareholders from net realized gain | (2,251,733) | (9,440,593) |
Total distributions | (3,236,159) | (9,805,210) |
Share transactions | 123,225,729 | 41,496,610 |
Reinvestment of distributions | 3,096,609 | 9,445,864 |
Cost of shares redeemed | (73,266,365) | (100,279,148) |
Net increase (decrease) in net assets resulting from share transactions | 53,055,973 | (49,336,674) |
Redemption fees | 16,026 | 14,707 |
Total increase (decrease) in net assets | (2,466,335) | (79,295,478) |
|
|
|
Net Assets | ||
Beginning of period | 84,685,184 | 163,980,662 |
End of period (including undistributed net investment income of $62,009 and undistributed net investment income of $401,942, respectively) | $ 82,218,849 | $ 84,685,184 |
Other Information Shares | ||
Sold | 4,621,586 | 1,081,943 |
Issued in reinvestment of distributions | 103,107 | 272,523 |
Redeemed | (2,712,351) | (2,368,762) |
Net increase (decrease) | 2,012,342 | (1,014,296) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 33.19 | $ 45.98 | $ 49.42 | $ 45.82 | $ 36.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .31 | .26 | .19 | - H | .02 |
Net realized and unrealized gain (loss) | (14.35) | (8.49) | 2.28 | 3.99 | 10.78 |
Total from investment operations | (14.04) | (8.23) | 2.47 | 3.99 | 10.80 |
Distributions from net investment income | (.30) | (.16) | (.05) | (.01) | - |
Distributions from net realized gain | (.85) | (4.41) | (5.87) | (.42) | (1.06) |
Total distributions | (1.15) | (4.57) | (5.92) | (.43) | (1.06) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .04 | .04 |
Net asset value, end of period | $ 18.01 | $ 33.19 | $ 45.98 | $ 49.42 | $ 45.82 |
Total Return A,B | (43.68)% | (18.11)% | 5.41% | 8.98% | 30.28% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.03% | .98% | 1.02% | 1.05% | 1.09% |
Expenses net of fee waivers, if any | 1.03% | .98% | 1.02% | 1.05% | 1.09% |
Expenses net of all reductions | 1.02% | .97% | 1.02% | 1.01% | 1.08% |
Net investment income (loss) | 1.14% | .63% | .41% | -% | .04% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 82,219 | $ 84,685 | $ 163,981 | $ 244,403 | $ 239,205 |
Portfolio turnover rate E | 85% | 102% | 54% | 154% | 119% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Consumer Discretionary Portfolio A | -40.37% | -8.78% | -4.35% |
A 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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500® market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Harris, Portfolio Manager of Select Consumer Discretionary Portfolio: For the 12-month period ending February 28, 2009, the fund's shares fell 40.37%, outpacing both the fund's sector benchmark, the MSCI® US Investable Market Consumer Discretionary Index, which declined 44.61%, and the Standard & Poor's 500 Index. Our performance versus the MSCI index was bolstered by stock selection across a wide variety of categories, including specialty stores, cable and satellite, automotive retail, broadcasting and catalog retail. Relative results also benefited from an overweighting in education services and underweightings in several of the index's weaker areas, including hotels, resorts and cruise lines, auto parts and equipment, and automobile manufacturers. Looking at individual stocks, adult education firm Apollo Group benefited from strong enrollment increases, and retailer Advance Auto Parts was helped by a trend towards do-it-yourself auto repairs, which sent its shares up. Also moving up were specialty store operator PetSmart and home improvement retailer Lowe's, both examples of leading franchises in their categories with good balance sheets and strong cash flow. Avoiding two index components that fell sharply - auto maker General Motors and media firm CBS - aided results as well. On the negative side, performance was held back by an overweighting and stock selection in casinos and gaming as well as by stock selection in general merchandise stores and homefurnishing retail. Underweighting restaurants detracted as well, but strong stock selection there more than made up the lost ground. Within casinos, our shares in Las Vegas Sands plummeted as the casino operator's business in Macau - a region of China that is one of the world's fastest-growing gaming markets - was hurt by the Chinese government's very successful attempt to slow down tourism growth in the region, among other factors. International Game Technology, which sells and leases slot machines, was hit by a general slowdown in the gaming industry. Underweighting home improvement retailer Home Depot, overweighting youth apparel retailer Tween brands and missing out on restaurant operator and index component Yum Brands held back results as well. I sold Tween Brands 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.
Portfolio
Select Consumer Discretionary Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 8.4 | 6.1 |
Lowe's Companies, Inc. | 6.8 | 4.9 |
Target Corp. | 6.5 | 6.8 |
Comcast Corp. Class A | 5.3 | 4.4 |
Time Warner, Inc. | 4.6 | 6.6 |
Home Depot, Inc. | 4.2 | 1.9 |
The Walt Disney Co. | 4.0 | 3.6 |
Staples, Inc. | 3.6 | 2.9 |
Amazon.com, Inc. | 2.9 | 2.3 |
The DIRECTV Group, Inc. | 2.4 | 2.0 |
| 48.7 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Specialty Retail | 24.8% |
| |
Media | 22.8% |
| |
Hotels, Restaurants & Leisure | 18.6% |
| |
Multiline Retail | 7.2% |
| |
Textiles, Apparel & Luxury Goods | 6.3% |
| |
All Others* | 20.3% |
|
As of August 31, 2008 | |||
Media | 29.1% |
| |
Specialty Retail | 23.5% |
| |
Hotels, Restaurants & Leisure | 14.1% |
| |
Multiline Retail | 7.7% |
| |
Textiles, Apparel & Luxury Goods | 6.0% |
| |
All Others* | 19.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Discretionary Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.6% | |||
Shares | Value | ||
AUTO COMPONENTS - 0.6% | |||
Auto Parts & Equipment - 0.6% | |||
Gentex Corp. | 14,900 | $ 119,200 | |
AUTOMOBILES - 0.0% | |||
Motorcycle Manufacturers - 0.0% | |||
Harley-Davidson, Inc. | 100 | 1,010 | |
DISTRIBUTORS - 0.9% | |||
Distributors - 0.9% | |||
Li & Fung Ltd. | 94,000 | 203,699 | |
DIVERSIFIED CONSUMER SERVICES - 3.8% | |||
Education Services - 3.3% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 6,700 | 485,750 | |
Princeton Review, Inc. (a) | 11,214 | 51,584 | |
Strayer Education, Inc. | 1,000 | 169,750 | |
| 707,084 | ||
Specialized Consumer Services - 0.5% | |||
Coinstar, Inc. (a) | 4,200 | 109,788 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 816,872 | ||
FOOD & STAPLES RETAILING - 4.0% | |||
Food Retail - 0.9% | |||
Susser Holdings Corp. (a) | 18,883 | 189,396 | |
Hypermarkets & Super Centers - 3.1% | |||
Costco Wholesale Corp. | 11,700 | 495,378 | |
Wal-Mart Stores, Inc. | 3,500 | 172,340 | |
| 667,718 | ||
TOTAL FOOD & STAPLES RETAILING | 857,114 | ||
HOTELS, RESTAURANTS & LEISURE - 18.6% | |||
Casinos & Gaming - 3.2% | |||
Bally Technologies, Inc. (a) | 5,400 | 100,440 | |
International Game Technology | 20,800 | 183,456 | |
Las Vegas Sands Corp. unit | 900 | 34,200 | |
Penn National Gaming, Inc. (a) | 10,700 | 204,263 | |
WMS Industries, Inc. (a) | 8,600 | 155,918 | |
| 678,277 | ||
Hotels, Resorts & Cruise Lines - 1.7% | |||
Carnival Corp. unit | 18,900 | 369,684 | |
Restaurants - 13.7% | |||
Brinker International, Inc. | 9,200 | 101,200 | |
Burger King Holdings, Inc. | 15,300 | 328,797 | |
Darden Restaurants, Inc. | 11,300 | 306,682 | |
Jack in the Box, Inc. (a) | 4,100 | 79,704 | |
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 721 | 73 | |
McDonald's Corp. | 34,400 | 1,797,400 | |
| |||
Shares | Value | ||
Sonic Corp. (a) | 21,500 | $ 193,500 | |
Wendy's/Arby's Group, Inc. | 23,600 | 106,908 | |
| 2,914,264 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 3,962,225 | ||
HOUSEHOLD DURABLES - 1.8% | |||
Homebuilding - 1.5% | |||
Centex Corp. | 8,900 | 55,269 | |
Lennar Corp. Class A | 6,570 | 43,888 | |
Pulte Homes, Inc. | 16,400 | 150,552 | |
Toll Brothers, Inc. (a) | 4,300 | 68,155 | |
| 317,864 | ||
Household Appliances - 0.3% | |||
Whirlpool Corp. | 3,300 | 73,359 | |
TOTAL HOUSEHOLD DURABLES | 391,223 | ||
INTERNET & CATALOG RETAIL - 2.9% | |||
Internet Retail - 2.9% | |||
Amazon.com, Inc. (d) | 9,400 | 609,026 | |
INTERNET SOFTWARE & SERVICES - 1.7% | |||
Internet Software & Services - 1.7% | |||
Dice Holdings, Inc. (a) | 4,100 | 9,717 | |
Google, Inc. Class A (sub. vtg.) (a) | 1,078 | 364,353 | |
| 374,070 | ||
LEISURE EQUIPMENT & PRODUCTS - 1.2% | |||
Leisure Products - 1.2% | |||
Hasbro, Inc. | 10,800 | 247,212 | |
MEDIA - 22.8% | |||
Advertising - 2.6% | |||
Interpublic Group of Companies, Inc. (a) | 42,400 | 161,544 | |
Lamar Advertising Co. Class A (a)(d) | 5,500 | 38,060 | |
Omnicom Group, Inc. | 14,600 | 350,838 | |
| 550,442 | ||
Broadcasting - 1.2% | |||
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,300 | 259,221 | |
Cable & Satellite - 9.0% | |||
Comcast Corp. Class A | 86,250 | 1,126,425 | |
Liberty Media Corp. - Entertainment Class A (a) | 8,400 | 145,488 | |
The DIRECTV Group, Inc. (a) | 25,400 | 506,476 | |
Time Warner Cable, Inc. (a) | 5,400 | 98,442 | |
Virgin Media, Inc. | 10,100 | 48,278 | |
| 1,925,109 | ||
Movies & Entertainment - 9.2% | |||
Ascent Media Corp. (a) | 1,300 | 30,485 | |
News Corp. Class A | 17,000 | 94,520 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Movies & Entertainment - continued | |||
The Walt Disney Co. | 50,900 | $ 853,593 | |
Time Warner, Inc. | 127,300 | 971,299 | |
| 1,949,897 | ||
Publishing - 0.8% | |||
McGraw-Hill Companies, Inc. | 8,900 | 175,597 | |
TOTAL MEDIA | 4,860,266 | ||
MULTILINE RETAIL - 7.2% | |||
Department Stores - 0.7% | |||
Nordstrom, Inc. (d) | 11,200 | 150,864 | |
General Merchandise Stores - 6.5% | |||
Target Corp. | 48,700 | 1,378,697 | |
TOTAL MULTILINE RETAIL | 1,529,561 | ||
SPECIALTY RETAIL - 24.8% | |||
Apparel Retail - 3.8% | |||
Abercrombie & Fitch Co. Class A | 7,200 | 158,328 | |
Citi Trends, Inc. (a) | 12,452 | 151,914 | |
Ross Stores, Inc. | 9,400 | 277,488 | |
Urban Outfitters, Inc. (a) | 8,500 | 141,440 | |
Zumiez, Inc. (a) | 9,700 | 76,533 | |
| 805,703 | ||
Automotive Retail - 3.0% | |||
Advance Auto Parts, Inc. | 11,700 | 447,525 | |
AutoZone, Inc. (a) | 1,300 | 184,899 | |
| 632,424 | ||
Computer & Electronics Retail - 1.1% | |||
Gamestop Corp. Class A (a) | 8,300 | 223,436 | |
Home Improvement Retail - 11.6% | |||
Home Depot, Inc. | 42,550 | 888,870 | |
Lowe's Companies, Inc. | 92,400 | 1,463,616 | |
Sherwin-Williams Co. | 2,700 | 124,065 | |
| 2,476,551 | ||
Homefurnishing Retail - 0.7% | |||
Williams-Sonoma, Inc. | 18,200 | 158,886 | |
Specialty Stores - 4.6% | |||
PetSmart, Inc. | 8,500 | 170,340 | |
Sally Beauty Holdings, Inc. (a) | 13,900 | 53,793 | |
Staples, Inc. | 47,750 | 761,613 | |
| 985,746 | ||
TOTAL SPECIALTY RETAIL | 5,282,746 | ||
| |||
Shares | Value | ||
TEXTILES, APPAREL & LUXURY GOODS - 6.3% | |||
Apparel, Accessories & Luxury Goods - 2.4% | |||
Coach, Inc. (a) | 9,900 | $ 138,402 | |
G-III Apparel Group Ltd. (a) | 10,559 | 35,901 | |
Hanesbrands, Inc. (a) | 11,300 | 79,100 | |
Polo Ralph Lauren Corp. Class A | 2,600 | 89,622 | |
VF Corp. | 3,400 | 176,460 | |
| 519,485 | ||
Footwear - 3.9% | |||
Iconix Brand Group, Inc. (a) | 44,934 | 363,965 | |
NIKE, Inc. Class B | 11,000 | 456,830 | |
| 820,795 | ||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 1,340,280 | ||
TOTAL COMMON STOCKS (Cost $29,597,999) | 20,594,504 | ||
Money Market Funds - 5.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 788,303 | 788,303 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 346,650 | 346,650 | |
TOTAL MONEY MARKET FUNDS (Cost $1,134,953) | 1,134,953 | ||
TOTAL INVESTMENT PORTFOLIO - 101.9% (Cost $30,732,952) | 21,729,457 | ||
NET OTHER ASSETS - (1.9)% | (404,679) | ||
NET ASSETS - 100% | $ 21,324,778 |
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 | $ 6,287 |
Fidelity Securities Lending Cash Central Fund | 30,348 |
Total | $ 36,635 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 21,729,457 | $ 21,491,485 | $ 237,972 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $2,598,465 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $2,111,320 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $352,524) - See accompanying schedule: Unaffiliated issuers (cost $29,597,999) | $ 20,594,504 |
|
Fidelity Central Funds (cost $1,134,953) | 1,134,953 |
|
Total Investments (cost $30,732,952) |
| $ 21,729,457 |
Receivable for investments sold | 129,234 | |
Receivable for fund shares sold | 228,665 | |
Dividends receivable | 42,352 | |
Distributions receivable from Fidelity Central Funds | 986 | |
Prepaid expenses | 201 | |
Receivable from investment adviser for expense reductions | 1,483 | |
Other receivables | 3,407 | |
Total assets | 22,135,785 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 341,086 | |
Payable for fund shares redeemed | 78,309 | |
Accrued management fee | 10,257 | |
Other affiliated payables | 5,997 | |
Other payables and accrued expenses | 28,708 | |
Collateral on securities loaned, at value | 346,650 | |
Total liabilities | 811,007 | |
|
|
|
Net Assets | $ 21,324,778 | |
Net Assets consist of: |
| |
Paid in capital | $ 35,623,251 | |
Undistributed net investment income | 18,727 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,313,797) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (9,003,403) | |
Net Assets, for 1,827,380 shares outstanding | $ 21,324,778 | |
Net Asset Value, offering price and redemption price per share ($21,324,778 ÷ 1,827,380 shares) | $ 11.67 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 364,136 |
Interest |
| 1,221 |
Income from Fidelity Central Funds (including $30,348 from security lending) |
| 36,635 |
Total income |
| 401,992 |
|
|
|
Expenses | ||
Management fee | $ 127,329 | |
Transfer agent fees | 68,293 | |
Accounting and security lending fees | 9,480 | |
Custodian fees and expenses | 10,338 | |
Independent trustees' compensation | 119 | |
Registration fees | 14,879 | |
Audit | 35,469 | |
Legal | 134 | |
Miscellaneous | 4,289 | |
Total expenses before reductions | 270,330 | |
Expense reductions | (8,977) | 261,353 |
Net investment income (loss) | 140,639 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (4,819,740) | |
Foreign currency transactions | (78) | |
Total net realized gain (loss) |
| (4,819,818) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (7,359,601) | |
Assets and liabilities in foreign currencies | (148) | |
Total change in net unrealized appreciation (depreciation) |
| (7,359,749) |
Net gain (loss) | (12,179,567) | |
Net increase (decrease) in net assets resulting from operations | $ (12,038,928) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 140,639 | $ 11,090 |
Net realized gain (loss) | (4,819,818) | 2,705,370 |
Change in net unrealized appreciation (depreciation) | (7,359,749) | (7,480,695) |
Net increase (decrease) in net assets resulting from operations | (12,038,928) | (4,764,235) |
Distributions to shareholders from net investment income | (120,743) | (92,720) |
Distributions to shareholders from net realized gain | (12,281) | (4,074,749) |
Total distributions | (133,024) | (4,167,469) |
Share transactions | 23,110,904 | 17,128,934 |
Reinvestment of distributions | 128,293 | 4,040,997 |
Cost of shares redeemed | (14,047,507) | (28,195,911) |
Net increase (decrease) in net assets resulting from share transactions | 9,191,690 | (7,025,980) |
Redemption fees | 7,634 | 5,785 |
Total increase (decrease) in net assets | (2,972,628) | (15,951,899) |
|
|
|
Net Assets | ||
Beginning of period | 24,297,406 | 40,249,305 |
End of period (including undistributed net investment income of $18,727 and undistributed net investment income of $1,957, respectively) | $ 21,324,778 | $ 24,297,406 |
Other Information Shares | ||
Sold | 1,454,483 | 690,579 |
Issued in reinvestment of distributions | 9,406 | 171,597 |
Redeemed | (870,086) | (1,127,796) |
Net increase (decrease) | 593,803 | (265,620) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 19.70 | $ 26.85 | $ 25.74 | $ 24.23 | $ 24.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .10 | .01 | .11 F | (.03) | (.07) |
Net realized and unrealized gain (loss) | (8.05) | (3.95) | 3.15 | 1.80 | 1.05 |
Total from investment operations | (7.95) | (3.94) | 3.26 | 1.77 | .98 |
Distributions from net investment income | (.08) | (.06) | - | - | - |
Distributions from net realized gain | (.01) | (3.15) | (2.16) | (.26) | (.97) |
Total distributions | (.09) | (3.21) | (2.16) | (.26) | (.97) |
Redemption fees added to paid in capital C | .01 | - I | .01 | - I | .01 |
Net asset value, end of period | $ 11.67 | $ 19.70 | $ 26.85 | $ 25.74 | $ 24.23 |
Total Return A,B | (40.37)% | (16.15)% | 12.99% | 7.31% | 4.18% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.19% | 1.12% | 1.14% | 1.15% | 1.23% |
Expenses net of fee waivers, if any | 1.15% | 1.12% | 1.14% | 1.15% | 1.22% |
Expenses net of all reductions | 1.15% | 1.12% | 1.13% | 1.13% | 1.19% |
Net investment income (loss) | .62% | .03% | .43% F | (.11)% | (.31)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 21,325 | $ 24,297 | $ 40,249 | $ 49,682 | $ 39,748 |
Portfolio turnover rate E | 71% | 108% | 244% | 71% | 112% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.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. |
See accompanying notes which are an integral part of the financial statements.
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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Leisure Portfolio | -32.07% | -2.97% | -0.32% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Leisure Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500 Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000 Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite Index dropped 38.77%.
Comments from Peter Dixon, Portfolio Manager of Select Leisure Portfolio: During the year, the fund lost 32.07%, outpacing the S&P 500 and the 35.26% loss of the MSCI® US Investable Market Consumer Services Index. The fund was helped considerably by good stock selection in casinos and gaming and in the restaurant industry. However, results were held back by an overweighting in casinos and gaming, which had a very rough year, and an underweighting in restaurants, which fared much better than most other groups in the industry. Holding a modest amount of cash also helped. The biggest individual contributions came from underweighted positions in MGM Mirage, Wynn Resorts and International Game Technology, as all three gaming stocks suffered from the recession's impact on discretionary consumer spending. I sold MGM and Wynn. Darden Restaurants, which owns Olive Garden and Red Lobster, was a strong performer in casual dining. Food-service distributor Sysco, an out-of-benchmark position, gained from the rising price of food. I sold the stock as inflation eased. Having a smaller-than-benchmark position in McDonald's was costly, as the fast-food restaurant chain did well. The fund's overweighting in weak casino/gaming stocks Las Vegas Sands and Bally Technologies also detracted. Motorcycle manufacturer Harley-Davidson, an out-of-benchmark holding, was hurt by poor consumer demand, and I ultimately sold our position. The fund also lost ground from underweighting strong-performing educational services firm Corinthian Colleges, as its enrollment rose and the stock soared.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Portfolio
Select Leisure Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
McDonald's Corp. | 24.2 | 24.3 |
Yum! Brands, Inc. | 6.9 | 7.4 |
Carnival Corp. unit | 6.0 | 4.7 |
Apollo Group, Inc. Class A (non-vtg.) | 5.5 | 3.5 |
Darden Restaurants, Inc. | 4.4 | 2.1 |
H&R Block, Inc. | 3.7 | 3.4 |
Penn National Gaming, Inc. | 3.6 | 3.8 |
Burger King Holdings, Inc. | 3.6 | 2.4 |
Hasbro, Inc. | 2.8 | 2.9 |
ITT Educational Services, Inc. | 2.6 | 1.3 |
| 63.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Hotels, Restaurants & Leisure | 73.4% |
| |
Diversified Consumer Services | 22.6% |
| |
Leisure Equipment & Products | 2.9% |
| |
Food Products | 0.3% |
| |
Specialty Retail | 0.2% |
| |
All Others* | 0.6% |
|
As of August 31, 2008 | |||
Hotels, Restaurants & Leisure | 74.5% |
| |
Diversified Consumer Services | 14.7% |
| |
Leisure Equipment & Products | 3.5% |
| |
Food & Staples Retailing | 2.9% |
| |
Automobiles | 1.0% |
| |
All Others* | 3.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Leisure Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 22.6% | |||
Education Services - 14.5% | |||
American Public Education, Inc. (a) | 26,300 | $ 982,305 | |
Apollo Group, Inc. Class A (non-vtg.) (a) | 120,300 | 8,721,750 | |
Capella Education Co. (a) | 10,800 | 598,968 | |
Career Education Corp. (a) | 69,200 | 1,707,164 | |
Corinthian Colleges, Inc. (a) | 56,442 | 1,111,907 | |
DeVry, Inc. | 62,300 | 3,236,485 | |
ITT Educational Services, Inc. (a) | 36,600 | 4,154,100 | |
Strayer Education, Inc. | 15,566 | 2,642,329 | |
| 23,155,008 | ||
Specialized Consumer Services - 8.1% | |||
Brinks Home Security Holdings, Inc. (a) | 55,800 | 1,170,126 | |
Coinstar, Inc. (a) | 77,300 | 2,020,622 | |
H&R Block, Inc. (d) | 305,100 | 5,827,410 | |
Hillenbrand, Inc. | 73,400 | 1,230,918 | |
Matthews International Corp. Class A | 23,200 | 805,968 | |
Regis Corp. | 33,900 | 427,140 | |
Service Corp. International | 286,500 | 968,370 | |
Sotheby's Class A (ltd. vtg.) (d) | 1,600 | 10,736 | |
Steiner Leisure Ltd. (a) | 13,700 | 345,377 | |
Stewart Enterprises, Inc. Class A | 7,000 | 16,240 | |
| 12,822,907 | ||
TOTAL DIVERSIFIED CONSUMER SERVICES | 35,977,915 | ||
FOOD PRODUCTS - 0.3% | |||
Packaged Foods & Meats - 0.3% | |||
TreeHouse Foods, Inc. (a) | 17,368 | 463,552 | |
HOTELS, RESTAURANTS & LEISURE - 73.4% | |||
Casinos & Gaming - 9.0% | |||
Ameristar Casinos, Inc. | 34,800 | 342,432 | |
Bally Technologies, Inc. (a) | 109,000 | 2,027,400 | |
International Game Technology | 214,500 | 1,891,890 | |
Las Vegas Sands Corp. unit | 11,700 | 444,600 | |
Penn National Gaming, Inc. (a) | 304,700 | 5,816,723 | |
WMS Industries, Inc. (a)(d) | 210,800 | 3,821,804 | |
| 14,344,849 | ||
Hotels, Resorts & Cruise Lines - 11.3% | |||
Carnival Corp. unit | 489,500 | 9,574,620 | |
Marriott International, Inc. Class A | 288,600 | 4,086,576 | |
Orient Express Hotels Ltd. Class A | 110,800 | 438,768 | |
Royal Caribbean Cruises Ltd. (d) | 269,600 | 1,617,600 | |
Starwood Hotels & Resorts Worldwide, Inc. | 185,100 | 2,145,309 | |
Wyndham Worldwide Corp. | 11,000 | 40,590 | |
| 17,903,463 | ||
Leisure Facilities - 1.0% | |||
International Speedway Corp. Class A | 24,400 | 471,652 | |
| |||
Shares | Value | ||
Life Time Fitness, Inc. (a)(d) | 24,800 | $ 212,288 | |
Vail Resorts, Inc. (a)(d) | 45,000 | 849,600 | |
| 1,533,540 | ||
Restaurants - 52.1% | |||
Brinker International, Inc. | 131,800 | 1,449,800 | |
Buffalo Wild Wings, Inc. (a)(d) | 100,561 | 3,104,318 | |
Burger King Holdings, Inc. | 268,700 | 5,774,363 | |
Chipotle Mexican Grill, Inc. Class B (a) | 55,209 | 2,769,283 | |
Darden Restaurants, Inc. | 255,700 | 6,939,698 | |
Domino's Pizza, Inc. (a) | 91,500 | 624,945 | |
Jack in the Box, Inc. (a) | 99,000 | 1,924,560 | |
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 4,752 | 484 | |
McDonald's Corp. | 735,800 | 38,445,549 | |
Panera Bread Co. Class A (a)(d) | 16,200 | 713,448 | |
Red Robin Gourmet Burgers, Inc. (a) | 46,000 | 653,660 | |
Sonic Corp. (a) | 87,300 | 785,700 | |
Starbucks Corp. (a) | 387,100 | 3,541,965 | |
Tim Hortons, Inc. (d) | 169,800 | 4,007,280 | |
Wendy's/Arby's Group, Inc. | 287,750 | 1,303,508 | |
Yum! Brands, Inc. | 414,800 | 10,900,944 | |
| 82,939,505 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 116,721,357 | ||
LEISURE EQUIPMENT & PRODUCTS - 2.9% | |||
Leisure Products - 2.9% | |||
Brunswick Corp. | 72,500 | 224,025 | |
Hasbro, Inc. | 193,200 | 4,422,348 | |
| 4,646,373 | ||
SPECIALTY RETAIL - 0.2% | |||
Specialty Stores - 0.2% | |||
MarineMax, Inc. (a) | 49,800 | 71,712 | |
Sally Beauty Holdings, Inc. (a) | 81,100 | 313,857 | |
| 385,569 | ||
TOTAL COMMON STOCKS (Cost $179,300,762) | 158,194,766 | ||
Money Market Funds - 5.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 366,738 | $ 366,738 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 8,012,875 | 8,012,875 | |
TOTAL MONEY MARKET FUNDS (Cost $8,379,613) | 8,379,613 | ||
TOTAL INVESTMENT PORTFOLIO - 104.7% (Cost $187,680,375) | 166,574,379 | ||
NET OTHER ASSETS - (4.7)% | (7,459,706) | ||
NET ASSETS - 100% | $ 159,114,673 |
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 | $ 45,544 |
Fidelity Securities Lending Cash Central Fund | 288,265 |
Total | $ 333,809 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 166,574,379 | $ 166,129,295 | $ 445,084 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $29,605,284 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $8,855,209 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $7,597,087) - See accompanying schedule: Unaffiliated issuers (cost $179,300,762) | $ 158,194,766 |
|
Fidelity Central Funds (cost $8,379,613) | 8,379,613 |
|
Total Investments (cost $187,680,375) |
| $ 166,574,379 |
Receivable for investments sold | 631,929 | |
Receivable for fund shares sold | 255,039 | |
Dividends receivable | 396,272 | |
Distributions receivable from Fidelity Central Funds | 13,469 | |
Prepaid expenses | 1,326 | |
Other receivables | 1 | |
Total assets | 167,872,415 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 350,552 | |
Payable for fund shares redeemed | 242,034 | |
Accrued management fee | 78,233 | |
Other affiliated payables | 45,936 | |
Other payables and accrued expenses | 28,112 | |
Collateral on securities loaned, at value | 8,012,875 | |
Total liabilities | 8,757,742 | |
|
|
|
Net Assets | $ 159,114,673 | |
Net Assets consist of: |
| |
Paid in capital | $ 223,229,188 | |
Undistributed net investment income | 370,424 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (43,378,531) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (21,106,408) | |
Net Assets, for 3,441,292 shares outstanding | $ 159,114,673 | |
Net Asset Value, offering price and redemption price per share ($159,114,673 ÷ 3,441,292 shares) | $ 46.24 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 2,977,802 |
Interest |
| 7,116 |
Income from Fidelity Central Funds (including $288,265 from security lending) |
| 333,809 |
Total income |
| 3,318,727 |
|
|
|
Expenses | ||
Management fee | $ 967,482 | |
Transfer agent fees | 478,995 | |
Accounting and security lending fees | 72,547 | |
Custodian fees and expenses | 8,437 | |
Independent trustees' compensation | 760 | |
Registration fees | 21,435 | |
Audit | 35,915 | |
Legal | 992 | |
Miscellaneous | 14,517 | |
Total expenses before reductions | 1,601,080 | |
Expense reductions | (2,470) | 1,598,610 |
Net investment income (loss) | 1,720,117 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (41,989,687) | |
Foreign currency transactions | 3,905 | |
Total net realized gain (loss) |
| (41,985,782) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (24,337,804) | |
Assets and liabilities in foreign currencies | (412) | |
Total change in net unrealized appreciation (depreciation) |
| (24,338,216) |
Net gain (loss) | (66,323,998) | |
Net increase (decrease) in net assets resulting from operations | $ (64,603,881) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 1,720,117 | $ 2,117,253 |
Net realized gain (loss) | (41,985,782) | 9,362,661 |
Change in net unrealized appreciation (depreciation) | (24,338,216) | (26,974,478) |
Net increase (decrease) in net assets resulting from operations | (64,603,881) | (15,494,564) |
Distributions to shareholders from net investment income | (1,549,729) | (1,643,447) |
Distributions to shareholders from net realized gain | (827,037) | (15,189,403) |
Total distributions | (2,376,766) | (16,832,850) |
Share transactions | 72,683,633 | 58,157,500 |
Reinvestment of distributions | 2,234,565 | 15,968,498 |
Cost of shares redeemed | (59,254,513) | (89,724,085) |
Net increase (decrease) in net assets resulting from share transactions | 15,663,685 | (15,598,087) |
Redemption fees | 7,977 | 8,856 |
Total increase (decrease) in net assets | (51,308,985) | (47,916,645) |
|
|
|
Net Assets | ||
Beginning of period | 210,423,658 | 258,340,303 |
End of period (including undistributed net investment income of $370,424 and undistributed net investment income of $542,997, respectively) | $ 159,114,673 | $ 210,423,658 |
Other Information Shares | ||
Sold | 1,360,167 | 727,886 |
Issued in reinvestment of distributions | 38,286 | 202,679 |
Redeemed | (1,005,494) | (1,127,342) |
Net increase (decrease) | 392,959 | (196,777) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 69.03 | $ 79.61 | $ 80.64 | $ 75.07 | $ 74.40 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .60 | .69 | .25 F | (.28) | (.20) |
Net realized and unrealized gain (loss) | (22.57) | (5.73) | 10.52 | 8.83 | 5.55 |
Total from investment operations | (21.97) | (5.04) | 10.77 | 8.55 | 5.35 |
Distributions from net investment income | (.54) | (.55) | (.12) | - | - |
Distributions from net realized gain | (.28) | (4.99) | (11.69) | (2.98) | (4.70) |
Total distributions | (.82) | (5.54) | (11.81) | (2.98) | (4.70) |
Redemption fees added to paid in capital C | - I | - I | .01 | - I | .02 |
Net asset value, end of period | $ 46.24 | $ 69.03 | $ 79.61 | $ 80.64 | $ 75.07 |
Total Return A,B | (32.07)% | (7.09)% | 13.61% | 11.67% | 7.43% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .93% | .91% | .96% | .99% | 1.01% |
Expenses net of fee waivers, if any | .93% | .91% | .96% | .99% | 1.01% |
Expenses net of all reductions | .93% | .91% | .94% | .94% | .96% |
Net investment income (loss) | 1.00% | .86% | .31% F | (.37)% | (.28)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 159,115 | $ 210,424 | $ 258,340 | $ 205,290 | $ 206,406 |
Portfolio turnover rate E | 120% | 74% | 179% | 107% | 117% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Multimedia 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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Multimedia Portfolio | -46.75% | -10.44% | -3.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Multimedia Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500® market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Kristina Salen, Portfolio Manager of Select Multimedia Portfolio: For the 12-month period ending February 28, 2009, the fund's shares fell 46.75%, outpacing the fund's industry benchmark, the MSCI® US Investable Market Media Index, which declined 51.51%, but lagging the Standard & Poor's 500 Index. A key factor in the fund's performance versus the MSCI index was avoiding or underweighting traditional media companies - such as broadcasting and publishing - that were hardest hit when the economy turned south and advertising declined precipitously during the second half of the period. Strong stock selection in those areas contributed as well. For example, within broadcasting, underweighting media giant CBS and not owning regional multimedia firm Belo aided results as their stocks sank significantly, while in print, underweighting newspaper publisher Gannett paid off. Likewise, an underweighting and favorable stock picks in movies and entertainment provided a boost, including an underweighting in traditional media conglomerate News Corp. Elsewhere, underweighting highly leveraged satellite radio company SiriusXM, along with a timely underweighting of non-fiction cable broadcaster Discovery Holding - which underwent a merger in September 2008 and became known as Discovery Communications - also helped. Outside of the benchmark, stock selection in Internet software and services played a significant role, including a position in new-media and online advertising giant Google. Also benefiting performance was a stake in holding company and index component Liberty Media, which represented a play on the cable and satellite industry. The fund's cash position was a positive as well. On the negative side, underweighting cable and satellite companies - including industry leader Comcast - detracted from results, though it was offset by good selection in that segment otherwise. Several weak picks in broadcasting hurt returns, including underweighting Discovery Communications, which was one of the industry's better performers after its merger deal was consummated, and Clear Channel Communications, which was acquired by a private-equity firm. Elsewhere in broadcasting, a non-benchmark position in Bermuda-based Central European Media detracted. National CineMedia, a leader in movie screen advertising, was another disappointment. An out-of-benchmark stake in Las Vegas Sands within the casinos and gaming area was a big negative, as the stock sank when local regulatory issues hurt its business in Macau, China. Also detracting were weak stock picking in advertising and a number of poor choices in out-of-index areas such as human resources and employment, and communications equipment. Some of the stocks I've discussed 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 Multimedia Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Time Warner, Inc. | 12.5 | 14.6 |
The Walt Disney Co. | 11.7 | 11.9 |
Comcast Corp. Class A | 9.9 | 8.8 |
Liberty Media Corp. - Entertainment Class A | 6.3 | 3.5 |
Comcast Corp. Class A (special) (non-vtg.) | 4.9 | 3.7 |
The DIRECTV Group, Inc. | 4.5 | 4.9 |
Viacom, Inc. Class B (non-vtg.) | 4.4 | 3.9 |
News Corp. Class A | 3.9 | 5.4 |
Google, Inc. Class A (sub. vtg.) | 3.8 | 1.4 |
Omnicom Group, Inc. | 3.5 | 3.7 |
| 65.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Media | 82.2% |
| |
Internet Software & Services | 7.0% |
| |
Internet & Catalog Retail | 0.6% |
| |
Communications Equipment | 0.5% |
| |
Professional Services | 0.4% |
| |
All Others* | 9.3% |
|
As of August 31, 2008 | |||
Media | 82.3% |
| |
Internet Software & Services | 2.5% |
| |
Software | 1.3% |
| |
Communications Equipment | 0.9% |
| |
Computers & Peripherals | 0.7% |
| |
All Others* | 12.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Multimedia Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 91.5% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.5% | |||
Communications Equipment - 0.5% | |||
Juniper Networks, Inc. (a) | 9,300 | $ 132,153 | |
INTERNET & CATALOG RETAIL - 0.6% | |||
Catalog Retail - 0.1% | |||
Liberty Media Corp. - Interactive Series A (a) | 10,500 | 34,020 | |
Internet Retail - 0.5% | |||
B2W Companhia Global Do Varejo | 5,900 | 52,126 | |
Priceline.com, Inc. (a)(d) | 900 | 76,374 | |
| 128,500 | ||
TOTAL INTERNET & CATALOG RETAIL | 162,520 | ||
INTERNET SOFTWARE & SERVICES - 7.0% | |||
Internet Software & Services - 7.0% | |||
Akamai Technologies, Inc. (a) | 3,600 | 65,124 | |
Baidu.com, Inc. sponsored ADR (a) | 300 | 44,496 | |
Bankrate, Inc. (a) | 2,000 | 44,600 | |
Dice Holdings, Inc. (a) | 68,700 | 162,819 | |
eBay, Inc. (a) | 2,200 | 23,914 | |
Google, Inc. Class A (sub. vtg.) (a) | 2,950 | 997,071 | |
Mercadolibre, Inc. (a) | 2,200 | 36,762 | |
Move, Inc. (a) | 34,200 | 55,404 | |
Omniture, Inc. (a) | 6,900 | 78,384 | |
Sohu.com, Inc. (a) | 2,600 | 128,440 | |
Tencent Holdings Ltd. | 32,400 | 185,102 | |
| 1,822,116 | ||
MEDIA - 82.2% | |||
Advertising - 5.5% | |||
Interpublic Group of Companies, Inc. (a) | 103,300 | 393,573 | |
Lamar Advertising Co. Class A (a)(d) | 17,900 | 123,868 | |
Omnicom Group, Inc. | 38,600 | 927,558 | |
| 1,444,999 | ||
Broadcasting - 3.0% | |||
Central European Media Enterprises Ltd. Class A (a)(d) | 4,900 | 31,164 | |
Citadel Broadcasting Corp. (a) | 8 | 1 | |
Discovery Communications, Inc. (a) | 16,250 | 252,038 | |
Discovery Communications, Inc. Class C (a) | 14,850 | 217,998 | |
Entercom Communications Corp. Class A | 3,600 | 3,708 | |
Grupo Televisa SA de CV (CPO) sponsored ADR | 23,700 | 288,429 | |
Sinclair Broadcast Group, Inc. Class A | 600 | 672 | |
| 794,010 | ||
Cable & Satellite - 35.7% | |||
Cablevision Systems Corp. - NY Group Class A | 42,200 | 548,178 | |
Comcast Corp.: | |||
Class A | 199,250 | 2,602,205 | |
Class A (special) (non-vtg.) | 106,000 | 1,287,900 | |
| |||
Shares | Value | ||
DISH Network Corp. Class A (a) | 47,500 | $ 534,375 | |
Liberty Global, Inc.: | |||
Class A (a) | 23,075 | 283,130 | |
Class C (a) | 12,800 | 152,192 | |
Liberty Media Corp.: | |||
- Capital Series A (a) | 8,400 | 43,176 | |
- Entertainment Class A (a) | 94,400 | 1,635,008 | |
Net Servicos de Comunicacao SA sponsored ADR | 9,200 | 57,316 | |
RRSat Global Communications Network Ltd. | 12,700 | 139,700 | |
Scripps Networks Interactive, Inc. Class A | 8,300 | 165,253 | |
Sirius XM Radio, Inc. (a) | 1,460 | 234 | |
The DIRECTV Group, Inc. (a) | 59,000 | 1,176,460 | |
Time Warner Cable, Inc. (a) | 14,500 | 264,335 | |
Virgin Media, Inc. | 94,300 | 450,754 | |
| 9,340,216 | ||
Movies & Entertainment - 35.1% | |||
Ascent Media Corp. (a) | 85 | 1,993 | |
Cinemark Holdings, Inc. | 3,800 | 29,222 | |
Cinemax India Ltd. | 56,743 | 36,849 | |
DreamWorks Animation SKG, Inc. Class A (a) | 13,700 | 264,273 | |
Lions Gate Entertainment Corp. (a) | 21,100 | 106,766 | |
Live Nation, Inc. (a) | 98 | 344 | |
Marvel Entertainment, Inc. (a) | 5,400 | 139,644 | |
News Corp. Class A | 182,582 | 1,015,156 | |
Regal Entertainment Group Class A | 4,500 | 46,080 | |
The Walt Disney Co. | 183,200 | 3,072,264 | |
Time Warner, Inc. | 429,500 | 3,277,082 | |
Viacom, Inc. Class B (non-vtg.) (a) | 74,300 | 1,143,477 | |
Vivendi | 2,304 | 54,767 | |
| 9,187,917 | ||
Publishing - 2.9% | |||
E.W. Scripps Co. Class A | 233 | 266 | |
Gannett Co., Inc. (d) | 6,000 | 19,440 | |
McGraw-Hill Companies, Inc. | 35,400 | 698,442 | |
R.H. Donnelley Corp. (a) | 200 | 34 | |
The New York Times Co. Class A (d) | 8,900 | 36,757 | |
| 754,939 | ||
TOTAL MEDIA | 21,522,081 | ||
PROFESSIONAL SERVICES - 0.4% | |||
Human Resource & Employment Services - 0.4% | |||
Monster Worldwide, Inc. (a) | 15,500 | 102,145 | |
SOFTWARE - 0.4% | |||
Home Entertainment Software - 0.0% | |||
Gameloft (a) | 900 | 1,419 | |
Ubisoft Entertainment SA (a) | 100 | 1,488 | |
| 2,907 | ||
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - 0.4% | |||
Macrovision Solutions Corp. (a) | 5,800 | $ 91,234 | |
TOTAL SOFTWARE | 94,141 | ||
SPECIALTY RETAIL - 0.2% | |||
Computer & Electronics Retail - 0.2% | |||
Gamestop Corp. Class A (a) | 2,200 | 59,224 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.2% | |||
Wireless Telecommunication Services - 0.2% | |||
Vivo Participacoes SA sponsored ADR | 3,900 | 63,219 | |
TOTAL COMMON STOCKS (Cost $40,431,050) | 23,957,599 | ||
Money Market Funds - 9.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 2,187,610 | 2,187,610 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 208,025 | 208,025 | |
TOTAL MONEY MARKET FUNDS (Cost $2,395,635) | 2,395,635 | ||
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $42,826,685) | 26,353,234 | ||
NET OTHER ASSETS - (0.6)% | (169,787) | ||
NET ASSETS - 100% | $ 26,183,447 |
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 | $ 45,180 |
Fidelity Securities Lending Cash Central Fund | 51,682 |
Total | $ 96,862 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 26,353,234 | $ 26,073,609 | $ 279,625 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $3,658,632 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $1,637,197 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $206,904) - See accompanying schedule: Unaffiliated issuers (cost $40,431,050) | $ 23,957,599 |
|
Fidelity Central Funds (cost $2,395,635) | 2,395,635 |
|
Total Investments (cost $42,826,685) |
| $ 26,353,234 |
Receivable for fund shares sold | 78,139 | |
Dividends receivable | 35,561 | |
Distributions receivable from Fidelity Central Funds | 1,796 | |
Prepaid expenses | 325 | |
Other receivables | 16 | |
Total assets | 26,469,071 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 28,215 | |
Accrued management fee | 13,120 | |
Other affiliated payables | 8,225 | |
Other payables and accrued expenses | 28,039 | |
Collateral on securities loaned, at value | 208,025 | |
Total liabilities | 285,624 | |
|
|
|
Net Assets | $ 26,183,447 | |
Net Assets consist of: |
| |
Paid in capital | $ 48,071,482 | |
Undistributed net investment income | 17,559 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,432,132) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,473,462) | |
Net Assets, for 1,433,323 shares outstanding | $ 26,183,447 | |
Net Asset Value, offering price and redemption price per share ($26,183,447 ÷ 1,433,323 shares) | $ 18.27 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 427,526 |
Interest |
| 7,433 |
Income from Fidelity Central Funds (including $51,682 from security lending) |
| 96,862 |
Total income |
| 531,821 |
|
|
|
Expenses | ||
Management fee | $ 230,318 | |
Transfer agent fees | 125,395 | |
Accounting and security lending fees | 17,737 | |
Custodian fees and expenses | 5,932 | |
Independent trustees' compensation | 220 | |
Registration fees | 15,209 | |
Audit | 39,575 | |
Legal | 301 | |
Miscellaneous | 4,913 | |
Total expenses before reductions | 439,600 | |
Expense reductions | (94) | 439,506 |
Net investment income (loss) | 92,315 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (5,232,428) | |
Foreign currency transactions | 81 | |
Total net realized gain (loss) |
| (5,232,347) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (18,069,667) | |
Assets and liabilities in foreign currencies | (26) | |
Total change in net unrealized appreciation (depreciation) |
| (18,069,693) |
Net gain (loss) | (23,302,040) | |
Net increase (decrease) in net assets resulting from operations | $ (23,209,725) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 92,315 | $ 8,560 |
Net realized gain (loss) | (5,232,347) | 7,111,365 |
Change in net unrealized appreciation (depreciation) | (18,069,693) | (17,201,284) |
Net increase (decrease) in net assets resulting from operations | (23,209,725) | (10,081,359) |
Distributions to shareholders from net investment income | (80,043) | - |
Distributions to shareholders from net realized gain | (1,247,080) | (9,951,014) |
Total distributions | (1,327,123) | (9,951,014) |
Share transactions | 18,040,482 | 36,431,773 |
Reinvestment of distributions | 1,278,352 | 9,517,533 |
Cost of shares redeemed | (30,742,054) | (54,588,877) |
Net increase (decrease) in net assets resulting from share transactions | (11,423,220) | (8,639,571) |
Redemption fees | 2,063 | 7,037 |
Total increase (decrease) in net assets | (35,958,005) | (28,664,907) |
|
|
|
Net Assets | ||
Beginning of period | 62,141,452 | 90,806,359 |
End of period (including undistributed net investment income of $17,559 and undistributed net investment income of $8,513, respectively) | $ 26,183,447 | $ 62,141,452 |
Other Information Shares | ||
Sold | 601,001 | 853,857 |
Issued in reinvestment of distributions | 39,967 | 225,807 |
Redeemed | (967,838) | (1,238,899) |
Net increase (decrease) | (326,870) | (159,235) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 35.30 | $ 47.31 | $ 47.33 | $ 43.55 | $ 44.83 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .01 | (.07) | (.12) | (.18) |
Net realized and unrealized gain (loss) | (16.17) | (5.79) | 6.27 | 4.70 | .19 |
Total from investment operations | (16.11) | (5.78) | 6.20 | 4.58 | .01 |
Distributions from net investment income | (.06) | - | - | - | - |
Distributions from net realized gain | (.86) | (6.23) | (6.23) | (.80) | (1.30) |
Total distributions | (.92) | (6.23) | (6.23) | (.80) | (1.30) |
Redemption fees added to paid in capital C | - H | - H | .01 | - H | .01 |
Net asset value, end of period | $ 18.27 | $ 35.30 | $ 47.31 | $ 47.33 | $ 43.55 |
Total Return A,B | (46.75)% | (13.88)% | 13.73% | 10.48% | .01% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.07% | .99% | 1.04% | 1.07% | 1.07% |
Expenses net of fee waivers, if any | 1.07% | .99% | 1.04% | 1.07% | 1.07% |
Expenses net of all reductions | 1.07% | .98% | 1.04% | 1.04% | 1.03% |
Net investment income (loss) | .22% | .01% | (.16)% | (.27)% | (.42)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 26,183 | $ 62,141 | $ 90,806 | $ 80,715 | $ 125,615 |
Portfolio turnover rate E | 39% | 68% | 179% | 48% | 88% |
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. |
See accompanying notes which are an integral part of the financial statements.
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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Retailing Portfolio | -27.09% | -4.09% | -2.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Retailing Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500® market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Evan Hornbuckle, Portfolio Manager of Select Retailing Portfolio: For the 12-month period ending February 28, 2009, the fund's shares fell 27.09%, outpacing both the fund's industry benchmark, the MSCI® US Investable Market Retailing Index, which declined 34.70%, and the S&P 500. A key factor in the fund's performance versus the MSCI index was my emphasis on undervalued companies with a lower dependence on discretionary product lines, including automotive parts retailers AutoZone and Advance Auto Parts, and an out-of-index stake in low-price retailer Wal-Mart. I also sought out companies that enjoyed a competitive advantage and market share gains, increasing the likelihood that they'd be industry survivors. Office-supply retailer Staples fell into this category. Good stock selection within general merchandise stores boosted performance, including underweighting Target, which faced competitive pressures, an uncompelling valuation and exposure to a deteriorating credit-card business. Within apparel retail, a combination of favorable picks aided returns, including overweightings in off-price apparel retailers Ross Stores and TJX Companies, and an underweighting in struggling Limited Brands. The fund's cash position helped returns as well. On the negative side, stock selection and an underweighting in distributors and home improvement retailers, including Home Depot and Lowe's, dragged on performance. A stake in OfficeMax detracted, as did an investment in apparel retailer Abercrombie & Fitch, which lost ground to more-promotional competitors that resulted in larger-than-expected sales declines, especially during the holiday season. An out-of-benchmark position in Internet auction pioneer eBay detracted as well. Within the auto replacement parts arena, underweighting distributor Genuine Parts and retailer O'Reilly Automotive proved disappointing, although other investments in the area more than offset the losses. Not holding a stake in department store chain Kohl's near the end of the period, which performed well in a dismal retailing environment, hurt as well. Some of the stocks I've discussed 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 Retailing Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Staples, Inc. | 14.5 | 11.8 |
Lowe's Companies, Inc. | 9.6 | 6.4 |
Home Depot, Inc. | 8.6 | 6.7 |
Target Corp. | 7.5 | 4.9 |
Amazon.com, Inc. | 6.3 | 3.7 |
TJX Companies, Inc. | 4.6 | 2.2 |
Best Buy Co., Inc. | 4.3 | 1.8 |
Ross Stores, Inc. | 2.7 | 1.1 |
AutoZone, Inc. | 2.6 | 3.0 |
Signet Jewelers Ltd. | 2.3 | 0.0 |
| 63.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Specialty Retail | 68.9% |
| |
Multiline Retail | 11.5% |
| |
Internet & Catalog Retail | 9.6% |
| |
Food & Staples Retailing | 1.8% |
| |
Distributors | 1.5% |
| |
All Others* | 6.7% |
|
As of August 31, 2008 | |||
Specialty Retail | 57.3% |
| |
Food & Staples Retailing | 13.5% |
| |
Multiline Retail | 9.1% |
| |
Internet & Catalog Retail | 9.1% |
| |
Internet Software & Services | 3.4% |
| |
All Others* | 7.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Retailing Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 95.2% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Diversified Support Services - 0.0% | |||
Cintas Corp. | 100 | $ 2,029 | |
DISTRIBUTORS - 1.5% | |||
Distributors - 1.5% | |||
Genuine Parts Co. | 20,600 | 579,684 | |
DIVERSIFIED CONSUMER SERVICES - 1.3% | |||
Specialized Consumer Services - 1.3% | |||
Regis Corp. | 40,800 | 514,080 | |
FOOD & STAPLES RETAILING - 1.8% | |||
Food Retail - 0.6% | |||
Kroger Co. | 8,800 | 181,896 | |
Whole Foods Market, Inc. | 4,200 | 51,030 | |
| 232,926 | ||
Hypermarkets & Super Centers - 1.2% | |||
Costco Wholesale Corp. | 2,700 | 114,318 | |
Wal-Mart Stores, Inc. | 7,900 | 388,996 | |
| 503,314 | ||
TOTAL FOOD & STAPLES RETAILING | 736,240 | ||
HOTELS, RESTAURANTS & LEISURE - 0.2% | |||
Leisure Facilities - 0.2% | |||
International Speedway Corp. Class A | 3,000 | 57,990 | |
Restaurants - 0.0% | |||
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 2,901 | 295 | |
Starbucks Corp. (a) | 700 | 6,405 | |
| 6,700 | ||
TOTAL HOTELS, RESTAURANTS & LEISURE | 64,690 | ||
INTERNET & CATALOG RETAIL - 9.6% | |||
Catalog Retail - 0.0% | |||
Gaiam, Inc. Class A (a) | 1,700 | 5,151 | |
Internet Retail - 9.6% | |||
Amazon.com, Inc. (d) | 39,300 | 2,546,247 | |
Blue Nile, Inc. (a)(d) | 34,800 | 830,676 | |
Expedia, Inc. (a) | 20,500 | 163,385 | |
Priceline.com, Inc. (a)(d) | 4,000 | 339,440 | |
| 3,879,748 | ||
TOTAL INTERNET & CATALOG RETAIL | 3,884,899 | ||
INTERNET SOFTWARE & SERVICES - 0.4% | |||
Internet Software & Services - 0.4% | |||
eBay, Inc. (a) | 16,000 | 173,920 | |
| |||
Shares | Value | ||
MULTILINE RETAIL - 11.5% | |||
Department Stores - 1.4% | |||
JCPenney Co., Inc. | 28,600 | $ 438,438 | |
Macy's, Inc. | 15,300 | 120,411 | |
| 558,849 | ||
General Merchandise Stores - 10.1% | |||
Big Lots, Inc. (a) | 5,900 | 91,509 | |
Dollar Tree, Inc. (a) | 16,200 | 628,884 | |
Family Dollar Stores, Inc. | 11,800 | 323,792 | |
Target Corp. | 107,300 | 3,037,663 | |
| 4,081,848 | ||
TOTAL MULTILINE RETAIL | 4,640,697 | ||
PERSONAL PRODUCTS - 0.0% | |||
Personal Products - 0.0% | |||
Herbalife Ltd. | 200 | 2,728 | |
SPECIALTY RETAIL - 68.9% | |||
Apparel Retail - 13.9% | |||
Abercrombie & Fitch Co. Class A (d) | 21,700 | 477,183 | |
American Eagle Outfitters, Inc. | 39,000 | 380,640 | |
AnnTaylor Stores Corp. (a) | 9,600 | 63,168 | |
Chico's FAS, Inc. (a) | 24,600 | 111,438 | |
Citi Trends, Inc. (a) | 42,900 | 523,380 | |
Gap, Inc. | 35,000 | 377,650 | |
Guess?, Inc. | 16,100 | 258,727 | |
Limited Brands, Inc. | 22,500 | 173,025 | |
Ross Stores, Inc. | 36,600 | 1,080,432 | |
The Men's Wearhouse, Inc. | 7,800 | 83,304 | |
TJX Companies, Inc. | 83,700 | 1,863,999 | |
Urban Outfitters, Inc. (a) | 10,600 | 176,384 | |
Zumiez, Inc. (a) | 3,400 | 26,826 | |
| 5,596,156 | ||
Automotive Retail - 4.5% | |||
Advance Auto Parts, Inc. | 19,600 | 749,700 | |
AutoZone, Inc. (a) | 7,400 | 1,052,502 | |
| 1,802,202 | ||
Computer & Electronics Retail - 4.5% | |||
Best Buy Co., Inc. | 60,000 | 1,729,200 | |
hhgregg, Inc. (a) | 7,200 | 73,872 | |
| 1,803,072 | ||
Home Improvement Retail - 21.7% | |||
Home Depot, Inc. | 166,300 | 3,474,007 | |
Lowe's Companies, Inc. | 243,600 | 3,858,624 | |
Lumber Liquidators, Inc. (a)(d) | 85,200 | 816,216 | |
Sherwin-Williams Co. | 13,700 | 629,515 | |
| 8,778,362 | ||
Homefurnishing Retail - 3.3% | |||
Bed Bath & Beyond, Inc. (a) | 36,600 | 779,580 | |
Kirkland's, Inc. (a) | 194,900 | 567,159 | |
| 1,346,739 | ||
Common Stocks - continued | |||
Shares | Value | ||
SPECIALTY RETAIL - CONTINUED | |||
Specialty Stores - 21.0% | |||
Jo-Ann Stores, Inc. (a) | 6,200 | $ 74,648 | |
OfficeMax, Inc. | 62,300 | 237,986 | |
PetSmart, Inc. | 45,300 | 907,812 | |
Sally Beauty Holdings, Inc. (a) | 4,300 | 16,641 | |
Signet Jewelers Ltd. | 123,200 | 911,680 | |
Staples, Inc. | 365,694 | 5,832,820 | |
Tiffany & Co., Inc. (d) | 19,600 | 373,184 | |
Tractor Supply Co. (a) | 3,700 | 115,588 | |
| 8,470,359 | ||
TOTAL SPECIALTY RETAIL | 27,796,890 | ||
TOTAL COMMON STOCKS (Cost $45,544,474) | 38,395,857 | ||
Money Market Funds - 13.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 1,300,143 | $ 1,300,143 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,016,100 | 4,016,100 | |
TOTAL MONEY MARKET FUNDS (Cost $5,316,243) | 5,316,243 | ||
TOTAL INVESTMENT PORTFOLIO - 108.4% (Cost $50,860,717) | 43,712,100 | ||
NET OTHER ASSETS - (8.4)% | (3,377,323) | ||
NET ASSETS - 100% | $ 40,334,777 |
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 | $ 21,216 |
Fidelity Securities Lending Cash Central Fund | 112,616 |
Total | $ 133,832 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 43,712,100 | $ 43,711,805 | $ 295 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $8,977,445 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $5,988,643 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,029,408) - See accompanying schedule: Unaffiliated issuers (cost $45,544,474) | $ 38,395,857 |
|
Fidelity Central Funds (cost $5,316,243) | 5,316,243 |
|
Total Investments (cost $50,860,717) |
| $ 43,712,100 |
Receivable for investments sold | 756,257 | |
Receivable for fund shares sold | 533,461 | |
Dividends receivable | 43,602 | |
Distributions receivable from Fidelity Central Funds | 4,241 | |
Prepaid expenses | 451 | |
Other receivables | 26,977 | |
Total assets | 45,077,089 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 602,819 | |
Payable for fund shares redeemed | 62,401 | |
Distributions payable | 56 | |
Accrued management fee | 18,993 | |
Other affiliated payables | 12,520 | |
Other payables and accrued expenses | 29,423 | |
Collateral on securities loaned, at value | 4,016,100 | |
Total liabilities | 4,742,312 | |
|
|
|
Net Assets | $ 40,334,777 | |
Net Assets consist of: |
| |
Paid in capital | $ 66,513,672 | |
Undistributed net investment income | 34 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (19,030,312) | |
Net unrealized appreciation (depreciation) on investments | (7,148,617) | |
Net Assets, for 1,523,234 shares outstanding | $ 40,334,777 | |
Net Asset Value, offering price and redemption price per share ($40,334,777 ÷ 1,523,234 shares) | $ 26.48 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 666,481 |
Interest |
| 3,199 |
Income from Fidelity Central Funds (including $112,616 from security lending) |
| 133,832 |
Total income |
| 803,512 |
|
|
|
Expenses | ||
Management fee | $ 266,553 | |
Transfer agent fees | 143,285 | |
Accounting and security lending fees | 20,262 | |
Custodian fees and expenses | 18,410 | |
Independent trustees' compensation | 165 | |
Registration fees | 17,482 | |
Audit | 36,980 | |
Legal | 337 | |
Miscellaneous | 4,476 | |
Total expenses before reductions | 507,950 | |
Expense reductions | (3,120) | 504,830 |
Net investment income (loss) | 298,682 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (14,109,592) | |
Foreign currency transactions | 1,847 | |
Total net realized gain (loss) |
| (14,107,745) |
Change in net unrealized appreciation (depreciation) on investment securities | (4,729,440) | |
Net gain (loss) | (18,837,185) | |
Net increase (decrease) in net assets resulting from operations | $ (18,538,503) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 298,682 | $ (16,370) |
Net realized gain (loss) | (14,107,745) | 6,106,972 |
Change in net unrealized appreciation (depreciation) | (4,729,440) | (19,430,381) |
Net increase (decrease) in net assets resulting from operations | (18,538,503) | (13,339,779) |
Distributions to shareholders from net investment income | (300,191) | (352,022) |
Distributions to shareholders from net realized gain | - | (10,059,043) |
Total distributions | (300,191) | (10,411,065) |
Share transactions | 55,538,999 | 38,803,095 |
Reinvestment of distributions | 282,913 | 9,647,189 |
Cost of shares redeemed | (44,697,053) | (60,520,827) |
Net increase (decrease) in net assets resulting from share transactions | 11,124,859 | (12,070,543) |
Redemption fees | 10,562 | 16,684 |
Total increase (decrease) in net assets | (7,703,273) | (35,804,703) |
|
|
|
Net Assets | ||
Beginning of period | 48,038,050 | 83,842,753 |
End of period (including undistributed net investment income of $34 and accumulated net investment loss of $304, respectively) | $ 40,334,777 | $ 48,038,050 |
Other Information Shares | ||
Sold | 1,613,669 | 788,545 |
Issued in reinvestment of distributions | 9,830 | 213,788 |
Redeemed | (1,413,926) | (1,213,769) |
Net increase (decrease) | 209,573 | (211,436) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 36.57 | $ 54.98 | $ 50.78 | $ 50.89 | $ 47.39 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .21 | (.01) | .30 F | (.10) | (.01) |
Net realized and unrealized gain (loss) | (10.11) | (10.59) | 7.46 | 6.24 | 4.00 |
Total from investment operations | (9.90) | (10.60) | 7.76 | 6.14 | 3.99 |
Distributions from net investment income | (.20) | (.22) | - | - | (.01) |
Distributions from net realized gain | - | (7.60) | (3.58) | (6.29) | (.50) |
Total distributions | (.20) | (7.82) | (3.58) | (6.29) | (.51) |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .04 | .02 |
Net asset value, end of period | $ 26.48 | $ 36.57 | $ 54.98 | $ 50.78 | $ 50.89 |
Total Return A,B | (27.09)% | (21.43)% | 15.79% | 12.77% | 8.47% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.07% | 1.02% | 1.06% | 1.06% | 1.08% |
Expenses net of fee waivers, if any | 1.07% | 1.02% | 1.06% | 1.06% | 1.08% |
Expenses net of all reductions | 1.06% | 1.02% | 1.06% | 1.04% | 1.03% |
Net investment income (loss) | .63% | (.02)% | .58% F | (.20)% | (.02)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 40,335 | $ 48,038 | $ 83,843 | $ 67,009 | $ 105,346 |
Portfolio turnover rate E | 504% | 260% | 202% | 114% | 94% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for each Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of each Fund's Schedule of Investments.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), 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 | $ 27,572,549 | $ 36,663 | $ (18,377,285) | $ (18,340,622) |
Construction and Housing Portfolio | 146,022,471 | 1,957,676 | (50,165,835) | (48,208,159) |
Consumer Discretionary Portfolio | 31,336,870 | 632,189 | (10,239,602) | (9,607,413) |
Leisure Portfolio | 192,598,830 | 17,132,692 | (43,157,143) | (26,024,451) |
Multimedia Portfolio | 42,963,082 | 957,982 | (17,567,830) | (16,609,848) |
Retailing Portfolio | 54,924,943 | 986,360 | (12,199,203) | (11,212,843) |
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
| Undistributed | Capital Loss |
Automotive Portfolio | $ 66,319 | $ (8,962,656) |
Construction and Housing Portfolio | 62,002 | (8,111,449) |
Consumer Discretionary Portfolio | 18,725 | (2,598,465) |
Leisure Portfolio | 370,511 | (29,605,284) |
Multimedia Portfolio | 17,635 | (3,658,632) |
Retailing Portfolio | 90 | (8,977,445) |
The tax character of distributions paid was as follows:
February 28, 2009 | Ordinary | Long-term | Total |
Automotive Portfolio | $ 195,123 | $ - | $ 195,123 |
Construction and Housing Portfolio | 984,426 | 2,251,733 | 3,236,159 |
Consumer Discretionary Portfolio | 133,024 | - | 133,024 |
Leisure Portfolio | 1,786,025 | 590,741 | 2,376,766 |
Multimedia Portfolio | 80,043 | 1,247,080 | 1,327,123 |
Retailing Portfolio | 300,191 | - | 300,191 |
February 29, 2008 | Ordinary | Long-term | 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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 ($) | Sales ($) |
Automotive Portfolio | 22,904,564 | 26,599,496 |
Construction and Housing Portfolio | 121,859,173 | 69,435,970 |
Consumer Discretionary Portfolio | 24,713,034 | 15,967,938 |
Leisure Portfolio | 223,327,497 | 206,303,489 |
Multimedia Portfolio | 15,329,723 | 24,735,421 |
Retailing Portfolio | 245,404,854 | 235,407,325 |
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% | .56% |
Construction and Housing Portfolio | .30% | .26% | .56% |
Consumer Discretionary Portfolio | .30% | .26% | .56% |
Leisure Portfolio | .30% | .26% | .56% |
Multimedia Portfolio | .30% | .26% | .56% |
Retailing Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Automotive Portfolio | .30% |
Construction and Housing Portfolio | .31% |
Consumer Discretionary Portfolio | .30% |
Leisure Portfolio | .28% |
Multimedia Portfolio | .30% |
Retailing Portfolio | .30% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Automotive Portfolio | $ 3,307 |
Construction and Housing Portfolio | 9,981 |
Consumer Discretionary Portfolio | 3,264 |
Leisure Portfolio | 3,565 |
Multimedia Portfolio | 2,827 |
Retailing Portfolio | 10,043 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Automotive Portfolio | $ 46 |
Construction and Housing Portfolio | 299 |
Consumer Discretionary Portfolio | 80 |
Leisure Portfolio | 596 |
Multimedia Portfolio | 133 |
Retailing Portfolio | 167 |
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% | $ 46,605 |
Consumer Discretionary Portfolio | 1.15% | 8,871 |
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 | $ 312 | $ - | $ - |
Construction and Housing Portfolio | 4,117 | - | 51 |
Consumer Discretionary Portfolio | 106 | - | - |
Leisure Portfolio | 2,470 | - | - |
Multimedia Portfolio | 94 | - | - |
Retailing Portfolio | 1,749 | 1,371 | - |
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.
Annual Report
Notes to Financial Statements - continued
10. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
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 Portfolio, Multimedia Portfolio and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP{
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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). |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (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. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Automotive Portfolio | - | 99% |
Select Construction and Housing Portfolio | 99% | 77% |
Select Consumer Discretionary Portfolio | 100% | 100% |
Select Leisure Portfolio | 88% | 100% |
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 2008 | December 2008 |
Select Automotive Portfolio | - | 100% |
Select Construction and Housing Portfolio | 99% | 77% |
Select Consumer Discretionary Portfolio | 100% | 100% |
Select Leisure Portfolio | 100% | 100% |
Select Multimedia Portfolio | - | 100% |
Select Retailing Portfolio | - | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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.
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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.
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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.
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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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Making Changes
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(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
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Covington, KY 41015
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Merrimack, NH 03054-0500
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
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(U.K.) Inc.
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FIL Investment Advisors
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Fidelity®
Select Portfolios®
Consumer Staples Sector
Select Consumer Staples Portfolio
Annual Report
February 28, 2009
(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 fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Consumer Staples A | -29.23% | 2.65% | 3.32% |
A Prior to October 1, 2006, Consumer Staples 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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Robert Lee, Portfolio Manager of Select Consumer Staples Portfolio: During the past year, the fund's Retail Class shares declined 29.23%, lagging the 24.11% decline of the fund's sector benchmark, the MSCI® US Investable Market Consumer Staples Index, but beating the S&P 500. A large part of the fund's underperformance of the MSCI index came from stocks with emerging-markets exposure, a theme I've been pursuing in the portfolio for some time. While I was correct on the business fundamentals - consumer staples spending continued to grow faster in emerging markets than in developed economies - I was wrong on the direction of the equity market. In a dramatically slowing economy, investors fled to the perceived safety of consumer staples companies doing business exclusively in developed nations. The stronger dollar also hurt the performance of foreign securities when translated back into dollars, including those securities held by the fund. On an industry level, the fund suffered from stock selection in brewers and in packaged food and meats, as well as from a major underweighting in hypermarkets and super centers. In the latter area, a below-market weighting in Wal-Mart was the key culprit. The stock proved very resilient as investors expected the company to benefit from its bargain pricing strategy. Within brewing, avoiding Anheuser-Busch for much of the period hurt when its share price spiked on a takeover bid from Belgian-based InBev, another fund detractor. However, once the deal was successfully consummated, the combined Anheuser-Busch InBev entity was the top individual contributor to relative performance. Our shares in personal products maker Avon, eastern European soft drink distributor Coca-Cola Hellenic and French spirits distiller Pernod Ricard declined sharply as well. On the positive side, overweighting brewers, underweighting household products and tobacco, and good stock selection in food retail contributed. Within household products, Kimberly-Clark and Procter & Gamble were helpful due to timely ownership. Elsewhere, I underweighted tobacco giant Philip Morris International, which was hurt by its foreign-currency-based earnings. I bought bottler Coca-Cola Enterprises at an attractive valuation, and its stock rose as the firm enjoyed expanding profit margins later in the period. The fund's cash position also aided returns.
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
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, 2008 to Febru-ary 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 725.20 | $ 5.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 724.30 | $ 6.24 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.60 | $ 8.37 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.50 | $ 8.33 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Consumer Staples | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 4.02 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
Institutional Class | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 3.98 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.1 | 16.4 |
The Coca-Cola Co. | 9.8 | 9.7 |
PepsiCo, Inc. | 8.9 | 8.4 |
Wal-Mart Stores, Inc. | 6.5 | 2.9 |
CVS Caremark Corp. | 6.2 | 5.5 |
British American Tobacco PLC sponsored ADR | 4.1 | 3.9 |
Nestle SA (Reg.) | 4.1 | 0.0 |
Anheuser-Busch InBev NV | 3.2 | 0.0 |
Unilever NV (NY Shares) | 3.0 | 2.5 |
Walgreen Co. | 2.8 | 2.8 |
| 63.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Beverages | 33.4% |
| |
Food & Staples Retailing | 19.0% |
| |
Household Products | 18.6% |
| |
Food Products | 14.0% |
| |
Tobacco | 8.1% |
| |
All Others* | 6.9% |
|
|
As of August 31, 2008 | |||
Beverages | 32.1% |
| |
Household Products | 23.6% |
| |
Food & Staples Retailing | 15.0% |
| |
Food Products | 14.6% |
| |
Tobacco | 7.8% |
| |
All Others* | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Staples Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value | ||
BEVERAGES - 33.4% | |||
Brewers - 6.6% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 245,611 | $ 1,560,260 | |
Anheuser-Busch InBev NV | 1,050,200 | 28,692,133 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 108,200 | 4,377,772 | |
Molson Coors Brewing Co. Class B | 662,380 | 23,335,647 | |
SABMiller PLC | 127,950 | 1,852,269 | |
| 59,818,081 | ||
Distillers & Vintners - 4.6% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,604,200 | 20,934,810 | |
Diageo PLC sponsored ADR | 265,900 | 12,361,691 | |
Pernod Ricard SA (d) | 130,100 | 7,082,663 | |
Remy Cointreau SA | 35,600 | 804,202 | |
| 41,183,366 | ||
Soft Drinks - 22.2% | |||
Coca-Cola Amatil Ltd. | 260,984 | 1,489,417 | |
Coca-Cola Enterprises, Inc. | 708,200 | 8,130,136 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 116,200 | 3,620,792 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 195,510 | 2,303,108 | |
Coca-Cola Icecek AS | 517,332 | 2,145,280 | |
Cott Corp. (a) | 1,372,400 | 1,100,380 | |
Dr Pepper Snapple Group, Inc. (a) | 155,700 | 2,187,585 | |
Embotelladora Andina SA sponsored ADR | 308,241 | 4,407,846 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 77,300 | 1,780,992 | |
Pepsi Bottling Group, Inc. | 253,100 | 4,682,350 | |
PepsiCo, Inc. | 1,672,700 | 80,523,778 | |
The Coca-Cola Co. | 2,154,400 | 88,007,240 | |
| 200,378,904 | ||
TOTAL BEVERAGES | 301,380,351 | ||
FOOD & STAPLES RETAILING - 19.0% | |||
Drug Retail - 9.0% | |||
CVS Caremark Corp. | 2,177,300 | 56,043,702 | |
Walgreen Co. | 1,067,900 | 25,480,094 | |
| 81,523,796 | ||
Food Distributors - 0.1% | |||
United Natural Foods, Inc. (a) | 26,600 | 395,808 | |
Food Retail - 3.4% | |||
Kroger Co. | 651,900 | 13,474,773 | |
Safeway, Inc. | 861,500 | 15,937,750 | |
SUPERVALU, Inc. | 99,000 | 1,545,390 | |
| 30,957,913 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 6.5% | |||
Wal-Mart Stores, Inc. | 1,195,500 | $ 58,866,420 | |
TOTAL FOOD & STAPLES RETAILING | 171,743,937 | ||
FOOD PRODUCTS - 14.0% | |||
Agricultural Products - 3.2% | |||
Archer Daniels Midland Co. | 571,800 | 15,244,188 | |
Bunge Ltd. (d) | 168,602 | 7,904,062 | |
Corn Products International, Inc. | 73,300 | 1,478,461 | |
SLC Agricola SA | 343,800 | 2,024,972 | |
Viterra, Inc. (a) | 307,900 | 2,449,356 | |
| 29,101,039 | ||
Packaged Foods & Meats - 10.8% | |||
Cadbury PLC sponsored ADR | 75,612 | 2,316,752 | |
Groupe Danone | 145,100 | 6,884,552 | |
Kraft Foods, Inc. Class A | 150,600 | 3,430,668 | |
Lindt & Spruengli AG (d) | 79 | 1,468,202 | |
Nestle SA (Reg.) | 1,122,867 | 36,703,912 | |
Perdigao SA | 126,600 | 1,554,802 | |
PureCircle Ltd. (a) | 324,800 | 765,116 | |
Ralcorp Holdings, Inc. (a) | 59,100 | 3,581,460 | |
Sadia SA ADR (d) | 431,000 | 1,474,020 | |
Smithfield Foods, Inc. (a) | 118,700 | 931,795 | |
Tyson Foods, Inc. Class A | 1,175,300 | 9,907,779 | |
Unilever NV (NY Shares) | 1,417,512 | 27,088,654 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR (a)(d) | 37,600 | 1,114,088 | |
| 97,221,800 | ||
TOTAL FOOD PRODUCTS | 126,322,839 | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 329 | 33 | |
HOUSEHOLD DURABLES - 0.2% | |||
Housewares & Specialties - 0.2% | |||
Fortune Brands, Inc. | 89,600 | 2,128,000 | |
HOUSEHOLD PRODUCTS - 18.6% | |||
Household Products - 18.6% | |||
Colgate-Palmolive Co. | 331,700 | 19,961,706 | |
Kimberly-Clark Corp. | 238,000 | 11,212,180 | |
Procter & Gamble Co. | 2,828,197 | 136,234,250 | |
| 167,408,136 | ||
PERSONAL PRODUCTS - 2.8% | |||
Personal Products - 2.8% | |||
Avon Products, Inc. | 1,199,276 | 21,095,265 | |
Bare Escentuals, Inc. (a) | 199,905 | 631,700 | |
Herbalife Ltd. | 16,600 | 226,424 | |
Common Stocks - continued | |||
Shares | Value | ||
PERSONAL PRODUCTS - CONTINUED | |||
Personal Products - continued | |||
Mead Johnson Nutrition Co. Class A (a) | 80,100 | $ 2,209,959 | |
Physicians Formula Holdings, Inc. (a) | 396,456 | 927,707 | |
| 25,091,055 | ||
PHARMACEUTICALS - 1.5% | |||
Pharmaceuticals - 1.5% | |||
Johnson & Johnson | 217,400 | 10,870,000 | |
Perrigo Co. | 107,500 | 2,159,675 | |
| 13,029,675 | ||
TOBACCO - 8.1% | |||
Tobacco - 8.1% | |||
Altria Group, Inc. | 879,000 | 13,571,760 | |
British American Tobacco PLC sponsored ADR | 731,980 | 37,360,259 | |
KT&G Corp. | 990 | 50,752 | |
Lorillard, Inc. | 39,400 | 2,302,536 | |
Philip Morris International, Inc. | 532,100 | 17,809,387 | |
Souza Cruz Industria Comerico | 113,800 | 2,281,800 | |
| 73,376,494 | ||
TOTAL COMMON STOCKS (Cost $1,089,424,078) | 880,480,520 | ||
Money Market Funds - 3.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 20,026,747 | $ 20,026,747 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,982,496 | 6,982,496 | |
TOTAL MONEY MARKET FUNDS (Cost $27,009,243) | 27,009,243 |
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $1,116,433,321) | 907,489,763 |
NET OTHER ASSETS - (0.6)% | (5,656,581) | ||
NET ASSETS - 100% | $ 901,833,182 |
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 | $ 409,906 |
Fidelity Securities Lending Cash Central Fund | 422,078 |
Total | $ 831,984 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 907,489,763 | $ 821,696,512 | $ 85,793,251 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.3% |
United Kingdom | 5.9% |
Switzerland | 4.2% |
Belgium | 3.2% |
Netherlands | 3.0% |
France | 1.7% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $14,179,345 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $20,196,973 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $6,812,362) - See accompanying schedule: Unaffiliated issuers (cost $1,089,424,078) | $ 880,480,520 |
|
Fidelity Central Funds (cost $27,009,243) | 27,009,243 |
|
Total Investments (cost $1,116,433,321) |
| $ 907,489,763 |
Receivable for investments sold | 8,231,074 | |
Receivable for fund shares sold | 3,397,361 | |
Dividends receivable | 972,894 | |
Distributions receivable from Fidelity Central Funds | 25,369 | |
Prepaid expenses | 7,903 | |
Other receivables | 1,908 | |
Total assets | 920,126,272 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,844,030 | |
Payable for fund shares redeemed | 3,597,276 | |
Accrued management fee | 449,415 | |
Distribution fees payable | 95,887 | |
Other affiliated payables | 270,921 | |
Other payables and accrued expenses | 53,065 | |
Collateral on securities loaned, at value | 6,982,496 | |
Total liabilities | 18,293,090 | |
|
|
|
Net Assets | $ 901,833,182 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,160,640,517 | |
Undistributed net investment income | 512,356 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (50,373,312) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (208,946,379) | |
Net Assets | $ 901,833,182 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 43.94 | |
|
|
|
Maximum offering price per share (100/94.25 of $43.94) | $ 46.62 | |
Class T: | $ 43.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $43.75) | $ 45.34 | |
Class B: | $ 43.53 | |
|
|
|
Class C: | $ 43.46 | |
|
|
|
Consumer Staples: | $ 44.14 | |
|
|
|
Institutional Class: | $ 44.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Staples Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 20,355,348 |
Interest |
| 4,760 |
Income from Fidelity Central Funds |
| 831,984 |
Total income |
| 21,192,092 |
|
|
|
Expenses | ||
Management fee | $ 4,860,293 | |
Transfer agent fees | 2,267,655 | |
Distribution fees | 694,800 | |
Accounting and security lending fees | 303,131 | |
Custodian fees and expenses | 130,860 | |
Independent trustees' compensation | 4,343 | |
Registration fees | 208,991 | |
Audit | 41,881 | |
Legal | 4,723 | |
Interest | 3,824 | |
Miscellaneous | 41,147 | |
Total expenses before reductions | 8,561,648 | |
Expense reductions | (35,242) | 8,526,406 |
Net investment income (loss) | 12,665,686 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (44,519,180) | |
Foreign currency transactions | (317,445) | |
Total net realized gain (loss) |
| (44,836,625) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (269,137,670) | |
Assets and liabilities in foreign currencies | (3,785) | |
Total change in net unrealized appreciation (depreciation) |
| (269,141,455) |
Net gain (loss) | (313,978,080) | |
Net increase (decrease) in net assets resulting from operations | $ (301,312,394) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 12,665,686 | $ 5,595,200 |
Net realized gain (loss) | (44,836,625) | 16,781,246 |
Change in net unrealized appreciation (depreciation) | (269,141,455) | 23,844,075 |
Net increase (decrease) in net assets resulting from operations | (301,312,394) | 46,220,521 |
Distributions to shareholders from net investment income | (11,887,776) | (4,297,338) |
Distributions to shareholders from net realized gain | (334,486) | (21,936,184) |
Total distributions | (12,222,262) | (26,233,522) |
Share transactions - net increase (decrease) | 494,877,505 | 323,338,123 |
Redemption fees | 113,075 | 70,107 |
Total increase (decrease) in net assets | 181,455,924 | 343,395,229 |
|
|
|
Net Assets | ||
Beginning of period | 720,377,258 | 376,982,029 |
End of period (including undistributed net investment income of $512,356 and undistributed net investment income of $1,685,304, respectively) | $ 901,833,182 | $ 720,377,258 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | (19.19) | 7.29 | 1.28 |
Total from investment operations | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.66) | (.42) | - |
Distributions from net realized gain | (.02) | (2.44) | - |
Total distributions | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B,C,D | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | (19.12) | 7.29 | 1.18 |
Total from investment operations | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.60) | (.35) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B,C,D | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | (19.01) | 7.27 | 1.18 |
Total from investment operations | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.42) | (.19) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B,C,D | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | (19.00) | 7.28 | 1.18 |
Total from investment operations | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.44) | (.29) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B,C,D | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .88 | .71 | .56 | .50 | .29 |
Net realized and unrealized gain (loss) | (19.31) | 7.30 | 8.88 | 3.25 | 4.90 |
Total from investment operations | (18.43) | 8.01 | 9.44 | 3.75 | 5.19 |
Distributions from net investment income | (.67) | (.46) | (.32) | (.44) | (.29) |
Distributions from net realized gain | (.03) | (2.44) | (3.18) | (2.56) | - |
Total distributions | (.69) H | (2.90) | (3.50) | (3.00) | (.29) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .02 |
Net asset value, end of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Total Return A,B | (29.23)% | 13.72% | 18.43% | 7.50% | 11.24% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | .91% | 1.01% | 1.04% | 1.06% |
Expenses net of fee waivers, if any | .91% | .90% | .99% | 1.04% | 1.06% |
Expenses net of all reductions | .90% | .90% | .98% | 1.03% | 1.05% |
Net investment income (loss) | 1.55% | 1.12% | .99% | .97% | .61% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 |
Portfolio turnover rate E | 70% | 71% | 99% | 75% | 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. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | (19.23) | 7.30 | 1.16 |
Total from investment operations | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.73) | (.51) | - |
Distributions from net realized gain | (.03) | (2.44) | - |
Total distributions | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | .01 | .01 | - J |
Net asset value, end of period | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B,C | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .91% | .85% | 1.00% A |
Expenses net of all reductions | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, 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 | $ 18,490,621 |
|
Unrealized depreciation | (243,433,994) |
|
Net unrealized appreciation (depreciation) | (224,943,373) |
|
Undistributed ordinary income | 512,482 |
|
Capital loss carryforward | (14,179,345) |
|
|
|
|
Cost for federal income tax purposes | $ 1,132,433,136 |
|
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 12,222,262 | $ 15,086,000 |
Long-term Capital Gains | - | 11,147,522 |
Total | $ 12,222,262 | $ 26,233,522 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $1,076,568,804 and $588,881,981, 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, except for the Institutional Class. 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% | $ 170,841 | $ 18,484 |
Class T | .25% | .25% | 70,470 | 65 |
Class B | .75% | .25% | 102,761 | 77,156 |
Class C | .75% | .25% | 350,728 | 230,446 |
|
|
| $ 694,800 | $ 326,151 |
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
6. 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 | $ 206,336 |
Class T | 20,690 |
Class B* | 24,704 |
Class C* | 20,538 |
| $ 272,268 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 194,817 | .29 |
Class T | 43,106 | .31 |
Class B | 31,119 | .30 |
Class C | 96,921 | .28 |
Consumer Staples | 1,854,710 | .26 |
Institutional Class | 46,982 | .27 |
| $ 2,267,655 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,479 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 5,978,800 | 2.30% | $ 3,824 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,280 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $422,078.
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 $33,412 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 $617. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Consumer Staples | $ 1,208 |
|
Institutional Class | 5 |
|
| $ 1,213 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
| 2009 | 2008 |
From net investment income |
|
|
Class A | $ 1,409,006 | $ 54,271 |
Class T | 273,000 | 42,873 |
Class B | 118,536 | 7,270 |
Class C | 437,729 | 46,840 |
Consumer Staples | 9,279,861 | 4,124,954 |
Institutional Class | 369,644 | 21,130 |
Total | $ 11,887,776 | $ 4,297,338 |
From net realized gain |
|
|
Class A | $ 11,953 | $ 279,894 |
Class T | - | 271,554 |
Class B | - | 90,489 |
Class C | - | 308,038 |
Consumer Staples | 317,666 | 20,893,023 |
Institutional Class | 4,867 | 93,186 |
Total | $ 334,486 | $ 21,936,184 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class A |
|
|
|
|
Shares sold | 2,896,213 | 394,208 | $ 154,503,507 | $ 25,121,582 |
Reinvestment of distributions | 27,496 | 4,833 | 1,327,859 | 319,149 |
Shares redeemed | (542,745) | (39,053) | (28,294,587) | (2,497,211) |
Net increase (decrease) | 2,380,964 | 359,988 | $ 127,536,779 | $ 22,943,520 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class T |
|
|
|
|
Shares sold | 520,546 | 195,158 | $ 27,382,626 | $ 12,251,985 |
Reinvestment of distributions | 5,430 | 4,490 | 260,678 | 296,489 |
Shares redeemed | (108,963) | (108,690) | (5,646,618) | (6,862,659) |
Net increase (decrease) | 417,013 | 90,958 | $ 21,996,686 | $ 5,685,815 |
Class B |
|
|
|
|
Shares sold | 323,554 | 76,823 | $ 17,593,411 | $ 4,855,507 |
Reinvestment of distributions | 1,967 | 1,410 | 94,022 | 92,490 |
Shares redeemed | (60,442) | (4,224) | (3,153,125) | (268,236) |
Net increase (decrease) | 265,079 | 74,009 | $ 14,534,308 | $ 4,679,761 |
Class C |
|
|
|
|
Shares sold | 1,133,018 | 328,900 | $ 59,347,217 | $ 21,121,099 |
Reinvestment of distributions | 6,095 | 4,849 | 290,992 | 319,529 |
Shares redeemed | (191,974) | (20,712) | (10,093,420) | (1,307,625) |
Net increase (decrease) | 947,139 | 313,037 | $ 49,544,789 | $ 20,133,003 |
Consumer Staples |
|
|
|
|
Shares sold | 13,482,265 | 8,600,962 | $ 765,828,751 | $ 555,032,219 |
Reinvestment of distributions | 185,893 | 360,932 | 9,096,289 | 23,544,138 |
Shares redeemed | (9,136,327) | (5,052,205) | (521,761,725) | (318,954,187) |
Net increase (decrease) | 4,531,831 | 3,909,689 | $ 253,163,315 | $ 259,622,170 |
Institutional Class |
|
|
|
|
Shares sold | 760,504 | 204,550 | $ 40,084,673 | $ 13,014,809 |
Reinvestment of distributions | 4,038 | 995 | 196,481 | 65,503 |
Shares redeemed | (227,140) | (43,560) | (12,179,526) | (2,806,458) |
Net increase (decrease) | 537,402 | 161,985 | $ 28,101,628 | $ 10,273,854 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014 which is recorded in the accompanying Statement of Operations.
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 Consumer Staples Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio (a fund of Fidelity Select Portfolios) at February 28, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Consumer Staples Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (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. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 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 | ||
| # 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
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELCS-UANN-0409
1.846041.102
Fidelity®
Select Portfolios®
Energy Sector
Select Energy Portfolio
Select Energy Service Portfolio
Select Natural Gas Portfolio
Select Natural Resources Portfolio
Annual Report
February 28, 2009
(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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Energy Portfolio | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 450.30 | $ 3.16 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.43 | $ 4.41 |
Energy Service Portfolio | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 350.70 | $ 2.91 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.48 | $ 4.36 |
Natural Gas Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 442.60 | $ 3.18 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Natural Resources Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 466.30 | $ 3.24 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Energy Portfolio | -56.63% | 5.69% | 9.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Energy Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Dowd, Portfolio Manager of Select Energy Portfolio: For the 12 months ending February 28, 2009, the fund returned - -56.63%, lagging the -43.42% return of the MSCI® US Investable Market Energy Index and the S&P 500. Economically sensitive stocks, including those of most energy and commodities companies, suffered significant losses during the period, as dwindling credit choked off economic growth around the world. Unfortunately, the fund's fairly aggressive positioning in mid- and smaller-sized company stocks, as well as a large underweighting in stronger-performing integrated oil stocks, led to its underperformance relative to the MSCI index. The biggest detractors included underweightings in integrated oil companies Exxon Mobil and Chevron. Overweighting the oil and gas refining/marketing and oil and gas exploration/production segments also had a significant negative impact. A large stake in oil and gas refiner Valero Energy hurt as refining margins continued to drop over the period. Large stakes in oil rig manufacturer National Oilwell Varco and natural gas drill-rig leasing company Nabors Industries declined when the global recession curtailed demand for their services. Brighter spots included underweightings in poorly performing integrated oil company ConocoPhillips, deepwater oil rig company Transocean and oil and gas exploration/production company Devon Energy. A major stake in natural gas producer Southwestern Energy boosted returns because this low-cost producer was able to operate more profitably than competitors in the current economic climate. A small stake in cash also helped during this down-market 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 Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Occidental Petroleum Corp. | 5.3 | 3.2 |
Southwestern Energy Co. | 5.1 | 2.2 |
Hess Corp. | 4.9 | 2.8 |
Range Resources Corp. | 4.7 | 4.4 |
Noble Corp. | 4.4 | 0.7 |
Transocean Ltd. | 4.0 | 0.8 |
Cabot Oil & Gas Corp. | 3.2 | 3.0 |
Petrohawk Energy Corp. | 2.9 | 3.4 |
Weatherford International Ltd. | 2.9 | 2.6 |
Valero Energy Corp. | 2.8 | 4.0 |
| 40.2 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Oil, Gas & Consumable Fuels | 66.2% |
| |
Energy Equipment & Services | 28.7% |
| |
Electrical Equipment | 1.9% |
| |
Gas Utilities | 1.3% |
| |
Industrial Conglomerates | 0.6% |
| |
All Others* | 1.3% |
|
As of August 31, 2008 | |||
Oil, Gas & Consumable Fuels | 61.4% |
| |
Energy Equipment & Services | 30.9% |
| |
Electrical Equipment | 5.6% |
| |
Construction & Engineering | 0.5% |
| |
Gas Utilities | 0.3% |
| |
All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Energy Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.0% | |||
Environmental & Facility Services - 0.0% | |||
Fuel Tech, Inc. (a) | 45,359 | $ 419,117 | |
CONSTRUCTION & ENGINEERING - 0.5% | |||
Construction & Engineering - 0.5% | |||
Jacobs Engineering Group, Inc. (a) | 193,854 | 6,540,634 | |
ELECTRICAL EQUIPMENT - 1.9% | |||
Electrical Components & Equipment - 1.8% | |||
Energy Conversion Devices, Inc. (a) | 161,817 | 3,548,647 | |
Evergreen Solar, Inc. (a)(d) | 730,527 | 891,243 | |
First Solar, Inc. (a)(d) | 64,500 | 6,820,230 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 1,326,182 | 2,692,149 | |
Q-Cells SE (a)(d) | 50,800 | 841,647 | |
Renewable Energy Corp. AS (a)(d) | 198,200 | 1,344,489 | |
Sunpower Corp. Class B (a) | 284,600 | 7,046,696 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 122,700 | 747,243 | |
| 23,932,344 | ||
Heavy Electrical Equipment - 0.1% | |||
Vestas Wind Systems AS (a) | 38,200 | 1,662,965 | |
TOTAL ELECTRICAL EQUIPMENT | 25,595,309 | ||
ENERGY EQUIPMENT & SERVICES - 28.7% | |||
Oil & Gas Drilling - 14.7% | |||
Atwood Oceanics, Inc. (a) | 1,065,645 | 16,283,056 | |
Helmerich & Payne, Inc. | 1,015,698 | 24,031,415 | |
Hercules Offshore, Inc. (a) | 599,933 | 863,904 | |
Nabors Industries Ltd. (a) | 2,322,411 | 22,550,611 | |
Noble Corp. | 2,399,100 | 58,993,869 | |
Patterson-UTI Energy, Inc. | 241,442 | 2,073,987 | |
Pride International, Inc. (a) | 1,114,000 | 19,205,360 | |
Transocean Ltd. (a) | 889,051 | 53,138,578 | |
| 197,140,780 | ||
Oil & Gas Equipment & Services - 14.0% | |||
Baker Hughes, Inc. | 313,000 | 9,174,030 | |
BJ Services Co. | 557,902 | 5,394,912 | |
Core Laboratories NV | 22,600 | 1,704,040 | |
Dresser-Rand Group, Inc. (a) | 78,900 | 1,657,689 | |
Dril-Quip, Inc. (a) | 237,078 | 4,983,380 | |
Exterran Holdings, Inc. (a) | 249,100 | 4,508,710 | |
Fugro NV (Certificaten Van Aandelen) unit | 5,202 | 133,671 | |
Global Industries Ltd. (a) | 1,140,360 | 3,603,538 | |
Halliburton Co. | 923,730 | 15,066,036 | |
Helix Energy Solutions Group, Inc. (a) | 231,200 | 719,032 | |
National Oilwell Varco, Inc. (a) | 1,348,812 | 36,053,745 | |
Oceaneering International, Inc. (a) | 212,070 | 6,737,464 | |
Oil States International, Inc. (a) | 125,700 | 1,674,324 | |
Schlumberger Ltd. (NY Shares) | 806,760 | 30,705,286 | |
Smith International, Inc. | 186,309 | 4,001,917 | |
| |||
Shares | Value | ||
Superior Energy Services, Inc. (a) | 543,306 | $ 7,166,206 | |
Tenaris SA sponsored ADR | 130,500 | 2,290,275 | |
Tidewater, Inc. | 180,100 | 6,361,132 | |
TSC Offshore Group Ltd. (a) | 3,620,000 | 256,051 | |
Weatherford International Ltd. (a) | 3,642,500 | 38,865,475 | |
Willbros Group, Inc. (a) | 781,818 | 5,613,453 | |
| 186,670,366 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 383,811,146 | ||
GAS UTILITIES - 1.3% | |||
Gas Utilities - 1.3% | |||
EQT Corp. | 167,621 | 5,154,346 | |
Questar Corp. | 373,128 | 10,757,280 | |
Zhongyu Gas Holdings Ltd. (a) | 18,716,000 | 1,078,519 | |
| 16,990,145 | ||
INDUSTRIAL CONGLOMERATES - 0.6% | |||
Industrial Conglomerates - 0.6% | |||
McDermott International, Inc. (a) | 695,600 | 8,201,124 | |
MACHINERY - 0.0% | |||
Industrial Machinery - 0.0% | |||
Vallourec SA | 200 | 15,564 | |
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Teck Cominco Ltd. Class B (sub. vtg.) | 180,900 | 635,635 | |
MULTI-UTILITIES - 0.0% | |||
Multi-Utilities - 0.0% | |||
Public Service Enterprise Group, Inc. | 100 | 2,729 | |
Sempra Energy | 96 | 3,991 | |
| 6,720 | ||
OIL, GAS & CONSUMABLE FUELS - 66.2% | |||
Coal & Consumable Fuels - 4.6% | |||
Arch Coal, Inc. | 917,000 | 12,746,300 | |
CONSOL Energy, Inc. | 597,816 | 16,290,486 | |
Foundation Coal Holdings, Inc. | 1,043,200 | 16,774,656 | |
Massey Energy Co. | 601,305 | 6,945,073 | |
Peabody Energy Corp. | 345,700 | 8,182,719 | |
PT Bumi Resources Tbk | 8,082,000 | 497,131 | |
Walter Industries, Inc. | 100 | 1,817 | |
| 61,438,182 | ||
Integrated Oil & Gas - 21.7% | |||
Chevron Corp. | 464,558 | 28,203,316 | |
ConocoPhillips | 313,400 | 11,705,490 | |
ENI SpA sponsored ADR | 374,800 | 14,995,748 | |
Exxon Mobil Corp. | 184,206 | 12,507,587 | |
Hess Corp. | 1,190,400 | 65,102,976 | |
Imperial Oil Ltd. | 100 | 3,124 | |
Marathon Oil Corp. | 1,287,700 | 29,964,779 | |
Murphy Oil Corp. | 100 | 4,181 | |
Occidental Petroleum Corp. | 1,357,038 | 70,389,559 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Integrated Oil & Gas - continued | |||
Petroleo Brasileiro SA - Petrobras (PN) sponsored ADR (non-vtg.) | 666,900 | $ 14,925,222 | |
Royal Dutch Shell PLC Class A sponsored ADR | 533,000 | 23,436,010 | |
Suncor Energy, Inc. | 156,100 | 3,246,792 | |
Total SA sponsored ADR | 329,300 | 15,542,960 | |
| 290,027,744 | ||
Oil & Gas Exploration & Production - 28.5% | |||
Anadarko Petroleum Corp. | 863,100 | 30,165,345 | |
Apache Corp. | 46,900 | 2,771,321 | |
Berry Petroleum Co. Class A | 8,907 | 59,232 | |
Cabot Oil & Gas Corp. | 2,093,780 | 42,650,299 | |
Canadian Natural Resources Ltd. | 390,900 | 12,567,551 | |
Chesapeake Energy Corp. | 111,600 | 1,745,424 | |
Comstock Resources, Inc. (a) | 671,316 | 20,428,146 | |
Concho Resources, Inc. (a) | 289,802 | 5,781,550 | |
Denbury Resources, Inc. (a) | 1,320,257 | 17,004,910 | |
Devon Energy Corp. | 8,100 | 353,727 | |
EOG Resources, Inc. | 3,947 | 197,508 | |
EXCO Resources, Inc. (a) | 1,429,283 | 13,020,768 | |
Forest Oil Corp. (a) | 2,691 | 38,158 | |
GMX Resources, Inc. (a) | 100 | 1,725 | |
Goodrich Petroleum Corp. (a)(d) | 145,400 | 2,884,736 | |
Nexen, Inc. | 386,300 | 5,277,596 | |
Noble Energy, Inc. | 339,400 | 15,456,276 | |
Oil Search Ltd. | 1,019,127 | 3,245,942 | |
OPTI Canada, Inc. (a) | 818,200 | 643,163 | |
Penn Virginia Corp. | 260,309 | 3,605,280 | |
Petrobank Energy & Resources Ltd. (a) | 74,700 | 1,131,525 | |
Petrohawk Energy Corp. (a) | 2,300,670 | 39,157,403 | |
Plains Exploration & Production Co. (a) | 837,743 | 16,034,401 | |
Quicksilver Resources, Inc. (a) | 1,164,810 | 6,988,860 | |
Range Resources Corp. | 1,757,000 | 62,496,490 | |
SandRidge Energy, Inc. (a) | 968,760 | 6,548,818 | |
Southwestern Energy Co. (a) | 2,378,690 | 68,434,911 | |
Talisman Energy, Inc. | 14,900 | 139,964 | |
Whiting Petroleum Corp. (a) | 100,100 | 2,332,330 | |
| 381,163,359 | ||
| |||
Shares | Value | ||
Oil & Gas Refining & Marketing - 10.0% | |||
Frontier Oil Corp. | 2,391,892 | $ 32,649,326 | |
Holly Corp. | 463,619 | 10,806,959 | |
Sunoco, Inc. | 812,600 | 27,181,470 | |
Tesoro Corp. | 1,682,327 | 24,831,147 | |
Valero Energy Corp. | 1,943,808 | 37,670,999 | |
| 133,139,901 | ||
Oil & Gas Storage & Transport - 1.4% | |||
El Paso Corp. | 865,900 | 5,844,825 | |
Williams Companies, Inc. | 1,189,000 | 13,435,700 | |
| 19,280,525 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 885,049,711 | ||
TOTAL COMMON STOCKS (Cost $1,746,635,865) | 1,327,265,105 | ||
Money Market Funds - 2.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 21,659,703 | 21,659,703 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 15,996,000 | 15,996,000 | |
TOTAL MONEY MARKET FUNDS (Cost $37,655,703) | 37,655,703 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% (Cost $1,784,291,568) | 1,364,920,808 | ||
NET OTHER ASSETS - (2.1)% | (27,538,885) | ||
NET ASSETS - 100% | $ 1,337,381,923 |
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 | $ 395,826 |
Fidelity Securities Lending Cash Central Fund | 1,169,650 |
Total | $ 1,565,476 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,364,920,808 | $ 1,355,844,829 | $ 9,075,979 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.2% |
Cayman Islands | 4.7% |
Switzerland | 4.0% |
Netherlands Antilles | 2.3% |
Canada | 1.8% |
United Kingdom | 1.8% |
France | 1.2% |
Italy | 1.1% |
Brazil | 1.1% |
Panama | 1.0% |
Others (individually less than 1%) | 0.8% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $262,842,323 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $14,779,416) - See accompanying schedule: Unaffiliated issuers (cost $1,746,635,865) | $ 1,327,265,105 |
|
Fidelity Central Funds (cost $37,655,703) | 37,655,703 |
|
Total Investments (cost $1,784,291,568) |
| $ 1,364,920,808 |
Receivable for investments sold | 5,939,792 | |
Receivable for fund shares sold | 2,985,033 | |
Dividends receivable | 2,735,348 | |
Distributions receivable from Fidelity Central Funds | 46,610 | |
Prepaid expenses | 15,182 | |
Other receivables | 2,471 | |
Total assets | 1,376,645,244 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 20,022,843 | |
Payable for fund shares redeemed | 1,834,996 | |
Accrued management fee | 681,469 | |
Other affiliated payables | 404,057 | |
Other payables and accrued expenses | 323,956 | |
Collateral on securities loaned, at value | 15,996,000 | |
Total liabilities | 39,263,321 | |
|
|
|
Net Assets | $ 1,337,381,923 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,088,543,899 | |
Distributions in excess of net investment income | (155) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (331,509,784) | |
Net unrealized appreciation (depreciation) on investments | (419,652,037) | |
Net Assets, for 48,754,457 shares outstanding | $ 1,337,381,923 | |
Net Asset Value, offering price and redemption price per share ($1,337,381,923 ÷ 48,754,457 shares) | $ 27.43 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 20,235,613 |
Interest |
| 6,444 |
Income from Fidelity Central Funds (including $1,169,650 from security lending) |
| 1,565,476 |
Total income |
| 21,807,533 |
|
|
|
Expenses | ||
Management fee | $ 14,084,653 | |
Transfer agent fees | 5,782,923 | |
Accounting and security lending fees | 749,884 | |
Custodian fees and expenses | 98,328 | |
Independent trustees' compensation | 12,395 | |
Registration fees | 134,358 | |
Audit | 48,887 | |
Legal | 14,422 | |
Interest | 17,122 | |
Miscellaneous | 133,567 | |
Total expenses before reductions | 21,076,539 | |
Expense reductions | (110,190) | 20,966,349 |
Net investment income (loss) | 841,184 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (276,321,544) | |
Foreign currency transactions | (164,710) | |
Total net realized gain (loss) |
| (276,486,254) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $60,693) | (1,486,947,366) | |
Assets and liabilities in foreign currencies | 39 | |
Total change in net unrealized appreciation (depreciation) |
| (1,486,947,327) |
Net gain (loss) | (1,763,433,581) | |
Net increase (decrease) in net assets resulting from operations | $ (1,762,592,397) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 841,184 | $ 631,157 |
Net realized gain (loss) | (276,486,254) | 227,548,109 |
Change in net unrealized appreciation (depreciation) | (1,486,947,327) | 617,612,214 |
Net increase (decrease) in net assets resulting from operations | (1,762,592,397) | 845,791,480 |
Distributions to shareholders from net investment income | (495,957) | (2,129,374) |
Distributions to shareholders from net realized gain | (62,490,281) | (176,432,494) |
Total distributions | (62,986,238) | (178,561,868) |
Share transactions | 1,140,937,797 | 1,244,851,803 |
Reinvestment of distributions | 59,330,132 | 169,542,081 |
Cost of shares redeemed | (1,193,502,037) | (1,071,446,589) |
Net increase (decrease) in net assets resulting from share transactions | 6,765,892 | 342,947,295 |
Redemption fees | 342,869 | 277,550 |
Total increase (decrease) in net assets | (1,818,469,874) | 1,010,454,457 |
|
|
|
Net Assets | ||
Beginning of period | 3,155,851,797 | 2,145,397,340 |
End of period (including distributions in excess of net investment income of $155 and undistributed net investment income of $446,148, respectively) | $ 1,337,381,923 | $ 3,155,851,797 |
Other Information Shares | ||
Sold | 22,915,495 | 20,488,134 |
Issued in reinvestment of distributions | 912,631 | 2,752,295 |
Redeemed | (24,013,312) | (18,263,322) |
Net increase (decrease) | (185,186) | 4,977,107 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 64.48 | $ 48.80 | $ 49.20 | $ 38.71 | $ 26.52 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .02 | .01 | .18 | .12 | .19 |
Net realized and unrealized gain (loss) | (35.81) | 19.61 | 4.13 | 12.87 | 12.43 |
Total from investment operations | (35.79) | 19.62 | 4.31 | 12.99 | 12.62 |
Distributions from net investment income | (.01) | (.05) | (.10) | (.09) | (.17) |
Distributions from net realized gain | (1.26) | (3.90) | (4.62) | (2.44) | (.28) |
Total distributions | (1.27) | (3.95) | (4.72) | (2.53) | (.45) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .03 | .02 |
Net asset value, end of period | $ 27.43 | $ 64.48 | $ 48.80 | $ 49.20 | $ 38.71 |
Total Return A,B | (56.63)% | 40.72% | 8.57% | 34.39% | 48.07% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .83% | .84% | .89% | .94% | .97% |
Expenses net of fee waivers, if any | .83% | .84% | .89% | .94% | .97% |
Expenses net of all reductions | .83% | .84% | .89% | .89% | .93% |
Net investment income (loss) | .03% | .02% | .36% | .27% | .62% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,337,382 | $ 3,155,852 | $ 2,145,397 | $ 2,547,799 | $ 1,148,860 |
Portfolio turnover rate E | 148% | 55% | 102% | 128% | 91% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Energy Service Portfolio | -61.89% | 1.55% | 11.39% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Energy Service Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Dowd, Portfolio Manager of Select Energy Service Portfolio: For the 12 months ending February 28, 2009, the fund returned -61.89%, lagging the -57.93% return of the MSCI® US Investable Market Energy Equipment & Services Index as well as the S&P 500. Economically sensitive stocks, including those of most energy and commodities companies, suffered significant losses during the period, as dwindling credit choked off economic growth around the world. Unfortunately, poor picks among oil and gas equipment/services and oil and gas drilling stocks led the fund to underperform relative to the MSCI index. The biggest detractors were in the oil and gas drilling and oil and gas equipment/services industries. An overweighting in rig leasing company Hercules Offshore was the largest negative. Underweighting oil and gas equipment/services giant Schlumberger also hurt, as did below-index weightings in deepwater rig companies Transocean and Diamond Offshore Drilling. Large stakes in natural gas drill-rig leasing company Nabors Industries and oil rig manufacturer National Oilwell Varco disappointed when the global recession curtailed demand for their services. Brighter spots included an overweighting in offshore rig company Noble Corp., timely ownership of oil and gas equipment/services company Core Laboratories, underweighting oil and gas equipment/services firm ION Geophysical, and a large position in deepwater oil/gas equipment maker Dril-Quip.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. (NY Shares) | 22.7 | 17.6 |
Noble Corp. | 9.4 | 3.7 |
Transocean Ltd. | 9.3 | 2.3 |
National Oilwell Varco, Inc. | 8.1 | 9.5 |
Weatherford International Ltd. | 4.7 | 6.4 |
Halliburton Co. | 4.5 | 9.7 |
Smith International, Inc. | 4.2 | 2.7 |
Baker Hughes, Inc. | 4.1 | 0.0 |
Helmerich & Payne, Inc. | 3.2 | 2.0 |
Nabors Industries Ltd. | 3.2 | 5.1 |
| 73.4 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Energy Equipment & Services | 95.6% |
| |
Electrical Equipment | 2.2% |
| |
Industrial Conglomerates | 0.3% |
| |
All Others* | 1.9% |
|
As of August 31, 2008 | |||
Energy Equipment & Services | 92.8% |
| |
Electrical Equipment | 4.8% |
| |
Machinery | 1.5% |
| |
Metals & Mining | 0.1% |
| |
Industrial Conglomerates | 0.0% |
| |
All Others* | 0.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Energy Service Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
ELECTRICAL EQUIPMENT - 2.2% | |||
Electrical Components & Equipment - 2.2% | |||
Energy Conversion Devices, Inc. (a) | 148,000 | $ 3,245,640 | |
Evergreen Solar, Inc. (a) | 15,300 | 18,666 | |
First Solar, Inc. (a) | 28,300 | 2,992,442 | |
JA Solar Holdings Co. Ltd. ADR (a)(d) | 659,900 | 1,339,597 | |
Q-Cells SE (a)(d) | 3,800 | 62,958 | |
Renewable Energy Corp. AS (a) | 20,100 | 136,348 | |
Sunpower Corp. Class B (a) | 260,400 | 6,447,504 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 382,000 | 2,326,380 | |
| 16,569,535 | ||
Heavy Electrical Equipment - 0.0% | |||
Vestas Wind Systems AS (a) | 1,400 | 60,946 | |
TOTAL ELECTRICAL EQUIPMENT | 16,630,481 | ||
ENERGY EQUIPMENT & SERVICES - 95.6% | |||
Oil & Gas Drilling - 30.9% | |||
Atwood Oceanics, Inc. (a) | 1,085,025 | 16,579,182 | |
Diamond Offshore Drilling, Inc. | 89,900 | 5,631,336 | |
ENSCO International, Inc. | 123,700 | 3,040,546 | |
Helmerich & Payne, Inc. | 1,012,600 | 23,958,116 | |
Hercules Offshore, Inc. (a)(d) | 1,657,931 | 2,387,421 | |
Nabors Industries Ltd. (a) | 2,461,555 | 23,901,699 | |
Noble Corp. | 2,824,200 | 69,447,078 | |
Patterson-UTI Energy, Inc. | 246,100 | 2,113,999 | |
Pride International, Inc. (a) | 741,900 | 12,790,356 | |
Songa Offshore Se (a) | 344,600 | 493,275 | |
Transocean Ltd. (a) | 1,147,787 | 68,603,229 | |
| 228,946,237 | ||
Oil & Gas Equipment & Services - 64.7% | |||
Baker Hughes, Inc. | 1,027,436 | 30,114,149 | |
BJ Services Co. | 1,352,300 | 13,076,741 | |
Bristow Group, Inc. (a)(d) | 301,040 | 6,096,060 | |
Cal Dive International, Inc. (a) | 62 | 313 | |
Cameron International Corp. (a) | 163,900 | 3,159,992 | |
Compagnie Generale de Geophysique SA (a) | 6,500 | 70,673 | |
Core Laboratories NV | 237,300 | 17,892,420 | |
Dresser-Rand Group, Inc. (a) | 295,700 | 6,212,657 | |
Dril-Quip, Inc. (a) | 461,300 | 9,696,526 | |
Exterran Holdings, Inc. (a)(d) | 397,713 | 7,198,605 | |
Global Industries Ltd. (a)(d) | 2,246,400 | 7,098,624 | |
Gulfmark Offshore, Inc. (a) | 100 | 2,089 | |
Halliburton Co. | 2,059,241 | 33,586,221 | |
Helix Energy Solutions Group, Inc. (a) | 482,200 | 1,499,642 | |
Hornbeck Offshore Services, Inc. (a) | 172,000 | 2,254,920 | |
ION Geophysical Corp. (a) | 17,500 | 18,725 | |
Matrix Service Co. (a) | 172,900 | 1,203,384 | |
NATCO Group, Inc. Class A (a) | 207,708 | 3,695,125 | |
National Oilwell Varco, Inc. (a) | 2,233,362 | 59,697,766 | |
| |||
Shares | Value | ||
Newpark Resources, Inc. (a) | 100 | $ 297 | |
Oceaneering International, Inc. (a) | 145,200 | 4,613,004 | |
Oil States International, Inc. (a) | 117,600 | 1,566,432 | |
Petroleum Geo-Services ASA (a) | 1,050 | 3,447 | |
PHI, Inc. (non-vtg.) (a) | 205,200 | 1,789,344 | |
Prosafe Production Public Ltd. (a) | 96,800 | 157,018 | |
Saipem SpA | 100 | 1,545 | |
Schlumberger Ltd. (NY Shares) | 4,427,246 | 168,500,984 | |
SEACOR Holdings, Inc. (a) | 100 | 5,991 | |
Smith International, Inc. | 1,454,556 | 31,243,863 | |
Superior Energy Services, Inc. (a) | 848,675 | 11,194,023 | |
T-3 Energy Services, Inc. (a) | 240,100 | 2,643,501 | |
Tenaris SA sponsored ADR | 151,000 | 2,650,050 | |
Tesco Corp. (a) | 136,600 | 1,047,722 | |
TETRA Technologies, Inc. (a) | 329,500 | 942,370 | |
Tidewater, Inc. | 315,000 | 11,125,800 | |
Trico Marine Services, Inc. (a)(d) | 225,400 | 737,058 | |
TSC Offshore Group Ltd. (a) | 4,114,000 | 290,992 | |
Weatherford International Ltd. (a) | 3,289,838 | 35,102,571 | |
Willbros Group, Inc. (a)(d) | 396,900 | 2,849,742 | |
| 479,040,386 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 707,986,623 | ||
INDUSTRIAL CONGLOMERATES - 0.3% | |||
Industrial Conglomerates - 0.3% | |||
Keppel Corp. Ltd. | 36,000 | 99,906 | |
McDermott International, Inc. (a) | 181,800 | 2,143,422 | |
| 2,243,328 | ||
TOTAL COMMON STOCKS (Cost $997,603,920) | 726,860,432 | ||
Money Market Funds - 2.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 12,470,757 | 12,470,757 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 7,934,598 | 7,934,598 | |
TOTAL MONEY MARKET FUNDS (Cost $20,405,355) | 20,405,355 | ||
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $1,018,009,275) | 747,265,787 | ||
NET OTHER ASSETS - (0.9)% | (6,320,149) | ||
NET ASSETS - 100% | $ 740,945,638 |
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 | $ 244,553 |
Fidelity Securities Lending Cash Central Fund | 1,548,364 |
Total | $ 1,792,917 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 747,265,787 | $ 745,888,679 | $ 1,377,108 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 54.3% |
Netherlands Antilles | 22.7% |
Cayman Islands | 9.9% |
Switzerland | 9.3% |
Netherlands | 2.4% |
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, 2010 approximately $271,353,144 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $7,471,638) - See accompanying schedule: Unaffiliated issuers (cost $997,603,920) | $ 726,860,432 |
|
Fidelity Central Funds (cost $20,405,355) | 20,405,355 |
|
Total Investments (cost $1,018,009,275) |
| $ 747,265,787 |
Cash | 993,128 | |
Receivable for investments sold | 5,033,540 | |
Receivable for fund shares sold | 1,576,179 | |
Dividends receivable | 1,459,177 | |
Distributions receivable from Fidelity Central Funds | 29,349 | |
Prepaid expenses | 10,876 | |
Other receivables | 346 | |
Total assets | 756,368,382 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,566,894 | |
Payable for fund shares redeemed | 1,299,440 | |
Accrued management fee | 366,935 | |
Other affiliated payables | 222,419 | |
Other payables and accrued expenses | 32,458 | |
Collateral on securities loaned, at value | 7,934,598 | |
Total liabilities | 15,422,744 | |
|
|
|
Net Assets | $ 740,945,638 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,314,984,665 | |
Accumulated net investment loss | (122) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (303,295,367) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (270,743,538) | |
Net Assets, for 21,876,528 shares outstanding | $ 740,945,638 | |
Net Asset Value, offering price and redemption price per share ($740,945,638 ÷ 21,876,528 shares) | $ 33.87 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 11,126,690 |
Special dividends |
| 1,610,550 |
Interest |
| 5,864 |
Income from Fidelity Central Funds (including $1,548,364 from security lending) |
| 1,792,917 |
Total income |
| 14,536,021 |
|
|
|
Expenses | ||
Management fee | $ 10,218,429 | |
Transfer agent fees | 3,863,689 | |
Accounting and security lending fees | 589,719 | |
Custodian fees and expenses | 62,296 | |
Independent trustees' compensation | 8,748 | |
Registration fees | 116,824 | |
Audit | 56,897 | |
Legal | 10,655 | |
Interest | 52,650 | |
Miscellaneous | 81,941 | |
Total expenses before reductions | 15,061,848 | |
Expense reductions | (47,995) | 15,013,853 |
Net investment income (loss) | (477,832) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (285,774,941) | |
Investment not meeting investment restrictions | (330) | |
Foreign currency transactions | (20,367) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 330 | |
Total net realized gain (loss) |
| (285,795,308) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $31,085) | (1,034,670,612) | |
Assets and liabilities in foreign currencies | 18,792 | |
Total change in net unrealized appreciation (depreciation) |
| (1,034,651,820) |
Net gain (loss) | (1,320,447,128) | |
Net increase (decrease) in net assets resulting from operations | $ (1,320,924,960) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (477,832) | $ (4,629,705) |
Net realized gain (loss) | (285,795,308) | 125,926,798 |
Change in net unrealized appreciation (depreciation) | (1,034,651,820) | 384,419,952 |
Net increase (decrease) in net assets resulting from operations | (1,320,924,960) | 505,717,045 |
Distributions to shareholders from net realized gain | (95,954,641) | (48,414,370) |
Share transactions | 984,296,735 | 1,788,482,418 |
Reinvestment of distributions | 90,434,435 | 46,304,551 |
Cost of shares redeemed | (1,173,417,767) | (1,257,831,911) |
Net increase (decrease) in net assets resulting from share transactions | (98,686,597) | 576,955,058 |
Redemption fees | 406,720 | 443,438 |
Total increase (decrease) in net assets | (1,515,159,478) | 1,034,701,171 |
|
|
|
Net Assets | ||
Beginning of period | 2,256,105,116 | 1,221,403,945 |
End of period (including accumulated net investment loss of $122 and accumulated net investment loss of $1,163, respectively) | $ 740,945,638 | $ 2,256,105,116 |
Other Information Shares | ||
Sold | 12,065,354 | 19,609,141 |
Issued in reinvestment of distributions | 951,841 | 573,388 |
Redeemed | (15,499,784) | (14,103,217) |
Net increase (decrease) | (2,482,589) | 6,079,312 |
Financial Highlights
Years ended February 28, | 2009 | 2008 J | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 92.62 | $ 66.82 | $ 68.03 | $ 49.44 | $ 35.65 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) F | (.21) | (.21) G | (.12) H | (.20) |
Net realized and unrealized gain (loss) | (54.75) | 28.45 | 3.07 | 18.64 | 13.95 |
Total from investment operations | (54.77) | 28.24 | 2.86 | 18.52 | 13.75 |
Distributions from net realized gain | (4.00) | (2.46) | (4.15) | - | - |
Redemption fees added to paid in capital C | .02 | .02 | .08 | .07 | .04 |
Net asset value, end of period | $ 33.87 | $ 92.62 | $ 66.82 | $ 68.03 | $ 49.44 |
Total Return A,B | (61.89)% | 42.91% | 3.92% | 37.60% | 38.68% |
Ratios to Average Net Assets D,I |
|
|
|
|
|
Expenses before reductions | .82% | .83% | .88% | .94% | .98% |
Expenses net of fee waivers, if any | .82% | .83% | .88% | .94% | .98% |
Expenses net of all reductions | .82% | .83% | .88% | .91% | .96% |
Net investment income (loss) | (.03)% F | (.23)% | (.30)% G | (.21)% H | (.53)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 740,946 | $ 2,256,105 | $ 1,221,404 | $ 1,734,076 | $ 896,252 |
Portfolio turnover rate E | 82% | 64% | 92% | 58% | 34% |
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 $.07 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.11)%. G Investment income per share reflects a special dividend which amounted to $.06 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.39)%. |
See accompanying notes which are an integral part of the financial statements.
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Natural Gas Portfolio | -59.99% | 3.21% | 10.19% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Natural Gas Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from James McElligott, Portfolio Manager of Select Natural Gas Portfolio: During the past year, the fund returned -59.99%, considerably behind both the -48.70% mark of the Standard & Poor's® Custom Natural Gas Index and the S&P 500. Versus the industry index, underweighting regulated utilities hampered performance, as that group posted much smaller losses than the benchmark overall. Owning positions in several refiners - notably Valero Energy and Tesoro - also was counterproductive. Profit margins for the group were squeezed in the first half of the period, when their main input, crude oil, rose faster than the prices for gasoline and the other refined products they sell. When the cost situation finally improved later in the period due to falling crude oil prices, the demand side deteriorated because of the oncoming recession. Valero and Tesoro were out-of-index positions. Stock selection in oil and gas exploration and production, electrical components and equipment, and coal and consumable fuels also detracted. Other individual positions that hurt included two exploration and production (E&P) holdings, Quicksilver Resources and Plains Exploration & Production, that made ill-timed acquisitions and took on considerable debt. China-based Suntech Power, a worldwide leader in the design and manufacture of solar power systems, further detracted. Plains Exploration & Production and Suntech were out-of-index holdings, and Suntech was not held by the fund at period end. Additionally, not owning regulated utilities and benchmark components Duke Energy, Dominion Resources and Sempra Energy hampered our results. Conversely, underweighted exposures to the oil and gas storage and transportation group and the oil and gas drilling segment aided performance, as did a small cash position. Underweighting driller Transocean and not owning integrated natural gas company Williams for much of the period contributed, as both stocks struggled with the late-period weakness in energy prices. Two E&P holdings that worked out relatively well were Southwestern Energy and Range Resources, the fund's largest holding at period end and an out-of-index position.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Portfolio
Select Natural Gas Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Range Resources Corp. | 8.1 | 4.3 |
Denbury Resources, Inc. | 8.0 | 4.7 |
Chesapeake Energy Corp. | 7.9 | 8.2 |
Southwestern Energy Co. | 6.9 | 4.2 |
Plains Exploration & Production Co. | 5.3 | 8.3 |
Quicksilver Resources, Inc. | 4.9 | 3.5 |
Noble Corp. | 4.1 | 0.5 |
Comstock Resources, Inc. | 3.3 | 3.1 |
Ultra Petroleum Corp. | 2.6 | 5.5 |
Petrohawk Energy Corp. | 2.4 | 1.3 |
| 53.5 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Oil, Gas & Consumable Fuels | 79.0% |
| |
Energy Equipment & Services | 15.9% |
| |
Electrical Equipment | 4.1% |
| |
Metals & Mining | 0.4% |
| |
Independent Power Producers & Energy Traders | 0.3% |
| |
All Others* | 0.3% |
|
As of August 31, 2008 | |||
Oil, Gas & Consumable Fuels | 72.2% |
| |
Energy Equipment & Services | 17.7% |
| |
Electrical Equipment | 5.9% |
| |
Independent Power Producers & Energy Traders | 2.1% |
| |
Metals & Mining | 0.8% |
| |
All Others* | 1.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Natural Gas Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 95.1% | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Specialized Finance - 0.2% | |||
Climate Exchange PLC (a)(d) | 111,000 | $ 1,138,345 | |
ELECTRICAL EQUIPMENT - 4.1% | |||
Electrical Components & Equipment - 4.1% | |||
Acuity Brands, Inc. | 43,300 | 992,436 | |
First Solar, Inc. (a)(d) | 102,400 | 10,827,776 | |
Q-Cells SE (a)(d) | 152,100 | 2,519,972 | |
Renewable Energy Corp. AS (a)(d) | 598,100 | 4,057,210 | |
Sunpower Corp. Class B (a) | 436,500 | 10,807,740 | |
| 29,205,134 | ||
ENERGY EQUIPMENT & SERVICES - 15.9% | |||
Oil & Gas Drilling - 11.4% | |||
Atwood Oceanics, Inc. (a) | 347,990 | 5,317,287 | |
Diamond Offshore Drilling, Inc. | 117,800 | 7,378,992 | |
ENSCO International, Inc. | 215,300 | 5,292,074 | |
Helmerich & Payne, Inc. | 232,415 | 5,498,939 | |
Hercules Offshore, Inc. (a) | 83,100 | 119,664 | |
Nabors Industries Ltd. (a) | 1,345,682 | 13,066,572 | |
Noble Corp. | 1,170,000 | 28,770,300 | |
Patterson-UTI Energy, Inc. | 437,800 | 3,760,702 | |
Pride International, Inc. (a) | 298,000 | 5,137,520 | |
Rowan Companies, Inc. | 304,500 | 3,687,495 | |
Songa Offshore Se (a) | 312,300 | 447,039 | |
Transocean Ltd. (a) | 29,927 | 1,788,737 | |
| 80,265,321 | ||
Oil & Gas Equipment & Services - 4.5% | |||
Cameron International Corp. (a) | 123,744 | 2,385,784 | |
Complete Production Services, Inc. (a) | 128,600 | 392,230 | |
Halliburton Co. | 210,100 | 3,426,731 | |
National Oilwell Varco, Inc. (a) | 320,356 | 8,563,116 | |
Oceaneering International, Inc. (a) | 34,900 | 1,108,773 | |
Oil States International, Inc. (a) | 38,300 | 510,156 | |
Smith International, Inc. | 221,190 | 4,751,161 | |
TSC Offshore Group Ltd. (a) | 3,962,000 | 280,241 | |
Weatherford International Ltd. (a) | 952,900 | 10,167,443 | |
| 31,585,635 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 111,850,956 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
Dynegy, Inc. Class A (a) | 1,594,100 | 2,072,330 | |
METALS & MINING - 0.4% | |||
Diversified Metals & Mining - 0.4% | |||
Ivanhoe Mines Ltd. (a) | 100,000 | 444,130 | |
Timminco Ltd. (a)(d) | 845,100 | 2,185,575 | |
| 2,629,705 | ||
| |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - 74.2% | |||
Coal & Consumable Fuels - 4.2% | |||
Arch Coal, Inc. | 257,708 | $ 3,582,141 | |
China Coal Energy Co. Ltd. (H Shares) | 4,135,000 | 2,489,153 | |
China Shenhua Energy Co. Ltd. (H Shares) | 1,881,000 | 3,634,840 | |
CONSOL Energy, Inc. | 251,900 | 6,864,275 | |
Evergreen Energy, Inc. (a) | 5,399,315 | 4,216,865 | |
Foundation Coal Holdings, Inc. | 100,000 | 1,608,000 | |
James River Coal Co. (a) | 187,400 | 2,059,526 | |
Massey Energy Co. | 71,500 | 825,825 | |
Peabody Energy Corp. | 131,700 | 3,117,339 | |
PT Bumi Resources Tbk | 16,479,500 | 1,013,669 | |
| 29,411,633 | ||
Integrated Oil & Gas - 2.0% | |||
Exxon Mobil Corp. | 10,000 | 679,000 | |
Hess Corp. | 250,400 | 13,694,376 | |
| 14,373,376 | ||
Oil & Gas Exploration & Production - 63.7% | |||
Anadarko Petroleum Corp. | 74,800 | 2,614,260 | |
Apache Corp. | 69,600 | 4,112,664 | |
Aurora Oil & Gas Corp. (a) | 3,958,153 | 277,071 | |
Canadian Natural Resources Ltd. | 29,000 | 932,359 | |
Chesapeake Energy Corp. | 3,566,400 | 55,778,496 | |
CNOOC Ltd. sponsored ADR (d) | 24,900 | 2,139,657 | |
Comstock Resources, Inc. (a) | 770,300 | 23,440,229 | |
Concho Resources, Inc. (a) | 454,900 | 9,075,255 | |
Denbury Resources, Inc. (a) | 4,362,375 | 56,187,390 | |
Devon Energy Corp. | 327,400 | 14,297,558 | |
EOG Resources, Inc. | 118,500 | 5,929,740 | |
EXCO Resources, Inc. (a) | 374,900 | 3,415,339 | |
Forest Oil Corp. (a) | 249,263 | 3,534,549 | |
FX Energy, Inc. (a) | 100,000 | 302,000 | |
Newfield Exploration Co. (a) | 50,000 | 966,500 | |
Noble Energy, Inc. | 318,800 | 14,518,152 | |
Petrobank Energy & Resources Ltd. (a) | 38,700 | 586,212 | |
Petrohawk Energy Corp. (a) | 980,572 | 16,689,335 | |
Plains Exploration & Production Co. (a) | 1,967,650 | 37,660,821 | |
Quicksilver Gas Services LP | 210,600 | 2,569,320 | |
Quicksilver Resources, Inc. (a)(d) | 5,742,020 | 34,452,120 | |
Range Resources Corp. | 1,613,200 | 57,381,522 | |
SandRidge Energy, Inc. (a) | 495,200 | 3,347,552 | |
Southwestern Energy Co. (a) | 1,689,000 | 48,592,530 | |
Ultra Petroleum Corp. (a) | 516,719 | 18,157,506 | |
Venoco, Inc. (a) | 2,301,795 | 7,043,493 | |
Whiting Petroleum Corp. (a) | 553,000 | 12,884,900 | |
XTO Energy, Inc. | 390,575 | 12,365,605 | |
| 449,252,135 | ||
Oil & Gas Refining & Marketing - 4.1% | |||
CVR Energy, Inc. (a) | 49,200 | 232,224 | |
Holly Corp. | 156,700 | 3,652,677 | |
Petroplus Holdings AG | 28,564 | 445,307 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Refining & Marketing - continued | |||
Reliance Industries Ltd. | 52,908 | $ 1,292,911 | |
Tesoro Corp. | 496,446 | 7,327,543 | |
Valero Energy Corp. | 724,800 | 14,046,624 | |
Western Refining, Inc. (d) | 160,700 | 1,823,945 | |
| 28,821,231 | ||
Oil & Gas Storage & Transport - 0.2% | |||
Copano Energy LLC | 114,003 | 1,621,123 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 523,479,498 | ||
TOTAL COMMON STOCKS (Cost $1,127,117,860) | 670,375,968 | ||
Convertible Preferred Stocks - 2.1% | |||
|
|
|
|
OIL, GAS & CONSUMABLE FUELS - 2.1% | |||
Oil & Gas Exploration & Production - 2.1% | |||
SandRidge Energy, Inc. 8.50% (a)(e) | 150,000 | 14,833,500 |
Convertible Bonds - 2.7% | ||||
| Principal Amount |
| ||
OIL, GAS & CONSUMABLE FUELS - 2.7% | ||||
Oil & Gas Exploration & Production - 2.7% | ||||
Chesapeake Energy Corp. 2.5% 5/15/37 | $ 31,540,000 | 19,151,088 |
Money Market Funds - 3.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 63,241 | 63,241 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 24,352,209 | 24,352,209 | |
TOTAL MONEY MARKET FUNDS (Cost $24,415,450) | 24,415,450 | ||
Cash Equivalents - 0.5% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 0.26%, dated 2/27/09 due 3/2/09 (Collateralized by U.S. Treasury Obligations) # | $ 3,474,075 | $ 3,474,000 | |
TOTAL INVESTMENT PORTFOLIO - 103.9% (Cost $1,188,272,818) | 732,250,006 | ||
NET OTHER ASSETS - (3.9)% | (27,248,370) | ||
NET ASSETS - 100% | $ 705,001,636 |
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 $14,833,500 or 2.1% of net assets. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$3,474,000 due 3/02/09 at 0.26% | |
BNP Paribas Securities Corp. | $ 1,714,214 |
Banc of America Securities LLC | 639,635 |
Barclays Capital, Inc. | 911,816 |
Deutsche Bank Securities, Inc. | 208,335 |
| $ 3,474,000 |
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 | $ 537,287 |
Fidelity Securities Lending Cash Central Fund | 1,851,958 |
Total | $ 2,389,245 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Evergreen Energy, Inc. | $ 11,608,527 | $ - | $ - | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 732,250,006 | $ 677,472,731 | $ 54,777,275 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.4% |
Cayman Islands | 4.1% |
Canada | 3.2% |
Others (individually less than 1%) | 3.3% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $56,730,497 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $257,879,894 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $23,278,034 and repurchase agreements of $3,474,000) - See accompanying schedule: Unaffiliated issuers (cost $1,163,857,368) | $ 707,834,556 |
|
Fidelity Central Funds (cost $24,415,450) | 24,415,450 |
|
Total Investments (cost $1,188,272,818) |
| $ 732,250,006 |
Cash | 237 | |
Receivable for investments sold | 20,909,414 | |
Receivable for fund shares sold | 831,262 | |
Dividends receivable | 491,998 | |
Interest receivable | 229,979 | |
Distributions receivable from Fidelity Central Funds | 40,589 | |
Prepaid expenses | 9,124 | |
Other receivables | 2,198 | |
Total assets | 754,764,807 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 23,243,566 | |
Payable for fund shares redeemed | 1,553,079 | |
Accrued management fee | 360,851 | |
Other affiliated payables | 215,192 | |
Other payables and accrued expenses | 38,274 | |
Collateral on securities loaned, at value | 24,352,209 | |
Total liabilities | 49,763,171 | |
|
|
|
Net Assets | $ 705,001,636 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,551,203,464 | |
Accumulated net investment loss | (3,824,668) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (386,353,649) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (456,023,511) | |
Net Assets, for 36,799,247 shares outstanding | $ 705,001,636 | |
Net Asset Value, offering price and redemption price per share ($705,001,636 ÷ 36,799,247 shares) | $ 19.16 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 8,143,410 |
Interest |
| 288,252 |
Income from Fidelity Central Funds (including $1,851,958 from security lending) |
| 2,389,245 |
Total income |
| 10,820,907 |
|
|
|
Expenses | ||
Management fee | $ 8,327,485 | |
Transfer agent fees | 3,501,116 | |
Accounting and security lending fees | 490,058 | |
Custodian fees and expenses | 64,651 | |
Independent trustees' compensation | 7,535 | |
Registration fees | 174,254 | |
Audit | 44,212 | |
Legal | 8,007 | |
Interest | 57,331 | |
Miscellaneous | 69,282 | |
Total expenses before reductions | 12,743,931 | |
Expense reductions | (48,433) | 12,695,498 |
Net investment income (loss) | (1,874,591) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (383,649,001) | |
Foreign currency transactions | (46,752) | |
Total net realized gain (loss) |
| (383,695,753) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $319,594) | (895,676,153) | |
Assets and liabilities in foreign currencies | (701) | |
Total change in net unrealized appreciation (depreciation) |
| (895,676,854) |
Net gain (loss) | (1,279,372,607) | |
Net increase (decrease) in net assets resulting from operations | $ (1,281,247,198) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,874,591) | $ (1,290,051) |
Net realized gain (loss) | (383,695,753) | 158,605,074 |
Change in net unrealized appreciation (depreciation) | (895,676,854) | 235,843,456 |
Net increase (decrease) in net assets resulting from operations | (1,281,247,198) | 393,158,479 |
Distributions to shareholders from net realized gain | (73,105,192) | (114,570,067) |
Share transactions | 1,350,618,090 | 801,203,677 |
Reinvestment of distributions | 66,614,755 | 105,819,959 |
Cost of shares redeemed | (961,532,824) | (608,096,713) |
Net increase (decrease) in net assets resulting from share transactions | 455,700,021 | 298,926,923 |
Redemption fees | 384,033 | 165,396 |
Total increase (decrease) in net assets | (898,268,336) | 577,680,731 |
|
|
|
Net Assets | ||
Beginning of period | 1,603,269,972 | 1,025,589,241 |
End of period (including accumulated net investment loss of $3,824,668 and accumulated net investment loss of $2,473,455, respectively) | $ 705,001,636 | $ 1,603,269,972 |
Other Information Shares | ||
Sold | 30,313,112 | 17,460,484 |
Issued in reinvestment of distributions | 1,342,769 | 2,363,894 |
Redeemed | (26,979,116) | (13,596,684) |
Net increase (decrease) | 4,676,765 | 6,227,694 |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 49.91 | $ 39.61 | $ 38.86 | $ 34.41 | $ 23.00 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.05) | (.05) | (.03) F | (.09) | .01 |
Net realized and unrealized gain (loss) | (28.62) | 14.53 | 4.08 | 8.58 | 11.83 |
Total from investment operations | (28.67) | 14.48 | 4.05 | 8.49 | 11.84 |
Distributions from net investment income | - | - | - | - | (.02) |
Distributions from net realized gain | (2.09) | (4.19) | (3.31) | (4.08) | (.44) |
Total distributions | (2.09) | (4.19) | (3.31) | (4.08) | (.46) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .04 | .03 |
Net asset value, end of period | $ 19.16 | $ 49.91 | $ 39.61 | $ 38.86 | $ 34.41 |
Total Return A,B | (59.99)% | 38.08% | 10.43% | 26.28% | 52.01% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .85% | .85% | .90% | .95% | .98% |
Expenses net of fee waivers, if any | .85% | .85% | .90% | .95% | .98% |
Expenses net of all reductions | .85% | .85% | .89% | .88% | .94% |
Net investment income (loss) | (.13)% | (.10)% | (.09)% F | (.24)% | .02% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 705,002 | $ 1,603,270 | $ 1,025,589 | $ 1,555,579 | $ 947,538 |
Portfolio turnover rate E | 81% | 68% | 59% | 148% | 190% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.09 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%. G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Natural Resources Portfolio | -55.24% | 6.19% | 10.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Natural Resources Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Dowd, Portfolio Manager of Select Natural Resources Portfolio: For the 12 months ending February 28, 2009, the fund returned -55.24%, lagging the -49.46% mark of the Standard & Poor's® North American Natural Resources Sector Index and that of the S&P 500. Economically sensitive stocks, including those from most energy and commodities companies, suffered significant losses during the period, as dwindling credit choked off economic growth around the world. Unfortunately, the fund's fairly aggressive positioning in mid- and smaller-sized company stocks, as well as a large underweighting in stronger-performing integrated oil stocks, led to its underperformance relative to the sector index. The biggest detractors were underweightings in integrated oil companies Exxon Mobil and Chevron. Large positions in the oil and gas refining/marketing industry also hurt, including stakes in oil and gas refiners Valero Energy and Tesoro. Currency fluctuations also were a drag on performance due to the fund's foreign exposure. Bright spots included overweightings in low-cost natural gas producer Southwestern Energy and low-cost oil exploration/production company Petrohawk Energy. Underweighted positions in deepwater rig company Transocean and mining company Freeport-McMoRan Copper & Gold also helped.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Portfolio
Select Natural Resources Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Southwestern Energy Co. | 5.0 | 2.7 |
Occidental Petroleum Corp. | 5.0 | 2.5 |
Noble Corp. | 4.5 | 0.5 |
Hess Corp. | 4.4 | 2.1 |
Petrohawk Energy Corp. | 3.2 | 3.3 |
Canadian Natural Resources Ltd. | 3.0 | 3.4 |
Range Resources Corp. | 2.6 | 1.8 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 2.3 | 0.8 |
Weatherford International Ltd. | 2.1 | 2.4 |
Schlumberger Ltd. (NY Shares) | 2.1 | 3.8 |
| 34.2 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Oil, Gas & Consumable Fuels | 56.8% |
| |
Energy Equipment & Services | 23.2% |
| |
Metals & Mining | 14.1% |
| |
Electrical Equipment | 1.6% |
| |
Chemicals | 1.5% |
| |
All Others* | 2.8% |
|
As of August 31, 2008 | |||
Oil, Gas & Consumable Fuels | 54.0% |
| |
Energy Equipment & Services | 26.3% |
| |
Metals & Mining | 11.8% |
| |
Electrical Equipment | 5.1% |
| |
Chemicals | 1.0% |
| |
All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Natural Resources Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
CHEMICALS - 1.5% | |||
Commodity Chemicals - 0.2% | |||
Calgon Carbon Corp. (a) | 146,700 | $ 2,149,155 | |
Fertilizers & Agricultural Chemicals - 1.3% | |||
Terra Industries, Inc. | 470,500 | 12,134,195 | |
TOTAL CHEMICALS | 14,283,350 | ||
CONSTRUCTION & ENGINEERING - 0.0% | |||
Construction & Engineering - 0.0% | |||
Jacobs Engineering Group, Inc. (a) | 1,200 | 40,488 | |
CONTAINERS & PACKAGING - 1.0% | |||
Metal & Glass Containers - 1.0% | |||
Crown Holdings, Inc. (a) | 110,000 | 2,318,800 | |
Greif, Inc. Class A | 32,300 | 993,225 | |
Owens-Illinois, Inc. (a) | 414,000 | 6,383,880 | |
| 9,695,905 | ||
ELECTRICAL EQUIPMENT - 1.6% | |||
Electrical Components & Equipment - 1.6% | |||
Energy Conversion Devices, Inc. (a) | 111,400 | 2,443,002 | |
First Solar, Inc. (a)(d) | 44,400 | 4,694,856 | |
JA Solar Holdings Co. Ltd. ADR (a) | 718,300 | 1,458,149 | |
Renewable Energy Corp. AS (a) | 129,500 | 878,463 | |
Sunpower Corp. Class B (a) | 166,100 | 4,112,636 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 178,400 | 1,086,456 | |
| 14,673,562 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Electronic Equipment & Instruments - 0.2% | |||
Itron, Inc. (a) | 34,700 | 1,549,702 | |
ENERGY EQUIPMENT & SERVICES - 23.2% | |||
Oil & Gas Drilling - 10.9% | |||
Atwood Oceanics, Inc. (a) | 333,500 | 5,095,880 | |
Helmerich & Payne, Inc. | 387,000 | 9,156,420 | |
Hercules Offshore, Inc. (a) | 571,594 | 823,095 | |
Nabors Industries Ltd. (a) | 1,303,000 | 12,652,130 | |
Noble Corp. | 1,690,100 | 41,559,559 | |
Patterson-UTI Energy, Inc. | 336,300 | 2,888,817 | |
Pride International, Inc. (a) | 767,200 | 13,226,528 | |
Transocean Ltd. (a) | 254,800 | 15,229,396 | |
| 100,631,825 | ||
Oil & Gas Equipment & Services - 12.3% | |||
Baker Hughes, Inc. | 169,200 | 4,959,252 | |
BJ Services Co. | 329,400 | 3,185,298 | |
Cameron International Corp. (a) | 100 | 1,928 | |
Core Laboratories NV | 22,400 | 1,688,960 | |
Dresser-Rand Group, Inc. (a) | 54,600 | 1,147,146 | |
Dril-Quip, Inc. (a) | 321,700 | 6,762,134 | |
Exterran Holdings, Inc. (a) | 110,750 | 2,004,575 | |
Global Industries Ltd. (a) | 473,400 | 1,495,944 | |
| |||
Shares | Value | ||
Halliburton Co. | 995,800 | $ 16,241,498 | |
National Oilwell Varco, Inc. (a) | 494,358 | 13,214,189 | |
Oceaneering International, Inc. (a) | 125,200 | 3,977,604 | |
Oil States International, Inc. (a) | 4,400 | 58,608 | |
Schlumberger Ltd. (NY Shares) | 502,452 | 19,123,323 | |
Smith International, Inc. | 441,400 | 9,481,272 | |
Superior Energy Services, Inc. (a) | 172,000 | 2,268,680 | |
Tenaris SA sponsored ADR | 122,900 | 2,156,895 | |
Tidewater, Inc. | 92,800 | 3,277,696 | |
TSC Offshore Group Ltd. (a) | 3,250,000 | 229,880 | |
Weatherford International Ltd. (a) | 1,832,080 | 19,548,294 | |
Willbros Group, Inc. (a) | 402,700 | 2,891,386 | |
| 113,714,562 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 214,346,387 | ||
GAS UTILITIES - 0.6% | |||
Gas Utilities - 0.6% | |||
EQT Corp. | 61,600 | 1,894,200 | |
Questar Corp. | 89,500 | 2,580,285 | |
Zhongyu Gas Holdings Ltd. (a) | 12,744,000 | 734,380 | |
| 5,208,865 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
NRG Energy, Inc. (a) | 159,070 | 3,006,423 | |
INDUSTRIAL CONGLOMERATES - 0.5% | |||
Industrial Conglomerates - 0.5% | |||
McDermott International, Inc. (a) | 385,100 | 4,540,329 | |
MACHINERY - 0.1% | |||
Construction & Farm Machinery & Heavy Trucks - 0.0% | |||
Joy Global, Inc. | 50 | 873 | |
Industrial Machinery - 0.1% | |||
Vallourec SA | 9,600 | 747,064 | |
TOTAL MACHINERY | 747,937 | ||
METALS & MINING - 14.1% | |||
Aluminum - 0.0% | |||
Alcoa, Inc. | 100 | 623 | |
Diversified Metals & Mining - 2.6% | |||
Compass Minerals International, Inc. | 31,666 | 1,653,599 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 698,567 | 21,250,408 | |
RTI International Metals, Inc. (a) | 138 | 1,496 | |
Teck Cominco Ltd. Class B (sub. vtg.) | 270,800 | 951,520 | |
Titanium Metals Corp. | 76 | 444 | |
| 23,857,467 | ||
Gold - 11.3% | |||
Agnico-Eagle Mines Ltd. | 156,100 | 7,847,027 | |
Barrick Gold Corp. | 624,800 | 18,884,220 | |
Eldorado Gold Corp. (a) | 972,000 | 8,198,373 | |
Gold Fields Ltd. sponsored ADR | 200,100 | 2,037,018 | |
Common Stocks - continued | |||
Shares | Value | ||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Goldcorp, Inc. | 275,100 | $ 7,992,529 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a) | 607,000 | 7,271,860 | |
IAMGOLD Corp. | 1,107,700 | 8,968,526 | |
Kinross Gold Corp. | 124,067 | 1,962,212 | |
Lihir Gold Ltd. (a) | 3,796,367 | 7,866,838 | |
Newcrest Mining Ltd. | 510,757 | 10,043,210 | |
Newmont Mining Corp. | 282,200 | 11,747,986 | |
Randgold Resources Ltd. sponsored ADR | 78,600 | 3,574,728 | |
Royal Gold, Inc. | 200 | 8,092 | |
Yamana Gold, Inc. | 867,800 | 7,585,533 | |
| 103,988,152 | ||
Precious Metals & Minerals - 0.2% | |||
Aquarius Platinum Ltd. (United Kingdom) | 929,500 | 2,243,160 | |
Steel - 0.0% | |||
Allegheny Technologies, Inc. | 900 | 17,703 | |
TOTAL METALS & MINING | 130,107,105 | ||
OIL, GAS & CONSUMABLE FUELS - 56.8% | |||
Coal & Consumable Fuels - 3.7% | |||
Arch Coal, Inc. | 603,900 | 8,394,210 | |
CONSOL Energy, Inc. | 421,200 | 11,477,700 | |
Foundation Coal Holdings, Inc. | 371,600 | 5,975,328 | |
Massey Energy Co. | 344,800 | 3,982,440 | |
Peabody Energy Corp. | 175,700 | 4,158,819 | |
USEC, Inc. (a) | 1,600 | 8,048 | |
Walter Industries, Inc. | 100 | 1,817 | |
| 33,998,362 | ||
Integrated Oil & Gas - 16.7% | |||
Chevron Corp. | 122,600 | 7,443,046 | |
ConocoPhillips | 26,400 | 986,040 | |
ENI SpA sponsored ADR | 216,100 | 8,646,161 | |
Exxon Mobil Corp. | 1,800 | 122,220 | |
Hess Corp. | 741,000 | 40,525,290 | |
Marathon Oil Corp. | 223,000 | 5,189,210 | |
Occidental Petroleum Corp. | 893,700 | 46,356,219 | |
Petroleo Brasileiro SA - Petrobras (PN) sponsored ADR (non-vtg.) | 134,200 | 3,003,396 | |
Royal Dutch Shell PLC Class A sponsored ADR | 361,300 | 15,886,361 | |
Suncor Energy, Inc. | 806,700 | 16,778,903 | |
Total SA sponsored ADR | 190,700 | 9,001,040 | |
| 153,937,886 | ||
Oil & Gas Exploration & Production - 30.2% | |||
Anadarko Petroleum Corp. | 298,900 | 10,446,555 | |
Apache Corp. | 32,800 | 1,938,152 | |
| |||
Shares | Value | ||
Cabot Oil & Gas Corp. | 730,700 | $ 14,884,359 | |
Canadian Natural Resources Ltd. | 873,500 | 28,083,284 | |
Chesapeake Energy Corp. | 493,100 | 7,712,084 | |
Comstock Resources, Inc. (a) | 356,600 | 10,851,338 | |
Concho Resources, Inc. (a) | 207,200 | 4,133,640 | |
Denbury Resources, Inc. (a) | 1,212,500 | 15,617,000 | |
Devon Energy Corp. | 38,500 | 1,681,295 | |
EnCana Corp. | 187,984 | 7,417,991 | |
Encore Acquisition Co. (a) | 152,600 | 3,064,208 | |
EOG Resources, Inc. | 800 | 40,032 | |
EXCO Resources, Inc. (a) | 988,250 | 9,002,958 | |
Forest Oil Corp. (a) | 158,091 | 2,241,730 | |
GMX Resources, Inc. (a) | 37,700 | 650,325 | |
Goodrich Petroleum Corp. (a) | 93,000 | 1,845,120 | |
Mariner Energy, Inc. (a) | 124 | 1,147 | |
Newfield Exploration Co. (a) | 113,400 | 2,192,022 | |
Nexen, Inc. | 538,400 | 7,355,573 | |
Noble Energy, Inc. | 393,400 | 17,915,436 | |
Oil Search Ltd. | 790,709 | 2,518,426 | |
OPTI Canada, Inc. (a) | 330,000 | 259,403 | |
Penn Virginia Corp. | 209,700 | 2,904,345 | |
Petrobank Energy & Resources Ltd. (a) | 50,000 | 757,379 | |
Petrohawk Energy Corp. (a) | 1,715,440 | 29,196,789 | |
Petroquest Energy, Inc. (a)(d) | 189,400 | 613,656 | |
Plains Exploration & Production Co. (a) | 605,913 | 11,597,175 | |
Quicksilver Resources, Inc. (a) | 113,400 | 680,400 | |
Range Resources Corp. | 683,573 | 24,314,692 | |
SandRidge Energy, Inc. (a) | 736,900 | 4,981,444 | |
Southwestern Energy Co. (a) | 1,617,200 | 46,526,842 | |
Talisman Energy, Inc. | 581,200 | 5,459,529 | |
Whiting Petroleum Corp. (a) | 1,100 | 25,630 | |
XTO Energy, Inc. | 59,700 | 1,890,102 | |
| 278,800,061 | ||
Oil & Gas Refining & Marketing - 5.2% | |||
Frontier Oil Corp. | 1,088,600 | 14,859,390 | |
Holly Corp. | 30,200 | 703,962 | |
Sunoco, Inc. | 163,600 | 5,472,420 | |
Tesoro Corp. | 764,600 | 11,285,496 | |
Valero Energy Corp. | 817,688 | 15,846,793 | |
Western Refining, Inc. | 100 | 1,135 | |
| 48,169,196 | ||
Oil & Gas Storage & Transport - 1.0% | |||
El Paso Corp. | 576,600 | 3,892,050 | |
Williams Companies, Inc. | 477,000 | 5,390,100 | |
| 9,282,150 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 524,187,655 | ||
PAPER & FOREST PRODUCTS - 0.0% | |||
Forest Products - 0.0% | |||
Weyerhaeuser Co. | 100 | 2,416 | |
TOTAL COMMON STOCKS (Cost $1,214,024,745) | 922,390,124 | ||
Money Market Funds - 1.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 7,613,142 | $ 7,613,142 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 3,828,082 | 3,828,082 | |
TOTAL MONEY MARKET FUNDS (Cost $11,441,224) | 11,441,224 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $1,225,465,969) | 933,831,348 | ||
NET OTHER ASSETS - (1.2)% | (10,721,223) | ||
NET ASSETS - 100% | $ 923,110,125 |
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 | $ 331,049 |
Fidelity Securities Lending Cash Central Fund | 718,713 |
Total | $ 1,049,762 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 933,831,348 | $ 908,569,927 | $ 25,261,421 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 68.3% |
Canada | 13.8% |
Cayman Islands | 4.9% |
United Kingdom | 2.1% |
Netherlands Antilles | 2.1% |
Switzerland | 1.6% |
Papua New Guinea | 1.2% |
Australia | 1.1% |
France | 1.1% |
South Africa | 1.0% |
Italy | 1.0% |
Others (individually less than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $125,735,259 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $328,420,523 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $3,601,284) - See accompanying schedule: Unaffiliated issuers (cost $1,214,024,745) | $ 922,390,124 |
|
Fidelity Central Funds (cost $11,441,224) | 11,441,224 |
|
Total Investments (cost $1,225,465,969) |
| $ 933,831,348 |
Receivable for investments sold | 13,204,178 | |
Receivable for fund shares sold | 1,838,247 | |
Dividends receivable | 1,264,748 | |
Distributions receivable from Fidelity Central Funds | 40,682 | |
Prepaid expenses | 11,150 | |
Other receivables | 3,511 | |
Total assets | 950,193,864 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 20,593,545 | |
Payable for fund shares redeemed | 1,869,744 | |
Accrued management fee | 467,018 | |
Other affiliated payables | 281,071 | |
Other payables and accrued expenses | 44,279 | |
Collateral on securities loaned, at value | 3,828,082 | |
Total liabilities | 27,083,739 | |
|
|
|
Net Assets | $ 923,110,125 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,703,245,137 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (488,530,572) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (291,604,440) | |
Net Assets, for 53,544,143 shares outstanding | $ 923,110,125 | |
Net Asset Value, offering price and redemption price per share ($923,110,125 ÷ 53,544,143 shares) | $ 17.24 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 15,922,591 |
Interest |
| 3,160 |
Income from Fidelity Central Funds (including $718,713 from security lending) |
| 1,049,762 |
Total income |
| 16,975,513 |
|
|
|
Expenses | ||
Management fee | $ 10,836,549 | |
Transfer agent fees | 4,593,715 | |
Accounting and security lending fees | 598,099 | |
Custodian fees and expenses | 108,902 | |
Independent trustees' compensation | 9,924 | |
Registration fees | 142,178 | |
Audit | 45,693 | |
Legal | 10,931 | |
Interest | 60,544 | |
Miscellaneous | 107,350 | |
Total expenses before reductions | 16,513,885 | |
Expense reductions | (148,534) | 16,365,351 |
Net investment income (loss) | 610,162 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (481,308,449) | |
Foreign currency transactions | (479,518) | |
Total net realized gain (loss) |
| (481,787,967) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (864,660,650) | |
Assets and liabilities in foreign currencies | 28,602 | |
Total change in net unrealized appreciation (depreciation) |
| (864,632,048) |
Net gain (loss) | (1,346,420,015) | |
Net increase (decrease) in net assets resulting from operations | $ (1,345,809,853) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 610,162 | $ 1,594,233 |
Net realized gain (loss) | (481,787,967) | 88,028,067 |
Change in net unrealized appreciation (depreciation) | (864,632,048) | 394,031,730 |
Net increase (decrease) in net assets resulting from operations | (1,345,809,853) | 483,654,030 |
Distributions to shareholders from net investment income | (636,818) | (1,264,149) |
Distributions to shareholders from net realized gain | (30,567,245) | (70,917,949) |
Total distributions | (31,204,063) | (72,182,098) |
Share transactions | 1,221,643,673 | 1,775,253,829 |
Reinvestment of distributions | 30,006,724 | 69,411,696 |
Cost of shares redeemed | (1,380,303,375) | (786,519,744) |
Net increase (decrease) in net assets resulting from share transactions | (128,652,978) | 1,058,145,781 |
Redemption fees | 402,052 | 314,569 |
Total increase (decrease) in net assets | (1,505,264,842) | 1,469,932,282 |
|
|
|
Net Assets | ||
Beginning of period | 2,428,374,967 | 958,442,685 |
End of period (including undistributed net investment income of $0 and undistributed net investment income of $700,062, respectively) | $ 923,110,125 | $ 2,428,374,967 |
Other Information Shares | ||
Sold | 34,996,171 | 49,318,162 |
Issued in reinvestment of distributions | 769,798 | 1,934,801 |
Redeemed | (44,494,728) | (22,315,817) |
Net increase (decrease) | (8,728,759) | 28,937,146 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.00 | $ 28.75 | $ 25.87 | $ 20.07 | $ 14.90 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | .03 | .08 | .05 | .09 |
Net realized and unrealized gain (loss) | (21.29) | 11.74 | 3.81 | 6.72 | 5.42 |
Total from investment operations | (21.28) | 11.77 | 3.89 | 6.77 | 5.51 |
Distributions from net investment income | (.01) | (.03) | (.07) | (.04) | (.07) |
Distributions from net realized gain | (.48) | (1.50) | (.95) | (.95) | (.28) |
Total distributions | (.49) | (1.53) | (1.02) | (.99) | (.35) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .02 | .01 |
Net asset value, end of period | $ 17.24 | $ 39.00 | $ 28.75 | $ 25.87 | $ 20.07 |
Total Return A,B | (55.24)% | 41.62% | 15.18% | 34.50% | 37.51% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .85% | .85% | .93% | .99% | 1.04% |
Expenses net of fee waivers, if any | .85% | .85% | .93% | .99% | 1.04% |
Expenses net of all reductions | .84% | .85% | .92% | .93% | 1.00% |
Net investment income (loss) | .03% | .09% | .31% | .21% | .55% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 923,110 | $ 2,428,375 | $ 958,443 | $ 880,840 | $ 308,695 |
Portfolio turnover rate E | 136% | 44% | 116% | 119% | 101% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are funds of Fidelity Select Portfolios (the trust). Energy Portfolio, Energy Service Portfolio, and Natural Gas Portfolio are non-diversified funds. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. The Natural Resources Portfolio may also invest in certain precious metals. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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, 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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for each Fund's investments is included at the end of each Fund's Schedule of Investments.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds 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, 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 Federal | Unrealized | Unrealized | Net Unrealized |
Energy Portfolio | $ 1,853,240,308 | $ 122,759,646 | $ (611,079,146) | $ (488,319,500) |
Energy Service Portfolio | 1,049,951,545 | 81,213,073 | (383,898,831) | (302,685,758) |
Natural Gas Portfolio | 1,263,841,452 | 56,044,932 | (587,636,378) | (531,591,446) |
Natural Resources Portfolio | 1,259,810,578 | 71,237,763 | (397,216,993) | (325,979,230) |
| Capital Loss |
Natural Gas Portfolio | $ (56,730,497) |
Natural Resources Portfolio | (125,735,259) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 28, 2009 | Ordinary | Long-term | Total |
Energy Portfolio | $ 495,957 | $ 62,490,281 | $ 62,986,238 |
Energy Service Portfolio | - | 95,954,641 | 95,954,641 |
Natural Gas Portfolio | 7,345,498 | 65,759,694 | 73,105,192 |
Natural Resources Portfolio | 636,818 | 30,567,245 | 31,204,063 |
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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 | 3,735,277,680 | 3,771,090,997 |
Energy Service Portfolio | 1,500,158,827 | 1,693,614,501 |
Natural Gas Portfolio | 1,614,195,544 | 1,188,222,417 |
Natural Resources Portfolio | 2,633,817,948 | 2,771,830,648 |
Energy Service Portfolio realized a loss on the sale of an investment not meeting the investment restrictions of the Fund. The loss was fully reimbursed by the Fund's investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as
Annual Report
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 |
Energy Portfolio | .30% | .26% | .56% |
Energy Service Portfolio | .30% | .26% | .56% |
Natural Gas Portfolio | .30% | .26% | .56% |
Natural Resources Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .23% |
Energy Service Portfolio | .21% |
Natural Gas Portfolio | .23% |
Natural Resources Portfolio | .24% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Energy Portfolio | $ 18,293 |
Energy Service Portfolio | 18,590 |
Natural Gas Portfolio | 18,079 |
Natural Resources Portfolio | 20,140 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily Loan Balance | Weighted Average | Interest |
Energy Portfolio | Borrower | $ 10,216,240 | 2.29% | $ 16,228 |
Energy Service Portfolio | Borrower | $ 12,683,610 | 2.27% | 47,117 |
Natural Gas Portfolio | Borrower | $17,219,843 | 2.27% | 55,442 |
Natural Resources Portfolio | Borrower | $ 19,902,820 | 2.19% | 60,544 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Energy Portfolio | $ 7,484 |
Energy Service Portfolio | 5,120 |
Natural Gas Portfolio | 4,336 |
Natural Resources Portfolio | 5,605 |
During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. 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 |
Energy Portfolio | $ 13,998,000 | 2.30% | $ 894 |
Energy Service Portfolio | 9,139,500 | 2.72% | 5,533 |
Natural Gas Portfolio | 9,686,000 | 2.34% | 1,889 |
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 | Custody | Transfer Agent |
Energy Portfolio | $ 98,777 | $ 2,213 | $ 9,200 |
Energy Service Portfolio | 41,500 | - | 6,495 |
Natural Gas Portfolio | 41,626 | 2,229 | 4,578 |
Natural Resources Portfolio | 132,600 | - | 15,934 |
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.
Annual Report
11. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
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 positions of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers.**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2009, or, if subsequently determined to be different, the net capital gain of such year.
Select Energy Portfolio | $45,478,267 |
Select Energy Service Portfolio | $13,067,486 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 |
Select Energy Portfolio | 100% |
Select Natural Gas Portfolio | 13% |
Select Natural Resources Portfolio | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2008 |
Select Energy Portfolio | 100% |
Select Natural Gas Portfolio | 14% |
Select Natural Resources Portfolio | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
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 28, 2009
(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.
Annual Report
Chairman's Message
Dear Shareholder:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Banking Portfolio | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 484.00 | $ 3.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
Brokerage and Investment Management Portfolio | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 533.20 | $ 3.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Financial Services Portfolio | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 486.70 | $ 3.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Home Finance Portfolio | .97% |
|
|
|
Actual |
| $ 1,000.00 | $ 478.10 | $ 3.55** |
HypotheticalA |
| $ 1,000.00 | $ 1,019.98 | $ 4.86** |
Insurance Portfolio | .99% |
|
|
|
Actual |
| $ 1,000.00 | $ 540.70 | $ 3.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.89 | $ 4.96 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
** If changes to transfer agent contracts, effective February 1, 2009 had been in effect during the entire period, the annualized expense ratio would have been 1.02% and the expenses paid in the actual and hypothetical examples above would have been $3.74 and $5.11, respectively.
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Banking Portfolio | -57.85% | -18.25% | -6.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Banking Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Vincent Montemaggiore, Portfolio Manager of Select Banking Portfolio: During the past year, the fund declined 57.85%, outperforming the -64.49% result of its benchmark, the MSCI® US Investable Market Banks Index but trailing the S&P 500. Solid stock selection and overall defensive positioning helped the fund beat its MSCI benchmark. Specifically, I owned banks that had healthy capital levels and manageable credit risk, and I invested in out-of-benchmark companies with business models that, in my view, were less economically sensitive than banks. Top contributors included out-of-index investments in Visa, which operates the world's largest retail electronic payments network, and Bank of New York Mellon, which generates most of its revenues from custody, securities processing and corporate trust services. Underweighting and ultimately selling off Fannie Mae and Washington Mutual also boosted relative results, as did an out-of-benchmark position in convertible preferred stock issued by regional bank holding company KeyCorp. Given the industry's difficulties during this period, an average cash allocation of approximately 7% of net assets also helped and was an important element in positioning the fund defensively. An out-of-benchmark investment in Bank of America was the biggest detractor, as the stock underperformed significantly during the period. Additional detractors included diversified financial services company Wachovia and an underweighted position in U.S. Bancorp.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 23.1 | 15.1 |
U.S. Bancorp, Delaware | 6.3 | 5.0 |
PNC Financial Services Group, Inc. | 5.4 | 4.9 |
JPMorgan Chase & Co. | 5.2 | 0.0 |
People's United Financial, Inc. | 4.3 | 2.7 |
Hudson City Bancorp, Inc. | 3.9 | 4.2 |
KeyCorp | 3.0 | 3.3 |
Goldman Sachs Group, Inc. | 3.0 | 0.0 |
First Horizon National Corp. | 2.6 | 0.0 |
Visa, Inc. | 2.6 | 1.1 |
| 59.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Commercial Banks | 65.1% |
| |
Thrifts & Mortgage Finance | 10.1% |
| |
Capital Markets | 5.8% |
| |
Diversified Financial Services | 5.5% |
| |
IT Services | 4.6% |
| |
All Others* | 8.9% |
|
| |||
As of August 31, 2008 | |||
Commercial Banks | 69.1% |
| |
Thrifts & Mortgage Finance | 10.3% |
| |
Diversified Financial Services | 5.4% |
| |
Capital Markets | 2.9% |
| |
Real Estate Investment Trusts | 2.0% |
| |
All Others* | 10.3% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Banking Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 92.7% | |||
Shares | Value | ||
CAPITAL MARKETS - 5.8% | |||
Asset Management & Custody Banks - 2.8% | |||
Bank of New York Mellon Corp. | 121,703 | $ 2,698,156 | |
BlackRock, Inc. Class A | 7,700 | 745,437 | |
State Street Corp. | 30,000 | 758,100 | |
| 4,201,693 | ||
Investment Banking & Brokerage - 3.0% | |||
Goldman Sachs Group, Inc. | 49,500 | 4,508,460 | |
TOTAL CAPITAL MARKETS | 8,710,153 | ||
COMMERCIAL BANKS - 63.0% | |||
Diversified Banks - 31.1% | |||
Comerica, Inc. | 176,100 | 2,643,261 | |
U.S. Bancorp, Delaware | 665,000 | 9,516,150 | |
Wells Fargo & Co. (d) | 2,881,992 | 34,872,104 | |
| 47,031,515 | ||
Regional Banks - 31.9% | |||
Associated Banc-Corp. | 257,820 | 3,728,077 | |
BB&T Corp. (d) | 167,842 | 2,707,291 | |
BOK Financial Corp. | 43,600 | 1,312,360 | |
Boston Private Financial Holdings, Inc. | 391,100 | 1,357,117 | |
CapitalSource, Inc. | 109,000 | 203,830 | |
City National Corp. | 105,100 | 3,371,608 | |
Cullen/Frost Bankers, Inc. | 63,200 | 2,720,128 | |
First Horizon National Corp. (d) | 435,200 | 3,990,784 | |
Glacier Bancorp, Inc. | 240,600 | 3,702,834 | |
Huntington Bancshares, Inc. (d) | 276,651 | 403,910 | |
KeyCorp | 653,000 | 4,577,530 | |
PacWest Bancorp | 182,700 | 2,499,336 | |
PNC Financial Services Group, Inc. (d) | 296,241 | 8,099,229 | |
Regions Financial Corp. | 330,300 | 1,129,626 | |
SunTrust Banks, Inc. | 264,000 | 3,175,920 | |
TCF Financial Corp. (d) | 257,400 | 3,155,724 | |
UCBH Holdings, Inc. (d) | 835,300 | 1,336,480 | |
Wintrust Financial Corp. | 55,100 | 686,546 | |
| 48,158,330 | ||
TOTAL COMMERCIAL BANKS | 95,189,845 | ||
DIVERSIFIED FINANCIAL SERVICES - 5.5% | |||
Other Diversified Financial Services - 5.5% | |||
Bank of America Corp. | 131,991 | 521,364 | |
JPMorgan Chase & Co. | 342,300 | 7,821,555 | |
| 8,342,919 | ||
INSURANCE - 1.9% | |||
Property & Casualty Insurance - 1.9% | |||
ACE Ltd. | 35,000 | 1,277,850 | |
Berkshire Hathaway, Inc. Class A (a) | 21 | 1,650,600 | |
| 2,928,450 | ||
| |||
Shares | Value | ||
IT SERVICES - 4.6% | |||
Data Processing & Outsourced Services - 4.6% | |||
Broadridge Financial Solutions, Inc. | 33,800 | $ 540,124 | |
Fiserv, Inc. (a) | 30,490 | 994,584 | |
The Western Union Co. | 136,400 | 1,522,224 | |
Visa, Inc. | 69,700 | 3,952,687 | |
| 7,009,619 | ||
REAL ESTATE INVESTMENT TRUSTS - 1.4% | |||
Mortgage REITs - 1.4% | |||
Annaly Capital Management, Inc. | 151,100 | 2,100,290 | |
THRIFTS & MORTGAGE FINANCE - 10.1% | |||
Thrifts & Mortgage Finance - 10.1% | |||
Astoria Financial Corp. | 115,900 | 828,685 | |
Bank Mutual Corp. | 252,800 | 2,136,160 | |
Hudson City Bancorp, Inc. | 563,000 | 5,838,310 | |
People's United Financial, Inc. | 371,890 | 6,474,605 | |
| 15,277,760 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
Wireless Telecommunication Services - 0.4% | |||
Telemig Celular Participacoes SA sponsored ADR | 13,700 | 530,327 | |
TOTAL COMMON STOCKS (Cost $271,152,094) | 140,089,363 | ||
Convertible Preferred Stocks - 2.1% | |||
|
|
|
|
COMMERCIAL BANKS - 2.1% | |||
Regional Banks - 2.1% | |||
KeyCorp Series A, 7.75% | 53,000 | 3,259,500 | |
Money Market Funds - 14.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 2,254,330 | 2,254,330 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 19,633,025 | 19,633,025 | |
TOTAL MONEY MARKET FUNDS (Cost $21,887,355) | 21,887,355 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount |
| ||
Investments in repurchase agreements in a joint trading account at 0.25%, dated 2/27/09 due 3/2/09 (Collateralized by U.S. Treasury Obligations) # | $ 31,001 | 31,000 |
TOTAL INVESTMENT PORTFOLIO - 109.3% (Cost $295,704,014) | 165,267,218 | |
NET OTHER ASSETS - (9.3)% | (14,109,704) | |
NET ASSETS - 100% | $ 151,157,514 |
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 |
$31,000 due 3/02/09 at 0.25% | |
BNP Paribas Securities Corp. | $ 16,661 |
Barclays Capital, Inc. | 4,022 |
Citigroup Global Markets, Inc. | 2,299 |
HSBC Securities (USA), Inc. | 1,149 |
J.P. Morgan Securities, Inc. | 2,272 |
Societe Generale, New York Branch | 4,597 |
| $ 31,000 |
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 | $ 388,795 |
Fidelity Securities Lending Cash Central Fund | 816,431 |
Total | $ 1,205,226 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 165,267,218 | $ 165,236,218 | $ 31,000 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $37,412,485 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $36,664,782 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $17,010,037 and repurchase agreements of $31,000) - Unaffiliated issuers | $ 143,379,863 |
|
Fidelity Central Funds | 21,887,355 |
|
Total Investments (cost $295,704,014) |
| $ 165,267,218 |
Cash | 136 | |
Receivable for investments sold | 10,253,673 | |
Receivable for fund shares sold | 515,267 | |
Dividends receivable | 1,233,300 | |
Distributions receivable from Fidelity Central Funds | 11,048 | |
Prepaid expenses | 2,732 | |
Other receivables | 5,293 | |
Total assets | 177,288,667 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,967,958 | |
Payable for fund shares redeemed | 369,475 | |
Accrued management fee | 76,853 | |
Other affiliated payables | 54,515 | |
Other payables and accrued expenses | 29,327 | |
Collateral on securities loaned, | 19,633,025 | |
Total liabilities | 26,131,153 | |
|
|
|
Net Assets | $ 151,157,514 | |
Net Assets consist of: |
| |
Paid in capital | $ 402,395,488 | |
Undistributed net investment income | 3,183,202 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (123,983,034) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (130,438,142) | |
Net Assets, for 16,728,336 shares outstanding | $ 151,157,514 | |
Net Asset Value, offering price and redemption price per share ($151,157,514 ÷ 16,728,336 shares) | $ 9.04 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 11,260,414 |
Interest |
| 6,939 |
Income from Fidelity Central Funds (including $816,431 from security lending) |
| 1,205,226 |
Total income |
| 12,472,579 |
|
|
|
Expenses | ||
Management fee | $ 1,454,666 | |
Transfer agent fees | 733,251 | |
Accounting and security lending fees | 114,858 | |
Custodian fees and expenses | 19,295 | |
Independent trustees' compensation | 1,225 | |
Registration fees | 48,166 | |
Audit | 40,500 | |
Legal | 1,822 | |
Miscellaneous | 17,179 | |
Total expenses before reductions | 2,430,962 | |
Expense reductions | (4,451) | 2,426,511 |
Net investment income (loss) | 10,046,068 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $4,920) | (117,455,234) | |
Investment not meeting investment restrictions | (5,506) | |
Foreign currency transactions | 16,974 | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 6,008 | |
Total net realized gain (loss) |
| (117,437,758) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $20) | (98,774,850) | |
Assets and liabilities in foreign currencies | (1,902) | |
Total change in net unrealized appreciation (depreciation) |
| (98,776,752) |
Net gain (loss) | (216,214,510) | |
Net increase (decrease) in net assets resulting from operations | $ (206,168,442) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 10,046,068 | $ 8,098,000 |
Net realized gain (loss) | (117,437,758) | 5,051,569 |
Change in net unrealized appreciation (depreciation) | (98,776,752) | (101,443,613) |
Net increase (decrease) in net assets resulting from operations | (206,168,442) | (88,294,044) |
Distributions to shareholders from net investment income | (8,084,799) | (6,219,747) |
Distributions to shareholders from net realized gain | (698,226) | (18,434,254) |
Total distributions | (8,783,025) | (24,654,001) |
Share transactions | 283,785,355 | 182,824,699 |
Reinvestment of distributions | 8,230,328 | 23,290,627 |
Cost of shares redeemed | (219,822,999) | (148,714,165) |
Net increase (decrease) in net assets resulting from share transactions | 72,192,684 | 57,401,161 |
Redemption fees | 149,764 | 42,503 |
Total increase (decrease) in net assets | (142,609,019) | (55,504,381) |
|
|
|
Net Assets | ||
Beginning of period | 293,766,533 | 349,270,914 |
End of period (including undistributed net investment income of $3,183,202 and undistributed net investment income of $3,006,863, respectively) | $ 151,157,514 | $ 293,766,533 |
Other Information Shares | ||
Sold | 15,878,703 | 6,977,204 |
Issued in reinvestment of distributions | 548,744 | 864,300 |
Redeemed | (12,908,021) | (5,053,208) |
Net increase (decrease) | 3,519,426 | 2,788,296 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.24 | $ 33.52 | $ 36.71 | $ 37.98 | $ 40.80 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .67 | .81 | .78 | .76 | .67 |
Net realized and unrealized gain (loss) | (13.32) | (9.57) | 2.12 | 1.82 | .54 |
Total from investment operations | (12.65) | (8.76) | 2.90 | 2.58 | 1.21 |
Distributions from net investment income | (.51) | (.64) | (.71) | (.62) | (.57) |
Distributions from net realized gain | (.05) | (1.88) | (5.39) | (3.23) | (3.46) |
Total distributions | (.56) | (2.52) | (6.10) | (3.85) | (4.03) |
Redemption fees added to paid in capital C | .01 | - H | .01 | - H | - H |
Net asset value, end of period | $ 9.04 | $ 22.24 | $ 33.52 | $ 36.71 | $ 37.98 |
Total Return A, B | (57.85)% | (27.30)% | 8.23% | 7.22% | 2.68% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .93% | .91% | .93% | .94% | .95% |
Expenses net of fee waivers, if any | .93% | .91% | .93% | .94% | .95% |
Expenses net of all reductions | .93% | .90% | .91% | .92% | .94% |
Net investment income (loss) | 3.86% | 2.75% | 2.15% | 2.04% | 1.70% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 151,158 | $ 293,767 | $ 349,271 | $ 367,009 | $ 475,509 |
Portfolio turnover rate E | 199% | 86% | 112% | 70% | 51% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Brokerage and Investment Management Portfolio | -51.86% | -7.03% | 1.97% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Brokerage and Investment Management Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Benjamin Hesse, Portfolio Manager of Select Brokerage and Investment Management Portfolio: For the 12 months ending February 28, 2009, the fund returned -51.86%, a terrible result but better than the -59.17% return of the MSCI® US Investable Markets Capital Markets Index. The industry lagged the S&P 500 by a wide margin, as the U.S. credit crisis spread across asset classes and geographies. Several industry leaders were brought to their knees through bankruptcy or acquisition. The fund's cash position - nearly 11% of assets on average - helped reduce losses, as did favorable weightings in investment banking/ brokerage, and good stock picking in the out-of-benchmark property/casualty insurers and data processing/outsourced services. Top contributors included title insurer Fidelity National Financial, which benefited as falling interest rates boosted mortgage refinancings, and credit card processor Visa, which enjoyed strong revenue and earnings growth. An underweighting in broker Merrill Lynch also provided some downside protection. Stock selection was disappointing in other diversified financial services, largely because of Citigroup, which is not in the MSCI index and saw its stock price plunge more than 90%. Asset management/custody banks also dampened relative performance, led by our underweighting in Northern Trust, which rallied. I sold this position before period end. Finally, a stronger U.S. dollar dampened returns due to the fund's meaningful stake in foreign companies.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Morgan Stanley | 7.6 | 5.6 |
Visa, Inc. | 6.9 | 6.9 |
Goldman Sachs Group, Inc. | 5.9 | 0.8 |
Credit Suisse Group sponsored ADR | 5.2 | 0.5 |
MF Global Ltd. | 4.9 | 4.7 |
JPMorgan Chase & Co. | 4.8 | 0.0 |
Fidelity National Financial, Inc. Class A | 4.6 | 0.4 |
Bank of New York Mellon Corp. | 4.5 | 2.3 |
UBS AG (NY Shares) | 4.3 | 0.0 |
EFG International | 2.8 | 5.5 |
| 51.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Capital Markets | 64.1% |
| |
Diversified Financial Services | 12.2% |
| |
IT Services | 8.7% |
| |
Insurance | 7.3% |
| |
Internet Software & Services | 1.1% |
| |
All Others* | 6.6% |
|
| |||
As of August 31, 2008 | |||
Capital Markets | 61.8% |
| |
IT Services | 11.2% |
| |
Diversified Financial Services | 3.5% |
| |
Insurance | 1.5% |
| |
Commercial Banks | 0.3% |
| |
All Others* | 21.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Brokerage and Investment Management Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 94.1% | |||
Shares | Value | ||
CAPITAL MARKETS - 64.1% | |||
Asset Management & Custody Banks - 27.7% | |||
A.F.P. Provida SA sponsored ADR (d) | 296,701 | $ 5,014,247 | |
Affiliated Managers Group, Inc. (a) | 1,000 | 35,980 | |
AllianceBernstein Holding LP | 1,200 | 14,604 | |
American Capital Ltd. (d) | 20,000 | 27,000 | |
Ameriprise Financial, Inc. | 900 | 14,346 | |
Bank of New York Mellon Corp. | 593,887 | 13,166,475 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 389,304 | 8,213,744 | |
BlackRock, Inc. Class A | 44,700 | 4,327,407 | |
BlueBay Asset Management (d) | 618,597 | 829,514 | |
EFG International | 1,185,540 | 8,226,003 | |
Franklin Resources, Inc. | 164,200 | 7,520,360 | |
Janus Capital Group, Inc. | 909,209 | 4,009,612 | |
Julius Baer Holding Ltd. | 311,420 | 7,177,567 | |
KKR Private Equity Investors, LP Restricted Depositary Units (a)(e) | 104,600 | 235,350 | |
Legg Mason, Inc. | 622,861 | 7,991,307 | |
Och-Ziff Capital Management Group LLC Class A | 969,587 | 5,003,069 | |
Patriot Capital Funding, Inc. | 182,148 | 327,866 | |
State Street Corp. | 288,500 | 7,290,395 | |
The Blackstone Group LP | 76,400 | 372,068 | |
U.S. Global Investments, Inc. Class A | 480,417 | 1,849,605 | |
| 81,646,519 | ||
Diversified Capital Markets - 9.7% | |||
Credit Suisse Group sponsored ADR | 631,600 | 15,259,456 | |
Deutsche Bank AG (NY Shares) | 24,000 | 613,440 | |
UBS AG (NY Shares) | 1,383,485 | 12,520,539 | |
| 28,393,435 | ||
Investment Banking & Brokerage - 26.7% | |||
Cowen Group, Inc. (a) | 3,400 | 13,804 | |
E*TRADE Financial Corp. (a)(d) | 4,146,515 | 3,317,212 | |
Evercore Partners, Inc. Class A | 305,010 | 3,724,172 | |
FCStone Group, Inc. (a) | 575,500 | 943,820 | |
GFI Group, Inc. | 3,465,424 | 7,762,550 | |
Goldman Sachs Group, Inc. | 191,800 | 17,469,144 | |
Greenhill & Co., Inc. | 34,600 | 2,235,160 | |
Jefferies Group, Inc. | 109,000 | 1,078,010 | |
Lazard Ltd. Class A | 45,800 | 1,112,024 | |
MF Global Ltd. (a)(d) | 3,338,551 | 14,489,311 | |
Morgan Stanley | 1,146,200 | 22,396,747 | |
Nomura Holdings, Inc. sponsored ADR (d) | 200,612 | 820,503 | |
optionsXpress Holdings, Inc. | 96,893 | 956,334 | |
SWS Group, Inc. | 79,700 | 1,081,529 | |
TD Ameritrade Holding Corp. (a) | 649 | 7,704 | |
Thomas Weisel Partners Group, Inc. (a) | 439,103 | 1,290,963 | |
TradeStation Group, Inc. (a) | 2,113 | 11,283 | |
| 78,710,270 | ||
TOTAL CAPITAL MARKETS | 188,750,224 | ||
| |||
Shares | Value | ||
COMMERCIAL BANKS - 0.3% | |||
Diversified Banks - 0.3% | |||
Barclays PLC | 8,200 | $ 10,756 | |
BBVA Banco Frances SA sponsored ADR (d) | 19,400 | 47,336 | |
Industrial & Commercial Bank of China | 756,000 | 304,488 | |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 2,400 | 125,592 | |
Wells Fargo & Co. | 27,600 | 333,960 | |
| 822,132 | ||
DIVERSIFIED FINANCIAL SERVICES - 12.2% | |||
Other Diversified Financial Services - 7.2% | |||
Citigroup, Inc. | 4,599,700 | 6,899,550 | |
JPMorgan Chase & Co. | 619,200 | 14,148,720 | |
| 21,048,270 | ||
Specialized Finance - 5.0% | |||
BM&F BOVESPA SA | 2,553,445 | 6,421,212 | |
Bursa Malaysia Bhd | 579,000 | 773,974 | |
Climate Exchange PLC (a) | 5,700 | 58,456 | |
CME Group, Inc. | 10,803 | 1,970,467 | |
Deutsche Boerse AG | 2,100 | 95,963 | |
IntercontinentalExchange, Inc. (a) | 55,732 | 3,163,906 | |
JSE Ltd. | 627,000 | 2,357,843 | |
| 14,841,821 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 35,890,091 | ||
INSURANCE - 7.3% | |||
Life & Health Insurance - 0.1% | |||
Principal Financial Group, Inc. | 25,900 | 206,941 | |
Property & Casualty Insurance - 7.2% | |||
Fidelity National Financial, Inc. Class A | 819,100 | 13,572,487 | |
The First American Corp. | 334,000 | 7,738,780 | |
| 21,311,267 | ||
TOTAL INSURANCE | 21,518,208 | ||
INTERNET SOFTWARE & SERVICES - 1.1% | |||
Internet Software & Services - 1.1% | |||
China Finance Online Co. Ltd. ADR (a) | 380,500 | 3,336,985 | |
IT SERVICES - 8.7% | |||
Data Processing & Outsourced Services - 8.7% | |||
CyberSource Corp. (a) | 302,800 | 3,730,496 | |
MasterCard, Inc. Class A | 1,200 | 189,636 | |
Online Resources Corp. (a) | 421,800 | 1,248,528 | |
VeriFone Holdings, Inc. (a) | 25,102 | 108,943 | |
Visa, Inc. (d) | 359,700 | 20,398,587 | |
| 25,676,190 | ||
PROFESSIONAL SERVICES - 0.3% | |||
Research & Consulting Services - 0.3% | |||
Equifax, Inc. | 43,400 | 933,100 | |
Common Stocks - continued | |||
Shares | Value | ||
REAL ESTATE INVESTMENT TRUSTS - 0.1% | |||
Mortgage REITs - 0.1% | |||
Annaly Capital Management, Inc. | 19,900 | $ 276,610 | |
SOFTWARE - 0.0% | |||
Application Software - 0.0% | |||
EPIQ Systems, Inc. (a) | 5,300 | 89,411 | |
TOTAL COMMON STOCKS (Cost $439,259,634) | 277,292,951 | ||
Money Market Funds - 15.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 16,899,444 | 16,899,444 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 28,145,725 | 28,145,725 | |
TOTAL MONEY MARKET FUNDS (Cost $45,045,169) | 45,045,169 |
TOTAL INVESTMENT PORTFOLIO - 109.4% (Cost $484,304,803) | 322,338,120 | |
NET OTHER ASSETS - (9.4)% | (27,720,349) | |
NET ASSETS - 100% | $ 294,617,771 |
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 $235,350 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 | $ 1,404,471 |
Fidelity Securities Lending Cash Central Fund | 1,687,884 |
Total | $ 3,092,355 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 322,338,120 | $ 296,647,655 | $ 25,690,465 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 70.1% |
Switzerland | 17.5% |
Bermuda | 5.3% |
Brazil | 2.3% |
Chile | 1.7% |
Hong Kong | 1.1% |
Others (individually less than 1%) | 2.0% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $86,484,136 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $87,989,827 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,063,852) - See accompanying schedule: Unaffiliated issuers | $ 277,292,951 |
|
Fidelity Central Funds | 45,045,169 |
|
Total Investments (cost $484,304,803) |
| $ 322,338,120 |
Receivable for investments sold | 354,248 | |
Receivable for fund shares sold | 150,897 | |
Dividends receivable | 609,380 | |
Distributions receivable from Fidelity Central Funds | 28,596 | |
Prepaid expenses | 4,279 | |
Other receivables | 49,898 | |
Total assets | 323,535,418 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 8,472 | |
Payable for fund shares redeemed | 476,426 | |
Accrued management fee | 156,919 | |
Other affiliated payables | 95,426 | |
Other payables and accrued expenses | 34,679 | |
Collateral on securities loaned, | 28,145,725 | |
Total liabilities | 28,917,647 | |
|
|
|
Net Assets | $ 294,617,771 | |
Net Assets consist of: |
| |
Paid in capital | $ 662,796,700 | |
Undistributed net investment income | 892,512 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (207,057,824) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (162,013,617) | |
Net Assets, for 11,042,571 shares outstanding | $ 294,617,771 | |
Net Asset Value, offering price and redemption price per share ($294,617,771 ÷ 11,042,571 shares) | $ 26.68 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,667,431 |
Interest |
| 47,394 |
Income from Fidelity Central Funds (including $1,687,884 from security lending) |
| 3,092,355 |
Total income |
| 13,807,180 |
|
|
|
Expenses | ||
Management fee | $ 2,921,002 | |
Transfer agent fees | 1,404,589 | |
Accounting and security lending fees | 208,014 | |
Custodian fees and expenses | 57,182 | |
Independent trustees' compensation | 2,766 | |
Registration fees | 37,513 | |
Audit | 37,432 | |
Legal | 3,792 | |
Interest | 2,959 | |
Miscellaneous | 43,005 | |
Total expenses before reductions | 4,718,254 | |
Expense reductions | (40,331) | 4,677,923 |
Net investment income (loss) | 9,129,257 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (191,826,187) | |
Investment not meeting investment restrictions | 32,547 | |
Foreign currency transactions | (214,938) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 16,625 | |
Total net realized gain (loss) |
| (191,991,953) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (166,335,772) | |
Assets and liabilities in foreign currencies | (66,450) | |
Total change in net unrealized appreciation (depreciation) |
| (166,402,222) |
Net gain (loss) | (358,394,175) | |
Net increase (decrease) in net assets resulting from operations | $ (349,264,918) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 9,129,257 | $ 13,393,329 |
Net realized gain (loss) | (191,991,953) | 75,655,400 |
Change in net unrealized appreciation (depreciation) | (166,402,222) | (172,029,141) |
Net increase (decrease) in net assets resulting from operations | (349,264,918) | (82,980,412) |
Distributions to shareholders from net investment income | (10,492,099) | (10,291,038) |
Distributions to shareholders from net realized gain | (29,161,301) | (73,490,990) |
Total distributions | (39,653,400) | (83,782,028) |
Share transactions | 173,647,647 | 350,352,763 |
Reinvestment of distributions | 37,807,918 | 80,380,962 |
Cost of shares redeemed | (227,185,576) | (817,428,086) |
Net increase (decrease) in net assets resulting from share transactions | (15,730,011) | (386,694,361) |
Redemption fees | 60,818 | 97,331 |
Total increase (decrease) in net assets | (404,587,511) | (553,359,470) |
|
|
|
Net Assets | ||
Beginning of period | 699,205,282 | 1,252,564,752 |
End of period (including undistributed net investment income of $892,512 and undistributed net investment income of $4,499,655, respectively) | $ 294,617,771 | $ 699,205,282 |
Other Information Shares | ||
Sold | 3,594,578 | 5,029,057 |
Issued in reinvestment of distributions | 803,102 | 1,163,923 |
Redeemed | (5,094,728) | (11,450,351) |
Net increase (decrease) | (697,048) | (5,257,371) |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 59.56 | $ 73.69 | $ 76.12 | $ 54.95 | $ 54.13 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .78 | 1.01 F | .61 | .98 G | .20 |
Net realized and unrealized gain (loss) | (30.23) | (8.50) | 6.18 | 23.81 | .85 |
Total from investment operations | (29.45) | (7.49) | 6.79 | 24.79 | 1.05 |
Distributions from net investment income | (.93) | (.87) | (.59) | (.19) | (.24) |
Distributions from net realized gain | (2.51) | (5.78) | (8.65) | (3.45) | - |
Total distributions | (3.44) | (6.65) | (9.24) | (3.64) | (.24) |
Redemption fees added to paid in capital C | .01 | .01 | .02 | .02 | .01 |
Net asset value, end of period | $ 26.68 | $ 59.56 | $ 73.69 | $ 76.12 | $ 54.95 |
Total Return A, B | (51.86)% | (11.16)% | 9.27% | 45.77% | 1.96% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .90% | .88% | .90% | .95% | .98% |
Expenses net of fee waivers, if any | .90% | .88% | .90% | .95% | .98% |
Expenses net of all reductions | .89% | .87% | .89% | .89% | .94% |
Net investment income (loss) | 1.74% | 1.41% F | .82% | 1.51% G | .40% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 294,618 | $ 699,205 | $ 1,252,565 | $ 1,246,298 | $ 415,237 |
Portfolio turnover rate E | 351% | 84% | 124% | 112% | 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 $.18 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been 1.15%. G Investment income per share reflects a special dividend which amounted to $.58 per share. Excluding 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Financial Services Portfolio | -59.22% | -16.38% | -5.33% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Financial Services Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Benjamin Hesse, who became Co-Portfolio Manager of Select Financial Services Portfolio on October 1, 2008, and sole Portfolio Manager on February 1, 2009: For the 12 months ending February 28, 2009, the fund returned -59.22%, compared with -63.97% for the MSCI® US Investable Market Financials Index. Financials lagged the broader S&P 500, as ongoing weakness in the housing market, credit losses and a lack of liquidity triggered a sector meltdown. Among the stocks hardest hit were insurer American International Group (AIG), investment bank Lehman Brothers, and mortgage giants Fannie Mae and Freddie Mac - all of which were in the portfolio at one point. Despite significant government aid to the sector, stock prices plunged. An above-average cash position and favorable positioning in investment banking/brokerage and reinsurance helped keep the fund from falling as much as the index. In addition, good security selection in data processing/outsourcing services, property/casualty insurance and diversified banks contributed. Among individual holdings, title insurer Fidelity National Financial gained nicely as falling mortgage rates boosted demand. Timely buying of investment bank Morgan Stanley and good positioning in diversified bank Wells Fargo also helped performance. Stock selection was a negative overall, mainly due to weak results in the diversified financial services, thrifts/mortgage finance, asset management/custody banks and retail real estate investment trusts groups. Major detractors included Citigroup, a large diversified financial that fell sharply as the full extent of its toxic assets came to light, and Fannie Mae, which sank amid huge credit losses.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 5.4 | 5.1 |
Goldman Sachs Group, Inc. | 5.4 | 1.9 |
Credit Suisse Group sponsored ADR | 5.3 | 0.0 |
KeyCorp | 5.0 | 0.7 |
Morgan Stanley | 4.9 | 1.8 |
BM&F BOVESPA SA | 4.7 | 0.0 |
The First American Corp. | 4.2 | 0.0 |
Fidelity National Financial, Inc. Class A | 4.1 | 0.0 |
CyberSource Corp. | 3.9 | 0.0 |
EPIQ Systems, Inc. | 3.3 | 0.0 |
| 46.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Capital Markets | 27.8% |
| |
Diversified Financial Services | 16.0% |
| |
Commercial Banks | 15.5% |
| |
Insurance | 12.4% |
| |
IT Services | 7.0% |
| |
All Others* | 21.3% |
|
| |||
As of August 31, 2008 | |||
Insurance | 23.4% |
| |
Diversified Financial Services | 18.4% |
| |
Capital Markets | 17.9% |
| |
Commercial Banks | 17.2% |
| |
Real Estate Investment Trusts | 6.0% |
| |
All Others* | 17.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Financial Services Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 88.2% | |||
Shares | Value | ||
CAPITAL MARKETS - 27.8% | |||
Asset Management & Custody Banks - 7.2% | |||
Bank of New York Mellon Corp. | 173,900 | $ 3,855,363 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 35,965 | 758,809 | |
EFG International | 116,633 | 809,271 | |
Franklin Resources, Inc. | 84,662 | 3,877,520 | |
GLG Partners, Inc. | 49,700 | 107,849 | |
Janus Capital Group, Inc. | 122,600 | 540,666 | |
Julius Baer Holding Ltd. | 100,565 | 2,317,809 | |
KKR Private Equity Investors, LP Restricted Depositary Units (a)(e) | 23,500 | 52,875 | |
Legg Mason, Inc. | 269,137 | 3,453,028 | |
Och-Ziff Capital Management Group LLC Class A | 116,100 | 599,076 | |
| 16,372,266 | ||
Diversified Capital Markets - 7.1% | |||
Credit Suisse Group sponsored ADR (d) | 499,800 | 12,075,168 | |
UBS AG (NY Shares) | 441,400 | 3,994,670 | |
| 16,069,838 | ||
Investment Banking & Brokerage - 13.5% | |||
Evercore Partners, Inc. Class A | 118,478 | 1,446,616 | |
GFI Group, Inc. | 1,425,166 | 3,192,372 | |
Goldman Sachs Group, Inc. | 134,400 | 12,241,152 | |
MF Global Ltd. (a) | 591,576 | 2,567,440 | |
Morgan Stanley | 574,500 | 11,225,730 | |
| 30,673,310 | ||
TOTAL CAPITAL MARKETS | 63,115,414 | ||
COMMERCIAL BANKS - 15.4% | |||
Diversified Banks - 1.8% | |||
U.S. Bancorp, Delaware | 95,204 | 1,362,369 | |
Wells Fargo & Co. | 213,786 | 2,586,811 | |
| 3,949,180 | ||
Regional Banks - 13.6% | |||
Bank of Hawaii Corp. | 197,943 | 6,342,094 | |
Cathay General Bancorp (d) | 48,580 | 472,198 | |
Glacier Bancorp, Inc. | 326,994 | 5,032,438 | |
Huntington Bancshares, Inc. (d) | 141,600 | 206,736 | |
KeyCorp | 1,602,337 | 11,232,382 | |
PNC Financial Services Group, Inc. (d) | 79,958 | 2,186,052 | |
Umpqua Holdings Corp. | 544,839 | 4,631,132 | |
Wintrust Financial Corp. | 67,133 | 836,477 | |
| 30,939,509 | ||
TOTAL COMMERCIAL BANKS | 34,888,689 | ||
| |||
Shares | Value | ||
CONSUMER FINANCE - 0.6% | |||
Consumer Finance - 0.6% | |||
Dollar Financial Corp. (a) | 72,979 | $ 443,712 | |
Promise Co. Ltd. (d) | 73,300 | 978,907 | |
| 1,422,619 | ||
DIVERSIFIED FINANCIAL SERVICES - 16.0% | |||
Other Diversified Financial Services - 10.4% | |||
Bank of America Corp. | 1,305,550 | 5,156,923 | |
Citigroup, Inc. | 4,097,810 | 6,146,715 | |
JPMorgan Chase & Co. | 543,445 | 12,417,717 | |
| 23,721,355 | ||
Specialized Finance - 5.6% | |||
BM&F BOVESPA SA | 4,197,800 | 10,556,312 | |
CME Group, Inc. | 10,100 | 1,842,240 | |
JSE Ltd. | 58,700 | 220,742 | |
| 12,619,294 | ||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 36,340,649 | ||
INSURANCE - 12.4% | |||
Insurance Brokers - 0.1% | |||
National Financial Partners Corp. | 53,700 | 133,713 | |
Life & Health Insurance - 1.9% | |||
AFLAC, Inc. | 68,400 | 1,146,384 | |
MetLife, Inc. | 175,600 | 3,241,576 | |
| 4,387,960 | ||
Multi-Line Insurance - 0.1% | |||
Hartford Financial Services Group, Inc. | 35,800 | 218,380 | |
Property & Casualty Insurance - 8.5% | |||
Fidelity National Financial, Inc. Class A | 560,732 | 9,291,329 | |
MBIA, Inc. (a) | 39,400 | 107,956 | |
The First American Corp. | 414,600 | 9,606,282 | |
United America Indemnity Ltd. | 41,600 | 354,432 | |
| 19,359,999 | ||
Reinsurance - 1.8% | |||
Everest Re Group Ltd. | 44,094 | 2,871,842 | |
Validus Holdings Ltd. | 52,700 | 1,261,638 | |
| 4,133,480 | ||
TOTAL INSURANCE | 28,233,532 | ||
INTERNET SOFTWARE & SERVICES - 2.2% | |||
Internet Software & Services - 2.2% | |||
China Finance Online Co. Ltd. ADR (a)(d) | 560,881 | 4,918,926 | |
Common Stocks - continued | |||
Shares | Value | ||
IT SERVICES - 7.0% | |||
Data Processing & Outsourced Services - 7.0% | |||
CyberSource Corp. (a)(d) | 718,696 | $ 8,854,335 | |
MasterCard, Inc. Class A | 13,100 | 2,070,193 | |
MoneyGram International, Inc. (a) | 1,032,683 | 1,445,756 | |
Visa, Inc. | 63,200 | 3,584,072 | |
| 15,954,356 | ||
PROFESSIONAL SERVICES - 1.4% | |||
Research & Consulting Services - 1.4% | |||
First Advantage Corp. Class A (a) | 309,298 | 3,225,978 | |
REAL ESTATE INVESTMENT TRUSTS - 0.5% | |||
Mortgage REITs - 0.0% | |||
Chimera Investment Corp. | 37,076 | 110,857 | |
Residential REITs - 0.4% | |||
UDR, Inc. | 104,059 | 823,107 | |
Retail REITs - 0.1% | |||
CBL & Associates Properties, Inc. | 21,800 | 67,580 | |
Developers Diversified Realty Corp. | 65,000 | 191,750 | |
| 259,330 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 1,193,294 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.6% | |||
Diversified Real Estate Activities - 0.5% | |||
Meruelo Maddux Properties, Inc. (a) | 78,500 | 11,775 | |
Mitsubishi Estate Co. Ltd. | 111,000 | 1,118,372 | |
| 1,130,147 | ||
Real Estate Development - 1.1% | |||
Xinyuan Real Estate Co. Ltd. ADR (a) | 625,329 | 2,482,556 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 3,612,703 | ||
SOFTWARE - 3.3% | |||
Application Software - 3.3% | |||
EPIQ Systems, Inc. (a) | 445,984 | 7,523,750 | |
THRIFTS & MORTGAGE FINANCE - 0.0% | |||
Thrifts & Mortgage Finance - 0.0% | |||
Washington Mutual, Inc. | 59,100 | 1,478 | |
TOTAL COMMON STOCKS (Cost $278,446,828) | 200,431,388 | ||
Convertible Preferred Stocks - 0.1% | |||
Shares | Value | ||
COMMERCIAL BANKS - 0.1% | |||
Regional Banks - 0.1% | |||
Huntington Bancshares, Inc. 8.50% | 900 | $ 234,675 | |
UCBH Holdings, Inc. Series B, 8.50% | 130 | 49,114 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Total Tax Cost $1,093,757) | 283,789 | ||
Money Market Funds - 5.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 6,488,298 | 6,488,298 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,073,860 | 6,073,860 | |
TOTAL MONEY MARKET FUNDS (Cost $12,562,158) | 12,562,158 |
TOTAL INVESTMENT PORTFOLIO - 93.8% (Cost $292,102,743) | 213,277,335 | |
NET OTHER ASSETS - 6.2% | 14,066,668 | |
NET ASSETS - 100% | $ 227,344,003 |
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 $52,875 or 0.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 536,255 |
Fidelity Securities Lending Cash Central Fund | 533,847 |
Total | $ 1,070,102 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 213,277,335 | $ 207,245,053 | $ 6,032,282 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 79.1% |
Switzerland | 8.8% |
Brazil | 4.7% |
Bermuda | 2.9% |
Hong Kong | 2.2% |
Cayman Islands | 1.3% |
Others (individually less than 1%) | 1.0% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $89,769,047 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $107,631,327 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $5,543,824) - See accompanying schedule: Unaffiliated issuers | $ 200,715,177 |
|
Fidelity Central Funds | 12,562,158 |
|
Total Investments (cost $292,102,743) |
| $ 213,277,335 |
Cash | 43,042 | |
Receivable for investments sold | 20,092,926 | |
Receivable for fund shares sold | 1,464,066 | |
Dividends receivable | 483,285 | |
Distributions receivable from Fidelity Central Funds | 26,038 | |
Prepaid expenses | 3,343 | |
Other receivables | 1,766 | |
Total assets | 235,391,801 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,471,273 | |
Payable for fund shares redeemed | 274,111 | |
Accrued management fee | 117,636 | |
Other affiliated payables | 75,672 | |
Other payables and accrued expenses | 35,246 | |
Collateral on securities loaned, | 6,073,860 | |
Total liabilities | 8,047,798 | |
|
|
|
Net Assets | $ 227,344,003 | |
Net Assets consist of: |
| |
Paid in capital | $ 528,091,000 | |
Undistributed net investment income | 1,639,234 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (223,556,662) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (78,829,569) | |
Net Assets, for 6,796,633 shares outstanding | $ 227,344,003 | |
Net Asset Value, offering price and redemption price per share ($227,344,003 ÷ 6,796,633 shares) | $ 33.45 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 11,083,401 |
Interest |
| 19,746 |
Income from Fidelity Central Funds (including $533,847 from security lending) |
| 1,070,102 |
Total income |
| 12,173,249 |
|
|
|
Expenses | ||
Management fee | $ 1,940,500 | |
Transfer agent fees | 1,022,655 | |
Accounting and security lending fees | 142,230 | |
Custodian fees and expenses | 32,646 | |
Independent trustees' compensation | 1,584 | |
Registration fees | 47,168 | |
Audit | 36,862 | |
Legal | 2,458 | |
Miscellaneous | 29,202 | |
Total expenses before reductions | 3,255,305 | |
Expense reductions | (8,465) | 3,246,840 |
Net investment income (loss) | 8,926,409 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (215,359,089) | |
Investment not meeting investment restrictions | (25,077) | |
Foreign currency transactions | (61,887) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 27,537 |
|
Total net realized gain (loss) |
| (215,418,516) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (90,084,043) | |
Assets and liabilities in foreign currencies | (4,828) | |
Total change in net unrealized appreciation (depreciation) |
| (90,088,871) |
Net gain (loss) | (305,507,387) | |
Net increase (decrease) in net assets resulting from operations | $ (296,580,978) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 8,926,409 | $ 7,300,531 |
Net realized gain (loss) | (215,418,516) | 15,110,769 |
Change in net unrealized appreciation (depreciation) | (90,088,871) | (129,892,000) |
Net increase (decrease) in net assets resulting from operations | (296,580,978) | (107,480,700) |
Distributions to shareholders from net investment income | (7,565,769) | (5,871,170) |
Distributions to shareholders from net realized gain | (616,556) | (22,490,248) |
Total distributions | (8,182,325) | (28,361,418) |
Share transactions | 334,665,316 | 194,700,129 |
Reinvestment of distributions | 7,877,782 | 27,116,864 |
Cost of shares redeemed | (193,057,404) | (245,141,588) |
Net increase (decrease) in net assets resulting from share transactions | 149,485,694 | (23,324,595) |
Redemption fees | 153,358 | 58,975 |
Total increase (decrease) in net assets | (155,124,251) | (159,107,738) |
|
|
|
Net Assets | ||
Beginning of period | 382,468,254 | 541,575,992 |
End of period (including undistributed net investment income of $1,639,234 and undistributed net investment income of $2,449,089, respectively) | $ 227,344,003 | $ 382,468,254 |
Other Information Shares | ||
Sold | 5,258,003 | 1,894,611 |
Issued in reinvestment of distributions | 163,932 | 271,439 |
Redeemed | (3,161,525) | (2,245,495) |
Net increase (decrease) | 2,260,410 | (79,445) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.31 | $ 117.33 | $ 120.01 | $ 114.70 | $ 121.09 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.58 | 1.73 | 1.56 | 1.41 | 1.11 |
Net realized and unrealized gain (loss) | (51.12) | (27.77) | 10.14 | 13.73 | 2.75 |
Total from investment operations | (49.54) | (26.04) | 11.70 | 15.14 | 3.86 |
Distributions from net investment income | (1.22) | (1.45) | (1.29) | (1.34) | (.89) |
Distributions from net realized gain | (.13) | (5.54) | (13.10) | (8.50) | (9.37) |
Total distributions | (1.35) | (6.99) | (14.39) | (9.84) | (10.26) |
Redemption fees added to paid in capital C | .03 | .01 | .01 | .01 | .01 |
Net asset value, end of period | $ 33.45 | $ 84.31 | $ 117.33 | $ 120.01 | $ 114.70 |
Total Return A, B | (59.22)% | (23.05)% | 10.14% | 14.51% | 3.29% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .94% | .90% | .93% | .97% | .97% |
Expenses net of fee waivers, if any | .94% | .90% | .93% | .97% | .97% |
Expenses net of all reductions | .93% | .89% | .92% | .95% | .94% |
Net investment income (loss) | 2.57% | 1.57% | 1.31% | 1.26% | .96% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 227,344 | $ 382,468 | $ 541,576 | $ 490,239 | $ 487,073 |
Portfolio turnover rate E | 129% | 53% | 55% | 47% | 101% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Home Finance Portfolio | -65.96% | -26.73% | -8.73% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Home Finance Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Christopher Lee, who became Portfolio Manager of Select Home Finance Portfolio on February 1, 2009: For the 12 months ending February 28, 2009, the fund returned a disappointing -65.96%, which was better than the -73.29% returned by the MSCI® US Thrifts & Mortgage Index. Thrifts and mortgage finance companies did much worse than the S&P 500® as falling home prices and rising unemployment led a growing number of homeowners to default on their mortgage loans. As lenders battled mounting credit losses and liquidity tightened, thrifts and mortgage finance companies such as Countrywide Financial - which was not in the fund at period end - Washington Mutual, Fannie Mae and Freddie Mac saw their stock prices plunge. Despite aggressive government intervention, consumer confidence waned, keeping borrowers on the sidelines. A higher-than-usual cash position - about 7.6% of net assets on average during the period - as well as investments in out-of-index companies with higher-quality balance sheets, including mortgage real estate investment trusts (REITs) Annaly Capital Management and MFA Financial and diversified bank Wells Fargo, helped reduce losses. I sold MFA Financial before period end. The fund further benefited from underweightings in Fannie Mae and Washington Mutual. Underweighted positions in some better capitalized thrifts and mortgage finance stocks, including People's United Financial and Hudson City Bancorp, hampered relative performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Home Finance Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Hudson City Bancorp, Inc. | 12.1 | 6.1 |
People's United Financial, Inc. | 9.1 | 4.7 |
Washington Federal, Inc. | 4.9 | 2.8 |
TFS Financial Corp. | 4.8 | 0.0 |
NewAlliance Bancshares, Inc. | 4.2 | 1.3 |
First Niagara Financial Group, Inc. | 4.1 | 1.3 |
New York Community Bancorp, Inc. | 4.1 | 4.0 |
Astoria Financial Corp. | 3.8 | 4.8 |
Capitol Federal Financial | 2.9 | 0.0 |
Bank Mutual Corp. | 2.8 | 1.9 |
| 52.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Thrifts & Mortgage Finance | 72.1% |
| |
Commercial Banks | 8.6% |
| |
IT Services | 4.4% |
| |
Insurance | 4.4% |
| |
Capital Markets | 3.0% |
| |
All Others* | 7.5% |
|
| |||
As of August 31, 2008 | |||
Thrifts & Mortgage Finance | 60.8% |
| |
Real Estate Investment Trusts | 10.8% |
| |
Commercial Banks | 10.1% |
| |
Diversified Financial Services | 6.7% |
| |
Capital Markets | 2.6% |
| |
All Others* | 9.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Home Finance Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
CAPITAL MARKETS - 3.0% | |||
Diversified Capital Markets - 0.5% | |||
Credit Suisse Group sponsored ADR | 10,000 | $ 241,600 | |
Investment Banking & Brokerage - 2.5% | |||
Goldman Sachs Group, Inc. | 9,000 | 819,720 | |
Morgan Stanley | 25,000 | 488,500 | |
| 1,308,220 | ||
TOTAL CAPITAL MARKETS | 1,549,820 | ||
COMMERCIAL BANKS - 7.5% | |||
Diversified Banks - 1.9% | |||
Wells Fargo & Co. | 80,000 | 968,000 | |
Regional Banks - 5.6% | |||
Associated Banc-Corp. | 25,000 | 361,500 | |
First Horizon National Corp. | 40,000 | 366,800 | |
Glacier Bancorp, Inc. | 35,000 | 538,650 | |
Investors Bancorp, Inc. (a) | 35,000 | 250,600 | |
PNC Financial Services Group, Inc. (d) | 35,000 | 956,900 | |
TCF Financial Corp. | 35,000 | 429,100 | |
| 2,903,550 | ||
TOTAL COMMERCIAL BANKS | 3,871,550 | ||
DIVERSIFIED FINANCIAL SERVICES - 2.6% | |||
Other Diversified Financial Services - 2.6% | |||
Bank of America Corp. | 50,000 | 197,500 | |
JPMorgan Chase & Co. | 50,000 | 1,142,500 | |
| 1,340,000 | ||
INSURANCE - 4.4% | |||
Property & Casualty Insurance - 4.4% | |||
Fidelity National Financial, Inc. Class A | 60,000 | 994,200 | |
Old Republic International Corp. | 60,000 | 544,800 | |
The First American Corp. | 30,000 | 695,100 | |
| 2,234,100 | ||
IT SERVICES - 4.4% | |||
Data Processing & Outsourced Services - 4.4% | |||
Fidelity National Information Services, Inc. | 25,000 | 437,500 | |
Lender Processing Services, Inc. | 12,000 | 314,280 | |
MasterCard, Inc. Class A | 4,000 | 632,120 | |
Visa, Inc. | 15,000 | 850,650 | |
| 2,234,550 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.0% | |||
Mortgage REITs - 2.0% | |||
Annaly Capital Management, Inc. | 75,000 | 1,042,500 | |
| |||
Shares | Value | ||
THRIFTS & MORTGAGE FINANCE - 72.1% | |||
Thrifts & Mortgage Finance - 72.1% | |||
Abington Bancorp, Inc. | 150,000 | $ 1,087,500 | |
Astoria Financial Corp. | 275,000 | 1,966,250 | |
Bank Mutual Corp. | 170,000 | 1,436,500 | |
BankFinancial Corp. | 30,800 | 266,728 | |
Beneficial Mutual Bancorp, Inc. (a) | 80,000 | 720,000 | |
Berkshire Hills Bancorp, Inc. | 18,500 | 389,610 | |
Brookline Bancorp, Inc., Delaware | 75,000 | 658,500 | |
Capitol Federal Financial | 40,000 | 1,481,200 | |
Danvers Bancorp, Inc. | 50,000 | 641,000 | |
Dime Community Bancshares, Inc. | 39,700 | 391,442 | |
First Niagara Financial Group, Inc. | 182,400 | 2,119,488 | |
Hudson City Bancorp, Inc. | 600,000 | 6,222,000 | |
Kearny Financial Corp. | 33,000 | 326,370 | |
Meridian Interstate Bancorp, Inc. (a) | 90,000 | 668,700 | |
MGIC Investment Corp. | 50,000 | 114,000 | |
New York Community Bancorp, Inc. | 215,000 | 2,117,750 | |
NewAlliance Bancshares, Inc. | 190,000 | 2,169,800 | |
Northwest Bancorp, Inc. | 31,000 | 470,580 | |
Ocwen Financial Corp. (a) | 100,000 | 913,000 | |
Oritani Financial Corp. (a) | 22,600 | 244,306 | |
People's United Financial, Inc. | 270,000 | 4,700,700 | |
Provident Financial Services, Inc. | 95,000 | 887,300 | |
Provident New York Bancorp | 55,600 | 474,824 | |
Radian Group, Inc. | 100,000 | 191,000 | |
TFS Financial Corp. | 210,000 | 2,452,800 | |
Trustco Bank Corp., New York | 121,900 | 737,495 | |
United Financial Bancorp, Inc. | 8,000 | 102,960 | |
Washington Federal, Inc. | 220,000 | 2,505,800 | |
Washington Mutual, Inc. | 114,128 | 2,853 | |
Westfield Financial, Inc. | 45,000 | 423,900 | |
WSFS Financial Corp. | 10,000 | 220,900 | |
| 37,105,256 | ||
TOTAL COMMON STOCKS (Cost $68,796,122) | 49,377,776 | ||
Convertible Preferred Stocks - 1.1% | |||
|
|
|
|
COMMERCIAL BANKS - 1.1% | |||
Regional Banks - 1.1% | |||
KeyCorp Series A, 7.75% | 9,000 | 553,500 | |
Money Market Funds - 5.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 1,731,960 | $ 1,731,960 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 1,037,000 | 1,037,000 | |
TOTAL MONEY MARKET FUNDS (Cost $2,768,960) | 2,768,960 |
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $72,206,833) | 52,700,236 | |
NET OTHER ASSETS - (2.5)% | (1,260,771) | |
NET ASSETS - 100% | $ 51,439,465 |
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. |
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 | $ 132,126 |
Fidelity Securities Lending Cash Central Fund | 411,777 |
Total | $ 543,903 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 52,700,236 | $ 52,700,236 | $ - | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $97,174,837 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $44,355,873 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Home Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $929,560) - See Unaffiliated issuers | $ 49,931,276 |
|
Fidelity Central Funds | 2,768,960 |
|
Total Investments (cost $72,206,833) |
| $ 52,700,236 |
Receivable for investments sold | 130,514 | |
Receivable for fund shares sold | 74,693 | |
Dividends receivable | 171,503 | |
Distributions receivable from Fidelity Central Funds | 2,951 | |
Prepaid expenses | 771 | |
Other receivables | 177 | |
Total assets | 53,080,845 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 235,952 | |
Payable for fund shares redeemed | 297,543 | |
Accrued management fee | 25,898 | |
Other affiliated payables | 17,502 | |
Other payables and accrued expenses | 27,485 | |
Collateral on securities loaned, | 1,037,000 | |
Total liabilities | 1,641,380 | |
|
|
|
Net Assets | $ 51,439,465 | |
Net Assets consist of: |
| |
Paid in capital | $ 219,573,177 | |
Undistributed net investment income | 1,794,191 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (150,421,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (19,506,735) | |
Net Assets, for 6,139,294 shares outstanding | $ 51,439,465 | |
Net Asset Value, offering price and redemption price per share ($51,439,465 ÷ 6,139,294 shares) | $ 8.38 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,994,363 |
Interest |
| 8,152 |
Income from Fidelity Central Funds (including $411,777 from security lending) |
| 543,903 |
Total income |
| 5,546,418 |
|
|
|
Expenses | ||
Management fee | $ 564,774 | |
Transfer agent fees | 308,729 | |
Accounting and security lending fees | 44,596 | |
Custodian fees and expenses | 5,257 | |
Independent trustees' compensation | 269 | |
Registration fees | 29,046 | |
Audit | 35,718 | |
Legal | 1,499 | |
Miscellaneous | 14,101 | |
Total expenses before reductions | 1,003,989 | |
Expense reductions | (881) | 1,003,108 |
Net investment income (loss) | 4,543,310 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (147,882,516) | |
Investment not meeting investment restrictions | 2,117 | |
Foreign currency transactions | 65 | |
Total net realized gain (loss) |
| (147,880,334) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 40,527,228 | |
Assets and liabilities in foreign currencies | (183) | |
Total change in net unrealized appreciation (depreciation) |
| 40,527,045 |
Net gain (loss) | (107,353,289) | |
Net increase (decrease) in net assets resulting from operations | $ (102,809,979) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 4,543,310 | $ 4,369,952 |
Net realized gain (loss) | (147,880,334) | 4,160,187 |
Change in net unrealized appreciation (depreciation) | 40,527,045 | (105,461,899) |
Net increase (decrease) in net assets resulting from operations | (102,809,979) | (96,931,760) |
Distributions to shareholders from net investment income | (3,386,062) | (3,929,528) |
Distributions to shareholders from net realized gain | (298,730) | (9,278,294) |
Total distributions | (3,684,792) | (13,207,822) |
Share transactions | 69,272,127 | 88,078,685 |
Reinvestment of distributions | 3,541,834 | 12,680,584 |
Cost of shares redeemed | (66,122,745) | (96,312,765) |
Net increase (decrease) in net assets resulting from share transactions | 6,691,216 | 4,446,504 |
Redemption fees | 40,782 | 22,704 |
Total increase (decrease) in net assets | (99,762,773) | (105,670,374) |
|
|
|
Net Assets | ||
Beginning of period | 151,202,238 | 256,872,612 |
End of period (including undistributed net investment income of $1,794,191 and undistributed net investment income of $1,237,232, respectively) | $ 51,439,465 | $ 151,202,238 |
Other Information Shares | ||
Sold | 3,651,965 | 2,739,630 |
Issued in reinvestment of distributions | 284,292 | 372,402 |
Redeemed | (3,650,187) | (2,566,429) |
Net increase (decrease) | 286,070 | 545,603 |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 25.83 | $ 48.40 | $ 51.83 | $ 59.12 | $ 68.76 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .75 | .86 | .81 | 1.32 F | .54 |
Net realized and unrealized gain (loss) | (17.60) | (20.77) | 3.01 | (.77) | (.54) |
Total from investment operations | (16.85) | (19.91) | 3.82 | .55 | - |
Distributions from net investment income | (.56) | (.80) | (.80) | (.99) | (.56) |
Distributions from net realized gain | (.05) | (1.86) | (6.45) | (6.85) | (9.09) |
Total distributions | (.61) | (2.66) | (7.25) | (7.84) | (9.65) |
Redemption fees added to paid in capital C | .01 | - I | - I | - I | .01 |
Net asset value, end of period | $ 8.38 | $ 25.83 | $ 48.40 | $ 51.83 | $ 59.12 |
Total Return A, B | (65.96)% | (42.37)% | 7.10% | .99% | (.46)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .99% | .93% | .93% | .97% | .97% |
Expenses net of fee waivers, if any | .99% | .93% | .93% | .97% | .97% |
Expenses net of all reductions | .99% | .92% | .93% | .94% | .96% |
Net investment income (loss) | 4.48% | 2.21% | 1.55% | 2.36% F | .83% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 51,439 | $ 151,202 | $ 256,873 | $ 292,124 | $ 396,088 |
Portfolio turnover rate E | 79% | 36% | 52% | 76% | 37% |
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. |
See accompanying notes which are an integral part of the financial statements.
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Insurance Portfolio | -54.83% | -13.22% | -1.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Insurance Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and a slowing of global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. In fact, all 10 of the S&P 500®'s market sectors landed in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Brian Wilhelm, Portfolio Manager of Select Insurance Portfolio: For the 12 months ending February 28, 2009, Select Insurance Portfolio produced a total return of -54.83%, which was ahead of the -59.44% return of the MSCI US Investable Market Insurance Index, but trailed the S&P 500. The sharp decline of the equity and credit markets was particularly hard on many life/health insurance companies, which have relatively more exposure to the bond and stock markets. However, the fund had a significant underweighting in life/health insurance, which contributed, meaningfully to relative returns. While property/casualty companies also declined, good stock selection within the group was a positive for us. The biggest boost came from reinsurance companies, where the pricing outlook was very positive and our exposure was roughly twice that of the index. Despite their negative absolute returns, the fund benefited from the outperformance relative to the index of Bermuda-based reinsurers Everest Reinsurance Group and Renaissance Holdings. Underweighting life/health insurer Aflac was also a positive, as the stock declined sharply. A modest position in cash also contributed to results. Detractors from relative performance included Hartford Financial Services, which did a poor job of hedging its credit exposure, and MetLife, which was one of the industry's better-capitalized companies, but couldn't avoid the industry's pain. The biggest drag on fund performance was an overweighting in multi-line insurance companies, with the most damage coming from one company - global insurance conglomerate American International Group (AIG), which all but collapsed under the weight of its troubled mortgage-related assets and was bailed out by the government.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
The Travelers Companies, Inc. | 9.6 | 0.0 |
ACE Ltd. | 9.1 | 5.8 |
Berkshire Hathaway, Inc. Class B | 8.8 | 2.1 |
Berkshire Hathaway, Inc. Class A | 6.3 | 6.7 |
Everest Re Group Ltd. | 4.7 | 1.9 |
The Chubb Corp. | 4.7 | 3.3 |
Unum Group | 4.5 | 0.0 |
RenaissanceRe Holdings Ltd. | 4.3 | 1.4 |
Prudential Financial, Inc. | 4.1 | 4.1 |
Axis Capital Holdings Ltd. | 3.8 | 3.4 |
| 59.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Insurance | 97.8% |
| |
Capital Markets | 2.0% |
| |
Thrifts & Mortgage Finance | 0.1% |
| |
All Others* | 0.1% |
|
| |||
| |||
As of August 31, 2008 | |||
Insurance | 95.7% |
| |
Thrifts & Mortgage Finance | 0.6% |
| |
All Others* | 3.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Insurance Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
CAPITAL MARKETS - 2.0% | |||
Asset Management & Custody Banks - 2.0% | |||
Ameriprise Financial, Inc. | 93,560 | $ 1,491,346 | |
Virtus Investment Partners, Inc. (a) | 1,150 | 5,750 | |
| 1,497,096 | ||
INSURANCE - 97.8% | |||
Insurance Brokers - 7.7% | |||
Aon Corp. | 50,000 | 1,912,000 | |
Brown & Brown, Inc. | 16,900 | 285,103 | |
Marsh & McLennan Companies, Inc. | 117,300 | 2,103,189 | |
National Financial Partners Corp. | 7,900 | 19,671 | |
Willis Group Holdings Ltd. | 73,000 | 1,597,970 | |
| 5,917,933 | ||
Life & Health Insurance - 14.5% | |||
AFLAC, Inc. | 87,800 | 1,471,528 | |
Delphi Financial Group, Inc. Class A | 9,200 | 99,728 | |
MetLife, Inc. | 157,791 | 2,912,822 | |
Phoenix Companies, Inc. | 23,000 | 11,040 | |
Prudential Financial, Inc. | 189,700 | 3,112,977 | |
Unum Group | 340,100 | 3,462,218 | |
| 11,070,313 | ||
Multi-Line Insurance - 4.3% | |||
American International Group, Inc. | 693,900 | 291,438 | |
Genworth Financial, Inc. Class A (non-vtg.) | 146,000 | 176,660 | |
Hartford Financial Services Group, Inc. | 96,200 | 586,820 | |
Horace Mann Educators Corp. | 8,600 | 66,134 | |
Loews Corp. | 105,700 | 2,098,145 | |
Unitrin, Inc. | 9,900 | 106,722 | |
| 3,325,919 | ||
Property & Casualty Insurance - 56.9% | |||
ACE Ltd. | 190,149 | 6,942,340 | |
Admiral Group PLC | 58,700 | 713,932 | |
Allstate Corp. | 84,700 | 1,425,501 | |
AMBAC Financial Group, Inc. (d) | 59,400 | 35,046 | |
Argo Group International Holdings, Ltd. (a) | 76,296 | 2,161,466 | |
Assured Guaranty Ltd. | 104,600 | 462,332 | |
Axis Capital Holdings Ltd. | 131,385 | 2,940,396 | |
Berkshire Hathaway, Inc.: | |||
Class A (a) | 61 | 4,794,600 | |
Class B (a) | 2,620 | 6,717,680 | |
Fidelity National Financial, Inc. Class A | 64,800 | 1,073,736 | |
LandAmerica Financial Group, Inc. | 6,200 | 310 | |
Markel Corp. (a) | 1,700 | 451,877 | |
MBIA, Inc. (a)(d) | 199,200 | 545,808 | |
Old Republic International Corp. | 91,073 | 826,943 | |
Progressive Corp. | 128,400 | 1,485,588 | |
The Chubb Corp. | 91,958 | 3,590,040 | |
The First American Corp. | 25,352 | 587,406 | |
The Travelers Companies, Inc. | 204,400 | 7,389,061 | |
| |||
Shares | Value | ||
United America Indemnity Ltd. | 35,437 | $ 301,923 | |
W.R. Berkley Corp. | 10,700 | 222,667 | |
XL Capital Ltd. Class A | 268,455 | 888,586 | |
| 43,557,238 | ||
Reinsurance - 14.4% | |||
Enstar Group Ltd. (a) | 47,320 | 2,180,979 | |
Everest Re Group Ltd. | 55,800 | 3,634,254 | |
IPC Holdings Ltd. | 11,100 | 282,051 | |
Maiden Holdings Ltd. (e) | 9,200 | 41,032 | |
OdysseyRe Holdings Corp. | 6,000 | 278,760 | |
PartnerRe Ltd. | 6,500 | 402,350 | |
Platinum Underwriters Holdings Ltd. | 10,125 | 283,905 | |
Reinsurance Group of America, Inc. | 22,900 | 622,880 | |
RenaissanceRe Holdings Ltd. | 73,495 | 3,309,480 | |
| 11,035,691 | ||
TOTAL INSURANCE | 74,907,094 | ||
THRIFTS & MORTGAGE FINANCE - 0.1% | |||
Thrifts & Mortgage Finance - 0.1% | |||
Radian Group, Inc. | 47,297 | 90,337 | |
TOTAL COMMON STOCKS (Cost $113,177,811) | 76,494,527 | ||
Money Market Funds - 5.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 2,950,688 | 2,950,688 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 876,000 | 876,000 | |
TOTAL MONEY MARKET FUNDS (Cost $3,826,688) | 3,826,688 |
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $117,004,499) | 80,321,215 | |
NET OTHER ASSETS - (4.9)% | (3,741,287) | |
NET ASSETS - 100% | $ 76,579,928 |
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 $ 41,032 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 | $ 35,841 |
Fidelity Securities Lending Cash Central Fund | 94,760 |
Total | $ 130,601 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 80,321,215 | $ 79,607,283 | $ 713,932 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 67.1% |
Bermuda | 22.5% |
Switzerland | 9.1% |
Others (individually less than 1%) | 1.3% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $1,214,111 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $9,182,441 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $727,400) - See Unaffiliated issuers | $ 76,494,527 |
|
Fidelity Central Funds | 3,826,688 |
|
Total Investments (cost $117,004,499) |
| $ 80,321,215 |
Receivable for investments sold | 7,374,849 | |
Receivable for fund shares sold | 84,480 | |
Dividends receivable | 78,813 | |
Distributions receivable from Fidelity Central Funds | 2,358 | |
Prepaid expenses | 761 | |
Total assets | 87,862,476 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,113,481 | |
Payable for fund shares redeemed | 196,698 | |
Accrued management fee | 41,769 | |
Other affiliated payables | 25,593 | |
Other payables and accrued expenses | 29,007 | |
Collateral on securities loaned, | 876,000 | |
Total liabilities | 11,282,548 | |
|
|
|
Net Assets | $ 76,579,928 | |
Net Assets consist of: |
| |
Paid in capital | $ 152,184,059 | |
Distributions in excess of net investment income | (12,126) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (38,908,874) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (36,683,131) | |
Net Assets, for 3,197,977 shares outstanding | $ 76,579,928 | |
Net Asset Value, offering price and redemption price per share ($76,579,928 ÷ 3,197,977 shares) | $ 23.95 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,228,292 |
Interest |
| 3,466 |
Income from Fidelity Central Funds (including $94,760 from security lending) |
| 130,601 |
Total income |
| 2,362,359 |
|
|
|
Expenses | ||
Management fee | $ 588,743 | |
Transfer agent fees | 311,674 | |
Accounting and security lending fees | 44,443 | |
Custodian fees and expenses | 12,470 | |
Independent trustees' compensation | 563 | |
Registration fees | 18,245 | |
Audit | 36,413 | |
Legal | 688 | |
Miscellaneous | 11,196 | |
Total expenses before reductions | 1,024,435 | |
Expense reductions | (2,960) | 1,021,475 |
Net investment income (loss) | 1,340,884 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (38,227,097) | |
Foreign currency transactions | 7,254 | |
Total net realized gain (loss) |
| (38,219,843) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (42,113,936) | |
Assets and liabilities in foreign currencies | (1,263) | |
Total change in net unrealized appreciation (depreciation) |
| (42,115,199) |
Net gain (loss) | (80,335,042) | |
Net increase (decrease) in net assets resulting from operations | $ (78,994,158) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,340,884 | $ 1,439,635 |
Net realized gain (loss) | (38,219,843) | 17,519,323 |
Change in net unrealized appreciation (depreciation) | (42,115,199) | (48,919,552) |
Net increase (decrease) in net assets resulting from operations | (78,994,158) | (29,960,594) |
Distributions to shareholders from net investment income | (1,343,177) | (810,406) |
Distributions to shareholders from net realized gain | (51,409) | (12,234,053) |
Total distributions | (1,394,586) | (13,044,459) |
Share transactions | 54,368,280 | 90,768,987 |
Reinvestment of distributions | 1,331,943 | 12,497,777 |
Cost of shares redeemed | (52,802,582) | (150,458,399) |
Net increase (decrease) in net assets resulting from share transactions | 2,897,641 | (47,191,635) |
Redemption fees | 8,364 | 8,334 |
Total increase (decrease) in net assets | (77,482,739) | (90,188,354) |
|
|
|
Net Assets | ||
Beginning of period | 154,062,667 | 244,251,021 |
End of period (including distributions in excess of net investment income of $12,126 and undistributed net investment income of $647,773, respectively) | $ 76,579,928 | $ 154,062,667 |
Other Information Shares | ||
Sold | 1,588,134 | 1,306,014 |
Issued in reinvestment of distributions | 44,579 | 201,317 |
Redeemed | (1,286,940) | (2,175,432) |
Net increase (decrease) | 345,773 | (668,101) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 54.02 | $ 69.38 | $ 68.72 | $ 62.15 | $ 59.67 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .51 | .45 | .44 | .70 F | .23 |
Net realized and unrealized gain (loss) | (30.02) | (10.95) | 5.25 | 7.71 | 2.92 |
Total from investment operations | (29.51) | (10.50) | 5.69 | 8.41 | 3.15 |
Distributions from net investment income | (.54) | (.30) | (.40) | (.60) | (.10) |
Distributions from net realized gain | (.02) | (4.56) | (4.64) | (1.26) | (.59) |
Total distributions | (.56) | (4.86) | (5.04) | (1.86) | (.69) |
Redemption fees added to paid in capital C | - I | - I | .01 | .02 | .02 |
Net asset value, end of period | $ 23.95 | $ 54.02 | $ 69.38 | $ 68.72 | $ 62.15 |
Total Return A, B | (54.83)% | (16.04)% | 8.33% | 13.68% | 5.35% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .97% | .93% | .98% | 1.03% | 1.05% |
Expenses net of fee waivers, if any | .97% | .93% | .98% | 1.03% | 1.05% |
Expenses net of all reductions | .97% | .93% | .98% | 1.02% | 1.04% |
Net investment income (loss) | 1.27% | .65% | .64% | 1.08% F | .39% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 76,580 | $ 154,063 | $ 244,251 | $ 208,927 | $ 173,377 |
Portfolio turnover rate E | 426% | 60% | 58% | 44% | 50% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
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. 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 held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for each Fund's investments is included at the end of each Fund's Schedule of Investments.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. Each Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds 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, 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 for each Fund:
| Cost for Federal | Unrealized | Unrealized | Net Unrealized |
Banking Portfolio | $ 345,623,179 | $ 2,186,649 | $ (182,542,610) | $ (180,355,961) |
Brokerage and Investment Management Portfolio | 517,034,156 | 17,527,795 | (212,223,831) | (194,696,036) |
Financial Services Portfolio | 318,263,197 | 14,508,478 | (119,494,340) | (104,985,862) |
Home Finance Portfolio | 81,097,436 | 2,386,135 | (30,783,335) | (28,397,200) |
Insurance Portfolio | 145,516,671 | 3,183,242 | (68,378,698) | (65,195,456) |
| Undistributed | Capital Loss |
Banking Portfolio | $ 3,195,324 | $ (37,412,485) |
Brokerage and Investment Management Portfolio | 991,053 | (86,484,136) |
Financial Services Portfolio | 1,639,293 | (89,769,047) |
Home Finance Portfolio | 1,794,233 | (97,174,837) |
Insurance Portfolio | - | (1,214,111) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
February 28, 2009 |
|
|
|
| Ordinary | Long-term | Total |
Banking Portfolio | $ 8,084,799 | $ 698,226 | $ 8,783,025 |
Brokerage and Investment Management Portfolio | 10,492,099 | 29,161,301 | 39,653,400 |
Financial Services Portfolio | 7,565,769 | 616,556 | 8,182,325 |
Home Finance Portfolio | 3,386,062 | 298,730 | 3,684,792 |
Insurance Portfolio | 1,368,057 | 26,529 | 1,394,586 |
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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 | 563,421,412 | 485,828,829 |
Brokerage and Investment Management Portfolio | 1,657,270,438 | 1,626,148,021 |
Financial Services Portfolio | 566,851,779 | 416,285,682 |
Home Finance Portfolio | 92,210,091 | 76,002,529 |
Insurance Portfolio | 452,009,702 | 448,480,889 |
Select Banking Portfolio realized a gain and loss of $502 and $6,008 respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $6,008 was fully reimbursed by the Fund's investment advisor.
Select Brokerage and Investment Management Portfolio realized a gain and loss of $49,172 and $16,625 respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $16,625 was fully reimbursed by the Fund's investment advisor.
Select Financial Services Portfolio realized a gain and loss of $2,460 and $27,537 respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $27,537 was fully reimbursed by the Fund's investment advisor.
Select Home Finance Portfolio realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
Annual Report
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Banking Portfolio | .30% | .26% | .56% |
Brokerage and Investment Management Portfolio | .30% | .26% | .56% |
Financial Services Portfolio | .30% | .26% | .56% |
Home Finance Portfolio | .30% | .26% | .56% |
Insurance Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Banking Portfolio | .28% |
Brokerage and Investment Management Portfolio | .27% |
Financial Services Portfolio | .29% |
Home Finance Portfolio | .30% |
Insurance Portfolio | .30% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Banking Portfolio | $ 22,287 |
Brokerage and Investment Management Portfolio | 150,502 |
Financial Services Portfolio | 91,749 |
Home Finance Portfolio | 36,360 |
Insurance Portfolio | 14,386 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or | Average Daily Loan Balance | Weighted | Interest |
Brokerage and Investment Management Portfolio | Borrower | $ 6,570,739 | .70% | $ 2,959 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Banking Portfolio | $ 917 |
Brokerage and Investment Management Portfolio | 1,663 |
Financial Services Portfolio | 1,196 |
Home Finance Portfolio | 319 |
Insurance Portfolio | 351 |
During the period, there were no borrowings on this line of credit.
Annual Report
Notes to Financial Statements - continued
8. Security Lending.
Certain Funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of certain Funds provided services to these Funds in addition to trade execution. These services included payments of expenses on behalf of each applicable Fund. In addition, through arrangements with each applicable Fund's custodian 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 | $ 3,030 | $ 656 | $ 765 |
Brokerage and Investment Management Portfolio | 37,175 | 2,801 | 355 |
Financial Services Portfolio | 5,793 | - | 2,672 |
Home Finance Portfolio | 111 | 770 | - |
Insurance Portfolio | 2,960 | - | - |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following fund:
Fund | Affiliated % |
Insurance Portfolio | .33% |
In addition, at the end of the period, PAS U.S. Opportunity Fidelity Fund of Funds was the owner of record of approximately 18% of the total outstanding shares of the Insurance Portfolio.
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
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 |
Annual Report
10. Other - continued
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 positions of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, Home Finance Portfolio and Insurance Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the years then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers.**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Financial Services Portfolio | 100% | 85% |
Select Brokerage and Investment Management Portfolio | 85% | 51% |
Select Insurance Portfolio | - | 75% |
Select Home Finance Portfolio | 100% | 67% |
Select Banking Portfolio | 99% | 75% |
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 2008 | December 2008 |
Select Financial Services Portfolio | 100% | 95% |
Select Brokerage and Investment Management Portfolio | 100% | 76% |
Select Insurance Portfolio | - | 100% |
Select Home Finance Portfolio | 100% | 73% |
Select Banking Portfolio | 100% | 84% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
SELFIN-UANN-0409
1.813662.104
Automated line for quickest service
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 28, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
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Shareholder Expense Example |
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Fund Updates* |
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Health Care Sector |
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Biotechnology |
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Health Care |
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Medical Delivery |
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Medical Equipment and Systems |
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Pharmaceuticals |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
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Proxy Voting Results |
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* Fund updates for each Select Portfolio include: Performance, Management's Discussion of Fund Performance, Investment Changes, Investments, and Financial Statements.
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 Portfolios Health Care Sector
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Biotechnology Portfolio | .91% |
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|
|
Actual |
| $ 1,000.00 | $ 762.30 | $ 3.98 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Health Care Portfolio | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 684.10 | $ 3.72 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
Medical Delivery Portfolio | .93% |
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|
|
Actual |
| $ 1,000.00 | $ 621.60 | $ 3.74 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Medical Equipment and Systems Portfolio | .90% |
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|
|
Actual |
| $ 1,000.00 | $ 662.50 | $ 3.71 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Pharmaceuticals Portfolio | .99% |
|
|
|
Actual |
| $ 1,000.00 | $ 741.10 | $ 4.27 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.89 | $ 4.96 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Biotechnology Portfolio | -12.73% | -0.28% | 3.63% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Biotechnology Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Rajiv Kaul, Portfolio Manager of Select Biotechnology Portfolio: During the past year, the fund returned -12.73%, trailing the -4.71% return of the MSCI® US Investable Market Biotechnology Index but beating the S&P 500 by a wide margin. Versus the MSCI index, the fund was hurt the most by the poor performance of a number of its small-cap holdings in pharmaceuticals, an industry that is not part of the MSCI benchmark. For the period overall, the MSCI index was dominated by a few big players, to which investors retreated amid an overall flight from risk. Two of those dominant index stocks were Amgen and Genentech. Although I liked those companies a lot and had significant positions in both, I couldn't - for reasons having to do with the fund's diversification mandate - mirror the concentration of the index. Consequently, underweighting those two stocks detracted from fund performance, given that both had positive returns for the period. Ireland-based Elan Corp. was our biggest detractor, its stock plummeting last summer on indications that its Tysabri medication for multiple sclerosis might be a bigger risk factor for a rare type of brain infection than previously thought. Other detractors included XenoPort, BioMarin Pharmaceutical and Akorn. Elan, Xenoport and Akorn were out-of-index holdings. Conversely, a small cash position helped cushion the fund's loss. Contributors included an underweighted position in Biogen Idec, Elan's partner in developing Tysabri. Both stocks fell sharply for the same Tysabri-related reason. Likewise, underweighting poorly performing major index component Celgene was helpful. Alexion Pharmaceuticals was a rarity during the period, posting a positive return. Cephalon contributed 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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Amgen, Inc. | 16.3 | 20.3 |
Genentech, Inc. | 15.3 | 10.7 |
Gilead Sciences, Inc. | 9.0 | 7.5 |
Biogen Idec, Inc. | 6.7 | 7.8 |
Alexion Pharmaceuticals, Inc. | 4.6 | 4.6 |
Genzyme Corp. | 4.6 | 1.2 |
Celgene Corp. | 4.5 | 2.5 |
Cephalon, Inc. | 4.1 | 4.9 |
Vertex Pharmaceuticals, Inc. | 3.5 | 1.8 |
Acorda Therapeutics, Inc. | 3.1 | 2.5 |
| 71.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Biotechnology | 87.5% |
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Pharmaceuticals | 6.8% |
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Health Care | 0.8% |
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Life Sciences Tools & Services | 0.6% |
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All Others* | 4.3% |
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As of August 31, 2008 | |||
Biotechnology | 80.6% |
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Pharmaceuticals | 13.2% |
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Health Care | 1.2% |
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Life Sciences Tools & Services | 0.5% |
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All Others* | 4.5% |
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* Includes short-term investments and net other assets. |
Annual Report
Select Biotechnology Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 95.4% | |||
Shares | Value | ||
BIOTECHNOLOGY - 87.2% | |||
Biotechnology - 87.2% | |||
Acadia Pharmaceuticals, Inc. (a) | 651,588 | $ 540,818 | |
Acorda Therapeutics, Inc. (a) | 1,613,484 | 35,496,648 | |
Affymax, Inc. (a) | 170,396 | 2,228,780 | |
Alexion Pharmaceuticals, Inc. (a) | 1,555,900 | 53,211,780 | |
Alkermes, Inc. (a) | 530,819 | 5,350,656 | |
Allos Therapeutics, Inc. (a) | 130,600 | 736,584 | |
Alnylam Pharmaceuticals, Inc. (a)(d) | 158,500 | 2,922,740 | |
Amgen, Inc. (a) | 3,848,978 | 188,330,494 | |
Amylin Pharmaceuticals, Inc. (a) | 86,073 | 785,846 | |
Anadys Pharmaceuticals, Inc. (a)(e) | 1,489,476 | 9,115,593 | |
Antigenics, Inc. (a) | 1,548,000 | 619,200 | |
Antigenics, Inc.: | |||
warrants 1/9/10 (a)(f) | 1,548,000 | 15 | |
warrants 1/9/18 (a)(f) | 1,548,000 | 575,840 | |
Arena Pharmaceuticals, Inc. (a) | 161,900 | 675,123 | |
Biogen Idec, Inc. (a) | 1,684,669 | 77,562,161 | |
BioMarin Pharmaceutical, Inc. (a)(d) | 1,206,315 | 14,475,780 | |
Celera Corp. (a) | 238,056 | 1,530,700 | |
Celgene Corp. (a) | 1,156,027 | 51,709,088 | |
Cephalon, Inc. (a)(d) | 727,461 | 47,714,167 | |
Cepheid, Inc. (a)(d) | 159,600 | 1,066,128 | |
Cougar Biotechnology, Inc. (a) | 313,400 | 7,844,402 | |
Cubist Pharmaceuticals, Inc. (a) | 117,308 | 1,666,947 | |
CV Therapeutics, Inc. (a) | 283,479 | 4,535,664 | |
Dendreon Corp. (a)(d) | 228,500 | 696,925 | |
Enzon Pharmaceuticals, Inc. (a)(d) | 115,000 | 608,350 | |
Facet Biotech Corp. (a) | 113,840 | 741,098 | |
Genentech, Inc. (a) | 2,057,139 | 175,988,241 | |
Genzyme Corp. (a) | 867,554 | 52,860,065 | |
Gilead Sciences, Inc. (a)(d) | 2,310,457 | 103,508,474 | |
GTx, Inc. (a)(d) | 59,546 | 554,373 | |
Halozyme Therapeutics, Inc. (a)(d) | 102,690 | 454,917 | |
Human Genome Sciences, Inc. (a) | 999,956 | 1,889,917 | |
Incyte Corp. (a) | 318,123 | 734,864 | |
InterMune, Inc. (a)(d) | 832,533 | 12,529,622 | |
Isis Pharmaceuticals, Inc. (a) | 412,810 | 5,308,737 | |
Ligand Pharmaceuticals, Inc. Class B (a) | 595,700 | 1,614,347 | |
Martek Biosciences | 73,800 | 1,382,274 | |
Momenta Pharmaceuticals, Inc. (a) | 90,100 | 864,960 | |
Myriad Genetics, Inc. (a) | 198,246 | 15,631,697 | |
ONYX Pharmaceuticals, Inc. (a)(d) | 448,018 | 13,436,060 | |
OREXIGEN Therapeutics, Inc. (a) | 317,199 | 1,265,624 | |
OSI Pharmaceuticals, Inc. (a)(d) | 595,097 | 20,292,808 | |
PDL BioPharma, Inc. | 569,200 | 3,341,204 | |
Poniard Pharmaceuticals, Inc. (a)(d) | 170,400 | 340,800 | |
| |||
Shares | Value | ||
Progenics Pharmaceuticals, Inc. (a) | 102,400 | $ 658,432 | |
Regeneron Pharmaceuticals, Inc. (a) | 182,557 | 2,601,437 | |
Rigel Pharmaceuticals, Inc. (a) | 172,565 | 904,241 | |
Sangamo Biosciences, Inc. (a) | 169,502 | 605,122 | |
Savient Pharmaceuticals, Inc. (a)(d) | 215,937 | 932,848 | |
Theratechnologies, Inc. (a) | 44,400 | 54,446 | |
Theravance, Inc. (a)(d) | 676,467 | 9,429,950 | |
United Therapeutics Corp. (a) | 393,248 | 26,390,873 | |
Vertex Pharmaceuticals, Inc. (a) | 1,320,704 | 39,924,882 | |
Zymogenetics, Inc. (a)(d) | 248,605 | 1,031,711 | |
| 1,005,274,453 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.8% | |||
Health Care Equipment - 0.8% | |||
Alsius Corp. (a) | 314,300 | 53,431 | |
Aradigm Corp. (a) | 509,900 | 61,188 | |
Quidel Corp. (a) | 776,100 | 8,568,144 | |
| 8,682,763 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.6% | |||
Life Sciences Tools & Services - 0.6% | |||
AMAG Pharmaceuticals, Inc. (a) | 67,100 | 1,815,055 | |
Clinical Data, Inc. (a)(d) | 114,756 | 958,213 | |
Exelixis, Inc. (a)(d) | 774,300 | 3,344,976 | |
Medivation, Inc. (a)(d) | 32,736 | 545,709 | |
| 6,663,953 | ||
PHARMACEUTICALS - 6.8% | |||
Pharmaceuticals - 6.8% | |||
Adolor Corp. (a) | 723,964 | 1,447,928 | |
Akorn, Inc. (a) | 2,653,427 | 3,714,798 | |
Alexza Pharmaceuticals, Inc. (a) | 153,744 | 245,990 | |
Auxilium Pharmaceuticals, Inc. (a) | 1,083,104 | 29,752,867 | |
Biodel, Inc. (a)(d)(e) | 2,338,348 | 8,698,655 | |
Catalyst Pharmaceutical Partners, Inc. (a) | 516,249 | 831,161 | |
Elan Corp. PLC sponsored ADR (a) | 1,783,400 | 11,021,412 | |
Inspire Pharmaceuticals, Inc. (a) | 31,300 | 104,542 | |
Jazz Pharmaceuticals, Inc. (a) | 6,965 | 5,154 | |
Sepracor, Inc. (a) | 307,886 | 4,612,132 | |
Wyeth | 211,500 | 8,633,430 | |
XenoPort, Inc. (a) | 421,851 | 8,812,467 | |
| 77,880,536 | ||
TOTAL COMMON STOCKS (Cost $1,330,459,079) | 1,098,501,705 | ||
Convertible Preferred Stocks - 0.3% | |||
|
|
|
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BIOTECHNOLOGY - 0.3% | |||
Biotechnology - 0.3% | |||
Xenon Pharmaceuticals, Inc. Series E (a)(f) | 981,626 | 3,416,058 | |
Money Market Funds - 10.9% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 42,620,668 | $ 42,620,668 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 83,373,879 | 83,373,879 | |
TOTAL MONEY MARKET FUNDS (Cost $125,994,547) | 125,994,547 | ||
TOTAL INVESTMENT PORTFOLIO - 106.6% (Cost $1,463,177,764) | 1,227,912,310 | ||
NET OTHER ASSETS - (6.6)% | (75,774,915) | ||
NET ASSETS - 100% | $ 1,152,137,395 |
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 $3,991,913 or 0.3% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Antigenics, Inc. warrants 1/9/10-1/9/18 | 1/9/08 | $ 1,930,631 |
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 | $ 521,515 |
Fidelity Securities Lending Cash Central Fund | 897,307 |
Total | $ 1,418,822 |
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: |
Affiliates | Value, | Purchases | Sales | Dividend Income | Value, |
Anadys Pharmaceuticals, Inc. | $ - | $ 5,910,400 | $ - | $ - | $ 9,115,593 |
Biodel, Inc. | 20,986,175 | 4,531,073 | - | - | 8,698,655 |
Vanda Pharmaceuticals, Inc. | 6,277,223 | - | 1,722,579 | - | - |
Total | $ 27,263,398 | $ 10,441,473 | $ 1,722,579 | $ - | $ 17,814,248 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,227,912,310 | $ 1,223,920,397 | $ 575,855 | $ 3,416,058 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ 3,416,058 |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | - |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ 3,416,058 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $302,864,856 of which $237,503,787 and $65,361,069 will expire on February 28, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $1,555,842 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $78,775,109) - See accompanying schedule: Unaffiliated issuers (cost $1,297,675,289) | $ 1,084,103,515 |
|
Fidelity Central Funds (cost $125,994,547) | 125,994,547 |
|
Other affiliated issuers (cost $39,507,928) | 17,814,248 |
|
Total Investments (cost $1,463,177,764) |
| $ 1,227,912,310 |
Receivable for investments sold | 10,379,316 | |
Receivable for fund shares sold | 2,215,946 | |
Dividends receivable | 63,450 | |
Distributions receivable from Fidelity Central Funds | 72,103 | |
Prepaid expenses | 11,797 | |
Other receivables | 2,986 | |
Total assets | 1,240,657,908 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 350,165 | |
Payable for fund shares redeemed | 3,821,844 | |
Accrued management fee | 603,165 | |
Other affiliated payables | 341,034 | |
Other payables and accrued expenses | 30,426 | |
Collateral on securities loaned, at value | 83,373,879 | |
Total liabilities | 88,520,513 | |
|
|
|
Net Assets | $ 1,152,137,395 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,709,160,254 | |
Accumulated net investment loss | (686) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (321,756,719) | |
Net unrealized appreciation (depreciation) on investments | (235,265,454) | |
Net Assets, for 21,094,747 shares outstanding | $ 1,152,137,395 | |
Net Asset Value, offering price and redemption price per share ($1,152,137,395 ÷ 21,094,747 shares) | $ 54.62 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 898,214 |
Special dividends |
| 1,017,375 |
Interest |
| 32,387 |
Income from Fidelity Central Funds (including $897,307 from security lending) |
| 1,418,822 |
Total income |
| 3,366,798 |
|
|
|
Expenses | ||
Management fee | $ 6,756,599 | |
Transfer agent fees | 3,249,901 | |
Accounting and security lending fees | 412,759 | |
Custodian fees and expenses | 24,419 | |
Independent trustees' compensation | 6,022 | |
Registration fees | 75,963 | |
Audit | 38,939 | |
Legal | 8,937 | |
Interest | 10,338 | |
Miscellaneous | 82,273 | |
Total expenses before reductions | 10,666,150 | |
Expense reductions | (2,383) | 10,663,767 |
Net investment income (loss) | (7,296,969) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (6,096,593) | |
Other affiliated issuers | (20,302,232) |
|
Foreign currency transactions | (795) | |
Total net realized gain (loss) |
| (26,399,620) |
Change in net unrealized appreciation (depreciation) on investment securities | (180,443,840) | |
Net gain (loss) | (206,843,460) | |
Net increase (decrease) in net assets resulting from operations | $ (214,140,429) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ (7,296,969) | $ (10,016,182) |
Net realized gain (loss) | (26,399,620) | 97,766,695 |
Change in net unrealized appreciation (depreciation) | (180,443,840) | (101,727,359) |
Net increase (decrease) in net assets resulting from operations | (214,140,429) | (13,976,846) |
Share transactions | 678,692,957 | 146,235,436 |
Cost of shares redeemed | (400,563,233) | (413,597,621) |
Net increase (decrease) in net assets resulting from share transactions | 278,129,724 | (267,362,185) |
Redemption fees | 144,635 | 33,065 |
Total increase (decrease) in net assets | 64,133,930 | (281,305,966) |
|
|
|
Net Assets | ||
Beginning of period | 1,088,003,465 | 1,369,309,431 |
End of period (including accumulated net investment loss of $686 and accumulated net investment loss of $2,899, respectively) | $ 1,152,137,395 | $ 1,088,003,465 |
Other Information Shares | ||
Sold | 10,174,385 | 2,180,917 |
Redeemed | (6,463,153) | (6,231,096) |
Net increase (decrease) | 3,711,232 | (4,050,179) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 62.59 | $ 63.89 | $ 68.06 | $ 49.04 | $ 55.39 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.38) F | (.53) | (.47) | (.48) | (.52) |
Net realized and unrealized gain (loss) | (7.60) | (.77) | (3.71) | 19.49 | (5.84) |
Total from investment operations | (7.98) | (1.30) | (4.18) | 19.01 | (6.36) |
Redemption fees added to paid in capital C | .01 | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 54.62 | $ 62.59 | $ 63.89 | $ 68.06 | $ 49.04 |
Total Return A, B | (12.73)% | (2.03)% | (6.13)% | 38.78% | (11.46)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .89% | .89% | .93% | .97% | .99% |
Expenses net of fee waivers, if any | .89% | .89% | .93% | .97% | .99% |
Expenses net of all reductions | .89% | .89% | .92% | .93% | .98% |
Net investment income (loss) | (.61)% F | (.79)% | (.75)% | (.83)% | (.94)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,152,137 | $ 1,088,003 | $ 1,369,309 | $ 1,811,492 | $ 1,487,400 |
Portfolio turnover rate E | 55% | 143% | 70% | 63% | 19% |
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 (.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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Health Care 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Health Care Portfolio | -32.34% | -2.50% | -0.19% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Health Care Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Edward Yoon, who became sole Portfolio Manager of Select Health Care Portfolio on February 28, 2009, after serving as Co-Portfolio Manager starting on October 1, 2008: For the year ending February 28, 2009, the fund fell 32.34%, underperforming the MSCI® US Investable Market Health Care Index, which declined 28.00%, but outperforming the S&P 500. The main factor behind the fund's underperformance of the MSCI index was the poor performance of out-of-benchmark positions in fertilizers and agricultural chemicals. Unfavorable stock selection among health care distributors also hurt, as did underweighting pharmaceuticals, which outperformed. On the plus side, the fund benefited from overweighting health care services and by positive security selection and an underweighting in managed health care. The fund's modest cash position also added value in a down market. Detractors included an underweighting in pharmaceutical giant and benchmark heavyweight Johnson & Johnson; out-of-benchmark positions in Brazilian drug distributor Profarma and Minnesota-based fertilizer company Mosaic (since sold off); an underweighting in biotechnology firm Amgen; and life sciences tools and services provider Thermo Fisher Scientific. Among the contributors to performance were biotech company Genentech; an underweighting in pharmaceutical company and major index component Pfizer; drug company Wyeth; and health services provider Medco Health Solutions.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Wyeth | 7.0 | 5.5 |
Pfizer, Inc. | 6.0 | 2.4 |
Medco Health Solutions, Inc. | 5.9 | 1.1 |
Genentech, Inc. | 5.6 | 4.7 |
Baxter International, Inc. | 4.4 | 3.8 |
Merck & Co., Inc. | 4.2 | 0.5 |
Allergan, Inc. | 4.0 | 1.6 |
Gilead Sciences, Inc. | 3.9 | 0.0 |
Schering-Plough Corp. | 3.8 | 0.0 |
Covidien Ltd. | 3.1 | 4.9 |
| 47.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Pharmaceuticals | 34.3% |
| |
Biotechnology | 21.2% |
| |
Health Care | 17.4% |
| |
Health Care | 16.9% |
| |
Life Sciences | 6.4% |
| |
All Others* | 3.8% |
|
As of August 31, 2008 | |||
Health Care | 25.3% |
| |
Pharmaceuticals | 21.4% |
| |
Biotechnology | 15.6% |
| |
Health Care | 13.8% |
| |
Life Sciences | 12.0% |
| |
All Others* | 11.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Health Care Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
BIOTECHNOLOGY - 21.2% | |||
Biotechnology - 21.2% | |||
Alexion Pharmaceuticals, Inc. (a) | 205,874 | $ 7,040,891 | |
Alkermes, Inc. (a) | 206,179 | 2,078,284 | |
Alnylam Pharmaceuticals, Inc. (a) | 181,200 | 3,341,328 | |
Amgen, Inc. (a) | 743,105 | 36,360,128 | |
Biogen Idec, Inc. (a) | 639,557 | 29,445,204 | |
BioMarin Pharmaceutical, Inc. (a) | 347,085 | 4,165,020 | |
Cephalon, Inc. (a) | 54,800 | 3,594,332 | |
Cougar Biotechnology, Inc. (a) | 29,307 | 733,554 | |
CSL Ltd. | 134,921 | 3,120,239 | |
Genentech, Inc. (a) | 775,422 | 66,337,352 | |
Genzyme Corp. (a) | 421,302 | 25,669,931 | |
Gilead Sciences, Inc. (a) | 1,044,125 | 46,776,800 | |
GTx, Inc. (a)(d) | 201,800 | 1,878,758 | |
Myriad Genetics, Inc. (a) | 43,873 | 3,459,386 | |
ONYX Pharmaceuticals, Inc. (a) | 81,422 | 2,441,846 | |
OSI Pharmaceuticals, Inc. (a) | 165,800 | 5,653,780 | |
Theravance, Inc. (a) | 160,100 | 2,231,794 | |
United Therapeutics Corp. (a) | 132,300 | 8,878,653 | |
| 253,207,280 | ||
CHEMICALS - 0.6% | |||
Fertilizers & Agricultural Chemicals - 0.6% | |||
Monsanto Co. | 84,951 | 6,479,213 | |
Specialty Chemicals - 0.0% | |||
Jubilant Organosys Ltd. | 87,269 | 185,710 | |
TOTAL CHEMICALS | 6,664,923 | ||
DIVERSIFIED CONSUMER SERVICES - 0.4% | |||
Specialized Consumer Services - 0.4% | |||
Carriage Services, Inc. Class A (a)(e) | 973,104 | 2,335,450 | |
Stewart Enterprises, Inc. Class A | 878,100 | 2,037,192 | |
| 4,372,642 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.0% | |||
Other Diversifed Financial Services - 0.0% | |||
MBF Healthcare Acquisition Corp. warrants 4/16/11 (a) | 144,380 | 1,444 | |
FOOD & STAPLES RETAILING - 0.5% | |||
Drug Retail - 0.5% | |||
China Nepstar Chain Drugstore Ltd. ADR | 8,100 | 29,484 | |
CVS Caremark Corp. | 244,386 | 6,290,496 | |
| 6,319,980 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 16.9% | |||
Health Care Equipment - 14.4% | |||
American Medical Systems Holdings, Inc. (a) | 157,165 | 1,626,658 | |
Aspect Medical Systems, Inc. (a) | 201,721 | 704,006 | |
Baxter International, Inc. | 1,022,535 | 52,057,257 | |
Boston Scientific Corp. (a) | 816,520 | 5,731,970 | |
Conceptus, Inc. (a) | 338,535 | 3,801,748 | |
| |||
Shares | Value | ||
Covidien Ltd. | 1,160,374 | $ 36,749,045 | |
Edwards Lifesciences Corp. (a) | 169,900 | 9,448,139 | |
Electro-Optical Sciences, Inc. (a)(d) | 393,846 | 1,575,384 | |
Electro-Optical Sciences, Inc. warrants 8/2/12 (a)(g) | 50,450 | 169,145 | |
ev3, Inc. (a) | 445,091 | 2,621,586 | |
Golden Meditech Co. Ltd. (a) | 6,136,000 | 668,650 | |
Hospira, Inc. (a) | 252,673 | 5,862,014 | |
I-Flow Corp. (a) | 20,800 | 65,936 | |
Integra LifeSciences Holdings Corp. (a) | 227,669 | 5,944,438 | |
Kinetic Concepts, Inc. (a) | 121,600 | 2,648,448 | |
Masimo Corp. (a) | 357,313 | 8,929,252 | |
Medtronic, Inc. | 258,101 | 7,637,209 | |
Micrus Endovascular Corp. (a) | 269,093 | 1,695,286 | |
Mindray Medical International Ltd. sponsored ADR (d) | 49,600 | 905,200 | |
NeuroMetrix, Inc. (a) | 182,755 | 241,237 | |
NuVasive, Inc. (a) | 135,100 | 3,830,085 | |
St. Jude Medical, Inc. (a) | 464,994 | 15,419,201 | |
Wright Medical Group, Inc. (a) | 173,067 | 2,528,509 | |
| 170,860,403 | ||
Health Care Supplies - 2.5% | |||
Align Technology, Inc. (a) | 224,200 | 1,535,770 | |
Cooper Companies, Inc. | 433,964 | 9,542,868 | |
InfuSystems Holdings, Inc. (a)(e) | 1,424,500 | 2,706,550 | |
InfuSystems Holdings, Inc. warrants 4/11/11 (a) | 131,400 | 15,768 | |
Inverness Medical Innovations, Inc. (a) | 592,535 | 13,314,261 | |
RTI Biologics, Inc. (a) | 1,087,000 | 3,065,340 | |
| 30,180,557 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 201,040,960 | ||
HEALTH CARE PROVIDERS & SERVICES - 17.4% | |||
Health Care Distributors & Services - 1.5% | |||
Henry Schein, Inc. (a) | 243,197 | 8,920,466 | |
McKesson Corp. | 149,200 | 6,120,184 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 1,585,300 | 3,311,124 | |
| 18,351,774 | ||
Health Care Facilities - 1.2% | |||
Hanger Orthopedic Group, Inc. (a) | 546,873 | 7,273,411 | |
Sun Healthcare Group, Inc. (a) | 274,212 | 2,451,455 | |
Universal Health Services, Inc. Class B | 121,100 | 4,460,113 | |
| 14,184,979 | ||
Health Care Services - 11.5% | |||
athenahealth, Inc. (a) | 192,095 | 4,894,581 | |
Express Scripts, Inc. (a) | 675,133 | 33,959,190 | |
Fresenius Medical Care AG & Co. KGaA sponsored ADR | 182,300 | 7,394,088 | |
Genoptix, Inc. (a) | 82,173 | 2,491,485 | |
Health Grades, Inc. (a) | 1,124,047 | 2,416,701 | |
Healthways, Inc. (a) | 136,200 | 1,240,782 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - CONTINUED | |||
Health Care Services - continued | |||
IPC The Hospitalist Co., Inc. (a) | 28,266 | $ 452,821 | |
Laboratory Corp. of America Holdings (a) | 162,900 | 8,961,129 | |
LHC Group, Inc. (a)(d) | 111,932 | 2,230,805 | |
Medco Health Solutions, Inc. (a) | 1,742,028 | 70,691,496 | |
NightHawk Radiology Holdings, Inc. (a) | 505,150 | 1,343,699 | |
Rural/Metro Corp. (a) | 338,500 | 456,975 | |
Virtual Radiologic Corp. (a)(d) | 32,247 | 201,544 | |
| 136,735,296 | ||
Managed Health Care - 3.2% | |||
Health Net, Inc. (a) | 201,300 | 2,657,160 | |
Humana, Inc. (a) | 264,291 | 6,255,768 | |
UnitedHealth Group, Inc. | 813,778 | 15,990,738 | |
Universal American Financial Corp. (a) | 5,568 | 37,361 | |
WellPoint, Inc. (a) | 396,592 | 13,452,401 | |
| 38,393,428 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 207,665,477 | ||
LIFE SCIENCES TOOLS & SERVICES - 6.4% | |||
Life Sciences Tools & Services - 6.4% | |||
Bruker BioSciences Corp. (a) | 402,923 | 1,696,306 | |
Illumina, Inc. (a)(d) | 833,928 | 26,126,964 | |
Life Technologies Corp. (a) | 42,600 | 1,241,790 | |
Millipore Corp. (a) | 138,600 | 7,631,316 | |
QIAGEN NV (a) | 1,390,442 | 22,274,881 | |
Thermo Fisher Scientific, Inc. (a) | 134,424 | 4,874,214 | |
Waters Corp. (a) | 352,775 | 12,424,736 | |
| 76,270,207 | ||
PERSONAL PRODUCTS - 0.2% | |||
Personal Products - 0.2% | |||
Mead Johnson Nutrition Co. Class A (a) | 77,300 | 2,132,707 | |
Nutraceutical International Corp. (a) | 24,288 | 188,232 | |
| 2,320,939 | ||
PHARMACEUTICALS - 33.8% | |||
Pharmaceuticals - 33.8% | |||
Abbott Laboratories | 591,253 | 27,989,917 | |
Allergan, Inc. | 1,234,980 | 47,843,125 | |
Auxilium Pharmaceuticals, Inc. (a) | 76,400 | 2,098,708 | |
Bristol-Myers Squibb Co. | 631,795 | 11,631,346 | |
China Shineway Pharmaceutical Group Ltd. | 1,722,000 | 968,310 | |
Elan Corp. PLC sponsored ADR (a) | 123,342 | 762,254 | |
Johnson & Johnson | 718,999 | 35,949,950 | |
Medicines Co. (a) | 398,150 | 4,885,301 | |
Merck & Co., Inc. | 2,084,981 | 50,456,540 | |
Pfizer, Inc. | 5,818,496 | 71,625,686 | |
Schering-Plough Corp. | 2,596,995 | 45,161,743 | |
Shire PLC sponsored ADR | 72,062 | 2,555,319 | |
| |||
Shares | Value | ||
Teva Pharmaceutical Industries Ltd. sponsored ADR | 286,769 | $ 12,784,162 | |
Wyeth | 2,038,909 | 83,228,262 | |
XenoPort, Inc. (a) | 205,437 | 4,291,579 | |
| 402,232,202 | ||
TOTAL COMMON STOCKS (Cost $1,274,671,632) | 1,160,096,054 | ||
Convertible Preferred Stocks - 0.2% | |||
|
|
|
|
PHARMACEUTICALS - 0.2% | |||
Pharmaceuticals - 0.2% | |||
Mylan, Inc. 6.50% | 3,300 | 2,681,250 |
Nonconvertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
PHARMACEUTICALS - 0.3% | ||||
Pharmaceuticals - 0.3% | ||||
Elan Finance PLC/Elan Finance Corp. 5.2344% 11/15/11 (f) | $ 3,910,000 | 3,264,850 |
Money Market Funds - 1.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 11,306,823 | 11,306,823 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 9,774,625 | 9,774,625 | |
TOTAL MONEY MARKET FUNDS (Cost $21,081,448) | 21,081,448 | ||
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $1,300,715,498) | 1,187,123,602 | ||
NET OTHER ASSETS - 0.3% | 4,019,177 | ||
NET ASSETS - 100% | $ 1,191,142,779 |
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) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(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 $169,145 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 | $ 805,171 |
Fidelity Securities Lending Cash Central Fund | 338,809 |
Total | $ 1,143,980 |
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: |
Affiliates | Value, | Purchases | Sales | Dividend | Value, |
Carriage Services, Inc. Class A | $ - | $ 5,489,722 | $ - | $ - | $ 2,335,450 |
InfuSystems Holdings, Inc. | 5,014,240 | - | - | - | 2,706,550 |
Total | $ 5,014,240 | $ 5,489,722 | $ - | $ - | $ 5,042,000 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,187,123,602 | $ 1,176,064,004 | $ 11,058,154 | $ 1,444 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ - |
Total Realized Gain (Loss) | (29,516) |
Total Unrealized Gain (Loss) | (31,638) |
Cost of Purchases | 66,166 |
Proceeds of Sales | (3,568) |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ 1,444 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $134,571,440 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $158,382,597 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $9,208,122) - See accompanying schedule: Unaffiliated issuers (cost $1,266,015,997) | $ 1,161,000,154 |
|
Fidelity Central Funds (cost $21,081,448) | 21,081,448 |
|
Other affiliated issuers (cost $13,618,053) | 5,042,000 |
|
Total Investments (cost $1,300,715,498) |
| $ 1,187,123,602 |
Cash | 395,942 | |
Receivable for investments sold | 152,405,517 | |
Receivable for fund shares sold | 717,810 | |
Dividends receivable | 2,874,934 | |
Interest receivable | 5,779 | |
Distributions receivable from Fidelity Central Funds | 35,954 | |
Prepaid expenses | 14,072 | |
Other receivables | 188,005 | |
Total assets | 1,343,761,615 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 136,187,290 | |
Payable for fund shares redeemed | 5,564,889 | |
Accrued management fee | 635,403 | |
Other affiliated payables | 365,864 | |
Other payables and accrued expenses | 90,765 | |
Collateral on securities loaned, at value | 9,774,625 | |
Total liabilities | 152,618,836 | |
|
|
|
Net Assets | $ 1,191,142,779 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,632,599,094 | |
Undistributed net investment income | 2,778,486 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (330,579,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (113,655,633) | |
Net Assets, for 16,173,533 shares outstanding | $ 1,191,142,779 | |
Net Asset Value, offering price and redemption price per share ($1,191,142,779 ÷ 16,173,533 shares) | $ 73.65 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 19,226,207 |
Interest |
| 431,368 |
Income from Fidelity Central Funds (including $338,809 from security lending) |
| 1,143,980 |
Total income |
| 20,801,555 |
|
|
|
Expenses | ||
Management fee | $ 8,961,965 | |
Transfer agent fees | 3,949,005 | |
Accounting and security lending fees | 501,524 | |
Custodian fees and expenses | 183,920 | |
Independent trustees' compensation | 8,487 | |
Depreciation in deferred trustee compensation account | (1,269) | |
Registration fees | 33,939 | |
Audit | 63,087 | |
Legal | 9,585 | |
Interest | 712 | |
Miscellaneous | 104,604 | |
Total expenses before reductions | 13,815,559 | |
Expense reductions | (65,987) | 13,749,572 |
Net investment income (loss) | 7,051,983 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $27,796) | (324,342,226) | |
Foreign currency transactions | (132,291) | |
Total net realized gain (loss) |
| (324,474,517) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $121,221) | (279,523,643) | |
Assets and liabilities in foreign currencies | (85,427) | |
Total change in net unrealized appreciation (depreciation) |
| (279,609,070) |
Net gain (loss) | (604,083,587) | |
Net increase (decrease) in net assets resulting from operations | $ (597,031,604) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended |
Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 7,051,983 | $ 6,366,655 |
Net realized gain (loss) | (324,474,517) | 241,063,204 |
Change in net unrealized appreciation (depreciation) | (279,609,070) | (227,132,582) |
Net increase (decrease) in net assets resulting from operations | (597,031,604) | 20,297,277 |
Distributions to shareholders from net investment income | (6,124,045) | (6,192,733) |
Distributions to shareholders from net realized gain | (77,726,943) | (224,013,816) |
Total distributions | (83,850,988) | (230,206,549) |
Share transactions | 251,717,005 | 297,559,081 |
Reinvestment of distributions | 79,184,139 | 216,028,272 |
Cost of shares redeemed | (407,072,802) | (429,358,886) |
Net increase (decrease) in net assets resulting from share transactions | (76,171,658) | 84,228,467 |
Redemption fees | 50,497 | 44,318 |
Total increase (decrease) in net assets | (757,003,753) | (125,636,487) |
|
|
|
Net Assets | ||
Beginning of period | 1,948,146,532 | 2,073,783,019 |
End of period (including undistributed net investment income of $2,778,486 and undistributed net investment income of $2,286,929, respectively) | $ 1,191,142,779 | $ 1,948,146,532 |
Other Information Shares | ||
Sold | 2,656,352 | 2,338,021 |
Issued in reinvestment of distributions | 777,486 | 1,705,095 |
Redeemed | (4,313,844) | (3,347,369) |
Net increase (decrease) | (880,006) | 695,747 |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 114.24 | $ 126.78 | $ 139.09 | $ 127.07 | $ 123.36 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .42 | .39 F | .39 | (.17) | .14 |
Net realized and unrealized gain (loss) | (35.98) | 1.63 | 4.49 | 25.97 | 3.69 |
Total from investment operations | (35.56) | 2.02 | 4.88 | 25.80 | 3.83 |
Distributions from net investment income | (.37) | (.39) | (.20) | (.04) | (.13) |
Distributions from net realized gain | (4.66) | (14.17) | (16.99) | (13.75) | - |
Total distributions | (5.03) | (14.56) | (17.19) | (13.79) | (.13) |
Redemption fees added to paid in capital C | - I | - I | - I | .01 | .01 |
Net asset value, end of period | $ 73.65 | $ 114.24 | $ 126.78 | $ 139.09 | $ 127.07 |
Total Return A, B | (32.34)% | .72% | 4.13% | 20.42% | 3.12% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .86% | .85% | .88% | .91% | .93% |
Expenses net of fee waivers, if any | .86% | .85% | .88% | .91% | .93% |
Expenses net of all reductions | .86% | .84% | .87% | .87% | .92% |
Net investment income (loss) | .44% | .30% F | .31% | (.12) % | .11% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,191,143 | $ 1,948,147 | $ 2,073,783 | $ 2,380,323 | $ 1,906,252 |
Portfolio turnover rate E | 173% | 120% | 91% | 120% | 32% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Medical Delivery Portfolio | -43.05% | -0.11% | 5.50% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Medical Delivery Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Andrew Hatem, who became Portfolio Manager of Select Medical Delivery Portfolio on February 28, 2009: For the year, the portfolio lost 43.05%, about in line with the decline of 43.20% for the MSCI® US Investable Market Health Care Providers & Services Index and the S&P 500. The fund was helped the most versus the MSCI index by underweighting managed health care and by the solid performance of its out-of-benchmark positions in health care supplies. Overweighting health care technologies boosted results further, as did a modest cash position. On the downside, unfavorable stock selection in health care distributors and underweighting health care services - the index's strongest group - hurt. Unfavorable currency movements also dampened the returns of the fund's overseas investments in U.S. dollar terms. Contributors included managed health care company and major index constituent WellPoint, whose stock was off significantly and we underweighted it; pharmacy benefit manager Express Scripts; an out-of-benchmark position in medical diagnostics company Inverness Medical Innovations; and underweighting two managed health care companies, index giant UnitedHealth Group and Coventry Health Care, whose stock price fell sharply. Coventry was not held at period end. Among the detractors were an out-of-benchmark stake in Brazilian drug distributor Profarma; underweighting health care services firm Quest Diagnostics and dialysis service provider DaVita; managed health care company Humana; and health care services provider NightHawk Radiology.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Medco Health Solutions, Inc. | 14.9 | 6.9 |
UnitedHealth Group, Inc. | 14.0 | 13.1 |
WellPoint, Inc. | 9.9 | 4.4 |
Express Scripts, Inc. | 9.1 | 8.6 |
McKesson Corp. | 5.5 | 7.8 |
Cardinal Health, Inc. | 4.6 | 3.3 |
Humana, Inc. | 4.2 | 6.4 |
Health Net, Inc. | 2.8 | 0.0 |
AmerisourceBergen Corp. | 2.7 | 0.0 |
Universal Health Services, Inc. Class B | 2.6 | 1.1 |
| 70.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Health Care | 91.9% |
| |
Health Care | 3.8% |
| |
Biotechnology | 1.9% |
| |
Diversified | 1.1% |
| |
Food & Staples Retailing | 1.1% |
| |
All Others* | 0.2% |
|
As of August 31, 2008 | |||
Health Care | 75.7% |
| |
Health Care | 8.0% |
| |
Food & Staples Retailing | 3.3% |
| |
Health Care Technology | 1.8% |
| |
Diversified | 1.4% |
| |
All Others* | 9.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Medical Delivery Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
BIOTECHNOLOGY - 1.9% | |||
Biotechnology - 1.9% | |||
Alnylam Pharmaceuticals, Inc. (a) | 29,300 | $ 540,292 | |
Genentech, Inc. (a) | 53,100 | 4,542,705 | |
| 5,082,997 | ||
DIVERSIFIED CONSUMER SERVICES - 1.1% | |||
Specialized Consumer Services - 1.1% | |||
Carriage Services, Inc. Class A (a) | 806,549 | 1,935,718 | |
Service Corp. International | 161,430 | 545,633 | |
Stewart Enterprises, Inc. Class A | 211,815 | 491,411 | |
| 2,972,762 | ||
DIVERSIFIED FINANCIAL SERVICES - 0.2% | |||
Other Diversifed Financial Services - 0.2% | |||
MBF Healthcare Acquisition Corp. (a) | 69,100 | 563,165 | |
MBF Healthcare Acquisition Corp. warrants 4/16/11 (a) | 260,100 | 2,601 | |
| 565,766 | ||
FOOD & STAPLES RETAILING - 1.1% | |||
Drug Retail - 1.1% | |||
CVS Caremark Corp. | 115,183 | 2,964,810 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 3.8% | |||
Health Care Equipment - 1.8% | |||
Baxter International, Inc. | 24,300 | 1,237,113 | |
Covidien Ltd. | 72,500 | 2,296,075 | |
Electro-Optical Sciences, Inc. (a)(e) | 150,000 | 600,000 | |
Golden Meditech Co. Ltd. (a) | 4,472,000 | 487,321 | |
Natus Medical, Inc. (a) | 1,000 | 7,830 | |
Sirona Dental Systems, Inc. (a) | 10,000 | 111,500 | |
| 4,739,839 | ||
Health Care Supplies - 2.0% | |||
InfuSystems Holdings, Inc. (a) | 20,000 | 38,000 | |
Inverness Medical Innovations, Inc. (a)(e) | 233,300 | 5,242,251 | |
| 5,280,251 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 10,020,090 | ||
HEALTH CARE PROVIDERS & SERVICES - 91.4% | |||
Health Care Distributors & Services - 15.0% | |||
AmerisourceBergen Corp. | 227,200 | 7,215,872 | |
Cardinal Health, Inc. | 372,900 | 12,100,605 | |
Henry Schein, Inc. (a) | 112,500 | 4,126,500 | |
McKesson Corp. | 354,500 | 14,541,590 | |
Patterson Companies, Inc. (a) | 20,000 | 361,400 | |
Profarma Distribuidora de Produtos Farmaceuticos SA | 619,700 | 1,294,331 | |
| 39,640,298 | ||
Health Care Facilities - 6.9% | |||
Apollo Hospitals Enterprise Ltd. | 4,939 | 37,617 | |
Bangkok Chain Hospital PCL | 4,250,000 | 842,199 | |
| |||
Shares | Value | ||
Bangkok Dusit Medical Service PCL (For. Reg.) | 297,600 | $ 138,144 | |
Brookdale Senior Living, Inc. | 184,900 | 674,885 | |
Community Health Systems, Inc. (a) | 93,500 | 1,529,660 | |
Emeritus Corp. (a) | 41,824 | 281,057 | |
Hanger Orthopedic Group, Inc. (a) | 145,000 | 1,928,500 | |
Health Management Associates, Inc. Class A (a) | 797,500 | 1,714,625 | |
LifePoint Hospitals, Inc. (a) | 45,000 | 945,900 | |
Sun Healthcare Group, Inc. (a) | 145,438 | 1,300,216 | |
Tenet Healthcare Corp. (a) | 1,318,600 | 1,463,646 | |
U.S. Physical Therapy, Inc. (a) | 30,698 | 314,961 | |
Universal Health Services, Inc. Class B | 186,900 | 6,883,527 | |
VCA Antech, Inc. (a) | 2,100 | 43,659 | |
| 18,098,596 | ||
Health Care Services - 32.8% | |||
athenahealth, Inc. (a) | 27,000 | 687,960 | |
DaVita, Inc. (a) | 30,564 | 1,434,063 | |
Emergency Medical Services Corp. Class A (a) | 100 | 3,062 | |
Express Scripts, Inc. (a) | 477,400 | 24,013,220 | |
Health Grades, Inc. (a) | 1,067,929 | 2,296,047 | |
Healthways, Inc. (a) | 222,000 | 2,022,420 | |
IPC The Hospitalist Co., Inc. (a) | 35,000 | 560,700 | |
Laboratory Corp. of America Holdings (a) | 76,000 | 4,180,760 | |
Lincare Holdings, Inc. (a) | 130,900 | 2,758,063 | |
Medco Health Solutions, Inc. (a) | 965,041 | 39,161,367 | |
MEDNAX, Inc. (a) | 73,457 | 2,174,327 | |
NightHawk Radiology Holdings, Inc. (a) | 811,320 | 2,158,111 | |
Quest Diagnostics, Inc. | 51,500 | 2,360,245 | |
Rural/Metro Corp. (a)(f) | 1,957,400 | 2,642,490 | |
Virtual Radiologic Corp. (a) | 3,800 | 23,750 | |
| 86,476,585 | ||
Managed Health Care - 36.7% | |||
Aetna, Inc. (e) | 140,656 | 3,357,459 | |
Centene Corp. (a) | 75,000 | 1,273,500 | |
CIGNA Corp. | 189,300 | 2,983,368 | |
Health Net, Inc. (a) | 559,600 | 7,386,720 | |
Humana, Inc. (a) | 463,972 | 10,982,217 | |
Medial Saude SA | 577,800 | 1,631,617 | |
Triple-S Management Corp. (a)(e) | 277,600 | 3,195,176 | |
UnitedHealth Group, Inc. | 1,874,497 | 36,833,866 | |
Universal American Financial Corp. (a) | 430,196 | 2,886,615 | |
WellPoint, Inc. (a) | 770,400 | 26,131,968 | |
| 96,662,506 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 240,877,985 | ||
HEALTH CARE TECHNOLOGY - 0.1% | |||
Health Care Technology - 0.1% | |||
HLTH Corp. (a) | 14,208 | 155,151 | |
Common Stocks - continued | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
WebMD Health Corp. Class A (a) | 8,400 | $ 194,712 | |
LIFE SCIENCES TOOLS & SERVICES - 0.1% | |||
Life Sciences Tools & Services - 0.1% | |||
Medtox Scientific, Inc. (a) | 35,000 | 243,950 | |
TOTAL COMMON STOCKS (Cost $354,082,612) | 263,078,223 |
Nonconvertible Bonds - 0.5% | ||||
| Principal Amount |
| ||
HEALTH CARE PROVIDERS & SERVICES - 0.5% | ||||
Health Care Services - 0.5% | ||||
Rural/Metro Corp.: | ||||
0% 3/15/16 (d) | $ 2,790,000 | 1,199,700 | ||
9.875% 3/15/15 | 20,000 | 16,000 | ||
TOTAL NONCONVERTIBLE BONDS (Cost $2,473,346) | 1,215,700 |
Money Market Funds - 3.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 5,141,626 | $ 5,141,626 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,828,600 | 4,828,600 | |
TOTAL MONEY MARKET FUNDS (Cost $9,970,226) | 9,970,226 | ||
TOTAL INVESTMENT PORTFOLIO - 104.1% (Cost $366,526,184) | 274,264,149 | ||
NET OTHER ASSETS - (4.1)% | (10,760,743) | ||
NET ASSETS - 100% | $ 263,503,406 |
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 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 | $ 255,370 |
Fidelity Securities Lending Cash Central Fund | 108,861 |
Total | $ 364,231 |
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, |
Rural/Metro Corp. | $ 5,284,980 | $ - | $ - | $ - | $ 2,642,490 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 274,264,149 | $ 271,540,567 | $ 2,720,981 | $ 2,601 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (56,999) |
Cost of Purchases | 59,600 |
Proceeds of Sales | - |
Amortization/Accretion | - |
Transfer in/out of Level 3 | - |
Ending Balance | $ 2,601 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $28,045,847 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $35,477,954 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Medical Delivery Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,552,366) - See accompanying schedule: Unaffiliated issuers (cost $341,463,224) | $ 261,651,433 |
|
Fidelity Central Funds (cost $9,970,226) | 9,970,226 |
|
Other affiliated issuers (cost $15,092,734) | 2,642,490 |
|
Total Investments (cost $366,526,184) |
| $ 274,264,149 |
Receivable for investments sold | 18,626,526 | |
Receivable for fund shares sold | 402,858 | |
Dividends receivable | 58,235 | |
Interest receivable | 905 | |
Distributions receivable from Fidelity Central Funds | 24,939 | |
Prepaid expenses | 2,887 | |
Other receivables | 8,356 | |
Total assets | 293,388,855 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 21,462,567 | |
Payable for fund shares redeemed | 3,328,470 | |
Accrued management fee | 153,677 | |
Other affiliated payables | 81,725 | |
Other payables and accrued expenses | 30,410 | |
Collateral on securities loaned, at value | 4,828,600 | |
Total liabilities | 29,885,449 | |
|
|
|
Net Assets | $ 263,503,406 | |
Net Assets consist of: |
| |
Paid in capital | $ 426,992,133 | |
Accumulated net investment loss | (149) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (71,209,858) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (92,278,720) | |
Net Assets, for 10,322,647 shares outstanding | $ 263,503,406 | |
Net Asset Value, offering price and redemption price per share ($263,503,406 ÷ 10,322,647 shares) | $ 25.53 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 914,966 |
Interest |
| 302,165 |
Income from Fidelity Central Funds (including $108,861 from security lending) |
| 364,231 |
Total income |
| 1,581,362 |
|
|
|
Expenses | ||
Management fee | $ 2,038,973 | |
Transfer agent fees | 1,049,594 | |
Accounting and security lending fees | 144,517 | |
Custodian fees and expenses | 58,112 | |
Independent trustees' compensation | 1,564 | |
Registration fees | 35,985 | |
Audit | 42,683 | |
Legal | 2,369 | |
Miscellaneous | 42,962 | |
Total expenses before reductions | 3,416,759 | |
Expense reductions | (8,131) | 3,408,628 |
Net investment income (loss) | (1,827,266) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (67,825,276) | |
Foreign currency transactions | (48,448) | |
Total net realized gain (loss) |
| (67,873,724) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $1,900) | (136,873,849) | |
Assets and liabilities in foreign currencies | (39,530) | |
Total change in net unrealized appreciation (depreciation) |
| (136,913,379) |
Net gain (loss) | (204,787,103) | |
Net increase (decrease) in net assets resulting from operations | $ (206,614,369) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (1,827,266) | $ 1,408,594 |
Net realized gain (loss) | (67,873,724) | 48,284,387 |
Change in net unrealized appreciation (depreciation) | (136,913,379) | (79,043,613) |
Net increase (decrease) in net assets resulting from operations | (206,614,369) | (29,350,632) |
Distributions to shareholders from net investment income | (331,975) | - |
Distributions to shareholders from net realized gain | (3,873,055) | (50,920,643) |
Total distributions | (4,205,030) | (50,920,643) |
Share transactions | 139,545,282 | 374,625,171 |
Reinvestment of distributions | 4,037,578 | 48,846,356 |
Cost of shares redeemed | (209,790,018) | (446,389,762) |
Net increase (decrease) in net assets resulting from share transactions | (66,207,158) | (22,918,235) |
Redemption fees | 32,689 | 45,642 |
Total increase (decrease) in net assets | (276,993,868) | (103,143,868) |
|
|
|
Net Assets | ||
Beginning of period | 540,497,274 | 643,641,142 |
End of period (including accumulated net investment loss of $149 and undistributed net investment income of $1,179,540, respectively) | $ 263,503,406 | $ 540,497,274 |
Other Information Shares | ||
Sold | 4,123,547 | 7,144,220 |
Issued in reinvestment of distributions | 103,874 | 944,218 |
Redeemed | (5,842,893) | (8,765,390) |
Net increase (decrease) | (1,615,472) | (676,952) |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 45.27 | $ 51.02 | $ 54.98 | $ 46.80 | $ 32.76 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | .11 F | (.29) | (.31) | (.28) |
Net realized and unrealized gain (loss) | (19.18) | (1.69) | 1.20 G | 11.41 | 14.28 |
Total from investment operations | (19.36) | (1.58) | .91 | 11.10 | 14.00 |
Distributions from net investment income | (.03) | - | - | - | - |
Distributions from net realized gain | (.35) | (4.17) | (4.88) | (2.94) | - |
Total distributions | (.38) | (4.17) | (4.88) | (2.94) | - |
Redemption fees added to paid in capital C | - J | - J | .01 | .02 | .04 |
Net asset value, end of period | $ 25.53 | $ 45.27 | $ 51.02 | $ 54.98 | $ 46.80 |
Total Return A, B | (43.05)% | (4.00)% | 2.23% | 24.54% | 42.86% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .94% | .92% | .95% | .95% | 1.03% |
Expenses net of fee waivers, if any | .94% | .92% | .95% | .95% | 1.03% |
Expenses net of all reductions | .94% | .91% | .94% | .91% | .92% |
Net investment income (loss) | (.50)% | .22% F | (.58)% | (.60)% | (.72)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 263,503 | $ 540,497 | $ 643,641 | $ 1,469,861 | $ 706,183 |
Portfolio turnover rate E | 122% | 113% | 92% | 106% | 244% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Medical Equipment and Systems Portfolio | -26.81% | 1.19% | 8.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Medical Equipment and Systems Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Edward Yoon, Portfolio Manager of Select Medical Equipment and Systems Portfolio: For the 12 months ending February 28, 2009, the fund declined 26.81%, outperforming both the S&P 500 and the 34.51% loss of the MSCI® US Investable Market Health Care Equipment & Supplies Index. The key to performance versus the MSCI Index was favorable stock picking in the health care equipment group, aided by good out-of-benchmark investments in the biotechnology and health care services groups. A modest cash position helped as well. Baxter International benefited from tight supply and strong demand in the blood plasma protein market. Underweightings in Intuitive Surgical and Stryker also helped. Intuitive, which manufactures robotic surgical technology, fell from a very high valuation, and Stryker, which produces beds, stretchers and orthopedic products, declined because of cuts in hospitals' capital spending and questions about the quality of its orthopedic implants. Omrix Biopharmaceuticals, an Israeli biotechnology company that developed a unique blood-clotting agent, was acquired at a large premium by Johnson & Johnson. Pharmacy benefits manager Medco Health Solutions helped results, as did Illumina, a maker of genetic analysis technology. Omrix, Medco and Illumina are not included in the MSCI index. By constrast, underweightings in safety syringe maker Becton Dickinson and heart valve producer Edwards Lifesciences hurt relative performance, as did an out-of-benchmark investment in Affymetrix, which makes chips for genetic analysis. I sold our Affymetrix stock 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 Medical Equipment and Systems Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Baxter International, Inc. | 15.6 | 16.5 |
Covidien Ltd. | 11.4 | 12.5 |
Medtronic, Inc. | 9.5 | 14.0 |
St. Jude Medical, Inc. | 5.2 | 1.9 |
Boston Scientific Corp. | 4.4 | 4.0 |
C.R. Bard, Inc. | 3.7 | 3.5 |
Medco Health Solutions, Inc. | 3.6 | 0.0 |
Allergan, Inc. | 3.5 | 3.3 |
Illumina, Inc. | 3.1 | 2.0 |
Hospira, Inc. | 2.9 | 0.0 |
| 62.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Health Care | 79.2% |
| |
Health Care | 8.2% |
| |
Life Sciences | 7.6% |
| |
Pharmaceuticals | 3.7% |
| |
Biotechnology | 0.8% |
| |
All Others* | 0.5% |
|
As of August 31, 2008 | |||
Health Care | 76.4% |
| |
Life Sciences | 7.3% |
| |
Pharmaceuticals | 3.6% |
| |
Health Care | 3.1% |
| |
Biotechnology | 2.0% |
| |
All Others* | 7.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Medical Equipment and Systems Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.8% | |||
Biotechnology - 0.8% | |||
Alnylam Pharmaceuticals, Inc. (a)(d) | 140,000 | $ 2,581,600 | |
CSL Ltd. | 250,000 | 5,781,604 | |
| 8,363,204 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 79.2% | |||
Health Care Equipment - 73.3% | |||
American Medical Systems Holdings, Inc. (a) | 1,000,000 | 10,350,000 | |
Aspect Medical Systems, Inc. (a) | 574,489 | 2,004,967 | |
Baxter International, Inc. (d) | 3,100,000 | 157,821,001 | |
Becton, Dickinson & Co. | 450,000 | 27,850,500 | |
Boston Scientific Corp. (a) | 6,300,000 | 44,226,000 | |
C.R. Bard, Inc. | 470,000 | 37,722,200 | |
Conceptus, Inc. (a) | 655,300 | 7,359,019 | |
Covidien Ltd. | 3,650,000 | 115,595,500 | |
Edwards Lifesciences Corp. (a) | 450,000 | 25,024,500 | |
Electro-Optical Sciences, Inc. warrants 11/2/11 (a)(e) | 90,313 | 284,540 | |
ev3, Inc. (a)(d) | 1,400,000 | 8,246,000 | |
Gen-Probe, Inc. (a) | 340,000 | 13,793,800 | |
HeartWare International, Inc. unit (a) | 13,172,315 | 9,098,564 | |
Hologic, Inc. (a) | 450,000 | 5,094,000 | |
Hospira, Inc. (a) | 1,250,000 | 29,000,000 | |
Integra LifeSciences Holdings Corp. (a)(d) | 440,000 | 11,488,400 | |
Intuitive Surgical, Inc. (a) | 30,000 | 2,728,800 | |
Kinetic Concepts, Inc. (a) | 500,000 | 10,890,000 | |
Mako Surgical Corp. | 270,515 | 2,118,132 | |
Masimo Corp. (a) | 700,000 | 17,493,000 | |
Medtronic, Inc. | 3,250,000 | 96,167,500 | |
Micrus Endovascular Corp. (a) | 680,000 | 4,284,000 | |
NuVasive, Inc. (a)(d) | 360,000 | 10,206,000 | |
ResMed, Inc. (a) | 200,000 | 7,376,000 | |
St. Jude Medical, Inc. (a) | 1,600,000 | 53,056,000 | |
Stryker Corp. | 160,000 | 5,387,200 | |
Varian Medical Systems, Inc. (a) | 100,000 | 3,051,000 | |
Vnus Medical Technologies, Inc. (a) | 200,000 | 3,818,000 | |
Wright Medical Group, Inc. (a) | 550,000 | 8,035,500 | |
Zimmer Holdings, Inc. (a) | 360,000 | 12,607,200 | |
| 742,177,323 | ||
Health Care Supplies - 5.9% | |||
Align Technology, Inc. (a)(d) | 775,000 | 5,308,750 | |
Cooper Companies, Inc. | 700,000 | 15,393,000 | |
DENTSPLY International, Inc. | 300,000 | 6,936,000 | |
Immucor, Inc. (a) | 600,000 | 13,464,000 | |
Inverness Medical Innovations, Inc. (a) | 530,000 | 11,909,100 | |
RTI Biologics, Inc. (a) | 2,200,000 | 6,204,000 | |
| 59,214,850 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 801,392,173 | ||
| |||
Shares | Value | ||
HEALTH CARE PROVIDERS & SERVICES - 8.2% | |||
Health Care Distributors & Services - 1.1% | |||
Henry Schein, Inc. (a) | 300,000 | $ 11,004,000 | |
Health Care Facilities - 0.6% | |||
Hanger Orthopedic Group, Inc. (a) | 500,000 | 6,650,000 | |
Health Care Services - 6.5% | |||
athenahealth, Inc. (a) | 50,000 | 1,274,000 | |
Express Scripts, Inc. (a) | 350,000 | 17,605,000 | |
Fresenius Medical Care AG & Co. KGaA sponsored ADR | 250,000 | 10,140,000 | |
Medco Health Solutions, Inc. (a) | 900,000 | 36,522,000 | |
| 65,541,000 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 83,195,000 | ||
LIFE SCIENCES TOOLS & SERVICES - 7.6% | |||
Life Sciences Tools & Services - 7.6% | |||
Illumina, Inc. (a)(d) | 1,000,000 | 31,330,000 | |
Millipore Corp. (a) | 150,000 | 8,259,000 | |
QIAGEN NV (a)(d) | 1,700,000 | 27,234,000 | |
Waters Corp. (a) | 300,000 | 10,566,000 | |
| 77,389,000 | ||
PHARMACEUTICALS - 3.7% | |||
Pharmaceuticals - 3.7% | |||
Allergan, Inc. | 900,000 | 34,866,000 | |
XenoPort, Inc. (a) | 100,000 | 2,089,000 | |
| 36,955,000 | ||
TOTAL COMMON STOCKS (Cost $1,186,147,756) | 1,007,294,377 | ||
Money Market Funds - 8.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 30,915,315 | 30,915,315 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 52,333,425 | 52,333,425 | |
TOTAL MONEY MARKET FUNDS (Cost $83,248,740) | 83,248,740 | ||
TOTAL INVESTMENT PORTFOLIO - 107.7% (Cost $1,269,396,496) | 1,090,543,117 | ||
NET OTHER ASSETS - (7.7)% | (78,079,020) | ||
NET ASSETS - 100% | $ 1,012,464,097 |
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 $284,540 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 | $ 602,275 |
Fidelity Securities Lending Cash Central Fund | 582,212 |
Total | $ 1,184,487 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,090,543,117 | $ 1,075,378,409 | $ 15,164,708 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 84.3% |
Bermuda | 11.4% |
Netherlands | 2.7% |
Germany | 1.0% |
Others (individually less than 1%) | 0.6% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $12,822,831 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $101,048,232 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $49,109,441) - See accompanying schedule: Unaffiliated issuers (cost $1,186,147,756) | $ 1,007,294,377 |
|
Fidelity Central Funds (cost $83,248,740) | 83,248,740 |
|
Total Investments (cost $1,269,396,496) |
| $ 1,090,543,117 |
Receivable for investments sold | 11,111,584 | |
Receivable for fund shares sold | 2,368,084 | |
Dividends receivable | 49,612 | |
Distributions receivable from Fidelity Central Funds | 47,696 | |
Prepaid expenses | 13,598 | |
Other receivables | 46,597 | |
Total assets | 1,104,180,288 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 26,029,471 | |
Payable for fund shares redeemed | 12,471,010 | |
Accrued management fee | 536,017 | |
Other affiliated payables | 307,500 | |
Other payables and accrued expenses | 38,768 | |
Collateral on securities loaned, at value | 52,333,425 | |
Total liabilities | 91,716,191 | |
|
|
|
Net Assets | $ 1,012,464,097 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,333,529,289 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (142,212,194) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (178,852,998) | |
Net Assets, for 58,518,288 shares outstanding | $ 1,012,464,097 | |
Net Asset Value, offering price and redemption price per share ($1,012,464,097 ÷ 58,518,288 shares) | $ 17.30 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 10,330,801 |
Interest |
| 7,386 |
Income from Fidelity Central Funds (including $582,212 from security lending) |
| 1,184,487 |
Total income |
| 11,522,674 |
|
|
|
Expenses | ||
Management fee | $ 6,916,414 | |
Transfer agent fees | 3,138,494 | |
Accounting and security lending fees | 410,687 | |
Custodian fees and expenses | 44,358 | |
Independent trustees' compensation | 6,486 | |
Registration fees | 144,544 | |
Audit | 39,088 | |
Legal | 5,588 | |
Miscellaneous | 64,166 | |
Total expenses before reductions | 10,769,825 | |
Expense reductions | (14,537) | 10,755,288 |
Net investment income (loss) | 767,386 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (138,825,271) | |
Foreign currency transactions | 136,759 | |
Total net realized gain (loss) |
| (138,688,512) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (312,582,272) | |
Assets and liabilities in foreign currencies | (1,246) | |
Total change in net unrealized appreciation (depreciation) |
| (312,583,518) |
Net gain (loss) | (451,272,030) | |
Net increase (decrease) in net assets resulting from operations | $ (450,504,644) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 767,386 | $ (1,819,054) |
Net realized gain (loss) | (138,688,512) | 104,918,144 |
Change in net unrealized appreciation (depreciation) | (312,583,518) | (5,873,675) |
Net increase (decrease) in net assets resulting from operations | (450,504,644) | 97,225,415 |
Distributions to shareholders from net investment income | (305,984) | - |
Distributions to shareholders from net realized gain | (36,663,628) | (76,638,625) |
Total distributions | (36,969,612) | (76,638,625) |
Share transactions | 1,025,190,451 | 655,708,750 |
Reinvestment of distributions | 35,608,206 | 73,785,048 |
Cost of shares redeemed | (731,022,154) | (377,258,197) |
Net increase (decrease) in net assets resulting from share transactions | 329,776,503 | 352,235,601 |
Redemption fees | 300,715 | 64,121 |
Total increase (decrease) in net assets | (157,397,038) | 372,886,512 |
|
|
|
Net Assets | ||
Beginning of period | 1,169,861,135 | 796,974,623 |
End of period | $ 1,012,464,097 | $ 1,169,861,135 |
Other Information Shares | ||
Sold | 43,960,563 | 26,109,754 |
Issued in reinvestment of distributions | 1,505,633 | 3,039,592 |
Redeemed | (34,870,564) | (14,899,288) |
Net increase (decrease) | 10,595,632 | 14,250,058 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 24.41 | $ 23.67 | $ 24.62 | $ 23.70 | $ 20.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .01 | (.05) | (.05) | (.04) | (.06) |
Net realized and unrealized gain (loss) | (6.35) | 2.97 | 1.35 | 1.80 | 2.88 |
Total from investment operations | (6.34) | 2.92 | 1.30 | 1.76 | 2.82 |
Distributions from net investment income | (.01) | - | - | - | - |
Distributions from net realized gain | (.77) | (2.18) | (2.25) | (.84) | (.11) |
Total distributions | (.78) | (2.18) | (2.25) | (.84) | (.11) |
Redemption fees added to paid in capital C | .01 | - H | - H | - H | - H |
Net asset value, end of period | $ 17.30 | $ 24.41 | $ 23.67 | $ 24.62 | $ 23.70 |
Total Return A, B | (26.81)% | 12.57% | 5.66% | 7.36% | 13.49% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .87% | .88% | .93% | .96% | 1.00% |
Expenses net of fee waivers, if any | .87% | .88% | .93% | .96% | 1.00% |
Expenses net of all reductions | .87% | .88% | .92% | .92% | .98% |
Net investment income (loss) | .06% | (.20)% | (.22)% | (.18)% | (.28)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,012,464 | $ 1,169,861 | $ 796,975 | $ 1,115,117 | $ 966,579 |
Portfolio turnover rate E | 116% | 129% | 71% | 99% | 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Life of |
Select Pharmaceuticals Portfolio | -26.23% | -1.15% | -2.17% |
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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Andrew Oh, Portfolio Manager of Select Pharmaceuticals Portfolio: For the 12 months ending February 28, 2009, the fund declined 26.23%, underperforming the MSCI® US Investable Market Pharmaceuticals Index, which fell 25.13%, but outpacing the S&P 500. Security selection in the pharmaceuticals industry detracted the most from performance versus the MSCI benchmark - especially an underweighting in index heavyweight Johnson & Johnson, which investors sought for defensive reasons, and an overweighting in Allergan, the maker of Botox. XenoPort's stock declined in part because of a delay in an FDA filing regarding its drug for restless-leg syndrome. Stock picking among health care equipment stocks, such as China Medical Technologies, also detracted from the fund's relative return. Alcon, a maker of eye-care supplies, hurt returns, and unfavorable currency movements had a negative impact as well. Neither China Medical Technologies nor Alcon is included in the index. On the other hand, out-of-benchmark investments in biotechnology companies boosted relative performance, including our stake in Myriad Genetics, a maker of diagnostic tests. Underweightings in two large-cap pharmaceutical companies, Pfizer and Eli Lilly, also contributed, and an overweighting in Wyeth, another large-cap drug maker, helped results after Pfizer announced that it would acquire the company at a premium to its then-current share price.
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
Select Pharmaceuticals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Wyeth | 24.0 | 8.4 |
Pfizer, Inc. | 9.7 | 4.9 |
Abbott Laboratories | 7.5 | 11.8 |
Schering-Plough Corp. | 6.7 | 4.3 |
Johnson & Johnson | 4.9 | 19.8 |
Merck & Co., Inc. | 4.6 | 10.3 |
Bristol-Myers Squibb Co. | 4.1 | 4.9 |
Allergan, Inc. | 3.2 | 2.8 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 2.3 | 0.5 |
Novo Nordisk AS Series B sponsored ADR | 2.1 | 1.2 |
| 69.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Pharmaceuticals | 81.0% |
| |
Biotechnology | 9.5% |
| |
Health Care | 4.8% |
| |
Health Care | 2.2% |
| |
Life Sciences | 1.4% |
| |
All Others* | 1.1% |
|
As of August 31, 2008 | |||
Pharmaceuticals | 82.9% |
| |
Biotechnology | 6.5% |
| |
Health Care | 5.4% |
| |
Life Sciences | 2.5% |
| |
Health Care | 1.6% |
| |
All Others* | 1.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Pharmaceuticals Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
BIOTECHNOLOGY - 9.5% | |||
Biotechnology - 9.5% | |||
Acorda Therapeutics, Inc. (a) | 20,400 | $ 448,800 | |
Actelion Ltd. (Reg.) (a) | 3,932 | 185,934 | |
Alexion Pharmaceuticals, Inc. (a) | 12,736 | 435,571 | |
Allos Therapeutics, Inc. (a) | 8,100 | 45,684 | |
Amgen, Inc. (a) | 12,200 | 596,946 | |
Amylin Pharmaceuticals, Inc. (a) | 22,360 | 204,147 | |
Basilea Pharmaceutica AG (a) | 1,570 | 73,250 | |
Biogen Idec, Inc. (a) | 24,700 | 1,137,188 | |
BioMarin Pharmaceutical, Inc. (a) | 33,600 | 403,200 | |
Cougar Biotechnology, Inc. (a) | 9,500 | 237,785 | |
CSL Ltd. | 28,967 | 669,903 | |
CV Therapeutics, Inc. (a) | 20,000 | 320,000 | |
Genentech, Inc. (a) | 32,850 | 2,810,318 | |
Genomic Health, Inc. (a) | 800 | 15,744 | |
Genzyme Corp. (a) | 11,400 | 694,602 | |
Gilead Sciences, Inc. (a) | 61,000 | 2,732,800 | |
Grifols SA | 3,401 | 53,309 | |
GTx, Inc. (a) | 2,200 | 20,482 | |
Intercell AG (a) | 100 | 2,885 | |
Myriad Genetics, Inc. (a) | 14,300 | 1,127,555 | |
ONYX Pharmaceuticals, Inc. (a) | 13,500 | 404,865 | |
OSI Pharmaceuticals, Inc. (a) | 1,000 | 34,100 | |
Savient Pharmaceuticals, Inc. (a) | 100 | 432 | |
United Therapeutics Corp. (a) | 11,800 | 791,898 | |
Vertex Pharmaceuticals, Inc. (a) | 180 | 5,441 | |
| 13,452,839 | ||
CHEMICALS - 0.3% | |||
Fertilizers & Agricultural Chemicals - 0.3% | |||
Monsanto Co. | 5,450 | 415,672 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 4.8% | |||
Health Care Equipment - 4.3% | |||
American Medical Systems Holdings, Inc. (a) | 14,200 | 146,970 | |
Baxter International, Inc. | 24,100 | 1,226,931 | |
Becton, Dickinson & Co. | 13,700 | 847,893 | |
C.R. Bard, Inc. | 7,700 | 618,002 | |
China Medical Technologies, Inc. sponsored ADR | 150 | 1,955 | |
Conceptus, Inc. (a) | 10,000 | 112,300 | |
Covidien Ltd. | 28,100 | 889,927 | |
Gen-Probe, Inc. (a) | 2,100 | 85,197 | |
Integra LifeSciences Holdings Corp. (a) | 600 | 15,666 | |
Intuitive Surgical, Inc. (a) | 400 | 36,384 | |
Mako Surgical Corp. | 13,000 | 101,790 | |
Masimo Corp. (a) | 26,830 | 670,482 | |
Meridian Bioscience, Inc. | 14,200 | 284,852 | |
Micrus Endovascular Corp. (a) | 27,000 | 170,100 | |
Mindray Medical International Ltd. sponsored ADR (d) | 12,100 | 220,825 | |
Nobel Biocare Holding AG (Switzerland) | 5,500 | 87,801 | |
| |||
Shares | Value | ||
NuVasive, Inc. (a) | 3,500 | $ 99,225 | |
Quidel Corp. (a) | 12,600 | 139,104 | |
ResMed, Inc. (a) | 3,800 | 140,144 | |
Sonova Holding AG | 3,350 | 164,266 | |
Wright Medical Group, Inc. (a) | 8,100 | 118,341 | |
| 6,178,155 | ||
Health Care Supplies - 0.5% | |||
Alcon, Inc. | 6,100 | 502,396 | |
Align Technology, Inc. (a) | 11,100 | 76,035 | |
Immucor, Inc. (a) | 3,100 | 69,564 | |
RTI Biologics, Inc. (a) | 18,000 | 50,760 | |
Shandong Weigao Group Medical Polymer Co. Ltd. (H Shares) | 12,000 | 20,047 | |
| 718,802 | ||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 6,896,957 | ||
HEALTH CARE PROVIDERS & SERVICES - 2.2% | |||
Health Care Distributors & Services - 0.0% | |||
BMP Sunstone Corp. warrants 8/19/12 (a)(e) | 1,000 | 322 | |
Health Care Facilities - 0.0% | |||
Hanger Orthopedic Group, Inc. (a) | 1,000 | 13,300 | |
Health Care Services - 2.2% | |||
athenahealth, Inc. (a) | 6,700 | 170,716 | |
Express Scripts, Inc. (a) | 27,900 | 1,403,370 | |
Medco Health Solutions, Inc. (a) | 39,300 | 1,594,794 | |
| 3,168,880 | ||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 3,182,502 | ||
LIFE SCIENCES TOOLS & SERVICES - 1.4% | |||
Life Sciences Tools & Services - 1.4% | |||
Illumina, Inc. (a) | 27,700 | 867,841 | |
Medivation, Inc. (a) | 3,900 | 65,013 | |
QIAGEN NV (a) | 51,477 | 824,662 | |
Sequenom, Inc. (a) | 1,000 | 14,630 | |
Techne Corp. | 366 | 17,879 | |
Waters Corp. (a) | 6,000 | 211,320 | |
| 2,001,345 | ||
PERSONAL PRODUCTS - 0.5% | |||
Personal Products - 0.5% | |||
Chattem, Inc. (a)(d) | 10,200 | 646,986 | |
Prestige Brands Holdings, Inc. (a) | 1,500 | 8,205 | |
| 655,191 | ||
PHARMACEUTICALS - 81.0% | |||
Pharmaceuticals - 81.0% | |||
Abbott Laboratories (d) | 225,800 | 10,689,372 | |
Akorn, Inc. (a) | 21,100 | 29,540 | |
Allergan, Inc. | 116,900 | 4,528,706 | |
AstraZeneca PLC sponsored ADR | 34,000 | 1,074,060 | |
Auxilium Pharmaceuticals, Inc. (a) | 21,700 | 596,099 | |
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - CONTINUED | |||
Pharmaceuticals - continued | |||
Bayer AG | 13,800 | $ 660,082 | |
BioForm Medical, Inc. (a) | 15,755 | 17,015 | |
Bristol-Myers Squibb Co. | 313,600 | 5,773,376 | |
Cardiome Pharma Corp. (a) | 7,000 | 27,953 | |
Elan Corp. PLC sponsored ADR (a) | 27,800 | 171,804 | |
Eli Lilly & Co. | 68,700 | 2,018,406 | |
Endo Pharmaceuticals Holdings, Inc. (a) | 100 | 1,898 | |
Endo Pharmaceuticals Holdings, Inc. rights 2/27/12 (a) | 9,000 | 0 | |
Forest Laboratories, Inc. (a) | 13,920 | 298,445 | |
GlaxoSmithKline PLC sponsored ADR | 27,000 | 813,510 | |
Ipsen SA | 100 | 3,807 | |
Johnson & Johnson | 138,500 | 6,925,000 | |
King Pharmaceuticals, Inc. (a) | 47,600 | 349,384 | |
MAP Pharmaceuticals, Inc. (a) | 1,400 | 3,122 | |
Matrixx Initiatives, Inc. (a) | 400 | 7,052 | |
Medicines Co. (a) | 36,600 | 449,082 | |
Medicis Pharmaceutical Corp. Class A | 12,200 | 137,616 | |
Merck & Co., Inc. | 268,300 | 6,492,860 | |
Merck KGaA | 19,600 | 1,463,870 | |
Mylan, Inc. (a) | 58,100 | 722,183 | |
Novartis AG sponsored ADR | 58,700 | 2,127,875 | |
Noven Pharmaceuticals, Inc. (a) | 6,000 | 48,780 | |
Novo Nordisk AS Series B sponsored ADR (d) | 62,800 | 3,040,776 | |
Par Pharmaceutical Companies, Inc. (a) | 7,100 | 94,572 | |
Perrigo Co. | 40,900 | 821,681 | |
Pfizer, Inc. | 1,118,800 | 13,772,428 | |
Questcor Pharmaceuticals, Inc. (a) | 12,400 | 60,264 | |
Roche Holding AG (participation certificate) | 12,768 | 1,449,269 | |
Sanofi-Aventis sponsored ADR | 51,000 | 1,306,620 | |
Schering-Plough Corp. | 545,990 | 9,494,766 | |
Sepracor, Inc. (a) | 100 | 1,498 | |
Shire PLC | 1,500 | 17,782 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 71,689 | 3,195,896 | |
Valeant Pharmaceuticals International (a)(d) | 77,400 | 1,346,760 | |
| |||
Shares | Value | ||
ViroPharma, Inc. (a) | 9,700 | $ 40,255 | |
Vivus, Inc. (a) | 20,000 | 80,600 | |
Warner Chilcott Ltd. (a) | 11,400 | 123,690 | |
Watson Pharmaceuticals, Inc. (a) | 6,100 | 172,447 | |
Wyeth | 835,270 | 34,095,719 | |
XenoPort, Inc. (a) | 22,300 | 465,847 | |
| 115,011,767 | ||
TOTAL COMMON STOCKS (Cost $158,500,059) | 141,616,273 | ||
Money Market Funds - 1.8% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 2,534,075 | 2,534,075 | |
TOTAL INVESTMENT PORTFOLIO - 101.5% (Cost $161,034,134) | 144,150,348 | ||
NET OTHER ASSETS - (1.5)% | (2,139,457) | ||
NET ASSETS - 100% | $ 142,010,891 |
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 $322 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
BMP Sunstone Corp. warrants 8/19/12 | 8/17/07 | $ 125 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 39,862 |
Fidelity Securities Lending Cash Central Fund | 78,328 |
Total | $ 118,190 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 144,150,348 | $ 139,297,821 | $ 4,852,527 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.5% |
Switzerland | 3.3% |
Israel | 2.3% |
Denmark | 2.1% |
Germany | 1.5% |
United Kingdom | 1.4% |
Others (individually less than 1%) | 2.9% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $2,417,505 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $8,102,477 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $2,430,364) - See accompanying schedule: Unaffiliated issuers (cost $158,500,059) | $ 141,616,273 |
|
Fidelity Central Funds (cost $2,534,075) | 2,534,075 |
|
Total Investments (cost $161,034,134) |
| $ 144,150,348 |
Foreign currency held at value (cost $358) | 314 | |
Receivable for investments sold | 4,713,311 | |
Receivable for fund shares sold | 517,354 | |
Dividends receivable | 845,888 | |
Distributions receivable from Fidelity Central Funds | 8,968 | |
Prepaid expenses | 1,311 | |
Other receivables | 1,406 | |
Total assets | 150,238,900 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 192,005 | |
Payable for investments purchased | 3,793,373 | |
Payable for fund shares redeemed | 1,548,506 | |
Accrued management fee | 75,930 | |
Other affiliated payables | 47,582 | |
Other payables and accrued expenses | 36,538 | |
Collateral on securities loaned, at value | 2,534,075 | |
Total liabilities | 8,228,009 | |
|
|
|
Net Assets | $ 142,010,891 | |
Net Assets consist of: |
| |
Paid in capital | $ 178,273,504 | |
Undistributed net investment income | 665,921 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (20,045,851) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (16,882,683) | |
Net Assets, for 18,678,952 shares outstanding | $ 142,010,891 | |
Net Asset Value, offering price and redemption price per share ($142,010,891 ÷ 18,678,952 shares) | $ 7.60 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 4,169,311 |
Interest |
| 1,331 |
Income from Fidelity Central Funds (including $78,328 from security lending) |
| 118,190 |
Total income |
| 4,288,832 |
|
|
|
Expenses | ||
Management fee | $ 835,375 | |
Transfer agent fees | 443,318 | |
Accounting and security lending fees | 60,130 | |
Custodian fees and expenses | 53,797 | |
Independent trustees' compensation | 804 | |
Registration fees | 28,938 | |
Audit | 42,052 | |
Legal | 820 | |
Interest | 389 | |
Miscellaneous | 13,269 | |
Total expenses before reductions | 1,478,892 | |
Expense reductions | (3,706) | 1,475,186 |
Net investment income (loss) | 2,813,646 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (18,281,111) | |
Investments not meeting investment restrictions | 1,525 | |
Foreign currency transactions | (24,063) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 908 | |
Total net realized gain (loss) |
| (18,302,741) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (28,241,456) | |
Assets and liabilities in foreign currencies | 255 | |
Total change in net unrealized appreciation (depreciation) |
| (28,241,201) |
Net gain (loss) | (46,543,942) | |
Net increase (decrease) in net assets resulting from operations | $ (43,730,296) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,813,646 | $ 1,776,461 |
Net realized gain (loss) | (18,302,741) | 6,098,836 |
Change in net unrealized appreciation (depreciation) | (28,241,201) | (6,287,931) |
Net increase (decrease) in net assets resulting from operations | (43,730,296) | 1,587,366 |
Distributions to shareholders from net investment income | (2,273,856) | (1,913,683) |
Distributions to shareholders from net realized gain | (887,024) | (8,339,317) |
Total distributions | (3,160,880) | (10,253,000) |
Share transactions | 125,994,096 | 150,830,868 |
Reinvestment of distributions | 2,937,853 | 8,257,255 |
Cost of shares redeemed | (107,369,589) | (178,255,837) |
Net increase (decrease) in net assets resulting from share transactions | 21,562,360 | (19,167,714) |
Redemption fees | 10,142 | 34,692 |
Total increase (decrease) in net assets | (25,318,674) | (27,798,656) |
|
|
|
Net Assets | ||
Beginning of period | 167,329,565 | 195,128,221 |
End of period (including undistributed net investment income of $665,921 and undistributed net investment income of $553,068, respectively) | $ 142,010,891 | $ 167,329,565 |
Other Information Shares | ||
Sold | 13,808,334 | 12,855,111 |
Issued in reinvestment of distributions | 330,453 | 708,682 |
Redeemed | (11,372,234) | (15,593,749) |
Net increase (decrease) | 2,766,553 | (2,029,956) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.52 | $ 10.88 | $ 10.41 | $ 8.64 | $ 8.95 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .18 | .10 | .08 | .02 | - I |
Net realized and unrealized gain (loss) | (2.91) | .13 F | .74 | 1.77 | (.31) |
Total from investment operations | (2.73) | .23 | .82 | 1.79 | (.31) |
Distributions from net investment income | (.13) | (.11) | (.04) | (.02) | - |
Distributions from net realized gain | (.06) | (.48) | (.31) | - | - |
Total distributions | (.19) | (.59) | (.35) | (.02) | - |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 7.60 | $ 10.52 | $ 10.88 | $ 10.41 | $ 8.64 |
Total Return A, B | (26.23)% | 1.64% | 8.05% | 20.68% | (3.46)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.00% | .95% | 1.02% | 1.11% | 1.20% |
Expenses net of fee waivers, if any | 1.00% | .95% | 1.02% | 1.11% | 1.20% |
Expenses net of all reductions | .99% | .95% | 1.01% | 1.03% | 1.19% |
Net investment income (loss) | 1.89% | .85% | .73% | .23% | .05% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 142,011 | $ 167,330 | $ 195,128 | $ 142,471 | $ 95,502 |
Portfolio turnover rate E | 240% | 119% | 204% | 207% | 42% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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, 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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of February 28, 2009, for each Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, if applicable, is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Health Care Portfolio, independent Trustees 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds 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), market discount, partnerships, deferred trustees compensation, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The 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 | $ 1,480,513,787 | $ 52,988,505 | $ (305,589,982) | $ (252,601,477) |
Health Care Portfolio | 1,338,378,365 | 69,945,702 | (221,200,465) | (151,254,763) |
Medical Delivery Portfolio | 374,228,927 | 8,562,640 | (108,527,418) | (99,964,778) |
Medical Equipment and Systems Portfolio | 1,297,737,244 | 68,080,962 | (275,275,089) | (207,194,127) |
Pharmaceuticals Portfolio | 170,558,898 | 2,997,987 | (29,406,537) | (26,408,550) |
| Undistributed | Capital Loss |
Biotechnology Portfolio | $ - | $ (302,864,856) |
Health Care Portfolio | 2,782,582 | (134,571,440) |
Medical Delivery Portfolio | - | (28,045,847) |
Medical Equipment and Systems Portfolio | - | (12,822,831) |
Pharmaceuticals Portfolio | 665,921 | (2,417,505) |
The tax character of distributions paid was as follows:
February 28, 2009 | Ordinary | Long-term | Total |
Health Care Portfolio | $ 6,124,045 | $ 77,726,943 | $ 83,850,988 |
Medical Delivery Portfolio | 331,975 | 3,873,055 | 4,205,030 |
Medical Equipment and Systems Portfolio | 11,257,458 | 25,712,154 | 36,969,612 |
Pharmaceuticals Portfolio | 2,273,856 | 887,024 | 3,160,880 |
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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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.
Annual Report
Notes to Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) |
Biotechnology Portfolio | 890,212,155 | 652,203,953 |
Health Care Portfolio | 2,712,945,143 | 2,868,783,736 |
Medical Delivery Portfolio | 434,607,843 | 502,875,336 |
Medical Equipment and Systems Portfolio | 1,689,173,774 | 1,384,017,725 |
Pharmaceuticals Portfolio | 375,865,763 | 353,560,674 |
Pharmaceuticals Portfolio realized a gain and loss of $2,433 and $908, respectively, on sales of investments which did not meet the investment restrictions of the Fund. The loss of $908 was fully reimbursed by the Fund's investment advisor.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Biotechnology Portfolio | .30% | .26% | .56% |
Health Care Portfolio | .30% | .26% | .56% |
Medical Delivery Portfolio | .30% | .26% | .56% |
Medical Equipment and Systems Portfolio | .30% | .26% | .56% |
Pharmaceuticals Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Biotechnology Portfolio | .27% |
Health Care Portfolio | .25% |
Medical Delivery Portfolio | .29% |
Medical Equipment and Systems Portfolio | .25% |
Pharmaceuticals Portfolio | .30% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Biotechnology Portfolio | $ 19,198 |
Health Care Portfolio | 52,719 |
Medical Delivery Portfolio | 11,928 |
Medical Equipment and Systems Portfolio | 32,511 |
Pharmaceuticals Portfolio | 4,087 |
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.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program - continued
Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average Daily Loan Balance | Weighted Average Interest Rate | Interest |
Biotechnology Portfolio | Borrower | $ 10,695,579 | 1.81% | $ 10,218 |
Health Care Portfolio | Borrower | 10,278,000 | 2.50% | 712 |
Pharmaceuticals Portfolio | Borrower | 6,256,000 | 2.24% | 389 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Biotechnology Portfolio | $ 4,477 |
Health Care Portfolio | 5,515 |
Medical Delivery Portfolio | 1,210 |
Medical Equipment and Systems Portfolio | 4,526 |
Pharmaceuticals Portfolio | 563 |
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 |
Biotechnology Portfolio | $ 3,321,000 | 1.30% | $ 120 |
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.
Annual Report
Notes to Financial Statements - continued
10. Expense Reductions - continued
All of the applicable expense reductions are noted in the table below.
| Brokerage | Custody | Transfer Agent |
Biotechnology Portfolio | $ 85 | $ - | $ 2,298 |
Health Care Portfolio | 52,502 | 5,053 | 8,432 |
Medical Delivery Portfolio | 7,216 | - | 915 |
Medical Equipment and Systems Portfolio | 10,555 | 1,989 | 1,993 |
Pharmaceuticals Portfolio | 3,387 | - | 319 |
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
Biotechnology Portfolio | $ 200,381 |
Health Care Portfolio | 411,516 |
Medical Delivery Portfolio | 78,410 |
Medical Equipment and Systems Portfolio | 41,968 |
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 positions of Biotechnology Portfolio, Health Care Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers.**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (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. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Health Care Portfolio | 100% | 100% |
Select Pharmaceuticals Portfolio | 100% | 100% |
Select Medical Equipment and Systems Portfolio | 7% | 100% |
Select Medical Delivery 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 2008 | December 2008 |
Select Health Care Portfolio | 100% | 100% |
Select Pharmaceuticals Portfolio | 100% | 100% |
Select Medical Equipment and Systems Portfolio | 10% | 100% |
Select Medical Delivery Portfolio | 100% | - |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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 |
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". | ||
| # of | % of |
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.
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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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Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
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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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Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
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(U.K.) Inc.
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(Hong Kong) Limited
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(Japan) Inc.
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(U.K.) Ltd.
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Boston, MA
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Fidelity®
Select Portfolios®
Materials Sector
Select Chemicals Portfolio
Select Gold Portfolio
Select Materials Portfolio
Select Paper and Forest Products Portfolio
Annual Report
February 28, 2009
(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 |
|
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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Chemicals Portfolio | -46.68% | 1.12% | 6.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Chemicals Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Matthew Schuldt, Portfolio Manager of Select Chemicals Fund: For the 12-month period ending February 28, 2009, the fund returned -46.68%, outperforming the -48.70% return of the MSCI® US Investable Market Chemicals Index, but trailing the broad market S&P 500. Strong stock selection, especially among diversified chemicals, fertilizers/agricultural chemicals and industrial gas names, helped results, as did an underweighting in diversified chemicals. A modest cash allocation also was a positive in a down market. Detractors included certain stock picks and underweightings in the specialty and commodity chemicals groups. Among individual holdings, an underweighting in major index component Dow Chemical contributed. The diversified chemicals firm struggled with investor unease regarding its long-term prospects and acquisition strategies. Diversified chemicals company FMC Corp. performed relatively well, aided by productivity improvements. Timely ownership of fertilizers/agricultural chemicals concern Monsanto also helped, as I took some profits in this stock prior to its steep decline. An underweighting in specialty chemicals firm Rohm and Haas detracted, with its shares moving sharply higher on news of its proposed acquisition by Dow Chemical. Commodity chemicals holding Celanese also hurt, impacted by declining demand among hard-hit end users.
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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .92% | $ 1,000.00 | $ 516.00 | $ 3.46 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 25.4 | 20.8 |
Praxair, Inc. | 9.9 | 8.7 |
E.I. du Pont de Nemours & Co. | 9.2 | 12.9 |
Air Products & Chemicals, Inc. | 5.9 | 4.2 |
The Mosaic Co. | 4.7 | 5.7 |
Rohm & Haas Co. | 4.1 | 0.0 |
FMC Corp. | 4.0 | 2.7 |
Albemarle Corp. | 3.9 | 2.7 |
Ecolab, Inc. | 3.7 | 3.0 |
Terra Industries, Inc. | 3.2 | 2.4 |
| 74.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Chemicals | 96.0% |
| |
Transportation Infrastructure | 0.5% |
| |
Containers & Packaging | 0.3% |
| |
All Others* | 3.2% |
|
As of August 31, 2008 | |||
Chemicals | 95.8% |
| |
Metals & Mining | 1.0% |
| |
Diversified Financial Services | 0.5% |
| |
Electrical Equipment | 0.4% |
| |
Energy Equipment & Services | 0.4% |
| |
All Others* | 1.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 94.8% | |||
Shares | Value | ||
CHEMICALS - 94.0% | |||
Commodity Chemicals - 2.2% | |||
Calgon Carbon Corp. (a) | 30 | $ 440 | |
Celanese Corp. Class A | 625,451 | 5,341,352 | |
Georgia Gulf Corp. (d) | 148,307 | 99,366 | |
| 5,441,158 | ||
Diversified Chemicals - 18.4% | |||
Ashland, Inc. | 191,400 | 1,131,174 | |
Dow Chemical Co. | 345,700 | 2,475,212 | |
E.I. du Pont de Nemours & Co. | 1,199,100 | 22,495,116 | |
FMC Corp. | 241,026 | 9,744,681 | |
Gulf Resources, Inc. (a) | 1,062,000 | 371,700 | |
PPG Industries, Inc. | 131,800 | 4,093,708 | |
Solutia, Inc. (a) | 1,043,913 | 3,914,674 | |
Tata Chemicals Ltd. | 225,000 | 536,290 | |
| 44,762,555 | ||
Fertilizers & Agricultural Chemicals - 36.3% | |||
CF Industries Holdings, Inc. | 101,600 | 6,535,928 | |
Intrepid Potash, Inc. | 35,000 | 785,400 | |
Monsanto Co. | 808,000 | 61,626,157 | |
Terra Industries, Inc. | 298,000 | 7,685,420 | |
The Mosaic Co. | 267,490 | 11,515,445 | |
| 88,148,350 | ||
Industrial Gases - 18.4% | |||
Air Products & Chemicals, Inc. | 312,300 | 14,443,875 | |
Airgas, Inc. | 201,800 | 6,213,422 | |
Praxair, Inc. | 422,460 | 23,974,605 | |
| 44,631,902 | ||
Specialty Chemicals - 18.7% | |||
Albemarle Corp. | 494,100 | 9,560,835 | |
Chemtura Corp. | 85,000 | 28,900 | |
Ecolab, Inc. | 285,400 | 9,070,012 | |
H.B. Fuller Co. | 100,950 | 1,150,830 | |
Lubrizol Corp. | 130,700 | 3,592,943 | |
Nalco Holding Co. | 478,700 | 5,442,819 | |
OM Group, Inc. (a) | 1 | 16 | |
OMNOVA Solutions, Inc. (a) | 1,118,490 | 950,717 | |
Rockwood Holdings, Inc. (a) | 364,600 | 2,147,494 | |
Rohm & Haas Co. | 190,500 | 9,919,335 | |
RPM International, Inc. | 40,000 | 433,600 | |
Valspar Corp. | 95,000 | 1,586,500 | |
W.R. Grace & Co. (a) | 299,700 | 1,678,320 | |
Zep, Inc. | 46 | 364 | |
| 45,562,685 | ||
TOTAL CHEMICALS | 228,546,650 | ||
| |||
Shares | Value | ||
CONTAINERS & PACKAGING - 0.3% | |||
Paper Packaging - 0.3% | |||
Rock-Tenn Co. Class A | 30,000 | $ 828,300 | |
TRANSPORTATION INFRASTRUCTURE - 0.5% | |||
Marine Ports & Services - 0.5% | |||
Aegean Marine Petroleum Network, Inc. | 70,000 | 1,148,000 | |
TOTAL COMMON STOCKS (Cost $343,675,727) | 230,522,950 |
Floating Rate Loans - 2.0% | ||||
| Principal Amount |
| ||
MATERIALS - 2.0% | ||||
Chemicals - 2.0% | ||||
Solutia, Inc. term loan 8.5% 2/28/14 (e) | $ 7,300,000 | 4,781,500 | ||
TOTAL FLOATING RATE LOANS (Cost $4,866,426) | 4,781,500 |
Money Market Funds - 4.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 9,310,293 | 9,310,293 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 561,000 | 561,000 | |
TOTAL MONEY MARKET FUNDS (Cost $9,871,293) | 9,871,293 | ||
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $358,413,446) | 245,175,743 | ||
NET OTHER ASSETS - (0.8)% | (2,031,283) | ||
NET ASSETS - 100% | $ 243,144,460 |
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) The coupon rate shown on floating or adjustable rate securities represents the rate 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 | $ 253,513 |
Fidelity Securities Lending Cash Central Fund | 134,589 |
Total | $ 388,102 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 245,175,743 | $ 239,857,953 | $ 5,317,790 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $34,655,503 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $43,136,481 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $555,150) - See accompanying schedule: Unaffiliated issuers (cost $348,542,153) | $ 235,304,450 |
|
Fidelity Central Funds (cost $9,871,293) | 9,871,293 |
|
Total Investments (cost $358,413,446) |
| $ 245,175,743 |
Receivable for investments sold | 5,484,926 | |
Receivable for fund shares sold | 461,079 | |
Dividends receivable | 751,426 | |
Interest receivable | 22,243 | |
Distributions receivable from Fidelity Central Funds | 7,540 | |
Prepaid expenses | 3,387 | |
Other receivables | 7 | |
Total assets | 251,906,351 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 193,501 | |
Payable for investments purchased | 7,095,452 | |
Payable for fund shares redeemed | 678,515 | |
Accrued management fee | 124,625 | |
Other affiliated payables | 76,900 | |
Other payables and accrued expenses | 31,898 | |
Collateral on securities loaned, at value | 561,000 | |
Total liabilities | 8,761,891 | |
|
|
|
Net Assets | $ 243,144,460 | |
Net Assets consist of: |
| |
Paid in capital | $ 471,849,544 | |
Undistributed net investment income | 593,361 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (116,053,677) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (113,244,768) | |
Net Assets, for 5,688,950 shares outstanding | $ 243,144,460 | |
Net Asset Value, offering price and redemption price per share ($243,144,460 ÷ 5,688,950 shares) | $ 42.74 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 7,337,492 |
Interest |
| 49,053 |
Income from Fidelity Central Funds |
| 388,102 |
Total income |
| 7,774,647 |
|
|
|
Expenses | ||
Management fee | $ 2,223,970 | |
Transfer agent fees | 1,058,368 | |
Accounting and security lending fees | 158,198 | |
Custodian fees and expenses | 34,045 | |
Independent trustees' compensation | 1,896 | |
Registration fees | 93,717 | |
Audit | 40,715 | |
Legal | 1,738 | |
Miscellaneous | 17,295 | |
Total expenses before reductions | 3,629,942 | |
Expense reductions | (29,198) | 3,600,744 |
Net investment income (loss) | 4,173,903 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (109,608,876) | |
Foreign currency transactions | (39,657) | |
Total net realized gain (loss) |
| (109,648,533) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (161,748,204) | |
Assets and liabilities in foreign currencies | (7,065) | |
Total change in net unrealized appreciation (depreciation) |
| (161,755,269) |
Net gain (loss) | (271,403,802) | |
Net increase (decrease) in net assets resulting from operations | $ (267,229,899) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 4,173,903 | $ 2,312,014 |
Net realized gain (loss) | (109,648,533) | 2,853,746 |
Change in net unrealized appreciation (depreciation) | (161,755,269) | 23,820,971 |
Net increase (decrease) in net assets resulting from operations | (267,229,899) | 28,986,731 |
Distributions to shareholders from net investment income | (3,797,773) | (1,582,334) |
Distributions to shareholders from net realized gain | (85,400) | (7,794,878) |
Total distributions | (3,883,173) | (9,377,212) |
Share transactions | 540,452,849 | 351,992,638 |
Reinvestment of distributions | 3,770,991 | 8,951,180 |
Cost of shares redeemed | (350,954,109) | (179,421,319) |
Net increase (decrease) in net assets resulting from share transactions | 193,269,731 | 181,522,499 |
Redemption fees | 152,793 | 28,477 |
Total increase (decrease) in net assets | (77,690,548) | 201,160,495 |
|
|
|
Net Assets | ||
Beginning of period | 320,835,008 | 119,674,513 |
End of period (including undistributed net investment income of $593,361 and undistributed net investment income of $844,788, respectively) | $ 243,144,460 | $ 320,835,008 |
Other Information Shares | ||
Sold | 6,725,611 | 4,442,680 |
Issued in reinvestment of distributions | 78,641 | 110,321 |
Redeemed | (5,061,028) | (2,302,398) |
Net increase (decrease) | 1,743,224 | 2,250,603 |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 81.31 | $ 70.60 | $ 69.50 | $ 71.52 | $ 51.75 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .73 | .85 | .82 F | .52 | .45 G |
Net realized and unrealized gain (loss) | (38.63) | 12.80 | 11.08 | (.33) | 19.83 |
Total from investment operations | (37.90) | 13.65 | 11.90 | .19 | 20.28 |
Distributions from net investment income | (.68) | (.49) | (.87) | (.52) | (.18) |
Distributions from net realized gain | (.02) | (2.46) | (9.96) | (1.72) | (.38) |
Total distributions | (.70) | (2.95) | (10.83) | (2.24) | (.56) |
Redemption fees added to paid in capital C | .03 | .01 | .03 | .03 | .05 |
Net asset value, end of period | $ 42.74 | $ 81.31 | $ 70.60 | $ 69.50 | $ 71.52 |
Total Return A,B | (46.68)% | 19.40% | 18.51% | .51% | 39.38% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .91% | .93% | 1.06% | 1.04% | 1.08% |
Expenses net of fee waivers, if any | .91% | .93% | 1.06% | 1.04% | 1.08% |
Expenses net of all reductions | .90% | .93% | 1.06% | .99% | 1.04% |
Net investment income (loss) | 1.05% | 1.08% | 1.19% F | .78% | .73% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 243,144 | $ 320,835 | $ 119,675 | $ 114,729 | $ 237,144 |
Portfolio turnover rate E | 201% | 65% | 90% | 141% | 73% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.26 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .82%. 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 $.07 per share and .12%, respectively. The change in estimate has no impact on total net assets or total return 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Chemicals Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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, 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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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, market discount, 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:
Unrealized appreciation | $ 16,507,425 |
|
Unrealized depreciation | (168,006,958) |
|
Net unrealized appreciation (depreciation) | (151,499,533) |
|
Undistributed ordinary income | 586,490 |
|
Capital loss carryforward | (34,655,503) |
|
|
|
|
Cost for federal income tax purposes | $ 396,675,276 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 3,883,173 | $ 7,777,560 |
Long-term Capital Gains | - | 1,599,652 |
Total | $ 3,883,173 | $ 9,377,212 |
Annual Report
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. 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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $965,450,572 and $764,884,070, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .27% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5,636 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,293 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. Net income from lending portfolio securities during the period amounted to $134,589.
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 $27,897 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 custody and transfer agent expenses by $268 and $1,033, 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $11,243, which is recorded in the accompanying Statement of Operations.
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 class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Gold | -33.59% | 10.96% | 14.70% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Select Gold Portfolio: During the past year, the fund's Retail Class shares returned -33.59%, beating the -36.56% return of the Standard & Poor's® BMI Global Gold Index and the S&P 500. Versus the industry index, my decision to hold some gold bullion was a key positive factor, as the price of bullion held up much better than gold mining stocks. Among our equity holdings, fund performance was aided by Randgold Resources, a U.K.-based gold mining company with most of its assets in West Africa that benefited from the prospect of robust production growth, a strong management team and promising exploration opportunities. Other contributors included Royal Gold; CONSOL Energy, a producer of thermal coal; and BHP Billiton, which is based in Australia but listed in the United Kingdom and is the world's largest diversified mining company. Although I later repurchased both stocks, I sold CONSOL and BHP Billiton during the summer of 2008 to take profits. Underweighting Barrick Gold further added value, although Barrick was the fund's second-largest holding at period end, at nearly 9% of net assets. A small cash position bolstered our results as well. Conversely, performance was hindered by our positioning in precious metals and minerals, an out-of-benchmark category, and in steel, where unfavorable stock selection outweighed the positive effects of an overweighted exposure to that outperforming group. In absolute terms, a stronger U.S. dollar undermined the returns of the fund's foreign holdings. Individual detractors included two platinum mining companies that were outside the S&P® industry index: Aquarius Platinum and Impala Platinum, both with operations in South Africa. The global recession slowed automobile and truck sales as well as dampened jewelry demand. Together, those markets typically account for more than 70% of platinum's sales. Lihir Gold, headquartered in Papua New Guinea, also detracted, as did not owning index component Gold Eagle, based in Canada, whose stock jumped in response to a buyout offer for the 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
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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.17% |
|
|
|
Actual |
| $ 1,000.00 | $ 903.60 | $ 5.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.99 | $ 5.86 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 902.20 | $ 6.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Gold | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.70 | $ 4.34 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.90 | $ 4.30 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Newmont Mining Corp. | 9.8 | 10.0 |
Barrick Gold Corp. | 8.7 | 9.8 |
Goldcorp, Inc. | 7.8 | 9.6 |
Agnico-Eagle Mines Ltd. | 6.2 | 6.3 |
Newcrest Mining Ltd. | 6.0 | 7.4 |
Randgold Resources Ltd. sponsored ADR | 4.3 | 4.4 |
Kinross Gold Corp. | 4.3 | 4.9 |
Yamana Gold, Inc. | 4.2 | 4.6 |
AngloGold Ashanti Ltd. sponsored ADR | 3.8 | 3.1 |
Lihir Gold Ltd. | 3.7 | 4.1 |
| 58.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Gold | 84.7% |
| |
Precious Metals & Minerals | 3.3% |
| |
Diversified Metals & Mining | 1.5% |
| |
Coal & Consumable Fuels | 1.2% |
| |
Steel | 0.9% |
| |
All Others* | 8.4% |
|
As of August 31, 2008 | |||
Gold | 88.6% |
| |
Precious Metals & Minerals | 5.5% |
| |
Diversified Metals & Mining | 3.6% |
| |
Steel | 1.5% |
| |
Coal & Consumable Fuels | 0.6% |
| |
All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 83.7% | |||
Shares | Value | ||
Australia - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
Andean Resources Ltd. (a) | 2,884,651 | $ 2,735,233 | |
Avoca Resources Ltd. (a) | 85,000 | 93,413 | |
Centamin Egypt Ltd. (a) | 2,327,000 | 1,706,192 | |
Newcrest Mining Ltd. | 6,030,913 | 118,588,143 | |
Sino Gold Mining Ltd. (a)(d) | 3,573,231 | 11,862,926 | |
Troy Resources NL (a)(e) | 2,300,000 | 1,880,281 | |
| 136,866,188 | ||
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 3,398,027 | 8,200,450 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce (PN-A) sponsored ADR | 130,000 | 1,449,500 | |
Canada - 42.1% | |||
METALS & MINING - 42.1% | |||
Diversified Metals & Mining - 0.1% | |||
Kimber Resources, Inc. (a) | 16,100 | 8,100 | |
Kimber Resources, Inc. (a)(e) | 3,888,000 | 1,955,996 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(e) | 1,944,000 | 15 | |
| 1,964,111 | ||
Gold - 40.7% | |||
Agnico-Eagle Mines Ltd. | 2,444,000 | 122,857,996 | |
Alamos Gold, Inc. (a) | 2,238,800 | 14,958,771 | |
Aquiline Resources, Inc. (a) | 875,500 | 1,892,564 | |
Aquiline Resources, Inc. (a)(e) | 1,024,600 | 2,214,872 | |
Aurizon Mines Ltd. (a) | 1,056,700 | 4,086,754 | |
Barrick Gold Corp. | 5,660,519 | 171,085,922 | |
Detour Gold Corp. (e) | 615,000 | 5,138,899 | |
Eldorado Gold Corp. (a) | 5,817,300 | 49,066,249 | |
European Goldfields Ltd. (a) | 603,600 | 1,451,885 | |
Franco-Nevada Corp. | 1,022,300 | 21,697,206 | |
Goldcorp, Inc. (d) | 5,286,200 | 153,580,908 | |
Golden Star Resources Ltd. (a)(d) | 3,875,769 | 5,849,528 | |
Great Basin Gold Ltd. (a)(d) | 3,407,900 | 4,687,989 | |
Guyana Goldfields, Inc. (a) | 783,000 | 1,778,776 | |
IAMGOLD Corp. | 3,652,200 | 29,570,145 | |
Jaguar Mining, Inc. (a)(f) | 690,500 | 3,897,174 | |
| |||
Shares | Value | ||
Kinross Gold Corp. | 5,279,600 | $ 83,500,807 | |
New Gold, Inc. (a) | 1,075,700 | 2,054,751 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 69,060 | |
Northgate Minerals Corp. (a) | 1,307,800 | 1,572,876 | |
Osisko Mining Corp. (a)(d) | 522,000 | 1,912,133 | |
Osisko Mining Corp. (a)(e) | 2,000,000 | 7,326,179 | |
Osisko Mining Corp. warrants 11/17/09 (a)(e) | 1,000,000 | 432,340 | |
Red Back Mining, Inc. (a) | 2,470,800 | 15,246,457 | |
Red Back Mining, Inc. (a)(e) | 1,059,500 | 6,537,810 | |
San Gold Corp. (a) | 367,400 | 447,644 | |
Seabridge Gold, Inc. (a)(d) | 132,700 | 2,246,611 | |
SEMAFO, Inc. (a) | 440,000 | 612,192 | |
Western Goldfields, Inc. (a) | 1,161,200 | 2,090,279 | |
Yamana Gold, Inc. | 9,385,100 | 82,036,169 | |
| 799,900,946 | ||
Precious Metals & Minerals - 1.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 449,551 | |
Etruscan Resources, Inc. (a)(e) | 1,549,400 | 572,431 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(e) | 774,700 | 30,448 | |
Gammon Gold, Inc. (a) | 250,000 | 1,965,177 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 6,632,080 | |
Pan American Silver Corp. (a) | 500,000 | 7,200,000 | |
Silver Standard Resources, Inc. (a) | 631,300 | 9,526,320 | |
| 26,376,007 | ||
TOTAL METALS & MINING | 828,241,064 | ||
China - 1.1% | |||
METALS & MINING - 1.1% | |||
Gold - 1.1% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 41,238,000 | 21,668,390 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Shares) | 282,900 | 5,468,457 | |
Papua New Guinea - 3.7% | |||
METALS & MINING - 3.7% | |||
Gold - 3.7% | |||
Lihir Gold Ltd. (a) | 35,560,881 | 73,689,317 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 780,000 | 15,022,800 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 9.5% | |||
AngloGold Ashanti Ltd. sponsored ADR | 2,517,534 | 75,098,039 | |
Gold Fields Ltd. sponsored ADR | 5,940,459 | 60,473,873 | |
Common Stocks - continued | |||
Shares | Value | ||
South Africa - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | $ 18,689,535 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 2,658,200 | 31,845,236 | |
| 186,106,683 | ||
Precious Metals & Minerals - 0.8% | |||
Impala Platinum Holdings Ltd. | 1,338,212 | 15,704,954 | |
Northam Platinum Ltd. | 75,000 | 162,024 | |
| 15,866,978 | ||
TOTAL METALS & MINING | 201,973,661 | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 0.3% | |||
BHP Billiton PLC | 375,400 | 5,849,952 | |
Gold - 4.3% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,877,574 | 85,392,066 | |
TOTAL METALS & MINING | 91,242,018 | ||
United States of America - 13.4% | |||
METALS & MINING - 12.2% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 668,200 | 20,326,644 | |
Gold - 10.6% | |||
Allied Nevada Gold Corp. (a) | 40,000 | 160,000 | |
Newmont Mining Corp. | 4,649,750 | 193,569,091 | |
Royal Gold, Inc. (d) | 367,535 | 14,870,466 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 68,709 | |
| 208,668,266 | ||
Steel - 0.6% | |||
Cliffs Natural Resources, Inc. | 360,000 | 5,554,800 | |
Commercial Metals Co. | 549,263 | 5,607,975 | |
| 11,162,775 | ||
TOTAL METALS & MINING | 240,157,685 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 210,000 | 5,722,500 | |
Foundation Coal Holdings, Inc. | 405,400 | 6,518,832 | |
| |||
Shares | Value | ||
Massey Energy Co. | 485,929 | $ 5,612,480 | |
Walter Industries, Inc. | 324,460 | 5,895,438 | |
| 23,749,250 | ||
TOTAL UNITED STATES OF AMERICA | 263,906,935 | ||
TOTAL COMMON STOCKS (Cost $1,674,185,608) | 1,647,728,780 |
Commodities - 7.9% | ||||
Troy Ounces |
| |||
Gold Bullion (a) | 164,500 | 154,922,810 |
Money Market Funds - 13.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 177,341,280 | 177,341,280 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 79,402,696 | 79,402,696 | |
TOTAL MONEY MARKET FUNDS (Cost $256,743,976) | 256,743,976 | ||
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $2,074,807,984) | 2,059,395,566 | ||
NET OTHER ASSETS - (4.6)% | (91,331,806) | ||
NET ASSETS - 100% | $ 1,968,063,760 |
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 $26,158,331 or 1.3% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(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 $68,709 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 | $ 725,396 |
Fidelity Securities Lending Cash Central Fund | 586,066 |
Total | $ 1,311,462 |
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, |
Coral Gold Resources Ltd. | $ 2,869,001 | $ - | $ 368,605 | $ - | $ - |
US Gold Canadian Acquisition Corp. | 8,770,114 | - | 2,471,386 | - | - |
Total | $ 11,639,115 | $ - | $ 2,839,991 | $ - | $ - |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select |
|
|
|
|
|
Gold Cayman Ltd. | $ 82,233,978 | $ 134,604,641 | $ 65,550,322 | $ - | $ 154,880,326 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments | $ 2,059,395,566 | $ 1,796,374,965 | $ 262,990,153 | $ 30,448 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments |
Beginning Balance | $ 0 |
Total Realized Gain (Loss) | 0 |
Total Unrealized Gain (Loss) | (363,180) |
Cost of Purchases | 0 |
Proceeds of Sales | 0 |
Amortization/Accretion | 0 |
Transfer in/out of Level 3 | 393,628 |
Ending Balance | $ 30,448 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $88,413,227 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $39,003,106 of losses recognized during the period of November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investments, at value (including securities loaned of $76,557,301) - See accompanying schedule: Unaffiliated issuers (cost $1,674,185,608) | $ 1,647,728,780 |
|
Fidelity Central Funds (cost $256,743,976) | 256,743,976 |
|
Commodities (cost $143,878,400) | 154,922,810 |
|
Total Investments (cost $2,074,807,984) |
| $ 2,059,395,566 |
Receivable for investments sold | 24,634,669 | |
Receivable for fund shares sold | 11,263,800 | |
Dividends receivable | 655,053 | |
Distributions receivable from Fidelity Central Funds | 112,548 | |
Prepaid expenses | 12,260 | |
Receivable from investment adviser for expense reductions | 38,508 | |
Other receivables | 17,852 | |
Total assets | 2,096,130,256 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 470 | |
Payable for investments purchased | 40,831,884 | |
Delayed delivery | 1,583,933 | |
Payable for fund shares redeemed | 4,728,435 | |
Accrued management fee | 934,504 | |
Distribution fees payable | 32,445 | |
Other affiliated payables | 472,364 | |
Other payables and accrued expenses | 79,765 | |
Collateral on securities loaned, at value | 79,402,696 | |
Total liabilities | 128,066,496 | |
|
|
|
Net Assets | $ 1,968,063,760 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,187,286,957 | |
Accumulated net investment loss | (714) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (203,845,681) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (15,376,802) | |
Net Assets | $ 1,968,063,760 |
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 30.45 | |
|
|
|
Maximum offering price per share (100/94.25 of $30.45) | $ 32.31 | |
Class T: | $ 30.36 | |
|
|
|
Maximum offering price per share (100/96.50 of $30.36) | $ 31.46 | |
Class B: | $ 30.08 | |
|
|
|
Class C: | $ 30.00 | |
|
|
|
Gold: | $ 30.67 | |
|
|
|
Institutional Class: | $ 30.65 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Select Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 12,225,702 |
Income from Fidelity Central Funds |
| 1,311,462 |
Total income |
| 13,537,164 |
|
|
|
Expenses | ||
Management fee | $ 10,708,758 | |
Transfer agent fees | 4,347,722 | |
Distribution fees | 300,335 | |
Accounting and security lending fees | 831,959 | |
Custodian fees and expenses | 272,770 | |
Independent trustees' compensation | 8,217 | |
Registration fees | 219,928 | |
Audit | 60,587 | |
Legal | 28,096 | |
Interest | 26,560 | |
Miscellaneous | 75,992 | |
Total expenses before reductions | 16,880,924 | |
Expense reductions | (653,397) | 16,227,527 |
Net investment income (loss) | (2,690,363) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (161,956,379) | |
Other affiliated issuers | (12,002,969) |
|
Commodities | (6,078,300) |
|
Foreign currency transactions | 119,862 | |
Total net realized gain (loss) |
| (179,917,786) |
Change in net unrealized appreciation (depreciation) on: Investments | (711,214,605) | |
Assets and liabilities in foreign currencies | 72,318 | |
Total change in net unrealized appreciation (depreciation) |
| (711,142,287) |
Net gain (loss) | (891,060,073) | |
Net increase (decrease) in net assets resulting from operations | $ (893,750,436) |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,690,363) | $ (863,055) |
Net realized gain (loss) | (179,917,786) | 189,513,263 |
Change in net unrealized appreciation (depreciation) | (711,142,287) | 426,680,411 |
Net increase (decrease) in net assets resulting from operations | (893,750,436) | 615,330,619 |
Distributions to shareholders from net investment income | - | (7,077,865) |
Distributions to shareholders from net realized gain | (9,542,341) | (201,157,130) |
Total distributions | (9,542,341) | (208,234,995) |
Share transactions - net increase (decrease) | 430,558,697 | 554,230,717 |
Redemption fees | 852,427 | 544,215 |
Total increase (decrease) in net assets | (471,881,653) | 961,870,556 |
|
|
|
Net Assets | ||
Beginning of period | 2,439,945,413 | 1,478,074,857 |
End of period (including accumulated net investment loss of $714 and accumulated net investment loss of $3,177, respectively) | $ 1,968,063,760 | $ 2,439,945,413 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | (15.44) | 15.00 | (.07) |
Total from investment operations | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.01) | - |
Total distributions | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B,C,D | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | (15.42) | 15.05 | (.09) |
Total from investment operations | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.97) | - |
Total distributions | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B,C,D | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.34) | 14.95 | (.08) |
Total from investment operations | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.84) | - |
Total distributions | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B,C,D | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.30) | 14.91 | (.10) |
Total from investment operations | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | (.17) | - |
Distributions from net realized gain | (.17) | (4.89) | - |
Total distributions | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B,C,D | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Gold
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | (.02) | .22 F | .04 | .02 G |
Net realized and unrealized gain (loss) | (15.51) | 15.05 | 5.49 | 12.21 | .18 |
Total from investment operations | (15.55) | 15.03 | 5.71 | 12.25 | .20 |
Distributions from net investment income | - | (.18) | (.02) | (.02) | - |
Distributions from net realized gain | (.17) | (5.03) | (5.10) | (3.84) | - |
Total distributions | (.17) | (5.21) | (5.12) | (3.86) | - |
Redemption fees added to paid in capital C | .02 | .01 | .04 | .06 | .05 |
Net asset value, end of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Total Return A,B | (33.59)% | 45.10% | 16.19% | 48.84% | .92% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .89% | .85% | .90% | .97% | 1.00% |
Expenses net of fee waivers, if any | .87% | .85% | .90% | .97% | 1.00% |
Expenses net of all reductions | .86% | .81% | .87% | .82% | .89% |
Net investment income (loss) | (.13)% | (.05)% | .62% F | .13% | .07% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 |
Portfolio turnover rate E | 42% | 55% | 85% | 108% | 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 $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.08)%. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | (15.49) | 15.03 | (.08) |
Total from investment operations | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.04) | - |
Total distributions | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .02 | .01 | .01 |
Net asset value, end of period | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B,C | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .89% | .83% | .94% A |
Expenses net of all reductions | .86% | .79% | .91% A |
Net investment income (loss) | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2009
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2009, the Fund held $154,880,326 in the Subsidiary, representing 7.9% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to
Annual Report
4. Significant Accounting Policies - continued
Security Valuation - continued
readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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), controlled foreign corporation, 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:
Unrealized appreciation | $ 243,686,134 |
|
Unrealized depreciation | (335,492,281) |
|
Net unrealized appreciation (depreciation) | (91,806,147) |
|
Capital loss carryforward | (88,413,227) |
|
|
|
|
Cost for federal income tax purposes | $ 2,151,201,713 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ - | $ 81,662,441 |
Long-term Capital Gains | 9,542,341 | 126,572,554 |
Total | $ 9,542,341 | $ 208,234,995 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. Securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term securities, aggregated $1,187,755,611 and $775,866,491, respectively.
Annual Report
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR.
The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its 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 $330,880.
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 | 0% | .25% | $ 68,735 | $ 5,104 |
Class T | .25% | .25% | 55,857 | 54 |
Class B | .75% | .25% | 63,776 | 47,880 |
Class C | .75% | .25% | 111,967 | 52,378 |
|
|
| $ 300,335 | $ 105,416 |
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 | $ 89,649 |
Class T | 13,056 |
Class B* | 21,234 |
Class C* | 11,304 |
| $ 135,243 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 82,682 | .30 |
Class T | 35,034 | .31 |
Class B | 19,275 | .30 |
Class C | 33,673 | .30 |
Gold | 4,168,247 | .23 |
Institutional Class | 8,811 | .25 |
| $ 4,347,722 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
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 $3,396 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 | $ 10,576,756 | 2.17% | $ 26,101 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $6,220 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $586,066.
10. 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 $7,138,000. The weighted average interest rate was 2.31%. The interest expense amounted to $459 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
11. 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 $313,930 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 |
|
Gold | $ 8,587 |
|
Annual Report
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 |
Institutional Class | - | 6,741 |
Total | $ - | $ 7,077,865 |
From net realized gain |
|
|
Class A | $ 120,234 | $ 955,695 |
Class T | 52,921 | 425,795 |
Class B | 30,037 | 289,226 |
Class C | 48,372 | 343,986 |
Gold | 9,277,078 | 198,940,407 |
Institutional Class | 13,699 | 202,021 |
Total | $ 9,542,341 | $ 201,157,130 |
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 | 1,309,698 | 567,655 | $ 44,660,266 | $ 23,751,338 |
Reinvestment of distributions | 2,750 | 25,125 | 115,078 | 945,727 |
Shares redeemed | (603,399) | (67,262) | (19,759,071) | (2,616,226) |
Net increase (decrease) | 709,049 | 525,518 | $ 25,016,273 | $ 22,080,839 |
Class T |
|
|
|
|
Shares sold | 490,596 | 245,988 | $ 16,725,703 | $ 10,279,473 |
Reinvestment of distributions | 1,250 | 11,403 | 52,336 | 428,815 |
Shares redeemed | (233,926) | (41,858) | (7,642,955) | (1,666,054) |
Net increase (decrease) | 257,920 | 215,533 | $ 9,135,084 | $ 9,042,234 |
Class B |
|
|
|
|
Shares sold | 268,687 | 138,954 | $ 9,041,240 | $ 5,690,539 |
Reinvestment of distributions | 619 | 7,385 | 25,767 | 276,855 |
Shares redeemed | (138,798) | (21,658) | (4,716,395) | (874,114) |
Net increase (decrease) | 130,508 | 124,681 | $ 4,350,612 | $ 5,093,280 |
Class C |
|
|
|
|
Shares sold | 585,858 | 253,353 | $ 18,965,561 | $ 10,551,196 |
Reinvestment of distributions | 1,077 | 8,652 | 44,699 | 324,140 |
Shares redeemed | (238,490) | (37,666) | (7,504,831) | (1,511,191) |
Net increase (decrease) | 348,445 | 224,339 | $ 11,505,429 | $ 9,364,145 |
Gold |
|
|
|
|
Shares sold | 46,487,078 | 30,095,254 | $ 1,611,564,135 | $ 1,246,042,833 |
Reinvestment of distributions | 212,477 | 5,273,633 | 8,930,407 | 197,489,804 |
Shares redeemed | (36,708,151) | (24,338,085) | (1,244,304,895) | (937,121,869) |
Net increase (decrease) | 9,991,404 | 11,030,802 | $ 376,189,647 | $ 506,410,768 |
Institutional Class |
|
|
|
|
Shares sold | 256,180 | 128,523 | $ 8,523,938 | $ 5,080,204 |
Reinvestment of distributions | 259 | 4,588 | 10,894 | 171,536 |
Shares redeemed | (126,881) | (75,163) | (4,173,180) | (3,012,289) |
Net increase (decrease) | 129,558 | 57,948 | $ 4,361,652 | $ 2,239,451 |
Annual Report
Notes to Consolidated Financial Statements - continued
14. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304, which is recorded in the accompanying Consolidated Statement of Operations.
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 class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Materials A | -51.15% | -1.02% | 5.75% |
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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Tobias Welo, Portfolio Manager of Select Materials Portfolio: For the one-year period ending February 28, 2009, the fund returned -51.15%, outperforming the -53.96% return for the MSCI® US Investable Market Materials Index, but trailing the broad market S&P 500. Versus the MSCI index, strong industry selection drove performance for the period, including an overweighting in gold and sizable underweightings in some lagging industries, including aluminum, paper products and diversified chemicals. In addition, stock selection within the latter segment aided results. A modest cash allocation also was a positive in a down market. Conversely, stock selection among steel issues hurt, as did certain stock picks and an overweighting in commodity chemicals and weak results from our specialty chemicals holdings. Among individual stocks, underweightings in aluminum maker Alcoa, International Paper and diversified chemicals maker Dow Chemical helped. Here, I'd sought to underweight firms with high debt levels that were exposed to certain hard-hit end markets. Commodity chemicals firm Celanese and an underweighting in steel company Nucor detracted. Celanese struggled amid a dramatic drop in global demand, while Nucor was helped by its relatively strong financial position versus competitors. Some of the stocks I've mentioned in this update were sold by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.21% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.90 | $ 4.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.20 | $ 5.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Materials | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.60 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Institutional Class | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.70 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Select Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 15.5 | 11.9 |
Newmont Mining Corp. | 6.7 | 3.8 |
E.I. du Pont de Nemours & Co. | 6.4 | 8.3 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 5.0 | 7.0 |
Praxair, Inc. | 4.4 | 2.1 |
FMC Corp. | 2.9 | 3.0 |
Airgas, Inc. | 2.8 | 1.9 |
Weyerhaeuser Co. | 2.7 | 1.5 |
Terra Industries, Inc. | 2.5 | 1.0 |
Rohm & Haas Co. | 2.4 | 0.0 |
| 51.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Chemicals | 56.4% |
| |
Metals & Mining | 21.4% |
| |
Containers & Packaging | 10.2% |
| |
Paper & Forest Products | 2.7% |
| |
Construction Materials | 2.4% |
| |
All Others* | 6.9% |
|
As of August 31, 2008 | |||
Chemicals | 51.3% |
| |
Metals & Mining | 30.9% |
| |
Containers & Packaging | 11.3% |
| |
Marine | 1.6% |
| |
Paper & Forest Products | 1.5% |
| |
All Others* | 3.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Materials Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.9% | |||
Building Products - 0.9% | |||
Masco Corp. | 218,700 | $ 1,126,305 | |
USG Corp. (a) | 32,400 | 186,948 | |
| 1,313,253 | ||
CHEMICALS - 55.9% | |||
Commodity Chemicals - 2.1% | |||
Celanese Corp. Class A | 369,678 | 3,157,050 | |
Diversified Chemicals - 10.7% | |||
E.I. du Pont de Nemours & Co. | 517,200 | 9,702,672 | |
FMC Corp. | 110,199 | 4,455,346 | |
Solutia, Inc. (a) | 555,100 | 2,081,625 | |
| 16,239,643 | ||
Fertilizers & Agricultural Chemicals - 20.9% | |||
CF Industries Holdings, Inc. | 37,200 | 2,393,076 | |
Monsanto Co. | 309,244 | 23,586,039 | |
Terra Industries, Inc. | 147,200 | 3,796,288 | |
The Mosaic Co. | 49,500 | 2,130,975 | |
| 31,906,378 | ||
Industrial Gases - 8.7% | |||
Air Products & Chemicals, Inc. | 49,000 | 2,266,250 | |
Airgas, Inc. | 137,100 | 4,221,309 | |
Praxair, Inc. | 119,000 | 6,753,250 | |
| 13,240,809 | ||
Specialty Chemicals - 13.5% | |||
Albemarle Corp. | 181,985 | 3,521,410 | |
Ecolab, Inc. | 98,500 | 3,130,330 | |
Lubrizol Corp. | 94,800 | 2,606,052 | |
Nalco Holding Co. | 198,618 | 2,258,287 | |
OMNOVA Solutions, Inc. (a) | 124,091 | 105,477 | |
Rockwood Holdings, Inc. (a) | 190,700 | 1,123,223 | |
Rohm & Haas Co. | 70,700 | 3,681,349 | |
Valspar Corp. | 88,100 | 1,471,270 | |
W.R. Grace & Co. (a) | 466,700 | 2,613,520 | |
| 20,510,918 | ||
TOTAL CHEMICALS | 85,054,798 | ||
CONSTRUCTION MATERIALS - 2.4% | |||
Construction Materials - 2.4% | |||
Martin Marietta Materials, Inc. (d) | 46,800 | 3,583,008 | |
CONTAINERS & PACKAGING - 10.2% | |||
Metal & Glass Containers - 6.4% | |||
Ball Corp. | 71,865 | 2,895,441 | |
Crown Holdings, Inc. (a) | 148,971 | 3,140,309 | |
Myers Industries, Inc. | 16,419 | 64,855 | |
Owens-Illinois, Inc. (a) | 141,200 | 2,177,304 | |
Pactiv Corp. (a) | 87,500 | 1,385,125 | |
| 9,663,034 | ||
| |||
Shares | Value | ||
Paper Packaging - 3.8% | |||
Packaging Corp. of America | 117,100 | $ 1,240,089 | |
Rock-Tenn Co. Class A | 88,728 | 2,449,780 | |
Sealed Air Corp. | 84,200 | 939,672 | |
Temple-Inland, Inc. (d) | 241,600 | 1,147,600 | |
| 5,777,141 | ||
TOTAL CONTAINERS & PACKAGING | 15,440,175 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Homebuilding - 0.4% | |||
Centex Corp. | 93,300 | 579,393 | |
MACHINERY - 0.5% | |||
Construction & Farm Machinery & Heavy Trucks - 0.5% | |||
Deere & Co. | 27,700 | 761,473 | |
MARINE - 0.4% | |||
Marine - 0.4% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 575,543 | |
METALS & MINING - 20.4% | |||
Diversified Metals & Mining - 5.8% | |||
BHP Billiton PLC | 78,600 | 1,224,843 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 247,728 | 7,535,886 | |
| 8,760,729 | ||
Gold - 9.0% | |||
Agnico-Eagle Mines Ltd. | 8,500 | 427,288 | |
Newmont Mining Corp. | 243,900 | 10,153,557 | |
Randgold Resources Ltd. sponsored ADR | 34,700 | 1,578,156 | |
Yamana Gold, Inc. | 184,300 | 1,610,986 | |
| 13,769,987 | ||
Precious Metals & Minerals - 0.3% | |||
Impala Platinum Holdings Ltd. | 34,460 | 404,415 | |
Steel - 5.3% | |||
ArcelorMittal SA (NY Shares) Class A (d) | 67,900 | 1,312,507 | |
Cliffs Natural Resources, Inc. | 89,300 | 1,377,899 | |
Commercial Metals Co. | 164,000 | 1,674,440 | |
Reliance Steel & Aluminum Co. | 73,000 | 1,736,670 | |
Steel Dynamics, Inc. | 242,000 | 2,020,700 | |
| 8,122,216 | ||
TOTAL METALS & MINING | 31,057,347 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 24,400 | 664,900 | |
Foundation Coal Holdings, Inc. | 25,200 | 405,216 | |
Massey Energy Co. | 69,400 | 801,570 | |
| 1,871,686 | ||
PAPER & FOREST PRODUCTS - 2.7% | |||
Forest Products - 2.7% | |||
Weyerhaeuser Co. | 171,800 | 4,150,688 | |
Common Stocks - continued | |||
Shares | Value | ||
TRANSPORTATION INFRASTRUCTURE - 1.0% | |||
Marine Ports & Services - 1.0% | |||
Aegean Marine Petroleum Network, Inc. | 96,500 | $ 1,582,600 | |
TOTAL COMMON STOCKS (Cost $211,717,445) | 145,969,964 | ||
Convertible Preferred Stocks - 1.0% | |||
|
|
|
|
METALS & MINING - 1.0% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 29,000 | 1,568,523 |
Floating Rate Loans - 0.5% | ||||
| Principal Amount |
| ||
MATERIALS - 0.5% | ||||
Chemicals - 0.5% | ||||
Celanese Holding LLC term loan 2.935% 4/2/14 (e) | $ 987,487 | 809,740 | ||
TOTAL FLOATING RATE LOANS (Cost $760,558) | 809,740 |
Money Market Funds - 4.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 2,803,758 | $ 2,803,758 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,425,750 | 4,425,750 | |
TOTAL MONEY MARKET FUNDS (Cost $7,229,508) | 7,229,508 | ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $221,275,013) | 155,577,735 | ||
NET OTHER ASSETS - (2.3)% | (3,457,685) | ||
NET ASSETS - 100% | $ 152,120,050 |
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. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate 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 | $ 207,459 |
Fidelity Securities Lending Cash Central Fund | 92,601 |
Total | $ 300,060 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 155,577,735 | $ 151,974,629 | $ 3,603,106 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $47,480,166 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $26,181,120 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,349,948) - See accompanying schedule: Unaffiliated issuers (cost $214,045,505) | $ 148,348,227 |
|
Fidelity Central Funds (cost $7,229,508) | 7,229,508 |
|
Total Investments (cost $221,275,013) |
| $ 155,577,735 |
Cash | 867,252 | |
Receivable for investments sold | 5,532,571 | |
Receivable for fund shares sold | 230,578 | |
Dividends receivable | 424,015 | |
Interest receivable | 4,589 | |
Distributions receivable from Fidelity Central Funds | 7,214 | |
Prepaid expenses | 1,949 | |
Other receivables | 207 | |
Total assets | 162,646,110 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,249,567 | |
Payable for fund shares redeemed | 678,545 | |
Accrued management fee | 77,730 | |
Distribution fees payable | 11,826 | |
Other affiliated payables | 47,607 | |
Other payables and accrued expenses | 35,035 | |
Collateral on securities loaned, at value | 4,425,750 | |
Total liabilities | 10,526,060 | |
|
|
|
Net Assets | $ 152,120,050 | |
Net Assets consist of: |
| |
Paid in capital | $ 295,565,722 | |
Undistributed net investment income | 350,358 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (78,098,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (65,697,862) | |
Net Assets | $ 152,120,050 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 27.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $27.65) | $ 29.34 | |
Class T: | $ 27.56 | |
|
|
|
Maximum offering price per share (100/96.50 of $27.56) | $ 28.56 | |
Class B: | $ 27.35 | |
|
|
|
Class C: | $ 27.31 | |
|
|
|
Materials: | $ 27.66 | |
|
|
|
Institutional Class: | $ 27.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 5,062,903 |
Interest |
| 32,366 |
Income from Fidelity Central Funds |
| 300,060 |
Total income |
| 5,395,329 |
|
|
|
Expenses | ||
Management fee | $ 1,788,061 | |
Transfer agent fees | 817,591 | |
Distribution fees | 219,469 | |
Accounting and security lending fees | 128,438 | |
Custodian fees and expenses | 27,331 | |
Independent trustees' compensation | 1,640 | |
Registration fees | 101,330 | |
Audit | 40,676 | |
Legal | 1,823 | |
Miscellaneous | 22,628 | |
Total expenses before reductions | 3,148,987 | |
Expense reductions | (13,467) | 3,135,520 |
Net investment income (loss) | 2,259,809 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (75,587,496) | |
Foreign currency transactions | (80,051) | |
Total net realized gain (loss) |
| (75,667,547) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (119,409,523) | |
Assets and liabilities in foreign currencies | (289) | |
Total change in net unrealized appreciation (depreciation) |
| (119,409,812) |
Net gain (loss) | (195,077,359) | |
Net increase (decrease) in net assets resulting from operations | $ (192,817,550) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,259,809 | $ 3,953,939 |
Net realized gain (loss) | (75,667,547) | 16,077,802 |
Change in net unrealized appreciation (depreciation) | (119,409,812) | 23,232,714 |
Net increase (decrease) in net assets resulting from operations | (192,817,550) | 43,264,455 |
Distributions to shareholders from net investment income | (976,789) | (2,382,687) |
Distributions to shareholders from net realized gain | - | (14,617,568) |
Total distributions | (976,789) | (17,000,255) |
Share transactions - net increase (decrease) | (41,426,103) | 127,763,307 |
Redemption fees | 46,748 | 66,997 |
Total increase (decrease) in net assets | (235,173,694) | 154,094,504 |
|
|
|
Net Assets | ||
Beginning of period | 387,293,744 | 233,199,240 |
End of period (including undistributed net investment income of $350,358 and undistributed net investment income of $1,848,037, respectively) | $ 152,120,050 | $ 387,293,744 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | (29.46) | 8.05 | 3.93 |
Total from investment operations | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.12) | (.32) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.12) | (2.53) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B,C,D | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | (29.32) | 8.00 | 3.87 |
Total from investment operations | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.03) | (.21) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.03) | (2.42) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B,C,D | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | (29.13) | 7.98 | 3.84 |
Total from investment operations | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | - | (.04) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.25) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B,C,D | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | (29.07) | 7.97 | 3.81 |
Total from investment operations | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | - | (.12) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.33) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B,C,D | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .38 | .64 | .42 | .32 | .15 |
Net realized and unrealized gain (loss) | (29.54) | 8.01 | 9.36 | 6.40 | 5.47 |
Total from investment operations | (29.16) | 8.65 | 9.78 | 6.72 | 5.62 |
Distributions from net investment income | (.20) | (.36) | (.48) | (.25) | (.12) |
Distributions from net realized gain | - | (2.21) | (4.79) | (.93) | (.74) |
Total distributions | (.20) | (2.57) H | (5.27) | (1.18) | (.86) |
Redemption fees added to paid in capital C | .01 | .01 | .06 | .03 | .03 |
Net asset value, end of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Total Return A,B | (51.15)% | 17.10% | 22.29% | 17.01% | 16.09% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .90% | .91% | 1.01% | 1.05% | 1.06% |
Expenses net of fee waivers, if any | .90% | .90% | .98% | 1.05% | 1.06% |
Expenses net of all reductions | .90% | .89% | .96% | 1.01% | 1.02% |
Net investment income (loss) | .78% | 1.14% | .87% | .78% | .42% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 |
Portfolio turnover rate E | 117% | 77% | 185% | 124% | 89% |
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. H Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | (29.53) | 8.00 | 3.92 |
Total from investment operations | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.20) | (.36) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.20) | (2.56) J | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 |
Net asset value, end of period | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B,C | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .90% | .89% | 1.06% A |
Expenses net of all reductions | .90% | .89% | 1.04% A |
Net investment income (loss) | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G 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 Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation.
Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, market discount, passive foreign investment companies (PFIC), 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:
Unrealized appreciation | $ 14,131,142 |
|
Unrealized depreciation | (84,258,446) |
|
Net unrealized appreciation (depreciation) | (70,127,304) |
|
Undistributed ordinary income | 342,912 |
|
Capital loss carryforward | (47,480,166) |
|
|
|
|
Cost for federal income tax purposes | $ 225,705,039 |
|
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 976,789 | $ 7,456,139 |
Long-term Capital Gains | - | 9,544,116 |
Total | $ 976,789 | $ 17,000,255 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $364,235,925 and $398,230,325, 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% | $ 40,870 | $ 4,531 |
Class T | .25% | .25% | 38,434 | 176 |
Class B | .75% | .25% | 44,212 | 33,209 |
Class C | .75% | .25% | 95,953 | 46,754 |
|
|
| $ 219,469 | $ 84,670 |
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 Financial Statements - continued
6. 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 | $ 44,174 |
Class T | 9,605 |
Class B* | 8,840 |
Class C* | 4,799 |
| $ 67,418 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 49,515 | .30 |
Class T | 23,883 | .31 |
Class B | 13,428 | .30 |
Class C | 29,201 | .30 |
Materials | 697,613 | .25 |
Institutional Class | 3,951 | .25 |
| $ 817,591 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,685 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $931 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 $92,601.
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 $13,058 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, these credits reduced the Fund's transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 409 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 43,307 | $ 49,508 |
Class T | 5,182 | 17,252 |
Class B | - | 2,017 |
Class C | - | 11,702 |
Materials | 923,202 | 2,291,825 |
Institutional Class | 5,098 | 10,383 |
Total | $ 976,789 | $ 2,382,687 |
From net realized gain |
|
|
Class A | $ - | $ 297,274 |
Class T | - | 171,986 |
Class B | - | 120,699 |
Class C | - | 203,194 |
Materials | - | 13,774,394 |
Institutional Class | - | 50,021 |
Total | $ - | $ 14,617,568 |
11. 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 | 400,579 | 264,311 | $ 21,052,656 | $ 14,817,528 |
Reinvestment of distributions | 1,376 | 5,853 | 40,415 | 336,777 |
Shares redeemed | (231,192) | (70,440) | (9,966,206) | (3,880,036) |
Net increase (decrease) | 170,763 | 199,724 | $ 11,126,865 | $ 11,274,269 |
Class T |
|
|
|
|
Shares sold | 127,856 | 146,420 | $ 6,586,988 | $ 8,122,926 |
Reinvestment of distributions | 169 | 2,954 | 4,976 | 169,021 |
Shares redeemed | (69,236) | (42,653) | (3,081,211) | (2,369,950) |
Net increase (decrease) | 58,789 | 106,721 | $ 3,510,753 | $ 5,921,997 |
Class B |
|
|
|
|
Shares sold | 70,236 | 83,153 | $ 3,670,456 | $ 4,611,263 |
Reinvestment of distributions | - | 2,052 | - | 116,729 |
Shares redeemed | (48,886) | (24,486) | (2,112,869) | (1,341,792) |
Net increase (decrease) | 21,350 | 60,719 | $ 1,557,587 | $ 3,386,200 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class C |
|
|
|
|
Shares sold | 186,111 | 171,703 | $ 9,519,248 | $ 9,620,121 |
Reinvestment of distributions | (8) | 3,133 | (480) | 178,976 |
Shares redeemed | (139,135) | (30,841) | (5,956,182) | (1,682,683) |
Net increase (decrease) | 46,968 | 143,995 | $ 3,562,586 | $ 8,116,414 |
Materials |
|
|
|
|
Shares sold | 3,524,569 | 7,472,335 | $ 186,250,882 | $ 416,206,078 |
Reinvestment of distributions | 29,537 | 270,946 | 866,336 | 15,331,841 |
Shares redeemed | (5,137,192) | (6,067,742) | (248,168,306) | (334,236,130) |
Net increase (decrease) | (1,583,086) | 1,675,539 | $ (61,051,088) | $ 97,301,789 |
Institutional Class |
|
|
|
|
Shares sold | 41,845 | 88,023 | $ 2,204,347 | $ 5,168,897 |
Reinvestment of distributions | 156 | 963 | 4,588 | 55,576 |
Shares redeemed | (47,942) | (59,388) | (2,341,741) | (3,461,835) |
Net increase (decrease) | (5,941) | 29,598 | $ (132,806) | $ 1,762,638 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935, which is recorded in the accompanying Statement of Operations.
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.
13. Proposed Reorganization
On November 18, 2008, the Board of Trustees of the Fund approved an Agreement and Plan of Reorganization between the Fund and Select Paper and Forest Products Portfolio. The agreement provides for the transfer of all of the assets and the assumption of all of the liabilities of Select Paper and Forest Products Portfolio in exchange solely for the number of equivalent shares of Materials (the original, retail class of shares of Select Materials Portfolio) having the same aggregate net asset value as the outstanding shares of Select Paper and Forest Products Portfolio, on the day the reorganization is effective.
A meeting of shareholders of Select Paper and Forest Products Portfolio is expected to be held on May 19, 2009 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about June 19, 2009. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
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 class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Paper and Forest Products Portfolio | -53.68% | -14.97% | -2.56% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Paper and Forest Products Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Sheehy, Portfolio Manager of Select Paper and Forest Products Portfolio: During the past year, the fund returned -53.68%, edging the -53.96% return of the MSCI® US Investable Market Materials Index but lagging the S&P 500®. Versus the MSCI index, the fund's holdings in specialized REITs (real estate investment trusts) - which are not included in the benchmark - added the most value. A large overweighting in paper packaging also helped. Not owning stocks in diversified chemicals, aluminum, steel, diversified metals and mining, and precious metals and minerals was beneficial as well. A modest cash position further cushioned the fund's loss. Contributors included out-of-index timberland REITs Plum Creek Timber and Potlatch. Paper packaging holdings Rock-Tenn and Sonoco Products also contributed, as did cigarette paper maker Schweitzer-Mauduit International. Not owning poorly performing MSCI index components Dow Chemical and aluminum maker Alcoa contributed as well. Conversely, a large overweighting in paper products detracted. Overweighting forest products hurt as well. Having no holdings in fertilizers and agricultural chemicals or in gold mining further detracted. In absolute terms, the stronger U.S. dollar had a negative impact on the fund's foreign holdings. Individual detractors included several outperforming index components we didn't own: agricultural products company Monsanto, industrial gases provider Praxair and gold mining company Newmont Mining. Overweightings in Canada-based Domtar, a maker of printing and writing papers, and Smurfit-Stone Container, which produces corrugated packaging, further detracted.
Note to shareholders: On November 18, 2008, the Board of Trustees agreed to present a proposal to shareholders to merge Select Paper and Forest Products Portfolio into Select Materials Portfolio. Shareholders of Select Paper and Forest Products Portfolio are expected to meet on May 19, 2009, to vote on the proposal. If approved, the merger is expected to be completed on or about June 19, 2009.
The foregoing is not a solicitation of any proxy. For a free copy of the Proxy Statement describing the Reorganization (and containing important information about fees, expenses and risk considerations) and a Prospectus for Select Materials Portfolio, please call 1-800-544-3198. The Prospectus/Proxy Statement also is available for free on the Securities and Exchange Commission's Web site (www.sec.gov).
The fund closed to most new accounts at the close of business on March 19, 2009.
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
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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | 1.17% | $ 1,000.00 | $ 459.20 | $ 4.23 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,018.99 | $ 5.86 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Paper and Forest Products Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Weyerhaeuser Co. | 13.8 | 9.1 |
Sealed Air Corp. | 9.4 | 1.3 |
Temple-Inland, Inc. | 7.8 | 7.6 |
Plum Creek Timber Co., Inc. | 7.2 | 12.4 |
Rock-Tenn Co. Class A | 5.9 | 4.9 |
Packaging Corp. of America | 5.3 | 5.4 |
Potlatch Corp. | 4.9 | 4.8 |
Sonoco Products Co. | 4.7 | 8.0 |
West Fraser Timber Co. Ltd. | 4.6 | 0.0 |
Schweitzer-Mauduit International, Inc. | 4.4 | 3.4 |
| 68.0 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Containers & Packaging | 42.1% |
| |
Paper & Forest Products | 39.8% |
| |
Real Estate Investment Trusts | 13.5% |
| |
Real Estate Management & Development | 1.3% |
| |
Trading Companies & Distributors | 0.8% |
| |
All Others* | 2.5% |
|
As of August 31, 2008 | |||
Containers & Packaging | 37.2% |
| |
Paper & Forest Products | 31.1% |
| |
Real Estate Investment Trusts | 19.9% |
| |
Commercial Services & Supplies | 2.5% |
| |
Real Estate Management & Development | 1.4% |
| |
All Others* | 7.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Paper and Forest Products Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.4% | |||
Building Products - 0.4% | |||
USG Corp. (a) | 5,300 | $ 30,581 | |
CONTAINERS & PACKAGING - 42.1% | |||
Metal & Glass Containers - 5.1% | |||
Greif, Inc. Class A | 6,300 | 193,725 | |
Owens-Illinois, Inc. (a) | 5,600 | 86,352 | |
Pactiv Corp. (a) | 7,100 | 112,393 | |
| 392,470 | ||
Paper Packaging - 37.0% | |||
Bemis Co., Inc. | 7,100 | 131,847 | |
Cascades, Inc. | 58,200 | 118,948 | |
Graphic Packaging Holding Co. (a) | 44,000 | 35,200 | |
Packaging Corp. of America | 38,900 | 411,951 | |
Rock-Tenn Co. Class A | 16,500 | 455,565 | |
Sealed Air Corp. | 65,150 | 727,074 | |
Smurfit Kappa Group PLC | 6,800 | 11,727 | |
Sonoco Products Co. | 18,900 | 364,203 | |
Temple-Inland, Inc. | 127,300 | 604,675 | |
| 2,861,190 | ||
TOTAL CONTAINERS & PACKAGING | 3,253,660 | ||
ELECTRIC UTILITIES - 0.3% | |||
Electric Utilities - 0.3% | |||
Brookfield Infrastructure Partners LP | 2,000 | 23,240 | |
FOOD PRODUCTS - 0.1% | |||
Agricultural Products - 0.1% | |||
Timbercorp Ltd. | 75,129 | 6,156 | |
HOUSEHOLD PRODUCTS - 0.7% | |||
Household Products - 0.7% | |||
Kimberly-Clark Corp. | 1,100 | 51,821 | |
MACHINERY - 0.2% | |||
Industrial Machinery - 0.2% | |||
Albany International Corp. Class A | 2,200 | 18,920 | |
MEDIA - 0.0% | |||
Publishing - 0.0% | |||
R.H. Donnelley Corp. (a) | 100 | 17 | |
PAPER & FOREST PRODUCTS - 39.8% | |||
Forest Products - 21.1% | |||
Canfor Corp. (a) | 5,700 | 25,047 | |
Deltic Timber Corp. | 1,000 | 31,300 | |
Gunns Ltd. | 1,650 | 730 | |
Louisiana-Pacific Corp. | 75,100 | 121,662 | |
Norbord, Inc. (d) | 62,000 | 30,704 | |
West Fraser Timber Co. Ltd. | 16,700 | 357,590 | |
Weyerhaeuser Co. | 44,200 | 1,067,872 | |
| 1,634,905 | ||
| |||
Shares | Value | ||
Paper Products - 18.7% | |||
Buckeye Technologies, Inc. (a) | 25,400 | $ 57,404 | |
Canfor Pulp Income Fund | 3,700 | 4,857 | |
Catalyst Paper Corp. (a) | 234,900 | 31,390 | |
Clearwater Paper Corp. (a) | 6,761 | 66,731 | |
Domtar Corp. (a) | 77,000 | 60,830 | |
Glatfelter | 22,800 | 141,816 | |
Kapstone Paper & Packaging Corp. (a) | 22,000 | 33,220 | |
MeadWestvaco Corp. | 35,400 | 330,636 | |
Mondi PLC | 11,700 | 20,486 | |
Neenah Paper, Inc. | 8,000 | 42,000 | |
Nine Dragons Paper (Holdings) Ltd. | 296,000 | 79,337 | |
Schweitzer-Mauduit International, Inc. | 22,200 | 337,440 | |
Sequana | 2,100 | 11,736 | |
Shandong Chenming Paper Holdings Ltd. (H Shares) (a) | 244,000 | 92,303 | |
Votorantim Celulose e Papel SA sponsored ADR (non-vtg.) | 16,900 | 80,782 | |
Wausau-Mosinee Paper Corp. | 9,500 | 52,725 | |
| 1,443,693 | ||
TOTAL PAPER & FOREST PRODUCTS | 3,078,598 | ||
REAL ESTATE INVESTMENT TRUSTS - 13.5% | |||
Specialized REITs - 13.5% | |||
Plum Creek Timber Co., Inc. | 21,200 | 556,076 | |
Potlatch Corp. | 16,464 | 374,885 | |
Rayonier, Inc. | 4,200 | 111,720 | |
| 1,042,681 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.3% | |||
Diversified Real Estate Activities - 0.2% | |||
The St. Joe Co. (a) | 1,100 | 20,229 | |
Real Estate Development - 1.1% | |||
Forestar Group, Inc. (a) | 10,933 | 82,216 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 102,445 | ||
TRADING COMPANIES & DISTRIBUTORS - 0.8% | |||
Trading Companies & Distributors - 0.8% | |||
Beacon Roofing Supply, Inc. (a) | 5,600 | 61,432 | |
TOTAL COMMON STOCKS (Cost $18,224,367) | 7,669,551 | ||
Money Market Funds - 0.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 37,691 | $ 37,691 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 25,300 | 25,300 | |
TOTAL MONEY MARKET FUNDS (Cost $62,991) | 62,991 | ||
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $18,287,358) | 7,732,542 | ||
NET OTHER ASSETS - 0.0% | 1,529 | ||
NET ASSETS - 100% | $ 7,734,071 |
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 | $ 10,622 |
Fidelity Securities Lending Cash Central Fund | 8,544 |
Total | $ 19,166 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 7,732,542 | $ 7,510,067 | $ 222,475 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.4% |
Canada | 7.3% |
China | 2.2% |
Brazil | 1.0% |
Others (individually less than 1%) | 1.1% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $7,051,816 of which $1,659,402 and $5,392,414 will expire on February 28, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $2,441,866 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Paper and Forest Products Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $22,840) - See accompanying schedule: Unaffiliated issuers (cost $18,224,367) | $ 7,669,551 |
|
Fidelity Central Funds (cost $62,991) | 62,991 |
|
Total Investments (cost $18,287,358) |
| $ 7,732,542 |
Cash | 22,094 | |
Receivable for investments sold | 40,860 | |
Receivable for fund shares sold | 16,169 | |
Dividends receivable | 51,528 | |
Distributions receivable from Fidelity Central Funds | 412 | |
Prepaid expenses | 158 | |
Receivable from investment adviser for expense reductions | 3,758 | |
Other receivables | 75 | |
Total assets | 7,867,596 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 56,167 | |
Payable for fund shares redeemed | 17,253 | |
Accrued management fee | 4,114 | |
Other affiliated payables | 2,628 | |
Other payables and accrued expenses | 28,063 | |
Collateral on securities loaned, at value | 25,300 | |
Total liabilities | 133,525 | |
|
|
|
Net Assets | $ 7,734,071 | |
Net Assets consist of: |
| |
Paid in capital | $ 29,291,004 | |
Undistributed net investment income | 15,329 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,017,445) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (10,554,817) | |
Net Assets, for 614,448 shares outstanding | $ 7,734,071 | |
Net Asset Value, offering price and redemption price per share ($7,734,071 ÷ 614,448 shares) | $ 12.59 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 342,194 |
Interest |
| 1,124 |
Income from Fidelity Central Funds |
| 19,166 |
Total income |
| 362,484 |
|
|
|
Expenses | ||
Management fee | $ 88,612 | |
Transfer agent fees | 47,503 | |
Accounting and security lending fees | 6,430 | |
Custodian fees and expenses | 10,728 | |
Independent trustees' compensation | 84 | |
Registration fees | 16,710 | |
Audit | 45,921 | |
Legal | 93 | |
Miscellaneous | 2,210 | |
Total expenses before reductions | 218,291 | |
Expense reductions | (37,724) | 180,567 |
Net investment income (loss) | 181,917 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (7,711,025) | |
Foreign currency transactions | (5,473) | |
Total net realized gain (loss) |
| (7,716,498) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (4,254,676) | |
Assets and liabilities in foreign currencies | 265 | |
Total change in net unrealized appreciation (depreciation) |
| (4,254,411) |
Net gain (loss) | (11,970,909) | |
Net increase (decrease) in net assets resulting from operations | $ (11,788,992) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 181,917 | $ 1,115,814 |
Net realized gain (loss) | (7,716,498) | 1,100,412 |
Change in net unrealized appreciation (depreciation) | (4,254,411) | (7,656,934) |
Net increase (decrease) in net assets resulting from operations | (11,788,992) | (5,440,708) |
Distributions to shareholders from net investment income | (154,829) | (1,107,744) |
Share transactions | 17,048,091 | 55,862,823 |
Reinvestment of distributions | 145,750 | 1,051,891 |
Cost of shares redeemed | (15,630,115) | (88,812,783) |
Net increase (decrease) in net assets resulting from share transactions | 1,563,726 | (31,898,069) |
Redemption fees | 10,019 | 24,082 |
Total increase (decrease) in net assets | (10,370,076) | (38,422,439) |
|
|
|
Net Assets | ||
Beginning of period | 18,104,147 | 56,526,586 |
End of period (including undistributed net investment income of $15,329 and undistributed net investment income of $176,683, respectively) | $ 7,734,071 | $ 18,104,147 |
Other Information Shares | ||
Sold | 668,460 | 1,585,085 |
Issued in reinvestment of distributions | 9,464 | 33,077 |
Redeemed | (718,895) | (2,599,544) |
Net increase (decrease) | (40,971) | (981,382) |
Financial Highlights
Years ended February 28, | 2009 | 2008 J | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 27.62 | $ 34.53 | $ 30.63 | $ 31.64 | $ 31.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .26 | .92 F | .89 G | .61 H | .14 |
Net realized and unrealized gain (loss) | (15.05) | (6.46) | 4.37 | (1.53) | (.06) |
Total from investment operations | (14.79) | (5.54) | 5.26 | (.92) | .08 |
Distributions from net investment income | (.25) | (1.39) | (1.37) | (.13) | (.12) |
Redemption fees added to paid in capital C | .01 | .02 | .01 | .04 | .04 |
Net asset value, end of period | $ 12.59 | $ 27.62 | $ 34.53 | $ 30.63 | $ 31.64 |
Total Return A,B | (53.68)% | (16.45)% | 17.70% | (2.77)% | .37% |
Ratios to Average Net Assets D,I |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.11% | 1.25% | 1.31% | 1.33% |
Expenses net of fee waivers, if any | 1.15% | 1.11% | 1.20% | 1.25% | 1.32% |
Expenses net of all reductions | 1.13% | 1.09% | 1.19% | 1.21% | 1.30% |
Net investment income (loss) | 1.14% | 2.67% F | 2.85% G | 2.10% H | .45% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,734 | $ 18,104 | $ 56,527 | $ 28,716 | $ 27,685 |
Portfolio turnover rate E | 150% | 221% | 126% | 207% | 65% |
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 1.09%. G Investment 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%. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
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 invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE) normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, 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 | $ 20,957 |
|
Unrealized depreciation | (12,099,176) |
|
Net unrealized appreciation (depreciation) | (12,078,579) |
|
Undistributed ordinary income | 15,324 |
|
Capital loss carryforward | (7,051,816) |
|
Cost for federal income tax purposes | $ 19,811,121 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 154,829 | $ 1,107,744 |
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.
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 $25,545,913 and $22,811,065, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .30% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $471 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $51 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 $8,544.
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
FMR voluntarily agreed to reimburse the Fund to the extent annual operating expenses exceeded 1.15% of average net assets. During the period this reimbursement reduced the Fund's expenses by $34,629.
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 $3,095 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $6,990, which is recorded in the accompanying Statement of Operations.
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. Proposed Reorganization
On November 18, 2008, the Board of Trustees of the Fund approved an Agreement and Plan of Reorganization between the Fund and Select Materials Portfolio. The Agreement provides for the transfer of all of the assets and the assumption of all of the liabilities of the Fund in exchange solely for the number of equivalent shares of Materials (the original, retail class of shares of Select Materials Portfolio) having the same aggregate net asset value as the outstanding shares of the Fund, on the day the reorganization is effective.
A meeting of shareholders of the Fund is expected to be held on May 19, 2009 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about June 19, 2009. The reorganization is expected to quality as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders. Effective March 19, 2009, the Fund's shares are no longer available for purchase pending the proposed reorganization. However, existing shareholders of the Fund can continue to purchase shares of the Fund.
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 statements 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 28, 2009, the results of their operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy call Fidelity at 1-800-544-5844.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Chemicals Portfolio | 100% | 100% |
Select Paper and Forest Products Portfolio | - | 100% |
Select Materials 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 2008 | December 2008 |
Select Chemicals Portfolio | 100% | 100% |
Select Paper and Forest Products Portfolio | - | 100% |
Select Materials Portfolio | - | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 income tax returns.
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
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Japan) Inc.
Fidelity Management & Research
(Hong Kong) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
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
SELMT-UANN-0409
1.846031.102
Automated line for quickest service
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 28, 2009
(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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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, 2008 to
February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Air Transportation Portfolio | 1.10% |
|
|
|
Actual |
| $ 1,000.00 | $ 587.30 | $ 4.33 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.34 | $ 5.51 |
Defense and Aerospace Portfolio | .90% |
|
|
|
Actual |
| $ 1,000.00 | $ 560.90 | $ 3.48 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.33 | $ 4.51 |
Environmental Portfolio | 1.06% |
|
|
|
Actual |
| $ 1,000.00 | $ 609.20 | $ 4.23 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
Industrial Equipment Portfolio | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 453.80 | $ 3.53 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
Industrials Portfolio | 1.02% |
|
|
|
Actual |
| $ 1,000.00 | $ 493.60 | $ 3.78 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.74 | $ 5.11 |
Transportation Portfolio | 1.02% |
|
|
|
Actual |
| $ 1,000.00 | $ 533.00 | $ 3.88 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.74 | $ 5.11 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Air Transportation Portfolio | -49.44% | -5.63% | 0.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Air Transportation Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Maurice FitzMaurice, Portfolio Manager of Select Air Transportation Portfolio during the period covered by this report: During the past year, the fund returned -49.44%, beating the -51.32% result of the Standard & Poor's® (S&P®) Custom Air Transportation Index but lagging the S&P 500. Versus the industry-specific index, a combination of favorable stock selection and a modest underweighting in the category of air freight and logistics added value, as did stock picking in the aerospace and defense group. A slight underweighting in airlines, on average, benefited our results, but the positive impact there was muted by weak stock selection. A modest cash position further helped. Underweighting Canadian business jet maker Bombardier was helpful, as demand in that space began to deteriorate during the summer and by the end of the period was extremely depressed. A lighter-than-index exposure to Southwest Airlines also was helpful given the company's fuel-hedging program, which protected it when fuel prices were soaring but offset many of the benefits of sharply falling fuel prices later in the period. Additionally, the company was slow to reduce capacity in the face of plummeting demand. Timely positioning in Continental Airlines had a positive effect as well, as did underweighting poorly performing industrial conglomerate Textron. I'll also mention Alaska Air Group, a regional carrier whose stock posted a relatively mild loss. Conversely, stock selection in the out-of-benchmark segment of diversified metals and mining - mainly due to a position in Titanium Metals - was counterproductive. Production delays at two key commercial aircraft manufacturers clouded the demand outlook for the metal, while titanium suppliers ramped up production to what I thought were unsustainable levels. Consequently, I sold the stock. Elsewhere, underweighting Ireland's Ryanair proved to be a mistake, as my concerns about excess capacity and weak demand in the company's European markets were misplaced. Unfavorable positioning in Hawaiian, an airline primarily providing service between Hawaii and the U.S. mainland, further curbed our results. Our holdings in airlines UAL and AMR, parent companies of United Air Lines and American Airlines, respectively, modestly detracted as well. In absolute terms, strength in the U.S. dollar undercut the performance of the fund's foreign holdings.
Note to shareholders: John Mirshekari will become Portfolio Manager of Select Air Transportation Portfolio on April 1, 2009.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Delta Air Lines, Inc. | 10.4 | 7.0 |
The Boeing Co. | 9.2 | 5.9 |
Precision Castparts Corp. | 8.9 | 7.0 |
FedEx Corp. | 7.0 | 6.6 |
United Parcel Service, Inc. Class B | 6.1 | 7.1 |
Spirit AeroSystems Holdings, Inc. Class A | 5.1 | 3.8 |
Continental Airlines, Inc. Class B | 4.8 | 4.9 |
Ryanair Holdings PLC sponsored ADR | 4.4 | 2.3 |
Alaska Air Group, Inc. | 4.3 | 1.8 |
Goodrich Corp. | 4.1 | 1.6 |
| 64.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Airlines | 46.3% |
| |
Aerospace & Defense | 31.3% |
| |
Air Freight & Logistics | 20.6% |
| |
Industrial Conglomerates | 3.4% |
| |
Oil, Gas & Consumable Fuels | 0.0% |
| |
All Others† | (1.6)% |
|
|
As of August 31, 2008 | |||
Airlines | 45.6% |
| |
Aerospace & Defense | 27.8% |
| |
Air Freight & Logistics | 21.4% |
| |
Industrial Conglomerates | 3.4% |
| |
Oil, Gas & Consumable Fuels | 0.3% |
| |
All Others* | 1.5% |
|
† Short-term investments and net other assets are not included in the pie chart. |
* Includes short-term investments and net other assets. |
Annual Report
Select Air Transportation Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 101.4% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 31.3% | |||
Aerospace & Defense - 31.3% | |||
Bombardier, Inc. Class B (sub. vtg.) | 367,100 | $ 854,157 | |
Goodrich Corp. | 42,800 | 1,418,392 | |
Precision Castparts Corp. | 56,000 | 3,104,080 | |
Rockwell Collins, Inc. | 17,400 | 542,880 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 180,200 | 1,787,584 | |
The Boeing Co. | 102,100 | 3,210,024 | |
| 10,917,117 | ||
AIR FREIGHT & LOGISTICS - 20.6% | |||
Air Freight & Logistics - 20.6% | |||
Atlas Air Worldwide Holdings, Inc. (a) | 4,500 | 63,630 | |
Expeditors International of Washington, Inc. | 42,000 | 1,157,100 | |
FedEx Corp. | 56,650 | 2,447,847 | |
Forward Air Corp. | 18,400 | 306,176 | |
United Parcel Service, Inc. Class B | 51,900 | 2,137,242 | |
UTI Worldwide, Inc. | 89,000 | 1,093,810 | |
| 7,205,805 | ||
AIRLINES - 46.1% | |||
Airlines - 46.1% | |||
ACE Aviation Holdings, Inc. Class A | 24,900 | 125,268 | |
AirTran Holdings, Inc. (a) | 293,600 | 877,864 | |
Alaska Air Group, Inc. (a) | 68,700 | 1,505,217 | |
Allegiant Travel Co. (a)(d) | 18,400 | 631,488 | |
AMR Corp. (a) | 224,900 | 919,841 | |
Continental Airlines, Inc. Class B (a)(d) | 168,100 | 1,684,362 | |
Delta Air Lines, Inc. (a) | 717,466 | 3,608,854 | |
ExpressJet Holdings, Inc. (a) | 20 | 27 | |
Frontier Airlines Holdings, Inc. (a) | 5 | 1 | |
Hawaiian Holdings, Inc. (a) | 92,600 | 293,542 | |
JetBlue Airways Corp. (a) | 304,900 | 1,161,669 | |
Pinnacle Airlines Corp. (a) | 49,600 | 69,440 | |
Republic Airways Holdings, Inc. (a) | 21,400 | 148,088 | |
Ryanair Holdings PLC sponsored ADR (a)(d) | 64,400 | 1,535,296 | |
SkyWest, Inc. | 34,000 | 348,160 | |
Southwest Airlines Co. | 125,000 | 736,250 | |
UAL Corp. (a)(d) | 149,700 | 735,027 | |
US Airways Group, Inc. (a)(d) | 186,566 | 531,713 | |
WestJet Airlines Ltd. (a) | 118,550 | 1,181,633 | |
| 16,093,740 | ||
| |||
Shares | Value | ||
INDUSTRIAL CONGLOMERATES - 3.4% | |||
Industrial Conglomerates - 3.4% | |||
Textron, Inc. | 211,200 | $ 1,193,280 | |
OIL, GAS & CONSUMABLE FUELS - 0.0% | |||
Oil & Gas Storage & Transport - 0.0% | |||
Ship Finance International Ltd. (NY Shares) | 18 | 154 | |
TOTAL COMMON STOCKS (Cost $61,109,714) | 35,410,096 |
Nonconvertible Bonds - 0.2% | ||||
| Principal Amount |
| ||
AIRLINES - 0.2% | ||||
Airlines - 0.2% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 3,500,000 | 70,000 |
Money Market Funds - 13.5% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 164,282 | 164,282 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,538,900 | 4,538,900 | |
TOTAL MONEY MARKET FUNDS (Cost $4,703,182) | 4,703,182 | ||
TOTAL INVESTMENT PORTFOLIO - 115.1% (Cost $65,883,240) | 40,183,278 | ||
NET OTHER ASSETS - (15.1)% | (5,272,628) | ||
NET ASSETS - 100% | $ 34,910,650 |
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 | $ 24,929 |
Fidelity Securities Lending Cash Central Fund | 52,127 |
Total | $ 77,056 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 40,183,278 | $ 40,113,278 | $ - | $ 70,000 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (35,370) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | (34,630) |
Transfer in/out of Level 3 | 140,000 |
Ending Balance | $ 70,000 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.3% |
Canada | 6.2% |
Ireland | 4.4% |
British Virgin Islands | 3.1% |
Others (individually less than 1%) | 0.0% |
| 100.0% |
Income Tax Information |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $3,807,866 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,095,384) - See accompanying schedule: Unaffiliated issuers | $ 35,480,096 |
|
Fidelity Central Funds (cost $4,703,182) | 4,703,182 |
|
Total Investments (cost $65,883,240) |
| $ 40,183,278 |
Receivable for investments sold | 757,287 | |
Receivable for fund shares sold | 89,524 | |
Dividends receivable | 94,899 | |
Distributions receivable from Fidelity Central Funds | 2,543 | |
Prepaid expenses | 339 | |
Other receivables | 492 | |
Total assets | 41,128,362 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 1,612,198 | |
Accrued management fee | 22,346 | |
Other affiliated payables | 16,368 | |
Other payables and accrued expenses | 27,900 | |
Collateral on securities loaned, at value | 4,538,900 | |
Total liabilities | 6,217,712 | |
|
|
|
Net Assets | $ 34,910,650 | |
Net Assets consist of: |
| |
Paid in capital | $ 65,556,754 | |
Undistributed net investment income | 4 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,945,908) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (25,700,200) | |
Net Assets, for 2,011,833 shares outstanding | $ 34,910,650 | |
Net Asset Value, offering price and redemption price per share ($34,910,650 ÷ 2,011,833 shares) | $ 17.35 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 231,967 |
Interest |
| 1,167 |
Income from Fidelity Central Funds (including $52,127 from security lending) |
| 77,056 |
Total income |
| 310,190 |
|
|
|
Expenses | ||
Management fee | $ 248,602 | |
Transfer agent fees | 136,155 | |
Accounting and security lending fees | 18,570 | |
Custodian fees and expenses | 7,809 | |
Independent trustees' compensation | 238 | |
Registration fees | 24,820 | |
Audit | 35,532 | |
Legal | 237 | |
Miscellaneous | 4,682 | |
Total expenses before reductions | 476,645 | |
Expense reductions | (3,917) | 472,728 |
Net investment income (loss) | (162,538) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (4,356,161) | |
Foreign currency transactions | (7,518) | |
Total net realized gain (loss) |
| (4,363,679) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (28,696,464) | |
Assets and liabilities in foreign currencies | (238) | |
Total change in net unrealized appreciation (depreciation) |
| (28,696,702) |
Net gain (loss) | (33,060,381) | |
Net increase (decrease) in net assets resulting from operations | $ (33,222,919) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Fund Name
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (162,538) | $ (59,083) |
Net realized gain (loss) | (4,363,679) | 12,472,733 |
Change in net unrealized appreciation (depreciation) | (28,696,702) | (21,762,283) |
Net increase (decrease) in net assets resulting from operations | (33,222,919) | (9,348,633) |
Distributions to shareholders from net realized gain | (3,673,839) | (8,187,067) |
Share transactions Proceeds from sales of shares | 76,536,947 | 32,946,702 |
Reinvestment of distributions | 3,509,136 | 7,857,086 |
Cost of shares redeemed | (55,210,430) | (123,642,326) |
Net increase (decrease) in net assets resulting from share transactions | 24,835,653 | (82,838,538) |
Redemption fees | 28,948 | 15,284 |
Total increase (decrease) in net assets | (12,032,157) | (100,358,954) |
|
|
|
Net Assets | ||
Beginning of period | 46,942,807 | 147,301,761 |
End of period (including undistributed net investment income of $4 and accumulated net investment loss of $4, respectively) | $ 34,910,650 | $ 46,942,807 |
Other Information Shares |
|
|
Sold | 2,864,984 | 667,471 |
Issued in reinvestment of distributions | 108,007 | 172,279 |
Redeemed | (2,213,883) | (2,490,225) |
Net increase (decrease) | 759,108 | (1,650,475) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.47 | $ 50.74 | $ 43.14 | $ 33.46 | $ 30.04 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.10) | (.04) F | (.06) | (.04) | .07 |
Net realized and unrealized gain (loss) | (17.05) | (7.61) | 8.48 | 10.44 | 3.73 |
Total from investment operations | (17.15) | (7.65) | 8.42 | 10.40 | 3.80 |
Distributions from net investment income | - | - | - | (.01) | (.06) |
Distributions from net realized gain | (2.99) | (5.63) | (.86) | (.75) | (.36) |
Total distributions | (2.99) | (5.63) | (.86) | (.76) | (.42) |
Redemption fees added to paid in capital C | .02 | .01 | .04 | .04 | .04 |
Net asset value, end of period | $ 17.35 | $ 37.47 | $ 50.74 | $ 43.14 | $ 33.46 |
Total Return A,B | (49.44)% | (16.72)% | 19.81% | 31.40% | 12.92% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | 1.08% | 1.01% | 1.00% | 1.16% | 1.23% |
Expenses net of fee waivers, if any | 1.08% | 1.01% | 1.00% | 1.16% | 1.23% |
Expenses net of all reductions | 1.07% | 1.01% | .99% | 1.11% | 1.21% |
Net investment income (loss) | (.37)% | (.08)% F | (.12)% | (.11)% | .22% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 34,911 | $ 46,943 | $ 147,302 | $ 117,641 | $ 35,292 |
Portfolio turnover rate E | 66% | 47% | 165% | 93% | 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 $.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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Defense and Aerospace Portfolio | -47.61% | -1.17% | 5.18% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Defense and Aerospace Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Maurice FitzMaurice, Portfolio Manager of Select Defense and Aerospace Portfolio: During the past year, the fund returned -47.61%, trailing the -46.22% result of the MSCI® US Investable Market Aerospace & Defense Index and the S&P 500. Versus the MSCI index, stock selection in a number of out-of-index categories, including industrial conglomerates, airlines, diversified metals and mining, and steel, held back performance. The largest detractor was an out-of-index position in industrial conglomerate Textron. The stock sustained a loss of roughly 90% due to the company's business jet exposure and concerns about losses at its finance division. A significant overweighting in Spirit AeroSystems had a negative impact on our results and, among our pure defense names, underweighting benchmark component Raytheon also detracted. United Technologies, the largest component of the MSCI index, was a detractor because it outperformed, and even after I increased the position, the fund's weighting remained smaller than the index's huge exposure. An overweighting in BE Aerospace, which makes aircraft cabin interiors, proved unrewarding as well. Conversely, stock picking added some value in electrical components and equipment, construction and farm machinery/heavy trucks, and communications equipment, which also were out-of-index groups. An out-of-index position in Force Protection, a maker of MRAP (mine resistant ambush protected) military vehicles, aided fund performance. The stock had suffered a massive sell-off toward the end of 2007 and recovered during the period on the possibility of MRAP use in Afghanistan. DRS Technologies, a defense electronics contractor, was acquired at a premium price by a European firm. An out-of-index position in Harris Corp., which manufactures tactical radios for the Army, also helped, as did underweighting defense contractor Northrop Grumman and aircraft manufacturer Boeing.
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 & Aerospace Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 16.4 | 15.0 |
The Boeing Co. | 13.9 | 12.6 |
Honeywell International, Inc. | 10.0 | 9.1 |
Lockheed Martin Corp. | 8.7 | 12.1 |
Precision Castparts Corp. | 5.0 | 4.6 |
L-3 Communications Holdings, Inc. | 4.9 | 4.8 |
Raytheon Co. | 4.8 | 4.8 |
Northrop Grumman Corp. | 4.7 | 4.8 |
General Dynamics Corp. | 4.6 | 4.8 |
Goodrich Corp. | 3.7 | 2.0 |
| 76.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Aerospace & Defense | 92.3% |
| |
Airlines | 1.3% |
| |
Machinery | 1.2% |
| |
Industrial Conglomerates | 0.9% |
| |
Communications Equipment | 0.8% |
| |
All Others* | 3.5% |
|
|
As of August 31, 2008 | |||
Aerospace & Defense | 91.2% |
| |
Communications Equipment | 1.6% |
| |
Airlines | 1.1% |
| |
Industrial Conglomerates | 0.7% |
| |
Metals & Mining | 0.7% |
| |
All Others* | 4.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Defense & Aerospace Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 92.3% | |||
Aerospace & Defense - 92.3% | |||
AAR Corp. (a) | 122,500 | $ 1,619,450 | |
AeroVironment, Inc. (a)(d) | 10,000 | 312,200 | |
Alliant Techsystems, Inc. (a) | 197,200 | 13,934,152 | |
BE Aerospace, Inc. (a)(d) | 468,800 | 3,497,248 | |
Curtiss-Wright Corp. | 197,000 | 5,238,230 | |
DynCorp International, Inc. Class A (a) | 159,900 | 1,949,181 | |
Esterline Technologies Corp. (a) | 95,000 | 2,407,300 | |
GenCorp, Inc. (non-vtg.) (a) | 184,700 | 467,291 | |
General Dynamics Corp. | 461,930 | 20,241,773 | |
Goodrich Corp. | 492,150 | 16,309,851 | |
Hexcel Corp. (a) | 253,400 | 1,573,614 | |
Honeywell International, Inc. | 1,623,200 | 43,550,456 | |
L-3 Communications Holdings, Inc. | 318,200 | 21,526,230 | |
Lockheed Martin Corp. | 601,300 | 37,948,043 | |
Moog, Inc. Class A (a) | 230,600 | 5,361,450 | |
Northrop Grumman Corp. | 546,400 | 20,413,504 | |
Orbital Sciences Corp. (a) | 196,792 | 2,784,607 | |
Precision Castparts Corp. | 393,000 | 21,783,990 | |
Raytheon Co. | 525,252 | 20,994,322 | |
Rockwell Collins, Inc. | 412,100 | 12,857,520 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 1,043,000 | 10,346,560 | |
The Boeing Co. | 1,930,166 | 60,684,419 | |
TransDigm Group, Inc. (a) | 60,200 | 2,127,468 | |
Triumph Group, Inc. | 93,700 | 3,384,444 | |
United Technologies Corp. | 1,749,700 | 71,440,252 | |
| 402,753,555 | ||
AIRLINES - 1.3% | |||
Airlines - 1.3% | |||
AMR Corp. (a) | 413,500 | 1,691,215 | |
Delta Air Lines, Inc. (a) | 559,175 | 2,812,650 | |
UAL Corp. (a) | 90,900 | 446,319 | |
US Airways Group, Inc. (a) | 166,600 | 474,810 | |
| 5,424,994 | ||
COMMUNICATIONS EQUIPMENT - 0.8% | |||
Communications Equipment - 0.8% | |||
Harris Corp. | 95,600 | 3,563,968 | |
INDUSTRIAL CONGLOMERATES - 0.9% | |||
Industrial Conglomerates - 0.9% | |||
Textron, Inc. | 686,100 | 3,876,465 | |
| |||
Shares | Value | ||
IT SERVICES - 0.2% | |||
IT Consulting & Other Services - 0.2% | |||
CACI International, Inc. Class A (a) | 19,500 | $ 834,015 | |
MACHINERY - 1.2% | |||
Construction & Farm Machinery & Heavy Trucks - 1.2% | |||
Force Protection, Inc. (a) | 498,553 | 2,572,533 | |
Navistar International Corp. (a) | 92,000 | 2,594,400 | |
| 5,166,933 | ||
METALS & MINING - 0.8% | |||
Diversified Metals & Mining - 0.2% | |||
RTI International Metals, Inc. (a) | 72,200 | 782,648 | |
Steel - 0.6% | |||
Allegheny Technologies, Inc. | 43,200 | 849,744 | |
Carpenter Technology Corp. | 140,800 | 1,928,960 | |
| 2,778,704 | ||
TOTAL METALS & MINING | 3,561,352 | ||
TOTAL COMMON STOCKS (Cost $732,726,551) | 425,181,282 | ||
Money Market Funds - 0.3% | |||
|
|
|
|
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 1,513,550 | 1,513,550 | |
TOTAL INVESTMENT PORTFOLIO - 97.8% (Cost $734,240,101) | 426,694,832 | ||
NET OTHER ASSETS - 2.2% | 9,595,842 | ||
NET ASSETS - 100% | $ 436,290,674 |
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 | $ 106,787 |
Fidelity Securities Lending Cash Central Fund | 168,730 |
Total | $ 275,517 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 426,694,832 | $ 426,694,832 | $ - | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $19,754,144 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $23,718,513 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,400,726) - See accompanying schedule: Unaffiliated issuers | $ 425,181,282 |
|
Fidelity Central Funds | 1,513,550 |
|
Total Investments |
| $ 426,694,832 |
Receivable for investments sold | 12,156,386 | |
Receivable for fund shares sold | 367,489 | |
Dividends receivable | 2,919,070 | |
Distributions receivable from Fidelity Central Funds | 7,130 | |
Prepaid expenses | 6,212 | |
Other receivables | 85 | |
Total assets | 442,151,204 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 2,671,919 | |
Payable for fund shares redeemed | 1,237,767 | |
Accrued management fee | 246,007 | |
Other affiliated payables | 159,801 | |
Other payables and accrued expenses | 31,486 | |
Collateral on securities loaned, at value | 1,513,550 | |
Total liabilities | 5,860,530 | |
|
|
|
Net Assets | $ 436,290,674 | |
Net Assets consist of: |
| |
Paid in capital | $ 789,547,431 | |
Undistributed net investment income | 3,073,309 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (48,784,797) | |
Net unrealized appreciation (depreciation) on investments | (307,545,269) | |
Net Assets, for 11,197,389 shares outstanding | $ 436,290,674 | |
Net Asset Value, offering price and redemption price per share ($436,290,674 ÷ 11,197,389 shares) | $ 38.96 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 14,870,874 |
Interest |
| 7,207 |
Income from Fidelity Central Funds (including $168,730 from security lending) |
| 275,517 |
Total income |
| 15,153,598 |
|
|
|
Expenses | ||
Management fee | $ 4,713,753 | |
Transfer agent fees | 2,265,129 | |
Accounting and security lending fees | 292,187 | |
Custodian fees and expenses | 21,974 | |
Independent trustees' compensation | 4,500 | |
Registration fees | 42,668 | |
Audit | 38,025 | |
Legal | 5,267 | |
Interest | 7,510 | |
Miscellaneous | 72,554 | |
Total expenses before reductions | 7,463,567 | |
Expense reductions | (4,765) | 7,458,802 |
Net investment income (loss) | 7,694,796 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (47,457,863) | |
Foreign currency transactions | (1,976) | |
Total net realized gain (loss) |
| (47,459,839) |
Change in net unrealized appreciation (depreciation) on investment securities | (427,448,553) | |
Net gain (loss) | (474,908,392) | |
Net increase (decrease) in net assets resulting from operations | $ (467,213,596) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 7,694,796 | $ 3,629,409 |
Net realized gain (loss) | (47,459,839) | 132,547,419 |
Change in net unrealized appreciation (depreciation) | (427,448,553) | (110,925,120) |
Net increase (decrease) in net assets resulting from operations | (467,213,596) | 25,251,708 |
Distributions to shareholders from net investment income | (6,223,008) | (2,154,171) |
Distributions to shareholders from net realized gain | (69,243,502) | (106,507,666) |
Total distributions | (75,466,510) | (108,661,837) |
Share transactions | 122,993,316 | 568,779,773 |
Reinvestment of distributions | 71,936,256 | 103,468,716 |
Cost of shares redeemed | (423,855,861) | (584,357,467) |
Net increase (decrease) in net assets resulting from share transactions | (228,926,289) | 87,891,022 |
Redemption fees | 30,355 | 91,811 |
Total increase (decrease) in net assets | (771,576,040) | 4,572,704 |
|
|
|
Net Assets | ||
Beginning of period | 1,207,866,714 | 1,203,294,010 |
End of period (including undistributed net investment income of $3,073,309 and undistributed net investment income of $1,909,243, respectively) | $ 436,290,674 | $ 1,207,866,714 |
Other Information Shares | ||
Sold | 1,915,383 | 6,374,164 |
Issued in reinvestment of distributions | 1,006,601 | 1,205,425 |
Redeemed | (6,835,961) | (6,714,951) |
Net increase (decrease) | (3,913,977) | 864,638 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 79.93 | $ 84.46 | $ 78.91 | $ 67.18 | $ 55.07 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .58 | .24 | .08 | .13 | .25 |
Net realized and unrealized gain (loss) | (36.29) | 2.46 | 12.07 | 15.04 | 12.28 |
Total from investment operations | (35.71) | 2.70 | 12.15 | 15.17 | 12.53 |
Distributions from net investment income | (.51) | (.14) | (.05) | (.11) | (.19) |
Distributions from net realized gain | (4.75) | (7.10) | (6.56) | (3.34) | (.25) |
Total distributions | (5.26) | (7.24) | (6.61) | (3.45) | (.44) |
Redemption fees added to paid in capital C | - H | .01 | .01 | .01 | .02 |
Net asset value, end of period | $ 38.96 | $ 79.93 | $ 84.46 | $ 78.91 | $ 67.18 |
Total Return A,B | (47.61)% | 2.80% | 15.90% | 23.02% | 22.82% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .88% | .87% | .92% | .97% | 1.02% |
Expenses net of fee waivers, if any | .88% | .87% | .92% | .97% | 1.02% |
Expenses net of all reductions | .88% | .87% | .92% | .95% | 1.00% |
Net investment income (loss) | .91% | .27% | .10% | .19% | .41% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 436,291 | $ 1,207,867 | $ 1,203,294 | $ 902,049 | $ 583,116 |
Portfolio turnover rate E | 58% | 57% | 82% | 50% | 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 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Environmental Portfolio | -37.88% | -3.64% | -1.44% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Environmental Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Douglas Simmons, who became Portfolio Manager of Select Environmental Portfolio on February 28, 2009: For the year, the fund declined 37.88%, outperforming the 52.70% drop in the MSCI® US Investable Market Industrials Index and the S&P 500. Relative to the MSCI index, the fund benefited significantly from a sizable overweighting and good stock selection in the outperforming environmental/facilities services industry. Not owning any industrial conglomerates - a big part of the index and a group that was down significantly during the period - also helped, as did the relatively strong performance of out-of-benchmark positions in specialty chemicals and favorable security selection in industrial machinery. Conversely, out-of-benchmark positions in multi-utilities and food retailers detracted, as did not owning aerospace and defense stocks, a segment that did better than the index overall. The main contributor to relative performance was not owning industrial conglomerate and benchmark heavyweight General Electric. Large overweightings in three waste management firms also helped: Waste Management, Republic Services and Waste Connections. Further contributions came from an out-of-benchmark investment in specialty chemicals company Ecolab, as well as the strong performance of medical waste services provider Stericycle. Three out-of-benchmark positions detracted: Paris-based multi-utility Veolia Environnement, food retailer Whole Foods Market and construction materials firm Headwaters. Performance was dampened further by not owning two index components that outperformed: aerospace and defense firm United Technologies and industrial conglomerate 3M.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Veolia Environnement sponsored ADR | 13.0 | 7.2 |
Ecolab, Inc. | 11.4 | 11.0 |
Waste Management, Inc. | 8.6 | 9.8 |
Republic Services, Inc. | 8.2 | 9.5 |
Stericycle, Inc. | 6.6 | 4.5 |
Nalco Holding Co. | 4.6 | 2.4 |
Pall Corp. | 4.2 | 3.4 |
Clean Harbors, Inc. | 4.1 | 3.4 |
Calgon Carbon Corp. | 4.1 | 2.2 |
Tetra Tech, Inc. | 4.0 | 2.9 |
| 68.8 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Commercial Services & Supplies | 38.1% |
| |
Chemicals | 20.1% |
| |
Multi-Utilities | 13.0% |
| |
Machinery | 9.8% |
| |
Independent Power Producers & Energy Traders | 1.9% |
| |
All Others* | 17.1% |
|
|
As of August 31, 2008 | |||
Commercial Services & Supplies | 45.2% |
| |
Chemicals | 16.2% |
| |
Machinery | 15.7% |
| |
Multi-Utilities | 7.2% |
| |
Electrical Equipment | 4.6% |
| |
All Others* | 11.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Environmental Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 89.1% | |||
Shares | Value | ||
BUILDING PRODUCTS - 1.2% | |||
Building Products - 1.2% | |||
Trex Co., Inc. (a)(d) | 50,000 | $ 450,500 | |
CHEMICALS - 20.1% | |||
Commodity Chemicals - 4.1% | |||
Calgon Carbon Corp. (a) | 109,000 | 1,596,850 | |
Specialty Chemicals - 16.0% | |||
Ecolab, Inc. | 139,300 | 4,426,954 | |
Nalco Holding Co. | 159,100 | 1,808,967 | |
| 6,235,921 | ||
TOTAL CHEMICALS | 7,832,771 | ||
COMMERCIAL SERVICES & SUPPLIES - 38.1% | |||
Environmental & Facility Services - 38.1% | |||
Bennett Environmental, Inc. (a) | 45,100 | 7,977 | |
Clean Harbors, Inc. (a) | 33,100 | 1,607,998 | |
Covanta Holding Corp. (a) | 72,300 | 1,101,129 | |
Republic Services, Inc. | 161,055 | 3,204,995 | |
Stericycle, Inc. (a) | 53,460 | 2,565,011 | |
Tetra Tech, Inc. (a) | 69,900 | 1,565,760 | |
TRC Companies, Inc. (a) | 8,700 | 24,012 | |
Waste Connections, Inc. (a) | 60,450 | 1,441,128 | |
Waste Management, Inc. | 124,093 | 3,350,511 | |
Waste Services, Inc. (a) | 1,000 | 4,350 | |
| 14,872,871 | ||
CONSTRUCTION MATERIALS - 0.3% | |||
Construction Materials - 0.3% | |||
Headwaters, Inc. (a) | 59,800 | 118,404 | |
ELECTRICAL EQUIPMENT - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
FuelCell Energy, Inc. (a) | 600 | 1,656 | |
Hydrogenics Corp. (a) | 3,300 | 1,122 | |
| 2,778 | ||
Heavy Electrical Equipment - 0.0% | |||
Vestas Wind Systems AS (a) | 100 | 4,353 | |
TOTAL ELECTRICAL EQUIPMENT | 7,131 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.3% | |||
Electronic Equipment & Instruments - 1.3% | |||
Itron, Inc. (a)(d) | 11,700 | 522,522 | |
ENERGY EQUIPMENT & SERVICES - 1.7% | |||
Oil & Gas Equipment & Services - 1.7% | |||
Newpark Resources, Inc. (a) | 217,000 | 644,490 | |
FOOD & STAPLES RETAILING - 1.7% | |||
Food Retail - 1.7% | |||
Whole Foods Market, Inc. (d) | 55,700 | 676,755 | |
| |||
Shares | Value | ||
FOOD PRODUCTS - 0.0% | |||
Packaged Foods & Meats - 0.0% | |||
Hain Celestial Group, Inc. (a) | 100 | $ 1,408 | |
SunOpta, Inc. (a) | 800 | 896 | |
| 2,304 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 1.9% | |||
Independent Power Producers & Energy Traders - 1.9% | |||
Ormat Technologies, Inc. | 28,200 | 724,458 | |
MACHINERY - 9.8% | |||
Construction & Farm Machinery & Heavy Trucks - 1.2% | |||
Lindsay Corp. (d) | 20,100 | 487,425 | |
Industrial Machinery - 8.6% | |||
CLARCOR, Inc. | 55,800 | 1,470,888 | |
ESCO Technologies, Inc. (a) | 7,000 | 227,570 | |
Pall Corp. | 69,700 | 1,656,769 | |
| 3,355,227 | ||
TOTAL MACHINERY | 3,842,652 | ||
MULTI-UTILITIES - 13.0% | |||
Multi-Utilities - 13.0% | |||
Veolia Environnement sponsored ADR | 234,700 | 5,053,090 | |
TOTAL COMMON STOCKS (Cost $46,429,927) | 34,747,948 | ||
Money Market Funds - 6.7% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 697,906 | 697,906 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 1,920,500 | 1,920,500 | |
TOTAL MONEY MARKET FUNDS (Cost $2,618,406) | 2,618,406 | ||
TOTAL INVESTMENT PORTFOLIO - 95.8% (Cost $49,048,333) | 37,366,354 | ||
NET OTHER ASSETS - 4.2% | 1,637,944 | ||
NET ASSETS - 100% | $ 39,004,298 |
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 | $ 32,882 |
Fidelity Securities Lending Cash Central Fund | 87,961 |
Total | $ 120,843 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 37,366,354 | $ 37,362,001 | $ 4,353 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.0% |
France | 13.0% |
Others (individually less than 1%) | 0.0% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $4,303,568 of which $657,634 and $3,645,934 will expire on February 28, 2015 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $4,318,014 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Environmental Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,759,630) - See accompanying schedule: Unaffiliated issuers (cost $46,429,927) | $ 34,747,948 |
|
Fidelity Central Funds (cost $2,618,406) | 2,618,406 |
|
Total Investments (cost $49,048,333) |
| $ 37,366,354 |
Receivable for investments sold | 3,486,197 | |
Receivable for fund shares sold | 171,621 | |
Dividends receivable | 6,923 | |
Distributions receivable from Fidelity Central Funds | 3,424 | |
Prepaid expenses | 374 | |
Other receivables | 313 | |
Total assets | 41,035,206 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | 49,935 | |
Accrued management fee | 19,948 | |
Other affiliated payables | 12,290 | |
Other payables and accrued expenses | 28,235 | |
Collateral on securities loaned, at value | 1,920,500 | |
Total liabilities | 2,030,908 | |
|
|
|
Net Assets | $ 39,004,298 | |
Net Assets consist of: |
| |
Paid in capital | $ 62,016,924 | |
Accumulated net investment loss | (43) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,330,604) | |
Net unrealized appreciation (depreciation) on investments | (11,681,979) | |
Net Assets, for 3,566,816 shares outstanding | $ 39,004,298 | |
Net Asset Value, offering price and redemption price per share ($39,004,298 ÷ 3,566,816 shares) | $ 10.94 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 524,855 |
Interest |
| 506 |
Income from Fidelity Central Funds (including $87,961 from security lending) |
| 120,843 |
Total income |
| 646,204 |
|
|
|
Expenses | ||
Management fee | $ 253,624 | |
Transfer agent fees | 136,550 | |
Accounting and security lending fees | 19,262 | |
Custodian fees and expenses | 7,676 | |
Independent trustees' compensation | 158 | |
Registration fees | 20,774 | |
Audit | 35,535 | |
Legal | 319 | |
Miscellaneous | 4,954 | |
Total expenses before reductions | 478,852 | |
Expense reductions | (1,135) | 477,717 |
Net investment income (loss) | 168,487 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (10,394,199) | |
Foreign currency transactions | 2,723 | |
Total net realized gain (loss) |
| (10,391,476) |
Change in net unrealized appreciation (depreciation) on investment securities | (11,224,683) | |
Net gain (loss) | (21,616,159) | |
Net increase (decrease) in net assets resulting from operations | $ (21,447,672) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 168,487 | $ 87,425 |
Net realized gain (loss) | (10,391,476) | 3,330,388 |
Change in net unrealized appreciation (depreciation) | (11,224,683) | (2,298,812) |
Net increase (decrease) in net assets resulting from operations | (21,447,672) | 1,119,001 |
Distributions to shareholders from net investment income | (218,293) | (134,764) |
Share transactions | 61,995,113 | 28,716,456 |
Reinvestment of distributions | 201,149 | 128,530 |
Cost of shares redeemed | (40,040,427) | (37,701,054) |
Net increase (decrease) in net assets resulting from share transactions | 22,155,835 | (8,856,068) |
Redemption fees | 4,917 | 4,778 |
Total increase (decrease) in net assets | 494,787 | (7,867,053) |
|
|
|
Net Assets | ||
Beginning of period | 38,509,511 | 46,376,564 |
End of period (including accumulated net investment loss of $43 and accumulated net investment loss of $229, respectively) | $ 39,004,298 | $ 38,509,511 |
Other Information Shares | ||
Sold | 3,936,887 | 1,562,983 |
Issued in reinvestment of distributions | 16,194 | 6,588 |
Redeemed | (2,561,068) | (2,089,625) |
Net increase (decrease) | 1,392,013 | (520,054) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 17.71 | $ 17.21 | $ 17.35 | $ 13.80 | $ 13.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .06 | .04 | (.02) | (.02) | (.14) |
Net realized and unrealized gain (loss) | (6.76) | .53 | (.14) | 3.55 | .64 |
Total from investment operations | (6.70) | .57 | (.16) | 3.53 | .50 |
Distributions from net investment income | (.07) | (.07) | - | - | - |
Redemption fees added to paid in capital C | - H | - H | .02 | .02 | .01 |
Net asset value, end of period | $ 10.94 | $ 17.71 | $ 17.21 | $ 17.35 | $ 13.80 |
Total Return A,B | (37.88)% | 3.27% | (.81)% | 25.72% | 3.84% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.06% | 1.08% | 1.11% | 1.40% | 1.87% |
Expenses net of fee waivers, if any | 1.06% | 1.08% | 1.11% | 1.25% | 1.83% |
Expenses net of all reductions | 1.06% | 1.07% | 1.09% | 1.16% | 1.74% |
Net investment income (loss) | .37% | .22% | (.12)% | (.14)% | (1.06)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,004 | $ 38,510 | $ 46,377 | $ 55,397 | $ 12,005 |
Portfolio turnover rate E | 107% | 76% | 224% | 166% | 220% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Industrial Equipment Portfolio | -55.46% | -6.82% | -1.31% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Industrial Equipment Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Jonathan Kasen, Portfolio Manager of Select Industrial Equipment Portfolio: During the past year, the fund returned - -55.46%, edging the -56.00% result of the MSCI® US Investable Market Capital Goods Index but lagging the S&P 500. Versus the MSCI index, the fund benefited from a significant underweighting in industrial conglomerates, particularly because of our relatively light exposure to General Electric (GE), which nevertheless was the fund's largest holding at period end. The stock lost almost three-quarters of its value amid concerns about GE's finance unit and fears about the impact of the increasingly severe global recession on the company's other divisions. Favorable stock picking in electrical components and equipment and in construction and farm machinery/heavy trucks also added value. Additionally, a modest cash position, which I allowed to drift higher as a defensive tactic, aided performance. Other contributors included three diversified industrial products companies - United Technologies, Danaher and AMETEK - as well as McDermott International, an energy-sensitive engineering and construction company that I bought near period end, after it had sold off to what I thought were excessively low levels. Conversely, my picks in industrial machinery held back our results, and weak stock picking in heavy electrical equipment outweighed the benefits of overweighting that group, which registered only a modest loss in the index. In absolute terms, the fund's foreign exposure detracted in view of the U.S. dollar's strength versus most foreign currencies. Not owning industrial conglomerate and major index component 3M hurt, as some investors saw that stock as a desirable defensive holding. Johnson Controls, an out-of-index position, was hampered in part because of lean times for its automotive interiors business. Fluid-handling systems maker Colfax - which I sold - - and building supplies distributor Masco detracted as well.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Portfolio
Select Industrial Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
General Electric Co. | 9.3 | 10.5 |
United Technologies Corp. | 8.8 | 6.7 |
Honeywell International, Inc. | 6.9 | 6.4 |
Emerson Electric Co. | 4.9 | 0.0 |
AMETEK, Inc. | 4.0 | 2.2 |
Danaher Corp. | 3.9 | 3.7 |
Lockheed Martin Corp. | 3.9 | 4.8 |
Cummins, Inc. | 3.6 | 3.3 |
Precision Castparts Corp. | 3.1 | 2.2 |
Siemens AG sponsored ADR | 2.8 | 2.5 |
| 51.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Aerospace & Defense | 27.0% |
| |
Electrical Equipment | 19.3% |
| |
Machinery | 17.6% |
| |
Industrial Conglomerates | 16.3% |
| |
Trading Companies & Distributors | 4.7% |
| |
All Others* | 15.1% |
|
|
As of August 31, 2008 | |||
Machinery | 37.5% |
| |
Aerospace & Defense | 24.9% |
| |
Industrial Conglomerates | 15.9% |
| |
Electrical Equipment | 11.8% |
| |
Auto Components | 3.9% |
| |
All Others* | 6.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Industrial Equipment Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 92.3% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 27.0% | |||
Aerospace & Defense - 27.0% | |||
Honeywell International, Inc. | 121,400 | $ 3,257,162 | |
Lockheed Martin Corp. | 29,400 | 1,855,434 | |
Precision Castparts Corp. | 26,300 | 1,457,809 | |
Raytheon Co. | 18,500 | 739,445 | |
Stanley, Inc. (a) | 7,400 | 229,474 | |
The Boeing Co. | 34,200 | 1,075,248 | |
United Technologies Corp. | 102,000 | 4,164,660 | |
| 12,779,232 | ||
AUTO COMPONENTS - 2.7% | |||
Auto Parts & Equipment - 2.1% | |||
BorgWarner, Inc. (d) | 19,500 | 336,375 | |
Federal-Mogul Corp. Class A (a) | 8,300 | 53,701 | |
Johnson Controls, Inc. | 53,600 | 609,968 | |
| 1,000,044 | ||
Tires & Rubber - 0.6% | |||
The Goodyear Tire & Rubber Co. (a) | 59,100 | 262,404 | |
TOTAL AUTO COMPONENTS | 1,262,448 | ||
BUILDING PRODUCTS - 3.0% | |||
Building Products - 3.0% | |||
Masco Corp. | 161,000 | 829,150 | |
Simpson Manufacturing Co. Ltd. (d) | 36,100 | 561,716 | |
| 1,390,866 | ||
CHEMICALS - 1.0% | |||
Diversified Chemicals - 0.6% | |||
Solutia, Inc. (a) | 75,800 | 284,250 | |
Industrial Gases - 0.4% | |||
Airgas, Inc. | 6,000 | 184,740 | |
TOTAL CHEMICALS | 468,990 | ||
ELECTRICAL EQUIPMENT - 19.3% | |||
Electrical Components & Equipment - 18.9% | |||
Acuity Brands, Inc. | 27,800 | 637,176 | |
AMETEK, Inc. | 71,050 | 1,879,983 | |
Chloride Group PLC | 79,100 | 147,005 | |
Cooper Industries Ltd. Class A | 33,400 | 704,406 | |
Emerson Electric Co. | 87,100 | 2,329,925 | |
First Solar, Inc. (a)(d) | 4,600 | 486,404 | |
Regal-Beloit Corp. | 21,200 | 608,016 | |
Rockwell Automation, Inc. | 53,700 | 1,079,370 | |
| |||
Shares | Value | ||
Roper Industries, Inc. | 22,000 | $ 909,700 | |
Saft Groupe SA | 6,700 | 152,696 | |
| 8,934,681 | ||
Heavy Electrical Equipment - 0.4% | |||
Vestas Wind Systems AS (a) | 4,600 | 200,252 | |
TOTAL ELECTRICAL EQUIPMENT | 9,134,933 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.7% | |||
Electronic Equipment & Instruments - 0.7% | |||
Rotork PLC | 30,675 | 312,408 | |
INDUSTRIAL CONGLOMERATES - 16.3% | |||
Industrial Conglomerates - 16.3% | |||
General Electric Co. | 515,555 | 4,387,374 | |
McDermott International, Inc. (a) | 43,200 | 509,328 | |
Siemens AG sponsored ADR (d) | 26,000 | 1,316,120 | |
Textron, Inc. | 44,900 | 253,685 | |
Tyco International Ltd. | 62,400 | 1,251,120 | |
| 7,717,627 | ||
MACHINERY - 17.6% | |||
Construction & Farm Machinery & Heavy Trucks - 8.9% | |||
Caterpillar, Inc. | 9,300 | 228,873 | |
Cummins, Inc. | 82,200 | 1,709,760 | |
Deere & Co. | 47,400 | 1,303,026 | |
Navistar International Corp. (a) | 35,100 | 989,820 | |
| 4,231,479 | ||
Industrial Machinery - 8.7% | |||
Danaher Corp. | 36,600 | 1,857,816 | |
Eaton Corp. | 3,300 | 119,295 | |
Graco, Inc. | 32,300 | 548,454 | |
Ingersoll-Rand Co. Ltd. Class A | 54,600 | 774,228 | |
John Bean Technologies Corp. | 38,700 | 375,003 | |
Middleby Corp. (a) | 4,500 | 97,875 | |
SPX Corp. | 7,200 | 318,816 | |
| 4,091,487 | ||
TOTAL MACHINERY | 8,322,966 | ||
TRADING COMPANIES & DISTRIBUTORS - 4.7% | |||
Trading Companies & Distributors - 4.7% | |||
Beacon Roofing Supply, Inc. (a) | 37,900 | 415,763 | |
Fastenal Co. (d) | 23,700 | 713,844 | |
Interline Brands, Inc. (a) | 73,000 | 579,620 | |
W.W. Grainger, Inc. | 7,600 | 502,816 | |
| 2,212,043 | ||
TOTAL COMMON STOCKS (Cost $74,003,086) | 43,601,513 | ||
Money Market Funds - 10.4% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 2,447,766 | $ 2,447,766 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 2,473,075 | 2,473,075 | |
TOTAL MONEY MARKET FUNDS (Cost $4,920,841) | 4,920,841 | ||
TOTAL INVESTMENT PORTFOLIO - 102.7% (Cost $78,923,927) | 48,522,354 | ||
NET OTHER ASSETS - (2.7)% | (1,262,548) | ||
NET ASSETS - 100% | $ 47,259,806 |
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 | $ 48,592 |
Fidelity Securities Lending Cash Central Fund | 39,748 |
Total | $ 88,340 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 48,522,354 | $ 47,709,993 | $ 812,361 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.7% |
Bermuda | 5.7% |
Germany | 2.8% |
Panama | 1.1% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 0.7% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $15,456,118 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $15,224,610 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $2,373,265) - See accompanying schedule: Unaffiliated issuers (cost $74,003,086) | $ 43,601,513 |
|
Fidelity Central Funds (cost $4,920,841) | 4,920,841 |
|
Total Investments (cost $78,923,927) |
| $ 48,522,354 |
Receivable for investments sold | 912,925 | |
Receivable for fund shares sold | 58,050 | |
Dividends receivable | 362,857 | |
Distributions receivable from Fidelity Central Funds | 6,649 | |
Prepaid expenses | 762 | |
Other receivables | 81 | |
Total assets | 49,863,678 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 21,050 | |
Payable for fund shares redeemed | 32,107 | |
Accrued management fee | 25,711 | |
Other affiliated payables | 17,286 | |
Other payables and accrued expenses | 34,643 | |
Collateral on securities loaned, at value | 2,473,075 | |
Total liabilities | 2,603,872 | |
|
|
|
Net Assets | $ 47,259,806 | |
Net Assets consist of: |
| |
Paid in capital | $ 112,314,568 | |
Undistributed net investment income | 305,731 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (34,957,008) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (30,403,485) | |
Net Assets, for 3,381,603 shares outstanding | $ 47,259,806 | |
Net Asset Value, offering price and redemption price per share ($47,259,806 ÷ 3,381,603 shares) | $ 13.98 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 2,359,527 |
Interest |
| 1,277 |
Income from Fidelity Central Funds (including $39,748 from security lending) |
| 88,340 |
Total income |
| 2,449,144 |
|
|
|
Expenses | ||
Management fee | $ 642,403 | |
Transfer agent fees | 263,437 | |
Accounting and security lending fees | 46,599 | |
Custodian fees and expenses | 22,544 | |
Independent trustees' compensation | 609 | |
Registration fees | 24,366 | |
Audit | 39,628 | |
Legal | 749 | |
Miscellaneous | 4,227 | |
Total expenses before reductions | 1,044,562 | |
Expense reductions | (3,710) | 1,040,852 |
Net investment income (loss) | 1,408,292 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (34,231,058) | |
Foreign currency transactions | (261) | |
Total net realized gain (loss) |
| (34,231,319) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (34,348,745) | |
Assets and liabilities in foreign currencies | (2,605) | |
Total change in net unrealized appreciation (depreciation) |
| (34,351,350) |
Net gain (loss) | (68,582,669) | |
Net increase (decrease) in net assets resulting from operations | $ (67,174,377) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 1,408,292 | $ 1,184,586 |
Net realized gain (loss) | (34,231,319) | 11,476,212 |
Change in net unrealized appreciation (depreciation) | (34,351,350) | (12,352,523) |
Net increase (decrease) in net assets resulting from operations | (67,174,377) | 308,275 |
Distributions to shareholders from net investment income | (1,289,984) | (873,074) |
Distributions to shareholders from net realized gain | (2,684,730) | (8,279,648) |
Total distributions | (3,974,714) | (9,152,722) |
Share transactions | 48,262,573 | 180,107,533 |
Reinvestment of distributions | 3,849,298 | 8,917,566 |
Cost of shares redeemed | (102,754,244) | (93,677,794) |
Net increase (decrease) in net assets resulting from share transactions | (50,642,373) | 95,347,305 |
Redemption fees | 6,077 | 14,587 |
Total increase (decrease) in net assets | (121,785,387) | 86,517,445 |
|
|
|
Net Assets | ||
Beginning of period | 169,045,193 | 82,527,748 |
End of period (including undistributed net investment income of $305,731 and undistributed net investment income of $554,537, respectively) | $ 47,259,806 | $ 169,045,193 |
Other Information Shares | ||
Sold | 1,720,009 | 5,037,479 |
Issued in reinvestment of distributions | 145,108 | 255,260 |
Redeemed | (3,693,123) | (2,703,266) |
Net increase (decrease) | (1,828,006) | 2,589,473 |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 32.45 | $ 31.50 | $ 29.15 | $ 26.85 | $ 24.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .33 | .28 | .18 | .07 | (.04) |
Net realized and unrealized gain (loss) | (17.96) | 2.73 F | 2.59 | 4.02 | 3.26 |
Total from investment operations | (17.63) | 3.01 | 2.77 | 4.09 | 3.22 |
Distributions from net investment income | (.34) | (.23) | (.10) | (.02) | - |
Distributions from net realized gain | (.50) | (1.83) | (.33) | (1.78) | (.98) |
Total distributions | (.84) | (2.06) | (.43) | (1.80) | (.98) |
Redemption fees added to paid in capital C | - I | - I | .01 | .01 | .01 |
Net asset value, end of period | $ 13.98 | $ 32.45 | $ 31.50 | $ 29.15 | $ 26.85 |
Total Return A,B | (55.46)% | 9.25% | 9.59% | 16.17% | 13.37% |
Ratios to Average Net Assets D,G |
|
|
|
|
|
Expenses before reductions | .90% | .88% | .99% | 1.03% | 1.07% |
Expenses net of fee waivers, if any | .90% | .88% | .99% | 1.03% | 1.07% |
Expenses net of all reductions | .90% | .88% | .98% | 1.02% | 1.06% |
Net investment income (loss) | 1.22% | .80% | .60% | .27% | (.17)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 47,260 | $ 169,045 | $ 82,528 | $ 74,770 | $ 46,305 |
Portfolio turnover rate E | 136% | 92% | 104% | 40% | 51% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Industrials Portfolio A | -49.92% | -3.06% | 2.34% |
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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Tobias Welo, Portfolio Manager of Select Industrials Portfolio: During the past year, the fund returned -49.92%, beating the -52.70% return of the MSCI® US Investable Market Industrials Index but trailing the S&P 500. Versus the MSCI index, the fund was helped by its positioning in industrial conglomerates, including a large underweighting and favorable stock picking. Overweighting heavy electrical equipment was beneficial as well, although the benefit there was more than offset by ineffective stock selection. A modest cash position further helped cushion the fund's loss. Contributors included General Electric (GE), a major index component and by far the fund's biggest contributor during the period. Underweighting the stock helped performance because of its poor showing versus the MSCI index. Another contributor, Danaher, is something of a conglomerate, with a solid balance sheet, high recurring revenues and strong free cash flow. Likewise, United Parcel Service benefited from its rock-solid balance sheet and its position as an industry leader. Aerospace and defense holdings Raytheon and United Technologies also helped, as did railroad Norfolk Southern. Conversely, stock selection detracted in auto parts and equipment. There, an out-of-index position in Johnson Controls was unrewarding, as the company's automotive interiors business was hampered by depressed auto sales. Not owning industrial conglomerate and index component 3M, which posted a milder loss than the index during the period, hurt as well. Lastly, underweighting CSX and not having any stake in Burlington Northern Santa Fe detracted, as both railroads outperformed the 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 Industrials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
United Technologies Corp. | 7.2 | 5.1 |
Honeywell International, Inc. | 5.5 | 4.3 |
Union Pacific Corp. | 5.0 | 3.9 |
Danaher Corp. | 4.3 | 3.2 |
Lockheed Martin Corp. | 3.4 | 4.0 |
Emerson Electric Co. | 3.1 | 0.9 |
The Boeing Co. | 3.1 | 0.0 |
Cummins, Inc. | 3.0 | 3.3 |
Raytheon Co. | 2.8 | 2.9 |
Deere & Co. | 2.8 | 2.1 |
| 40.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Aerospace & Defense | 27.3% |
| |
Machinery | 17.4% |
| |
Electrical Equipment | 11.0% |
| |
Road & Rail | 10.9% |
| |
Industrial Conglomerates | 7.9% |
| |
All Others* | 25.5% |
|
|
As of August 31, 2008 | |||
Machinery | 23.3% |
| |
Aerospace & Defense | 17.2% |
| |
Electrical Equipment | 10.8% |
| |
Industrial Conglomerates | 10.4% |
| |
Road & Rail | 9.3% |
| |
All Others* | 29.0% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Industrials Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 27.3% | |||
Aerospace & Defense - 27.3% | |||
Goodrich Corp. | 18,100 | $ 599,834 | |
Honeywell International, Inc. | 169,600 | 4,550,368 | |
Lockheed Martin Corp. | 44,800 | 2,827,328 | |
Northrop Grumman Corp. | 52,900 | 1,976,344 | |
Precision Castparts Corp. | 29,100 | 1,613,013 | |
Raytheon Co. | 58,900 | 2,354,233 | |
Stanley, Inc. (a) | 8,900 | 275,989 | |
The Boeing Co. | 81,800 | 2,571,792 | |
United Technologies Corp. | 148,101 | 6,046,964 | |
| 22,815,865 | ||
AIR FREIGHT & LOGISTICS - 6.6% | |||
Air Freight & Logistics - 6.6% | |||
C.H. Robinson Worldwide, Inc. | 23,500 | 972,430 | |
FedEx Corp. | 46,800 | 2,022,228 | |
United Parcel Service, Inc. Class B | 46,100 | 1,898,398 | |
UTI Worldwide, Inc. | 49,300 | 605,897 | |
| 5,498,953 | ||
AUTO COMPONENTS - 2.1% | |||
Auto Parts & Equipment - 0.7% | |||
Johnson Controls, Inc. | 52,000 | 591,760 | |
Tires & Rubber - 1.4% | |||
The Goodyear Tire & Rubber Co. (a) | 261,800 | 1,162,392 | |
TOTAL AUTO COMPONENTS | 1,754,152 | ||
BUILDING PRODUCTS - 1.9% | |||
Building Products - 1.9% | |||
Masco Corp. | 228,510 | 1,176,827 | |
Owens Corning (a) | 20,115 | 167,960 | |
USG Corp. (a)(d) | 47,300 | 272,921 | |
| 1,617,708 | ||
CHEMICALS - 1.3% | |||
Specialty Chemicals - 1.3% | |||
Albemarle Corp. | 11,665 | 225,718 | |
Nalco Holding Co. | 47,764 | 543,077 | |
W.R. Grace & Co. (a) | 61,062 | 341,947 | |
| 1,110,742 | ||
COMMERCIAL SERVICES & SUPPLIES - 2.2% | |||
Environmental & Facility Services - 1.4% | |||
Republic Services, Inc. | 57,795 | 1,150,121 | |
Office Services & Supplies - 0.3% | |||
United Stationers, Inc. (a) | 13,532 | 294,050 | |
Security & Alarm Services - 0.5% | |||
Corrections Corp. of America (a) | 36,200 | 384,444 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 1,828,615 | ||
| |||
Shares | Value | ||
CONSTRUCTION MATERIALS - 0.3% | |||
Construction Materials - 0.3% | |||
Martin Marietta Materials, Inc. | 3,000 | $ 229,680 | |
DIVERSIFIED CONSUMER SERVICES - 0.6% | |||
Specialized Consumer Services - 0.6% | |||
Brinks Home Security Holdings, Inc. (a) | 21,764 | 456,391 | |
ELECTRICAL EQUIPMENT - 11.0% | |||
Electrical Components & Equipment - 10.4% | |||
Acuity Brands, Inc. | 33,200 | 760,944 | |
AMETEK, Inc. | 75,150 | 1,988,469 | |
Cooper Industries Ltd. Class A | 71,800 | 1,514,262 | |
Emerson Electric Co. | 96,300 | 2,576,025 | |
Ener1, Inc. (a) | 59,947 | 187,634 | |
Energy Conversion Devices, Inc. (a)(d) | 7,578 | 166,186 | |
Regal-Beloit Corp. | 10,900 | 312,612 | |
Rockwell Automation, Inc. | 44,600 | 896,460 | |
Saft Groupe SA | 10,723 | 244,382 | |
| 8,646,974 | ||
Heavy Electrical Equipment - 0.6% | |||
Vestas Wind Systems AS (a) | 12,000 | 522,397 | |
TOTAL ELECTRICAL EQUIPMENT | 9,169,371 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% | |||
Electronic Equipment & Instruments - 0.5% | |||
Itron, Inc. (a) | 9,073 | 405,200 | |
HOUSEHOLD DURABLES - 0.2% | |||
Homebuilding - 0.2% | |||
Centex Corp. | 32,900 | 204,309 | |
INDUSTRIAL CONGLOMERATES - 7.9% | |||
Industrial Conglomerates - 7.9% | |||
General Electric Co. | 215,901 | 1,837,318 | |
Siemens AG sponsored ADR (d) | 44,500 | 2,252,590 | |
Textron, Inc. | 84,800 | 479,120 | |
Tyco International Ltd. | 101,136 | 2,027,777 | |
| 6,596,805 | ||
MACHINERY - 17.4% | |||
Construction & Farm Machinery & Heavy Trucks - 10.5% | |||
Cummins, Inc. | 119,750 | 2,490,800 | |
Deere & Co. | 84,900 | 2,333,901 | |
Manitowoc Co., Inc. | 88,200 | 361,620 | |
Navistar International Corp. (a) | 54,900 | 1,548,180 | |
PACCAR, Inc. | 63,200 | 1,584,424 | |
Terex Corp. (a) | 5,900 | 52,628 | |
Toro Co. (d) | 18,000 | 393,660 | |
| 8,765,213 | ||
Industrial Machinery - 6.9% | |||
Danaher Corp. | 71,600 | 3,634,416 | |
Eaton Corp. | 24,300 | 878,445 | |
Common Stocks - continued | |||
Shares | Value | ||
MACHINERY - CONTINUED | |||
Industrial Machinery - continued | |||
Ingersoll-Rand Co. Ltd. Class A | 12,100 | $ 171,578 | |
Parker Hannifin Corp. | 33,000 | 1,101,210 | |
| 5,785,649 | ||
TOTAL MACHINERY | 14,550,862 | ||
MARINE - 0.3% | |||
Marine - 0.3% | |||
Safe Bulkers, Inc. | 25,231 | 95,878 | |
Ultrapetrol (Bahamas) Ltd. (a) | 74,486 | 153,441 | |
| 249,319 | ||
PAPER & FOREST PRODUCTS - 0.5% | |||
Forest Products - 0.5% | |||
Weyerhaeuser Co. | 18,000 | 434,880 | |
PROFESSIONAL SERVICES - 1.8% | |||
Human Resource & Employment Services - 0.8% | |||
Manpower, Inc. | 24,000 | 669,120 | |
Research & Consulting Services - 1.0% | |||
Equifax, Inc. | 36,800 | 791,200 | |
TOTAL PROFESSIONAL SERVICES | 1,460,320 | ||
ROAD & RAIL - 10.9% | |||
Railroads - 8.4% | |||
CSX Corp. | 36,200 | 893,416 | |
Norfolk Southern Corp. | 59,300 | 1,880,996 | |
Union Pacific Corp. | 112,400 | 4,217,248 | |
| 6,991,660 | ||
Trucking - 2.5% | |||
Con-way, Inc. | 30,500 | 460,855 | |
Landstar System, Inc. | 15,300 | 484,245 | |
Old Dominion Freight Lines, Inc. (a) | 29,737 | 647,969 | |
Ryder System, Inc. | 24,100 | 550,926 | |
| 2,143,995 | ||
TOTAL ROAD & RAIL | 9,135,655 | ||
| |||
Shares | Value | ||
TRADING COMPANIES & DISTRIBUTORS - 2.1% | |||
Trading Companies & Distributors - 2.1% | |||
Rush Enterprises, Inc. Class A (a) | 132,244 | $ 1,080,433 | |
W.W. Grainger, Inc. | 10,600 | 701,296 | |
| 1,781,729 | ||
TRANSPORTATION INFRASTRUCTURE - 1.1% | |||
Marine Ports & Services - 1.1% | |||
Aegean Marine Petroleum Network, Inc. | 57,100 | 936,440 | |
TOTAL COMMON STOCKS (Cost $119,873,233) | 80,236,996 |
Nonconvertible Bonds - 0.0% | ||||
| Principal Amount |
| ||
AIRLINES - 0.0% | ||||
Airlines - 0.0% | ||||
Delta Air Lines, Inc. 8.3% 12/15/29 (a) | $ 670,000 | 13,400 |
Money Market Funds - 2.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 1,883,644 | 1,883,644 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 528,031 | 528,031 | |
TOTAL MONEY MARKET FUNDS (Cost $2,411,675) | 2,411,675 | ||
TOTAL INVESTMENT PORTFOLIO - 98.9% (Cost $122,297,885) | 82,662,071 | ||
NET OTHER ASSETS - 1.1% | 879,887 | ||
NET ASSETS - 100% | $ 83,541,958 |
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 | $ 87,474 |
Fidelity Securities Lending Cash Central Fund | 120,328 |
Total | $ 207,802 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 82,662,071 | $ 81,881,892 | $ 766,779 | $ 13,400 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ - |
Total Realized Gain (Loss) | - |
Total Unrealized Gain (Loss) | (7,012) |
Cost of Purchases | - |
Proceeds of Sales | - |
Amortization/Accretion | (6,388) |
Transfer in/out of Level 3 | 26,800 |
Ending Balance | $ 13,400 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.9% |
Bermuda | 4.4% |
Germany | 2.7% |
Marshall Islands | 1.2% |
Others (individually less than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $12,506,212 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $19,663,924 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $499,844) - See accompanying schedule: Unaffiliated issuers (cost $119,886,210) | $ 80,250,396 |
|
Fidelity Central Funds (cost $2,411,675) | 2,411,675 |
|
Total Investments (cost $122,297,885) |
| $ 82,662,071 |
Receivable for investments sold | 1,923,983 | |
Receivable for fund shares sold | 443,920 | |
Dividends receivable | 451,101 | |
Distributions receivable from Fidelity Central Funds | 5,433 | |
Prepaid expenses | 967 | |
Other receivables | 242 | |
Total assets | 85,487,717 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,111,853 | |
Payable for fund shares redeemed | 199,928 | |
Accrued management fee | 44,968 | |
Other affiliated payables | 28,073 | |
Other payables and accrued expenses | 32,906 | |
Collateral on securities loaned, at value | 528,031 | |
Total liabilities | 1,945,759 | |
|
|
|
Net Assets | $ 83,541,958 | |
Net Assets consist of: |
| |
Paid in capital | $ 159,322,377 | |
Undistributed net investment income | 272,154 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,414,547) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (39,638,026) | |
Net Assets, for 8,258,424 shares outstanding | $ 83,541,958 | |
Net Asset Value, offering price and redemption price per share ($83,541,958 ÷ 8,258,424 shares) | $ 10.12 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 2,297,320 |
Interest |
| 1,461 |
Income from Fidelity Central Funds (including $120,328 from security lending) |
| 207,802 |
Total income |
| 2,506,583 |
|
|
|
Expenses | ||
Management fee | $ 676,999 | |
Transfer agent fees | 364,339 | |
Accounting and security lending fees | 47,832 | |
Custodian fees and expenses | 31,026 | |
Independent trustees' compensation | 627 | |
Registration fees | 31,462 | |
Audit | 41,575 | |
Legal | 604 | |
Miscellaneous | 11,930 | |
Total expenses before reductions | 1,206,394 | |
Expense reductions | (4,593) | 1,201,801 |
Net investment income (loss) | 1,304,782 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (35,410,875) | |
Foreign currency transactions | 476 | |
Total net realized gain (loss) |
| (35,410,399) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (41,576,505) | |
Assets and liabilities in foreign currencies | (2,097) | |
Total change in net unrealized appreciation (depreciation) |
| (41,578,602) |
Net gain (loss) | (76,989,001) | |
Net increase (decrease) in net assets resulting from operations | $ (75,684,219) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 1,304,782 | $ 518,681 |
Net realized gain (loss) | (35,410,399) | 5,849,003 |
Change in net unrealized appreciation (depreciation) | (41,578,602) | (4,890,207) |
Net increase (decrease) in net assets resulting from operations | (75,684,219) | 1,477,477 |
Distributions to shareholders from net investment income | (1,096,997) | (402,070) |
Distributions to shareholders from net realized gain | (383,781) | (7,628,266) |
Total distributions | (1,480,778) | (8,030,336) |
Share transactions | 101,692,231 | 113,432,100 |
Reinvestment of distributions | 1,429,794 | 7,700,139 |
Cost of shares redeemed | (66,872,108) | (66,163,349) |
Net increase (decrease) in net assets resulting from share transactions | 36,249,917 | 54,968,890 |
Redemption fees | 13,781 | 16,044 |
Total increase (decrease) in net assets | (40,901,299) | 48,432,075 |
|
|
|
Net Assets | ||
Beginning of period | 124,443,257 | 76,011,182 |
End of period (including undistributed net investment income of $272,154 and undistributed net investment income of $265,301, respectively) | $ 83,541,958 | $ 124,443,257 |
Other Information Shares | ||
Sold | 5,994,821 | 5,077,420 |
Issued in reinvestment of distributions | 100,146 | 358,631 |
Redeemed | (3,907,588) | (3,036,797) |
Net increase (decrease) | 2,187,379 | 2,399,254 |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 20.50 | $ 20.70 | $ 20.97 | $ 19.21 | $ 16.22 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .18 | .11 | .14 | .06 | .05 |
Net realized and unrealized gain (loss) | (10.35) | 1.40 | 1.55 | 3.06 | 3.99 |
Total from investment operations | (10.17) | 1.51 | 1.69 | 3.12 | 4.04 |
Distributions from net investment income | (.15) | (.09) | (.08) | (.05) | (.02) |
Distributions from net realized gain | (.06) | (1.62) | (1.89) | (1.32) | (1.04) |
Total distributions | (.21) | (1.71) | (1.97) | (1.37) | (1.06) |
Redemption fees added to paid in capital C | - H | - H | .01 | .01 | .01 |
Net asset value, end of period | $ 10.12 | $ 20.50 | $ 20.70 | $ 20.97 | $ 19.21 |
Total Return A,B | (49.92)% | 7.14% | 8.34% | 17.23% | 25.60% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | 1.00% | 1.00% | 1.10% | 1.12% | 1.19% |
Expenses net of fee waivers, if any | 1.00% | 1.00% | 1.10% | 1.12% | 1.19% |
Expenses net of all reductions | .99% | .99% | 1.09% | 1.07% | 1.15% |
Net investment income (loss) | 1.08% | .49% | .66% | .34% | .27% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 83,542 | $ 124,443 | $ 76,011 | $ 83,680 | $ 64,969 |
Portfolio turnover rate E | 132% | 108% | 185% | 168% | 151% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Transportation Portfolio | -44.20% | -2.92% | 3.49% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Transportation Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from John Mirshekari, who became Portfolio Manager of Select Transportation Portfolio on February 28, 2009: During the past year, the fund returned -44.20%, slightly trailing the -43.22% result of the MSCI® US Investable Market Transportation Index and the S&P 500. Versus the MSCI index, a combination of unfavorable stock selection and an underweighting in railroads had a negative impact on fund performance, as did weak picks and an overweighting in airlines. An underweighted position in railroad Burlington Northern Santa Fe was the fund's biggest detractor. The company had some fuel hedges in place that boosted its earnings when energy prices were soaring but were a hindrance when fuel got cheaper. United Parcel Service (UPS) was another major index component that detracted because it outperformed and was underweighted in the fund. Still, the fund's average weighting in UPS was more than 15%, and it was our second-largest holding at period end. Unfavorable timing in owning railroad CSX made that position a detractor, while an overweighting in UAL - the parent company of United Air Lines - proved unrewarding. An out-of-index position in Titanium Metals - which the fund no longer owned at period end - also fared poorly. Conversely, a modest cash position had the biggest positive influence on our results. Additionally, stock picking in the trucking group added value. Among individual holdings, UTI Worldwide, a supply chain manager for the transportation industry, saw its stock finish with a more modest loss than the index, as the company's restructuring process appeared to be gaining traction. Not owning Macquarie Infrastructure, an airport services company, and having a lighter-than-benchmark exposure to car and truck rental firm Avis Budget Group, both poorly performing index components, also proved rewarding. In the case of less-than-truckload hauler YRC Worldwide, the fund was overweighted for much of the period but sold out of the stock before it collapsed in the fourth quarter. A modest out-of-index position in Canadian National Railway, a well-run railroad, also was beneficial.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Union Pacific Corp. | 15.9 | 16.7 |
United Parcel Service, Inc. Class B | 13.7 | 13.5 |
FedEx Corp. | 10.9 | 7.4 |
Norfolk Southern Corp. | 10.5 | 10.6 |
Burlington Northern Santa Fe Corp. | 5.0 | 0.4 |
CSX Corp. | 4.9 | 4.9 |
C.H. Robinson Worldwide, Inc. | 4.3 | 2.6 |
Expeditors International of Washington, Inc. | 3.6 | 2.1 |
Southwest Airlines Co. | 2.9 | 3.6 |
UTI Worldwide, Inc. | 2.8 | 1.8 |
| 74.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Road & Rail | 46.4% |
| |
Air Freight & Logistics | 36.4% |
| |
Airlines | 8.0% |
| |
Marine | 3.0% |
| |
Software | 1.7% |
| |
All Others* | 4.5% |
|
|
As of August 31, 2008 | |||
Road & Rail | 43.8% |
| |
Air Freight & Logistics | 30.1% |
| |
Airlines | 12.1% |
| |
Marine | 3.8% |
| |
Oil, Gas & Consumable Fuels | 2.0% |
| |
All Others* | 8.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Transportation Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
AEROSPACE & DEFENSE - 1.4% | |||
Aerospace & Defense - 1.4% | |||
AerCap Holdings NV (a) | 213,800 | $ 690,574 | |
The Boeing Co. | 12,600 | 396,144 | |
| 1,086,718 | ||
AIR FREIGHT & LOGISTICS - 36.4% | |||
Air Freight & Logistics - 36.4% | |||
Atlas Air Worldwide Holdings, Inc. (a) | 6,900 | 97,566 | |
C.H. Robinson Worldwide, Inc. | 83,400 | 3,451,092 | |
Expeditors International of Washington, Inc. | 104,320 | 2,874,016 | |
FedEx Corp. | 200,900 | 8,680,889 | |
Hub Group, Inc. Class A (a) | 22,060 | 396,198 | |
Panalpina Welttransport Holding AG | 12,010 | 429,235 | |
United Parcel Service, Inc. Class B | 264,300 | 10,883,874 | |
UTI Worldwide, Inc. | 180,500 | 2,218,345 | |
| 29,031,215 | ||
AIRLINES - 8.0% | |||
Airlines - 8.0% | |||
AirTran Holdings, Inc. (a) | 53,200 | 159,068 | |
Alaska Air Group, Inc. (a) | 15,900 | 348,369 | |
AMR Corp. (a) | 108,500 | 443,765 | |
Continental Airlines, Inc. Class B (a) | 77,800 | 779,556 | |
Delta Air Lines, Inc. (a) | 246,402 | 1,239,402 | |
JetBlue Airways Corp. (a) | 59,000 | 224,790 | |
SkyWest, Inc. | 24,000 | 245,760 | |
Southwest Airlines Co. | 389,487 | 2,294,078 | |
UAL Corp. (a)(d) | 92,900 | 456,139 | |
US Airways Group, Inc. (a) | 71,600 | 204,060 | |
| 6,394,987 | ||
INDUSTRIAL CONGLOMERATES - 0.3% | |||
Industrial Conglomerates - 0.3% | |||
Textron, Inc. | 37,000 | 209,050 | |
MARINE - 3.0% | |||
Marine - 3.0% | |||
Alexander & Baldwin, Inc. | 21,500 | 403,985 | |
Diana Shipping, Inc. | 8,300 | 97,359 | |
Eagle Bulk Shipping, Inc. (d) | 19,400 | 72,944 | |
Genco Shipping & Trading Ltd. | 15,100 | 185,277 | |
Horizon Lines, Inc. Class A (d) | 39,290 | 133,586 | |
Kirby Corp. (a) | 29,500 | 650,180 | |
Kuehne & Nagel International AG | 16,786 | 805,168 | |
Ultrapetrol (Bahamas) Ltd. (a) | 16,100 | 33,166 | |
| 2,381,665 | ||
OIL, GAS & CONSUMABLE FUELS - 0.6% | |||
Oil & Gas Storage & Transport - 0.6% | |||
El Paso Corp. | 30,600 | 206,550 | |
Southern Union Co. | 19,200 | 257,472 | |
| 464,022 | ||
| |||
Shares | Value | ||
ROAD & RAIL - 46.4% | |||
Railroads - 39.0% | |||
Burlington Northern Santa Fe Corp. | 68,000 | $ 3,996,360 | |
Canadian National Railway Co. | 22,500 | 722,674 | |
Canadian Pacific Railway Ltd. | 9,000 | 254,687 | |
CSX Corp. | 158,500 | 3,911,780 | |
Genesee & Wyoming, Inc. Class A (a) | 9,300 | 194,277 | |
Kansas City Southern (a) | 54,450 | 963,221 | |
Norfolk Southern Corp. | 264,200 | 8,380,424 | |
Union Pacific Corp. | 337,600 | 12,666,751 | |
| 31,090,174 | ||
Trucking - 7.4% | |||
Avis Budget Group, Inc. (a) | 7,900 | 3,160 | |
Con-way, Inc. | 24,500 | 370,195 | |
DSV de Sammensluttede Vognmaend AS | 46,000 | 345,312 | |
Heartland Express, Inc. | 19,600 | 242,452 | |
Hertz Global Holdings, Inc. (a) | 60,000 | 189,600 | |
J.B. Hunt Transport Services, Inc. | 52,600 | 1,071,988 | |
Knight Transportation, Inc. | 57,800 | 749,088 | |
Landstar System, Inc. | 47,070 | 1,489,766 | |
Old Dominion Freight Lines, Inc. (a) | 11,100 | 241,869 | |
Ryder System, Inc. | 39,800 | 909,828 | |
Werner Enterprises, Inc. | 20,200 | 275,124 | |
| 5,888,382 | ||
TOTAL ROAD & RAIL | 36,978,556 | ||
SOFTWARE - 1.7% | |||
Systems Software - 1.7% | |||
Versant Corp. (a) | 95,000 | 1,387,950 | |
TOTAL COMMON STOCKS (Cost $120,232,203) | 77,934,163 | ||
Money Market Funds - 2.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 1,681,004 | 1,681,004 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 187,250 | 187,250 | |
TOTAL MONEY MARKET FUNDS (Cost $1,868,254) | 1,868,254 | ||
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $122,100,457) | 79,802,417 | ||
NET OTHER ASSETS - (0.1)% | (96,993) | ||
NET ASSETS - 100% | $ 79,705,424 |
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 | $ 57,485 |
Fidelity Securities Lending Cash Central Fund | 57,843 |
Total | $ 115,328 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 79,802,417 | $ 78,222,702 | $ 1,579,715 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $4,423,937 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $3,662,860 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $159,900) - See accompanying schedule: Unaffiliated issuers (cost $120,232,203) | $ 77,934,163 |
|
Fidelity Central Funds | 1,868,254 |
|
Total Investments |
| $ 79,802,417 |
Receivable for fund shares sold | 150,175 | |
Dividends receivable | 371,702 | |
Distributions receivable from Fidelity Central Funds | 2,901 | |
Prepaid expenses | 923 | |
Total assets | 80,328,118 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 776 | |
Payable for fund shares redeemed | 332,566 | |
Accrued management fee | 43,981 | |
Other affiliated payables | 28,819 | |
Other payables and accrued expenses | 29,302 | |
Collateral on securities loaned, at value | 187,250 | |
Total liabilities | 622,694 | |
|
|
|
Net Assets | $ 79,705,424 | |
Net Assets consist of: |
| |
Paid in capital | $ 133,016,054 | |
Undistributed net investment income | 88,502 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (11,101,182) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (42,297,950) | |
Net Assets, for 3,336,876 shares outstanding | $ 79,705,424 | |
Net Asset Value, offering price and redemption price per share ($79,705,424 ÷ 3,336,876 shares) | $ 23.89 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,473,954 |
Interest |
| 1,327 |
Income from Fidelity Central Funds (including $57,843 from security lending) |
| 115,328 |
Total income |
| 1,590,609 |
|
|
|
Expenses | ||
Management fee | $ 492,937 | |
Transfer agent fees | 270,762 | |
Accounting and security lending fees | 36,434 | |
Custodian fees and expenses | 13,962 | |
Independent trustees' compensation | 475 | |
Registration fees | 34,455 | |
Audit | 44,688 | |
Legal | 382 | |
Interest | 2,877 | |
Miscellaneous | 6,442 | |
Total expenses before reductions | 903,414 | |
Expense reductions | (548) | 902,866 |
Net investment income (loss) | 687,743 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (9,277,879) | |
Foreign currency transactions | (1,153) | |
Total net realized gain (loss) |
| (9,279,032) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (49,256,265) | |
Assets and liabilities in foreign currencies | 90 | |
Total change in net unrealized appreciation (depreciation) |
| (49,256,175) |
Net gain (loss) | (58,535,207) | |
Net increase (decrease) in net assets resulting from operations | $ (57,847,464) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 687,743 | $ 325,382 |
Net realized gain (loss) | (9,279,032) | 8,214,054 |
Change in net unrealized appreciation (depreciation) | (49,256,175) | (17,145,899) |
Net increase (decrease) in net assets resulting from operations | (57,847,464) | (8,606,463) |
Distributions to shareholders from net investment income | (707,330) | (115,413) |
Distributions to shareholders from net realized gain | (1,981,663) | (6,213,287) |
Total distributions | (2,688,993) | (6,328,700) |
Share transactions | 145,988,565 | 73,610,965 |
Reinvestment of distributions | 2,597,393 | 5,922,468 |
Cost of shares redeemed | (100,791,576) | (77,216,334) |
Net increase (decrease) in net assets resulting from share transactions | 47,794,382 | 2,317,099 |
Redemption fees | 15,389 | 23,033 |
Total increase (decrease) in net assets | (12,726,686) | (12,595,031) |
|
|
|
Net Assets | ||
Beginning of period | 92,432,110 | 105,027,141 |
End of period (including undistributed net investment income of $88,502 and undistributed net investment income of $266,146, respectively) | $ 79,705,424 | $ 92,432,110 |
Other Information Shares | ||
Sold | 3,860,524 | 1,461,784 |
Issued in reinvestment of distributions | 65,814 | 124,605 |
Redeemed | (2,674,176) | (1,483,372) |
Net increase (decrease) | 1,252,162 | 103,017 |
Financial Highlights
Years ended February 28, | 2009 | 2008 J | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 44.34 | $ 53.00 | $ 50.22 | $ 42.08 | $ 32.84 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 | .19 F | .04 | .17 | .20 G |
Net realized and unrealized gain (loss) | (19.29) | (4.66) | 3.72 H | 8.99 | 9.24 |
Total from investment operations | (19.00) | (4.47) | 3.76 | 9.16 | 9.44 |
Distributions from net investment income | (.25) | (.07) | (.02) | (.10) | (.11) |
Distributions from net realized gain | (1.21) | (4.13) | (1.01) | (.96) | (.13) |
Total distributions | (1.46) | (4.20) | (1.03) | (1.06) | (.24) |
Redemption fees added to paid in capital C | .01 | .01 | .05 | .04 | .04 |
Net asset value, end of period | $ 23.89 | $ 44.34 | $ 53.00 | $ 50.22 | $ 42.08 |
Total Return A,B | (44.20)% | (8.89)% | 7.65% | 22.24% | 28.86% |
Ratios to Average Net Assets D,I |
|
|
|
|
|
Expenses before reductions | 1.03% | .99% | 1.03% | 1.13% | 1.17% |
Expenses net of fee waivers, if any | 1.03% | .99% | 1.03% | 1.13% | 1.17% |
Expenses net of all reductions | 1.03% | .99% | 1.02% | 1.11% | 1.14% |
Net investment income (loss) | .79% | .36% F | .09% | .40% | .53% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 79,705 | $ 92,432 | $ 105,027 | $ 103,927 | $ 81,958 |
Portfolio turnover rate E | 81% | 84% | 133% | 142% | 148% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.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 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the trust). The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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, 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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for each Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, if applicable, is included at the end of each Fund's Schedule of Investments.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. As a result of a change in the estimate of the return of capital component of dividend income realized in the year ended February 29, 2008, dividend income has been reduced $150,285 with a corresponding increase to net unrealized appreciation (depreciation). The change in estimate has no impact on total net assets or total return of Air Transportation Portfolio. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds 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, capital loss carryforwards, net operating losses, 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 |
Air Transportation Portfolio | $ 67,021,519 | $ 1,945,548 | $ (28,783,789) | $ (26,838,241) |
Defense and Aerospace Portfolio | 739,552,239 | 35,653,210 | (348,510,617) | (312,857,407) |
Environmental Portfolio | 51,757,356 | 861,830 | (15,252,832) | (14,391,002) |
Industrial Equipment Portfolio | 83,202,123 | 883,180 | (35,562,949) | (34,679,769) |
Industrials Portfolio | 126,544,505 | 353,539 | (44,235,973) | (43,882,434) |
Transportation Portfolio | 125,114,750 | 3,535,815 | (48,848,148) | (45,312,333) |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
| Undistributed | Capital Loss |
Defense and Aerospace Portfolio | $ 3,073,306 | $ (19,754,144) |
Environmental Portfolio | - | (4,303,568) |
Industrial Equipment Portfolio | 305,725 | (15,456,118) |
Industrials Portfolio | 272,155 | (12,506,212) |
Transportation Portfolio | 88,500 | (4,423,937) |
The tax character of distributions paid was as follows:
February 28, 2009 | Ordinary | Long-term | Total |
Air Transportation Portfolio | $ - | $ 3,673,839 | $ 3,673,839 |
Defense and Aerospace Portfolio | 6,223,008 | 69,243,502 | 75,466,510 |
Environmental Portfolio | 218,293 | - | 218,293 |
Industrial Equipment Portfolio | 1,289,984 | 2,684,730 | 3,974,714 |
Industrials Portfolio | 1,096,997 | 383,781 | 1,480,778 |
Transportation Portfolio | 707,330 | 1,981,663 | 2,688,993 |
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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 | 51,073,369 | 28,371,668 |
Defense and Aerospace Portfolio | 489,107,574 | 789,340,043 |
Environmental Portfolio | 66,117,623 | 46,216,830 |
Industrial Equipment Portfolio | 154,258,117 | 208,500,624 |
Industrials Portfolio | 191,274,631 | 153,956,961 |
Transportation Portfolio | 118,993,097 | 69,552,236 |
Annual Report
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Air Transportation Portfolio | .30% | .26% | .56% |
Defense and Aerospace Portfolio | .30% | .26% | .56% |
Environmental Portfolio | .30% | .26% | .56% |
Industrial Equipment Portfolio | .30% | .26% | .56% |
Industrials Portfolio | .30% | .26% | .56% |
Transportation Portfolio | .30% | .26% | .56% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Air Transportation Portfolio | .31% |
|
Defense and Aerospace Portfolio | .27% |
|
Environmental Portfolio | .30% |
|
Industrial Equipment Portfolio | .23% |
|
Industrials Portfolio | .30% |
|
Transportation Portfolio | .31% |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Air Transportation Portfolio | $ 1,099 |
Defense and Aerospace Portfolio | 13,047 |
Environmental Portfolio | 434 |
Industrial Equipment Portfolio | 3,815 |
Industrials Portfolio | 4,923 |
Transportation Portfolio | 2,711 |
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 | $ 5,770,565 | 2.04% | $ 7,510 |
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Air Transportation Portfolio | $ 169 |
Defense and Aerospace Portfolio | 2,667 |
Environmental Portfolio | 158 |
Industrial Equipment Portfolio | 341 |
Industrials Portfolio | 406 |
Transportation Portfolio | 353 |
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 | Interest |
Transportation Portfolio | $10,899,000 | 3.17% | $ 2,877 |
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 | $ 3,917 | $ - |
Defense and Aerospace Portfolio | 1,278 | 3,487 |
Environmental Portfolio | 1,135 | - |
Industrial Equipment Portfolio | 3,710 | - |
Industrials Portfolio | 3,702 | 891 |
Transportation Portfolio | 548 | - |
Annual Report
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
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 positions of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environmental Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (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. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2009, or, if subsequently determined to be different, the net capital gain of such year.
Select Air Transportation Portfolio | $375,977 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Defense and Aerospace Portfolio | 100% | 100% |
Select Environmental Portfolio | - | 100% |
Select Industrial Equipment Portfolio | 100% | 100% |
Select Industrials Portfolio | 100% | 100% |
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 2008 | December 2008 |
Select Defense and Aerospace Portfolio | 100% | 100% |
Select Environmental Portfolio | - | 100% |
Select Industrial Equipment Portfolio | 100% | 100% |
Select Industrials Portfolio | 100% | 100% |
Select Transportation Portfolio | 100% | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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
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Annual Report
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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 28, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message |
| |
Shareholder Expense Example |
| |
Fund Updates* |
|
|
Information Technology Sector |
|
|
Communications Equipment |
| |
Computers |
| |
Electronics |
| |
IT Services |
| |
Networking and Infrastructure |
| |
Software and Computer Services |
| |
Technology |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
|
* 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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Communications Equipment Portfolio | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 512.20 | $ 3.56 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Computers Portfolio | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 569.60 | $ 3.62 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
Electronics Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 566.90 | $ 3.54 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
IT Services Portfolio | 1.03% |
|
|
|
Actual |
| $ 1,000.00 | $ 633.30 | $ 4.17 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.69 | $ 5.16 |
Networking and Infrastructure Portfolio | 1.07% |
|
|
|
Actual |
| $ 1,000.00 | $ 576.20 | $ 4.18 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.49 | $ 5.36 |
Software and Computer Services Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 648.50 | $ 3.72 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Technology Portfolio | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 538.90 | $ 3.47 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Communications Equipment Portfolio A | -44.79% | -11.87% | -6.15% |
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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Charlie Chai, Portfolio Manager of Select Communications Equipment Portfolio: During the past year, the fund returned -44.79%, lagging the -39.58% return of the MSCI® US Investable Market Communications Equipment Index and the S&P 500. Versus the MSCI index, unfavorable stock selection in the fund's primary category of communications equipment, where I invested an average of roughly 76% of net assets during the period, held back our return. To a lesser extent, my picks in several out-of-benchmark segments - electronic equipment and instruments, advertising and computer hardware - worked against performance as well. On an absolute basis, the stronger U.S. dollar dampened the returns of our foreign holdings. The biggest relative detractor was a large out-of-benchmark position in Comverse Technology, a maker of software and systems for network-based, multimedia-enhanced communication and billing services. Despite its relatively stable revenue stream, the stock fell by more than half amid the weakening global economic environment. Other detractors included two providers of infrastructure solutions for communications networks, CommScope and ADC Telecommunications, as well as Powerwave Technologies, which makes equipment for wireless communications networks. Elsewhere, a tougher competitive landscape for smartphones - cellular phones that also incorporate Internet browsing and e-mail capabilities - sidetracked Canada's Research In Motion, an out-of-index holding and maker of the popular BlackBerry smartphone. Lastly, a large underweighting in MSCI index heavyweight QUALCOMM was counterproductive, as the stock posted a relatively modest loss. That said, I increased the fund's stake in the maker of wireless chips, making QUALCOMM our largest holding by period end, at more than 20% of net assets. Conversely, stock selection in semiconductors, wireless telecommunication services and application software added value. Additionally, the fund's cash position helped cushion its loss. Starent Networks, a provider of infrastructure hardware and software products that enable mobile operators to deliver multimedia services to their subscribers, was the fund's top contributor. The company won several lucrative contracts and in January reported solid fourth-quarter financial results while reaffirming its fiscal 2009 guidance, enabling its stock to post a slight gain during the period. I added substantially to our position in Starent, making it the fund's third-largest holding by period end, at more than 11% of net assets. Arris Group, which provides cable telephony and other broadband equipment, also aided our results, as did a large underweighting in weak-performing major benchmark component Corning, which I sold off entirely 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 Communications Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
QUALCOMM, Inc. | 20.5 | 16.5 |
Cisco Systems, Inc. | 15.9 | 13.2 |
Starent Networks Corp. | 11.5 | 5.1 |
Comverse Technology, Inc. | 4.5 | 5.2 |
Motorola, Inc. | 4.4 | 3.5 |
Ulticom, Inc. | 2.4 | 1.7 |
SBA Communications Corp. Class A | 2.3 | 0.0 |
ADC Telecommunications, Inc. | 2.1 | 3.9 |
VisionChina Media, Inc. ADR | 1.7 | 1.5 |
F5 Networks, Inc. | 1.6 | 1.4 |
| 66.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Communications Equipment | 73.7% |
| |
Semiconductors & Semiconductor Equipment | 8.3% |
| |
Software | 6.1% |
| |
Wireless Telecommunication Services | 3.8% |
| |
Media | 2.3% |
| |
All Others* | 5.8% |
|
As of August 31, 2008 | |||
Communications Equipment | 77.6% |
| |
Computers & Peripherals | 8.1% |
| |
Software | 3.3% |
| |
Electronic Equipment & Instruments | 3.2% |
| |
Semiconductors & Semiconductor Equipment | 3.2% |
| |
All Others* | 4.6% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Communications Equipment Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 73.4% | |||
Communications Equipment - 73.4% | |||
Acme Packet, Inc. (a) | 154,945 | $ 680,209 | |
ADC Telecommunications, Inc. (a)(d) | 918,100 | 2,607,404 | |
Adtran, Inc. | 130,900 | 1,890,196 | |
ADVA AG Optical Networking (a) | 246,763 | 294,459 | |
Alcatel-Lucent SA sponsored ADR (a) | 134,700 | 176,457 | |
Arris Group, Inc. (a) | 89,356 | 546,859 | |
Aruba Networks, Inc. (a) | 4,200 | 11,592 | |
AudioCodes Ltd. (a) | 445,190 | 498,613 | |
Ceragon Networks Ltd. (a) | 4,100 | 19,106 | |
China GrenTech Corp. Ltd. ADR (a) | 317,306 | 323,652 | |
Ciena Corp. (a)(d) | 372,741 | 2,001,619 | |
Cisco Systems, Inc. (a) | 1,377,331 | 20,067,713 | |
Cogo Group, Inc. (a) | 82,511 | 509,093 | |
CommScope, Inc. (a) | 148,400 | 1,325,212 | |
Comverse Technology, Inc. (a) | 1,048,210 | 5,712,745 | |
F5 Networks, Inc. (a) | 103,000 | 2,060,000 | |
Finisar Corp. (a) | 92,135 | 23,034 | |
Foxconn International Holdings Ltd. (a) | 80,000 | 23,208 | |
Harris Stratex Networks, Inc. Class A (a) | 100,965 | 396,792 | |
Infinera Corp. (a) | 42,974 | 309,413 | |
Motorola, Inc. | 1,578,500 | 5,556,320 | |
Opnext, Inc. (a) | 199,600 | 333,332 | |
Polycom, Inc. (a) | 18,300 | 243,390 | |
Powerwave Technologies, Inc. (a) | 555,561 | 188,891 | |
QUALCOMM, Inc. | 772,130 | 25,812,304 | |
Research In Motion Ltd. (a) | 48,500 | 1,937,090 | |
Riverbed Technology, Inc. (a) | 25,000 | 261,750 | |
Sandvine Corp. (a) | 673,800 | 386,648 | |
Sandvine Corp. (U.K.) (a) | 1,762,900 | 1,050,333 | |
Sonus Networks, Inc. (a) | 492,032 | 610,120 | |
Starent Networks Corp. (a)(d) | 914,424 | 14,457,043 | |
Tekelec (a) | 23,800 | 291,788 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 7,900 | 64,464 | |
Tellabs, Inc. (a) | 477,400 | 1,814,120 | |
| 92,484,969 | ||
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Hardware - 0.0% | |||
Compal Electronics, Inc. | 1,244 | 707 | |
Palm, Inc. (a) | 4,000 | 28,960 | |
| 29,667 | ||
Computer Storage & Peripherals - 0.1% | |||
Isilon Systems, Inc. (a) | 500 | 1,125 | |
STEC, Inc. (a) | 14,800 | 83,472 | |
| 84,597 | ||
TOTAL COMPUTERS & PERIPHERALS | 114,264 | ||
| |||
Shares | Value | ||
ELECTRICAL EQUIPMENT - 0.2% | |||
Electrical Components & Equipment - 0.2% | |||
General Cable Corp. (a) | 15,500 | $ 239,165 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.4% | |||
Electronic Components - 0.2% | |||
Amphenol Corp. Class A | 7,700 | 195,734 | |
Electronic Equipment & Instruments - 0.4% | |||
China Security & Surveillance Technology, Inc. (a)(d) | 149,103 | 472,657 | |
Electronic Manufacturing Services - 0.8% | |||
Flextronics International Ltd. (a) | 216,900 | 446,814 | |
SMART Modular Technologies (WWH), Inc. (a) | 168,484 | 205,550 | |
Trimble Navigation Ltd. (a) | 27,000 | 380,700 | |
| 1,033,064 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 1,701,455 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. (a) | 300 | 7,644 | |
INTERNET SOFTWARE & SERVICES - 1.1% | |||
Internet Software & Services - 1.1% | |||
DivX, Inc. (a) | 400 | 1,852 | |
Equinix, Inc. (a) | 11,900 | 552,279 | |
Switch & Data Facilities Co., Inc. (a) | 33,200 | 204,180 | |
Tencent Holdings Ltd. | 115,000 | 656,996 | |
| 1,415,307 | ||
MEDIA - 2.3% | |||
Advertising - 1.7% | |||
VisionChina Media, Inc. ADR (a)(d) | 340,800 | 2,065,248 | |
Cable & Satellite - 0.6% | |||
Virgin Media, Inc. | 161,500 | 771,970 | |
TOTAL MEDIA | 2,837,218 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.3% | |||
Semiconductors - 8.3% | |||
Actel Corp. (a) | 19,449 | 176,402 | |
ANADIGICS, Inc. (a) | 122,500 | 198,450 | |
ARM Holdings PLC sponsored ADR | 98,400 | 412,296 | |
Cavium Networks, Inc. (a)(d) | 202,300 | 1,923,873 | |
Cree, Inc. (a) | 4,000 | 78,560 | |
Exar Corp. (a) | 6,701 | 39,201 | |
Hittite Microwave Corp. (a) | 11,100 | 306,138 | |
Ikanos Communications, Inc. (a) | 1,700 | 2,431 | |
Infineon Technologies AG sponsored ADR (a)(d) | 144,500 | 86,700 | |
International Rectifier Corp. (a) | 47,600 | 597,380 | |
Marvell Technology Group Ltd. (a) | 86,000 | 645,860 | |
MIPS Technologies, Inc. (a) | 48,602 | 97,204 | |
Netlogic Microsystems, Inc. (a) | 44,784 | 1,061,829 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Omnivision Technologies, Inc. (a) | 73,100 | $ 496,349 | |
ON Semiconductor Corp. (a) | 274,630 | 1,005,146 | |
Pericom Semiconductor Corp. (a) | 58,100 | 311,997 | |
Pixelplus Co. Ltd. ADR (a) | 30,925 | 619 | |
PLX Technology, Inc. (a) | 48,400 | 103,576 | |
Skyworks Solutions, Inc. (a) | 146,000 | 949,000 | |
Standard Microsystems Corp. (a) | 1,600 | 24,912 | |
TriQuint Semiconductor, Inc. (a) | 461,000 | 1,074,130 | |
Zoran Corp. (a) | 162,600 | 845,520 | |
| 10,437,573 | ||
SOFTWARE - 6.1% | |||
Application Software - 5.4% | |||
Amdocs Ltd. (a) | 107,600 | 1,802,300 | |
ECtel Ltd. (a) | 2,790 | 949 | |
Smith Micro Software, Inc. (a) | 238,139 | 1,012,091 | |
Synchronoss Technologies, Inc. (a) | 96,600 | 921,564 | |
Taleo Corp. Class A (a) | 1,800 | 16,200 | |
Ulticom, Inc. (a) | 608,678 | 3,043,390 | |
| 6,796,494 | ||
Home Entertainment Software - 0.7% | |||
Ubisoft Entertainment SA (a) | 58,200 | 866,127 | |
Systems Software - 0.0% | |||
Allot Communications Ltd. (a) | 9,500 | 14,155 | |
TOTAL SOFTWARE | 7,676,776 | ||
WIRELESS TELECOMMUNICATION SERVICES - 3.8% | |||
Wireless Telecommunication Services - 3.8% | |||
American Tower Corp. Class A (a) | 44,160 | 1,285,939 | |
Crown Castle International Corp. (a) | 35,100 | 615,654 | |
SBA Communications Corp. Class A (a) | 138,300 | 2,873,874 | |
| 4,775,467 | ||
TOTAL COMMON STOCKS (Cost $225,469,231) | 121,689,838 |
Convertible Bonds - 0.3% | ||||
| Principal Amount | Value | ||
COMMUNICATIONS EQUIPMENT - 0.3% | ||||
Communications Equipment - 0.3% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 700,000 | $ 388,990 |
Money Market Funds - 8.1% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 3,277,161 | 3,277,161 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,934,175 | 6,934,175 | |
TOTAL MONEY MARKET FUNDS (Cost $10,211,336) | 10,211,336 |
TOTAL INVESTMENT PORTFOLIO - 105.1% (Cost $236,380,567) | 132,290,164 |
NET OTHER ASSETS - (5.1)% | (6,371,946) | ||
NET ASSETS - 100% | $ 125,918,218 |
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 | $ 229,487 |
Fidelity Securities Lending Cash Central Fund | 803,223 |
Total | $ 1,032,710 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 132,290,164 | $ 129,009,344 | $ 3,280,820 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $1,235,260,787 of which $865,500,593, $355,447,951, $5,046,977 and $9,265,266 will expire on February 28, 2010, 2011, February 29, 2016 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $36,767,129 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $6,425,815) - See accompanying schedule: Unaffiliated issuers (cost $226,169,231) | $ 122,078,828 |
|
Fidelity Central Funds (cost $10,211,336) | 10,211,336 |
|
Total Investments (cost $236,380,567) |
| $ 132,290,164 |
Receivable for investments sold | 733,075 | |
Receivable for fund shares sold | 51,075 | |
Dividends receivable | 123,540 | |
Interest receivable | 578 | |
Distributions receivable from Fidelity Central Funds | 21,646 | |
Prepaid expenses | 1,659 | |
Other receivables | 292 | |
Total assets | 133,222,029 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 71,772 | |
Payable for fund shares redeemed | 169,941 | |
Accrued management fee | 62,135 | |
Other affiliated payables | 37,065 | |
Other payables and accrued expenses | 28,723 | |
Collateral on securities loaned, at value | 6,934,175 | |
Total liabilities | 7,303,811 | |
|
|
|
Net Assets | $ 125,918,218 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,504,130,262 | |
Accumulated net investment loss | (67) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,274,121,574) | |
Net unrealized appreciation (depreciation) on investments | (104,090,403) | |
Net Assets, for 11,744,970 shares outstanding | $ 125,918,218 | |
Net Asset Value, offering price and redemption price per share ($125,918,218 ÷ 11,744,970 shares) | $ 10.72 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 1,543,173 |
Interest |
| 27,729 |
Income from Fidelity Central Funds (including $803,223 from security lending) |
| 1,032,710 |
|
| 2,603,612 |
Less foreign taxes withheld |
| (175,926) |
Total income |
| 2,427,686 |
|
|
|
Expenses | ||
Management fee | $ 1,131,771 | |
Transfer agent fees | 603,450 | |
Accounting and security lending fees | 83,639 | |
Custodian fees and expenses | 21,809 | |
Independent trustees' compensation | 848 | |
Registration fees | 17,521 | |
Audit | 37,411 | |
Legal | 5,074 | |
Interest | 1,400 | |
Miscellaneous | 29,159 | |
Total expenses before reductions | 1,932,082 | |
Expense reductions | (14,972) | 1,917,110 |
Net investment income (loss) | 510,576 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (47,009,971) | |
Investment not meeting investment restrictions | (1,106) | |
Foreign currency transactions | (32,565) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 1,106 | |
Total net realized gain (loss) |
| (47,042,536) |
Change in net unrealized appreciation (depreciation) on investment securities | (61,760,318) | |
Net gain (loss) | (108,802,854) | |
Net increase (decrease) in net assets resulting from operations | $ (108,292,278) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 510,576 | $ (1,718,047) |
Net realized gain (loss) | (47,042,536) | 2,691,518 |
Change in net unrealized appreciation (depreciation) | (61,760,318) | (11,315,128) |
Net increase (decrease) in net assets resulting from operations | (108,292,278) | (10,341,657) |
Distributions to shareholders from net investment income | (497,720) | - |
Share transactions | 90,532,492 | 50,343,117 |
Reinvestment of distributions | 477,121 | - |
Cost of shares redeemed | (97,531,101) | (120,763,143) |
Net increase (decrease) in net assets resulting from share transactions | (6,521,488) | (70,420,026) |
Redemption fees | 16,560 | 7,726 |
Total increase (decrease) in net assets | (115,294,926) | (80,753,957) |
|
|
|
Net Assets | ||
Beginning of period | 241,213,144 | 321,967,101 |
End of period (including accumulated net investment loss of $67 and accumulated net investment loss of $555, respectively) | $ 125,918,218 | $ 241,213,144 |
|
|
|
Other Information Shares | ||
Sold | 4,763,695 | 2,201,275 |
Issued in reinvestment of distributions | 45,106 | - |
Redeemed | (5,434,215) | (5,427,281) |
Net increase (decrease) | (625,414) | (3,226,006) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 19.50 | $ 20.64 | $ 21.67 | $ 17.67 | $ 20.25 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .04 | (.12) | (.13) | (.09) | (.11) |
Net realized and unrealized gain (loss) | (8.77) | (1.02) | (.90) | 4.09 | (2.48) |
Total from investment operations | (8.73) | (1.14) | (1.03) | 4.00 | (2.59) |
Distributions from net investment income | (.05) | - | - | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 10.72 | $ 19.50 | $ 20.64 | $ 21.67 | $ 17.67 |
Total Return A, B | (44.79)% | (5.52)% | (4.75)% | 22.64% | (12.74)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .95% | .93% | 1.01% | 1.06% | 1.07% |
Expenses net of fee waivers, if any | .95% | .93% | 1.01% | 1.06% | 1.07% |
Expenses net of all reductions | .94% | .93% | 1.00% | .94% | .89% |
Net investment income (loss) | .25% | (.55)% | (.63)% | (.48)% | (.64)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 125,918 | $ 241,213 | $ 321,967 | $ 480,127 | $ 511,210 |
Portfolio turnover rate E | 120% | 39% | 122% | 167% | 226% |
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. |
See accompanying notes which are an integral part of the financial statements.
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Computers Portfolio | -41.78% | -8.97% | -5.65% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Computers Portfolio on February 28, 1999. 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 Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Heather Lawrence, Portfolio Manager of Select Computers Portfolio: During the past year, the fund returned -41.78%, trailing the -33.76% result of the MSCI® US Investable Market Computers & Peripherals Index but beating the steeper decline of the S&P 500. Underweighting IBM and two other index heavyweights in the computer hardware group that outperformed the MSCI index, Hewlett-Packard and Apple, accounted for roughly half of the fund's underperformance. Also hampering our results was unrewarding stock picking in communications equipment, which more than offset the benefits of overweighting that strong-performing segment. My picks in computer storage and peripherals also did worse overall than the index names in that group. Other stocks that detracted included Hong Kong-based Ju Teng International Holdings, which makes cases for computer notebooks and was hurt by expectations of slowing demand. In the case of Finnish cellular handset maker Nokia, the company's profit margins eroded and its market share declined. I sold Ju Teng and Nokia by period end. Likewise, Research In Motion, a Canadian company, was hurt by weakening smartphone demand and a loss of market share to rivals. Ju Teng, Nokia and Research In Motion were out-of-index positions. Conversely, the fund's average cash position of a little more than 4% helped cushion its loss. At the individual stock level, performance benefited from hard-disk drive maker Seagate Technology. I underweighted the stock for most of the period but shifted to an overweighting late in 2008, when it had fallen to what I thought were attractive levels and it seemed that the company's loss of market share might slow. The largest absolute contributor was Diebold, a maker of ATMs and other automated transaction processing equipment. The fund's holdings in the stock gained more than 27% due to timely trading. A small position in a convertible bond issued by computer chip manufacturer Advanced Micro Devices also boosted our relative return, as investors saw it as a defensive play that also had some upside potential.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 20.8 | 24.8 |
Hewlett-Packard Co. | 20.7 | 25.2 |
International Business Machines Corp. | 8.6 | 5.0 |
EMC Corp. | 4.8 | 5.0 |
Dell, Inc. | 4.6 | 4.9 |
Sun Microsystems, Inc. | 3.1 | 1.0 |
Seagate Technology | 2.9 | 1.4 |
Taiwan Semiconductor Manufacturing Co. Ltd. | 2.3 | 0.0 |
Advanced Micro Devices, Inc. | 1.6 | 0.0 |
SanDisk Corp. | 1.5 | 2.6 |
| 70.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Computers & Peripherals | 77.0% |
| |
Semiconductors & Semiconductor Equipment | 12.4% |
| |
Electronic Equipment & Components | 3.3% |
| |
Software | 2.3% |
| |
Communications Equipment | 1.6% |
| |
All Others* | 3.4% |
|
As of August 31, 2008 | |||
Computers & Peripherals | 78.0% |
| |
Communications Equipment | 5.7% |
| |
Electronic Equipment & Instruments | 2.6% |
| |
Software | 2.5% |
| |
Semiconductors & Semiconductor Equipment | 1.8% |
| |
All Others* | 9.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Computers Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 95.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 1.6% | |||
Communications Equipment - 1.6% | |||
Cisco Systems, Inc. (a) | 72,300 | $ 1,053,411 | |
QUALCOMM, Inc. | 25,900 | 865,837 | |
Research In Motion Ltd. (a) | 34,700 | 1,385,918 | |
| 3,305,166 | ||
COMPUTERS & PERIPHERALS - 77.0% | |||
Computer Hardware - 61.2% | |||
3PAR, Inc. (a) | 129,500 | 875,420 | |
Apple, Inc. (a) | 482,700 | 43,109,938 | |
Dell, Inc. (a) | 1,126,178 | 9,606,298 | |
Diebold, Inc. | 55,000 | 1,216,600 | |
Hewlett-Packard Co. | 1,479,500 | 42,949,885 | |
International Business Machines Corp. | 194,248 | 17,876,643 | |
NCR Corp. (a) | 133,400 | 1,056,528 | |
Palm, Inc. (a) | 9,700 | 70,228 | |
Rackable Systems, Inc. (a) | 113,900 | 418,013 | |
Stratasys, Inc. (a) | 45,500 | 414,050 | |
Sun Microsystems, Inc. (a) | 1,354,925 | 6,341,049 | |
Teradata Corp. (a) | 32,500 | 502,450 | |
Wistron Corp. | 3,170,000 | 2,390,060 | |
| 126,827,162 | ||
Computer Storage & Peripherals - 15.8% | |||
Adaptec, Inc. (a) | 447,400 | 1,046,916 | |
Data Domain, Inc. (a)(d) | 94,100 | 1,221,418 | |
Electronics for Imaging, Inc. (a) | 39,024 | 347,314 | |
EMC Corp. (a) | 950,078 | 9,975,819 | |
Hutchinson Technology, Inc. (a)(d) | 259,400 | 466,920 | |
Imation Corp. | 68,500 | 550,740 | |
Intermec, Inc. (a) | 95,800 | 966,622 | |
Lexmark International, Inc. Class A (a) | 52,300 | 896,422 | |
NetApp, Inc. (a) | 153,100 | 2,057,664 | |
Netezza Corp. (a) | 166,500 | 955,710 | |
QLogic Corp. (a) | 63,300 | 583,626 | |
Quantum Corp. (a) | 1,318,200 | 487,734 | |
SanDisk Corp. (a) | 347,100 | 3,092,661 | |
Seagate Technology | 1,397,800 | 6,010,540 | |
Synaptics, Inc. (a)(d) | 64,900 | 1,346,675 | |
Western Digital Corp. (a) | 204,284 | 2,790,519 | |
| 32,797,300 | ||
TOTAL COMPUTERS & PERIPHERALS | 159,624,462 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.0% | |||
Integrated Telecommunication Services - 0.0% | |||
AT&T, Inc. | 800 | 19,016 | |
Verizon Communications, Inc. | 700 | 19,971 | |
| 38,987 | ||
| |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 3.3% | |||
Electronic Components - 0.5% | |||
AU Optronics Corp. sponsored ADR (d) | 138,701 | $ 997,260 | |
Electronic Manufacturing Services - 0.5% | |||
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 514,000 | 1,007,841 | |
Technology Distributors - 2.3% | |||
Arrow Electronics, Inc. (a) | 95,700 | 1,591,491 | |
Ingram Micro, Inc. Class A (a) | 171,200 | 1,864,368 | |
Insight Enterprises, Inc. (a) | 99,300 | 261,159 | |
Tech Data Corp. (a) | 60,200 | 1,040,858 | |
| 4,757,876 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 6,762,977 | ||
IT SERVICES - 0.2% | |||
Data Processing & Outsourced Services - 0.2% | |||
Syntel, Inc. | 20,762 | 422,299 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.9% | |||
Semiconductors - 9.9% | |||
Advanced Micro Devices, Inc. (a)(d) | 1,518,200 | 3,309,676 | |
Broadcom Corp. Class A (a) | 78,500 | 1,291,325 | |
Intel Corp. | 202,000 | 2,573,480 | |
Marvell Technology Group Ltd. (a) | 202,000 | 1,517,020 | |
Micron Technology, Inc. (a) | 354,600 | 1,141,812 | |
NVIDIA Corp. (a) | 118,300 | 979,524 | |
PMC-Sierra, Inc. (a) | 201,900 | 1,031,709 | |
Skyworks Solutions, Inc. (a) | 377,500 | 2,453,750 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 3,772,000 | 4,755,935 | |
United Microelectronics Corp. | 2,452,000 | 539,668 | |
Xilinx, Inc. | 54,100 | 956,488 | |
| 20,550,387 | ||
SOFTWARE - 2.3% | |||
Application Software - 1.0% | |||
Informatica Corp. (a) | 98,500 | 1,270,650 | |
Quest Software, Inc. (a) | 72,200 | 815,860 | |
| 2,086,510 | ||
Systems Software - 1.3% | |||
Oracle Corp. (a) | 118,700 | 1,844,598 | |
Phoenix Technologies Ltd. (a) | 339,200 | 793,728 | |
| 2,638,326 | ||
TOTAL SOFTWARE | 4,724,836 | ||
SPECIALTY RETAIL - 0.5% | |||
Computer & Electronics Retail - 0.5% | |||
Gamestop Corp. Class A (a) | 35,700 | 961,044 | |
TRADING COMPANIES & DISTRIBUTORS - 0.4% | |||
Trading Companies & Distributors - 0.4% | |||
Samsung C&T Corp. | 35,618 | 753,107 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.5% | |||
Wireless Telecommunication Services - 0.5% | |||
Sprint Nextel Corp. (a) | 327,800 | $ 1,078,462 | |
TOTAL COMMON STOCKS (Cost $306,605,848) | 198,221,727 |
Convertible Bonds - 2.5% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.5% | ||||
Semiconductors - 2.5% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 | $ 10,700,000 | 3,905,500 | ||
Xilinx, Inc. 3.125% 3/15/37 | 1,700,000 | 1,170,960 | ||
TOTAL CONVERTIBLE BONDS (Cost $4,428,427) | 5,076,460 |
Money Market Funds - 4.2% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 2,678,470 | $ 2,678,470 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,117,350 | 6,117,350 | |
TOTAL MONEY MARKET FUNDS (Cost $8,795,820) | 8,795,820 | ||
TOTAL INVESTMENT PORTFOLIO - 102.4% (Cost $319,830,095) | 212,094,007 | ||
NET OTHER ASSETS - (2.4)% | (4,930,931) | ||
NET ASSETS - 100% | $ 207,163,076 |
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 | $ 279,359 |
Fidelity Securities Lending Cash Central Fund | 336,450 |
Total | $ 615,809 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 212,094,007 | $ 197,570,936 | $ 14,523,071 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $728,481,031 of which $453,006,030, $251,780,199, and $23,694,802 will expire on February 28, 2010, 2011, and 2017 respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $37,006,431 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $5,918,558) - See accompanying schedule: Unaffiliated issuers (cost $311,034,275) | $ 203,298,187 |
|
Fidelity Central Funds (cost $8,795,820) | 8,795,820 |
|
Total Investments (cost $319,830,095) |
| $ 212,094,007 |
Receivable for investments sold | 2,010,231 | |
Receivable for fund shares sold | 97,332 | |
Dividends receivable | 143,848 | |
Interest receivable | 236,566 | |
Distributions receivable from Fidelity Central Funds | 12,582 | |
Prepaid expenses | 2,615 | |
Other receivables | 183,852 | |
Total assets | 214,781,033 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,048,148 | |
Payable for fund shares redeemed | 253,694 | |
Accrued management fee | 104,041 | |
Other affiliated payables | 62,776 | |
Other payables and accrued expenses | 31,948 | |
Collateral on securities loaned, at value | 6,117,350 | |
Total liabilities | 7,617,957 | |
|
|
|
Net Assets | $ 207,163,076 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,113,674,012 | |
Undistributed net investment income | 29,684 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (798,753,488) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (107,787,132) | |
Net Assets, for 8,838,480 shares outstanding | $ 207,163,076 | |
Net Asset Value, offering price and redemption price per share ($207,163,076 ÷ 8,838,480 shares) | $ 23.44 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 2,246,215 |
Interest |
| 110,863 |
Income from Fidelity Central Funds (including $336,450 from security lending) |
| 615,809 |
Total income |
| 2,972,887 |
|
|
|
Expenses | ||
Management fee | $ 1,934,947 | |
Transfer agent fees | 985,366 | |
Accounting and security lending fees | 139,954 | |
Custodian fees and expenses | 31,374 | |
Independent trustees' compensation | 1,604 | |
Registration fees | 27,180 | |
Audit | 39,991 | |
Legal | 7,856 | |
Interest | 663 | |
Miscellaneous | 35,144 | |
Total expenses before reductions | 3,204,079 | |
Expense reductions | (44,148) | 3,159,931 |
Net investment income (loss) | (187,044) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (88,229,445) | |
Investment not meeting investment restrictions | (104) | |
Foreign currency transactions | (32,341) | |
Payment from investment advisor for loss on investment not meeting investment restrictions | 104 | |
Total net realized gain (loss) |
| (88,261,786) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (62,375,769) | |
Assets and liabilities in foreign currencies | (49,228) | |
Total change in net unrealized appreciation (depreciation) |
| (62,424,997) |
Net gain (loss) | (150,686,783) | |
Net increase (decrease) in net assets resulting from operations | $ (150,873,827) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (187,044) | $ (1,324,683) |
Net realized gain (loss) | (88,261,786) | 62,985,171 |
Change in net unrealized appreciation (depreciation) | (62,424,997) | (54,257,215) |
Net increase (decrease) in net assets resulting from operations | (150,873,827) | 7,403,273 |
Share transactions | 52,960,888 | 250,889,123 |
Cost of shares redeemed | (132,192,597) | (281,603,085) |
Net increase (decrease) in net assets resulting from share transactions | (79,231,709) | (30,713,962) |
Redemption fees | 17,677 | 29,659 |
Total increase (decrease) in net assets | (230,087,859) | (23,281,030) |
|
|
|
Net Assets | ||
Beginning of period | 437,250,935 | 460,531,965 |
End of period (including undistributed net investment income of $29,684 and accumulated net investment loss of $739, respectively) | $ 207,163,076 | $ 437,250,935 |
Other Information Shares | ||
Sold | 1,486,599 | 5,458,006 |
Redeemed | (3,507,997) | (6,319,547) |
Net increase (decrease) | (2,021,398) | (861,541) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 40.26 | $ 39.29 | $ 37.55 | $ 34.65 | $ 37.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | (.12) | (.10) | (.20) | (.21) F |
Net realized and unrealized gain (loss) | (16.80) | 1.09 | 1.83 | 3.10 | (2.64) |
Total from investment operations | (16.82) | .97 | 1.73 | 2.90 | (2.85) |
Redemption fees added to paid in capital C | - I | - I | .01 | - I | - I |
Net asset value, end of period | $ 23.44 | $ 40.26 | $ 39.29 | $ 37.55 | $ 34.65 |
Total Return A, B | (41.78)% | 2.47% | 4.63% | 8.37% | (7.60)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .92% | .92% | 1.02% | 1.04% | 1.05% |
Expenses net of fee waivers, if any | .92% | .92% | 1.02% | 1.04% | 1.05% |
Expenses net of all reductions | .91% | .91% | 1.00% | .98% | .98% |
Net investment income (loss) | (.05)% | (.26)% | (.28)% | (.56)% | (.63)% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 207,163 | $ 437,251 | $ 460,532 | $ 531,707 | $ 667,801 |
Portfolio turnover rate E | 183% | 234% | 214% | 112% | 100% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Investment income per share reflects a special dividend which amounted to $.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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Electronics 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Electronics Portfolio | -42.63% | -13.24% | -4.62% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Electronics Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Stephen Barwikowski and Christopher Lin, who became Co-Portfolio Managers of Select Electronics Portfolio on January 1, 2009: During the past year, the fund returned -42.63%, about in line with the -42.60% mark of the MSCI® US Investable Market Semiconductors & Semiconductor Equipment Index and modestly outpacing the S&P 500. Strong stock picking in the semiconductor equipment segment had the most positive impact on our results versus the MSCI index. Within that group, a sizable underweighting in MEMC Electronic Materials was beneficial. The company, which makes silicon wafers for the solar and semiconductor industries, was hurt by falling demand, the severe contraction in credit and a sharp pullback in the shares of companies with ties to alternative energy. However, we thought the stock got extremely cheap and still liked the longer-term prospects for solar energy, so we boosted MEMC to an overweighting by period end. Stock selection in computer storage and peripherals and in technology distributors modestly added value, and a small cash position provided some additional downside cushion. Other contributors included wireless infrastructure provider QUALCOMM, Synaptics, a maker of chips for touchscreens, and Taiwan Semiconductor Manufacturing. Underweighting weak-performing KLA-Tencor, a maker of chip equipment, was beneficial as well. QUALCOMM, Synaptics and Taiwan Semiconductor Manufacturing were out-of-index positions. Conversely, stock selection in electrical components and equipment detracted from performance, as did a large underweighting in semiconductors, which outperformed the MSCI index. On an absolute basis, strength in the U.S. dollar was detrimental to the fund's foreign holdings. At the stock level, the biggest detractor by a long shot was personal computer chip maker Intel, which hurt because it outperformed the MSCI index and we underweighted it. That said, Intel was the fund's largest holding at period end. Underweighting two other chip stocks that outperformed worked against performance as well: Cypress Semiconductor and Linear Technology. Among stocks we overweighted, one detractor was Finland's Nokia, which declined steadily during the period amid slackening demand for cellular handsets and an erosion of market share. The fund did not own Nokia at period end. Another was Arrowhead Research, a development-stage nanotechnology holding that was in the fund when we took over. Nokia and Arrowhead were out-of-index holdings.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Electronics Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 22.5 | 23.4 |
Texas Instruments, Inc. | 9.6 | 7.5 |
Applied Materials, Inc. | 7.1 | 8.3 |
Marvell Technology Group Ltd. | 3.3 | 0.7 |
National Semiconductor Corp. | 2.6 | 0.0 |
Atmel Corp. | 2.5 | 0.0 |
NVIDIA Corp. | 2.3 | 1.3 |
Analog Devices, Inc. | 2.2 | 0.0 |
Broadcom Corp. Class A | 2.1 | 3.2 |
Lam Research Corp. | 2.1 | 2.4 |
| 56.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Semiconductors & Semiconductor Equipment | 87.0% |
| |
Electronic Equipment & Components | 4.0% |
| |
Communications Equipment | 2.6% |
| |
Computers & Peripherals | 1.1% |
| |
Electrical Equipment | 0.9% |
| |
All Others* | 4.4% |
|
As of August 31, 2008 | |||
Semiconductors & Semiconductor Equipment | 75.3% |
| |
Communications Equipment | 5.5% |
| |
Electrical Equipment | 5.1% |
| |
Computers & Peripherals | 4.3% |
| |
Electronic | 2.7% |
| |
All Others* | 7.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Electronics Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 91.4% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 2.3% | |||
Communications Equipment - 2.3% | |||
Cisco Systems, Inc. (a) | 171,200 | $ 2,494,384 | |
QUALCOMM, Inc. | 313,700 | 10,486,991 | |
| 12,981,375 | ||
COMPUTERS & PERIPHERALS - 0.9% | |||
Computer Hardware - 0.2% | |||
HTC Corp. | 101,000 | 1,093,365 | |
Computer Storage & Peripherals - 0.7% | |||
SanDisk Corp. (a) | 130,500 | 1,162,755 | |
Seagate Technology | 604,700 | 2,600,210 | |
| 3,762,965 | ||
TOTAL COMPUTERS & PERIPHERALS | 4,856,330 | ||
ELECTRICAL EQUIPMENT - 0.9% | |||
Electrical Components & Equipment - 0.9% | |||
First Solar, Inc. (a) | 6,400 | 676,736 | |
Motech Industries, Inc. | 1 | 2 | |
Q-Cells SE (a)(e) | 60,000 | 994,072 | |
Renewable Energy Corp. AS (a)(e) | 159,600 | 1,082,646 | |
SolarWorld AG (e) | 76,100 | 1,316,256 | |
Sunpower Corp. Class B (a) | 33,200 | 822,032 | |
| 4,891,744 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 3.5% | |||
Electronic Components - 0.6% | |||
Everlight Electronics Co. Ltd. | 1,464,993 | 2,233,920 | |
Vishay Intertechnology, Inc. (a) | 606,300 | 1,546,065 | |
| 3,779,985 | ||
Electronic Manufacturing Services - 0.6% | |||
DDi Corp. (a) | 173,600 | 558,992 | |
Flextronics International Ltd. (a) | 1,090,093 | 2,245,592 | |
Jabil Circuit, Inc. | 148,600 | 615,204 | |
| 3,419,788 | ||
Technology Distributors - 2.3% | |||
Arrow Electronics, Inc. (a) | 157,800 | 2,624,214 | |
Avnet, Inc. (a) | 487,800 | 8,424,306 | |
Ingram Micro, Inc. Class A (a) | 153,100 | 1,667,259 | |
Insight Enterprises, Inc. (a) | 46,200 | 121,506 | |
| 12,837,285 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 20,037,058 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.2% | |||
Life Sciences Tools & Services - 0.2% | |||
Arrowhead Research Corp. (a)(e) | 2,126,672 | 829,402 | |
Arrowhead Research Corp. warrants 5/21/17 (a) | 285,468 | 75,779 | |
| 905,181 | ||
| |||
Shares | Value | ||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Timminco Ltd. (a) | 200,000 | $ 517,235 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 83.5% | |||
Semiconductor Equipment - 17.8% | |||
Advanced Energy Industries, Inc. (a) | 14,100 | 95,316 | |
Aixtron AG | 332,400 | 1,348,606 | |
Amkor Technology, Inc. (a) | 278,800 | 476,748 | |
Applied Materials, Inc. | 4,307,100 | 39,668,391 | |
ASML Holding NV (NY Shares) | 600,400 | 9,084,052 | |
ATMI, Inc. (a) | 105,700 | 1,405,810 | |
Brooks Automation, Inc. (a) | 26,400 | 112,992 | |
Cabot Microelectronics Corp. (a) | 11,300 | 232,554 | |
Cohu, Inc. | 9,700 | 82,159 | |
Cymer, Inc. (a) | 315,871 | 5,834,137 | |
Entegris, Inc. (a) | 45,200 | 27,572 | |
FEI Co. (a) | 15,400 | 220,374 | |
FormFactor, Inc. (a) | 102,000 | 1,474,920 | |
Global Unichip Corp. | 451,382 | 1,916,964 | |
KLA-Tencor Corp. | 71,500 | 1,233,375 | |
Kulicke & Soffa Industries, Inc. (a) | 320,683 | 432,922 | |
Lam Research Corp. (a)(e) | 589,800 | 11,536,488 | |
MEMC Electronic Materials, Inc. (a) | 739,800 | 11,104,398 | |
MKS Instruments, Inc. (a) | 18,000 | 226,620 | |
Novellus Systems, Inc. (a) | 40,900 | 521,475 | |
Teradyne, Inc. (a) | 30,700 | 126,791 | |
Tessera Technologies, Inc. (a) | 257,200 | 2,777,760 | |
Ultratech, Inc. (a) | 10,300 | 113,094 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 564,500 | 10,302,125 | |
Veeco Instruments, Inc. (a) | 12,100 | 51,546 | |
Verigy Ltd. (a) | 24,200 | 167,222 | |
| 100,574,411 | ||
Semiconductors - 65.7% | |||
Actel Corp. (a) | 10,400 | 94,328 | |
Advanced Analogic Technologies, Inc. (a) | 865,600 | 2,726,640 | |
Advanced Micro Devices, Inc. (a)(e) | 927,400 | 2,021,732 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR (e) | 2,772,702 | 4,713,593 | |
Altera Corp. | 252,900 | 3,876,957 | |
Analog Devices, Inc. | 674,900 | 12,580,136 | |
Applied Micro Circuits Corp. (a) | 92,800 | 335,008 | |
ARM Holdings PLC sponsored ADR (e) | 1,647,200 | 6,901,768 | |
Atheros Communications, Inc. (a) | 53,900 | 651,112 | |
Atmel Corp. (a) | 3,984,700 | 14,225,379 | |
Broadcom Corp. Class A (a)(e) | 724,000 | 11,909,800 | |
California Micro Devices Corp. (a) | 352,774 | 737,298 | |
Cavium Networks, Inc. (a) | 177,800 | 1,690,878 | |
Chartered Semiconductor Manufacturing Ltd. sponsored ADR (a) | 678,519 | 1,072,060 | |
Cirrus Logic, Inc. (a) | 161,700 | 574,035 | |
Cree, Inc. (a) | 29,600 | 581,344 | |
CSR PLC (a)(e) | 97,800 | 276,143 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Cypress Semiconductor Corp. (a) | 378,800 | $ 2,106,128 | |
Diodes, Inc. (a) | 12,200 | 94,916 | |
DSP Group, Inc. (a) | 12,100 | 67,155 | |
Exar Corp. (a) | 15,000 | 87,750 | |
Fairchild Semiconductor International, Inc. (a) | 1,520,400 | 5,321,400 | |
Himax Technologies, Inc. sponsored ADR | 356,700 | 588,555 | |
Infineon Technologies AG sponsored ADR (a)(e) | 1,483,300 | 889,980 | |
Integrated Device Technology, Inc. (a) | 761,400 | 3,411,072 | |
Intel Corp. | 9,928,400 | 126,487,815 | |
International Rectifier Corp. (a) | 348,100 | 4,368,655 | |
Intersil Corp. Class A | 464,700 | 4,698,117 | |
Linear Technology Corp. | 88,300 | 1,924,940 | |
LSI Corp. (a) | 611,200 | 1,772,480 | |
Marvell Technology Group Ltd. (a) | 2,465,100 | 18,512,901 | |
Maxim Integrated Products, Inc. | 328,700 | 3,977,270 | |
Micrel, Inc. | 23,000 | 152,950 | |
Microchip Technology, Inc. | 47,800 | 897,206 | |
Micron Technology, Inc. (a) | 2,282,200 | 7,348,684 | |
Microsemi Corp. (a) | 214,000 | 2,163,540 | |
National Semiconductor Corp. | 1,354,700 | 14,766,230 | |
Netlogic Microsystems, Inc. (a) | 7,500 | 177,825 | |
NVIDIA Corp. (a) | 1,578,650 | 13,071,222 | |
O2Micro International Ltd. sponsored ADR (a) | 479,200 | 1,111,744 | |
Omnivision Technologies, Inc. (a) | 115,600 | 784,924 | |
ON Semiconductor Corp. (a) | 220,500 | 807,030 | |
PMC-Sierra, Inc. (a) | 649,700 | 3,319,967 | |
Power Integrations, Inc. | 46,000 | 844,100 | |
Rambus, Inc. (a) | 38,800 | 332,128 | |
RF Micro Devices, Inc. (a) | 455,700 | 414,687 | |
Richtek Technology Corp. | 409,000 | 1,747,575 | |
Samsung Electronics Co. Ltd. | 12,958 | 3,985,465 | |
Semtech Corp. (a) | 27,800 | 326,650 | |
Sigma Designs, Inc. (a)(e) | 10,800 | 148,176 | |
Silicon Image, Inc. (a) | 355,845 | 825,560 | |
Silicon Laboratories, Inc. (a) | 19,600 | 429,240 | |
Silicon Storage Technology, Inc. (a) | 39,300 | 57,378 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR (e) | 559,100 | 2,476,813 | |
SiRF Technology Holdings, Inc. (a) | 251,700 | 460,611 | |
Skyworks Solutions, Inc. (a) | 514,600 | 3,344,900 | |
Standard Microsystems Corp. (a) | 101,600 | 1,581,912 | |
Supertex, Inc. (a) | 39,800 | 830,228 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 706,000 | 890,162 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 1,116,300 | 8,416,902 | |
Texas Instruments, Inc. | 3,756,200 | 53,901,470 | |
TriQuint Semiconductor, Inc. (a) | 61,600 | 143,528 | |
| |||
Shares | Value | ||
Xilinx, Inc. | 204,800 | $ 3,620,864 | |
Zoran Corp. (a) | 241,700 | 1,256,840 | |
| 369,913,856 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 470,488,267 | ||
SOFTWARE - 0.0% | |||
Home Entertainment Software - 0.0% | |||
Nintendo Co. Ltd. | 200 | 56,400 | |
TOTAL COMMON STOCKS (Cost $1,005,369,315) | 514,733,590 |
Corporate Bonds - 4.5% | ||||
| Principal Amount (d) |
| ||
Convertible Bonds - 4.1% | ||||
COMMUNICATIONS EQUIPMENT - 0.3% | ||||
Communications Equipment - 0.3% | ||||
Lucent Technologies, Inc. 2.875% 6/15/25 | $ 3,660,000 | 1,590,673 | ||
COMPUTERS & PERIPHERALS - 0.2% | ||||
Computer Storage & Peripherals - 0.2% | ||||
Maxtor Corp. 2.375% 8/15/12 | 1,690,000 | 1,002,508 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.5% | ||||
Electronic Manufacturing Services - 0.5% | ||||
TTM Technologies, Inc. 3.25% 5/15/15 | 5,260,000 | 2,687,334 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.1% | ||||
Semiconductor Equipment - 0.6% | ||||
Amkor Technology, Inc. 2.5% 5/15/11 | 5,920,000 | 3,535,424 | ||
Semiconductors - 2.5% | ||||
Advanced Micro Devices, Inc.: | ||||
5.75% 8/15/12 | 1,000,000 | 401,250 | ||
6% 5/1/15 | 17,270,000 | 6,303,550 | ||
Diodes, Inc. 2.25% 10/1/26 | 2,830,000 | 1,997,980 | ||
Infineon Technologies Holding BV 5% 6/5/10 | EUR | 4,450,000 | 2,199,746 | |
Xilinx, Inc. 3.125% 3/15/37 | 4,790,000 | 3,299,352 | ||
| 14,201,878 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 17,737,302 | |||
TOTAL CONVERTIBLE BONDS | 23,017,817 | |||
Corporate Bonds - continued | ||||
| Principal Amount | Value | ||
Nonconvertible Bonds - 0.4% | ||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.4% | ||||
Semiconductors - 0.4% | ||||
Avago Technologies Finance Ltd.: | ||||
10.125% 12/1/13 | $ 500,000 | $ 421,250 | ||
11.875% 12/1/15 | 1,500,000 | 1,110,000 | ||
Freescale Semiconductor, Inc.: | ||||
9.875% 12/15/14 pay-in-kind (f) | 2,500,000 | 111,068 | ||
10.125% 12/15/16 | 2,000,000 | 260,000 | ||
NXP BV: | ||||
7.875% 10/15/14 | 1,995,000 | 389,025 | ||
9.5% 10/15/15 | 2,000,000 | 150,000 | ||
| 2,441,343 | |||
TOTAL CORPORATE BONDS (Cost $28,017,021) | 25,459,160 |
Money Market Funds - 5.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 21,870,843 | 21,870,843 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 11,631,260 | 11,631,260 | |
TOTAL MONEY MARKET FUNDS (Cost $33,502,103) | 33,502,103 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount | Value | ||
Investments in repurchase agreements in a joint trading account at 0.25%, dated 2/27/09 due 3/2/09 (Collateralized by U.S. Treasury Obligations) # | $ 69,001 | $ 69,000 | |
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $1,066,957,439) | 573,763,853 | ||
NET OTHER ASSETS - (1.8)% | (10,310,410) | ||
NET ASSETS - 100% | $ 563,453,443 |
Currency Abbreviation | ||
EUR | - | European Monetary Unit |
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) Principal amount is stated in United States dollars unless otherwise noted. |
(e) Security or a portion of the security is on loan at period end. |
(f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$69,000 due 3/02/09 at 0.25% | |
BNP Paribas Securities Corp. | $ 37,085 |
Barclays Capital, Inc. | 8,953 |
Citigroup Global Markets, Inc. | 5,116 |
HSBC Securities (USA), Inc. | 2,558 |
J.P. Morgan Securities, Inc. | 5,056 |
Societe Generale, New York Branch | 10,232 |
| $ 69,000 |
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 | $ 440,241 |
Fidelity Securities Lending Cash Central Fund | 564,292 |
Total | $ 1,004,533 |
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, |
Arrowhead Research Corp. | $ 10,303,312 | $ 251,673 | $ 2,667,961 | $ - | $ - |
Nanophase Technologies Corp. | 6,595,232 | - | 3,092,579 | - | - |
Total | $ 16,898,544 | $ 251,673 | $ 5,760,540 | $ - | $ - |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 573,763,853 | $ 531,218,338 | $ 42,545,515 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.0% |
Taiwan | 4.1% |
Bermuda | 3.3% |
Netherlands | 2.1% |
United Kingdom | 1.3% |
Others (individually less than 1%) | 3.2% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $2,645,400,056 of which $804,312,747, $1,514,779,921, $67,503,898 and $258,803,490 will expire on February 28, 2010, 2011, February 29, 2012 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $163,607,371 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $11,034,498 and repurchase agreements of $69,000) - - See accompanying schedule: Unaffiliated issuers (cost $1,033,455,336) | $ 540,261,750 |
|
Fidelity Central Funds (cost $33,502,103) | 33,502,103 |
|
Total Investments (cost $1,066,957,439) |
| $ 573,763,853 |
Cash | 30,218 | |
Receivable for investments sold | 6,255,209 | |
Receivable for fund shares sold | 253,895 | |
Dividends receivable | 1,918,823 | |
Interest receivable | 1,023,577 | |
Distributions receivable from Fidelity Central Funds | 25,956 | |
Prepaid expenses | 7,573 | |
Other receivables | 31,401 | |
Total assets | 583,310,505 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 7,232,546 | |
Payable for fund shares redeemed | 487,302 | |
Accrued management fee | 280,087 | |
Other affiliated payables | 167,352 | |
Other payables and accrued expenses | 58,515 | |
Collateral on securities loaned, at value | 11,631,260 | |
Total liabilities | 19,857,062 | |
|
|
|
Net Assets | $ 563,453,443 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,893,271,923 | |
Undistributed net investment income | 2,316,529 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,838,915,872) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (493,219,137) | |
Net Assets, for 26,667,129 shares outstanding | $ 563,453,443 | |
Net Asset Value, offering price and redemption price per share ($563,453,443 ÷ 26,667,129 shares) | $ 21.13 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 17,962,458 |
Interest |
| 880,186 |
Income from Fidelity Central Funds (including $564,292 from security lending) |
| 1,004,533 |
|
| 19,847,177 |
Less foreign taxes withheld |
| (1,172,238) |
Total income |
| 18,674,939 |
|
|
|
Expenses | ||
Management fee | $ 5,372,059 | |
Transfer agent fees | 2,635,314 | |
Accounting and security lending fees | 336,897 | |
Custodian fees and expenses | 102,725 | |
Independent trustees' compensation | 5,056 | |
Depreciation in deferred trustee compensation account | (386) | |
Registration fees | 26,906 | |
Audit | 41,901 | |
Legal | 10,600 | |
Miscellaneous | 88,199 | |
Total expenses before reductions | 8,619,271 | |
Expense reductions | (97,680) | 8,521,591 |
Net investment income (loss) | 10,153,348 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (320,832,156) | |
Other affiliated issuers | (16,917,126) |
|
Foreign currency transactions | (358,093) | |
Total net realized gain (loss) |
| (338,107,375) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (139,536,289) | |
Assets and liabilities in foreign currencies | (25,865) | |
Total change in net unrealized appreciation (depreciation) |
| (139,562,154) |
Net gain (loss) | (477,669,529) | |
Net increase (decrease) in net assets resulting from operations | $ (467,516,181) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 10,153,348 | $ 6,113,873 |
Net realized gain (loss) | (338,107,375) | 22,171,161 |
Change in net unrealized appreciation (depreciation) | (139,562,154) | (302,178,662) |
Net increase (decrease) in net assets resulting from operations | (467,516,181) | (273,893,628) |
Distributions to shareholders from net investment income | (5,135,720) | (5,736,828) |
Distributions to shareholders from net realized gain | - | (4,099,933) |
Total distributions | (5,135,720) | (9,836,761) |
Share transactions | 85,955,651 | 145,805,179 |
Reinvestment of distributions | 4,870,280 | 9,356,072 |
Cost of shares redeemed | (256,580,265) | (613,892,168) |
Net increase (decrease) in net assets resulting from share transactions | (165,754,334) | (458,730,917) |
Redemption fees | 35,043 | 63,102 |
Total increase (decrease) in net assets | (638,371,192) | (742,398,204) |
|
|
|
Net Assets | ||
Beginning of period | 1,201,824,635 | 1,944,222,839 |
End of period (including undistributed net investment income of $2,316,529 and accumulated net investment loss of $1,850,134, respectively) | $ 563,453,443 | $ 1,201,824,635 |
Other Information Shares | ||
Sold | 2,625,746 | 3,124,320 |
Issued in reinvestment of distributions | 236,536 | 199,414 |
Redeemed | (8,528,536) | (13,126,353) |
Net increase (decrease) | (5,666,254) | (9,802,619) |
Financial Highlights
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.17 | $ 46.14 | $ 46.60 | $ 38.93 | $ 43.67 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .34 | .17 | .05 | (.07) | (.17) |
Net realized and unrealized gain (loss) | (16.19) | (8.85) | (.48) | 7.73 | (4.58) |
Total from investment operations | (15.85) | (8.68) | (.43) | 7.66 | (4.75) |
Distributions from net investment income | (.19) | (.17) | (.03) | - | - |
Distributions from net realized gain | - | (.12) | - | - | - |
Total distributions | (.19) | (.29) | (.03) | - | - |
Redemption fees added to paid in capital C | - H | - H | - H | .01 | .01 |
Net asset value, end of period | $ 21.13 | $ 37.17 | $ 46.14 | $ 46.60 | $ 38.93 |
Total Return A, B | (42.63)% | (18.95)% | (.92)% | 19.70% | (10.85)% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .89% | .87% | .91% | .95% | .96% |
Expenses net of fee waivers, if any | .89% | .87% | .91% | .95% | .96% |
Expenses net of all reductions | .88% | .86% | .89% | .88% | .89% |
Net investment income (loss) | 1.05% | .36% | .11% | (.17)% | (.45)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 563,453 | $ 1,201,825 | $ 1,944,223 | $ 2,840,570 | $ 2,797,324 |
Portfolio turnover rate E | 91% | 87% | 97% | 80% | 119% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Total returns do not include the effect of the former sales charges. C Calculated based on average shares outstanding during the period. D Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. E Amount does not include the portfolio activity of any underlying Fidelity Central Funds. F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. G For the year ended February 29. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 years |
Select IT Services Portfolio A | -28.10% | 0.03% | 2.39% |
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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Kyle Weaver, who became Portfolio Manager of Select IT Services Portfolio on February 1, 2009: During the past year, the fund returned -28.10%, trailing the -24.49% return of the MSCI® US Investable Market IT Services Index but beating the steeper decline of the S&P 500. Versus the MSCI index, unfavorable stock picking in the index's largest subindustry group, data processing and outsourced services, accounted for more than half of the total performance shortfall. Also undermining the fund's results was weak stock selection in the IT consulting and other services segment. VeriFone, specializing in secure electronic payment solutions, was the largest individual detractor. Its shares were particularly punished by investors in the fourth quarter, when the company reduced its financial guidance and the stock was downgraded by Wall Street analysts. Having lighter-than-index exposures to systems integration specialist Electronic Data Systems - which announced that it would be acquired - and payroll processor Automatic Data Processing was counterproductive, as both stocks outperformed the MSCI index. Other detractors included money transfer provider Western Union, Alliance Data Systems and Wright Express. Alliance manages loyalty and payment programs for retailers, while Wright Express provides payment services to the trucking industry. Conversely, stock selection in the diversified support services group modestly aided performance, as did a small cash position. Electronic payment network providers Visa and MasterCard, the fund's two largest positions at period end, both contributed to performance. Although many investors avoided these stocks in the mistaken belief that they would be hurt by the growing problem with credit card delinquency, in fact neither company has direct credit risk in the way that the issuers of credit cards do. Not owning index component DST Systems, a provider of information processing and software services/products, also helped, as did overweightings in Affiliated Computer Services, which provides an array of data processing services that help corporate and government customers save money, and leading IT services provider Accenture.
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 (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Visa, Inc. | 15.2 | 12.5 |
MasterCard, Inc. Class A | 12.3 | 6.3 |
Accenture Ltd. Class A | 11.4 | 12.9 |
Fiserv, Inc. | 6.4 | 4.6 |
Affiliated Computer Services, Inc. Class A | 4.6 | 4.6 |
Cognizant Technology Solutions Corp. Class A | 4.5 | 4.7 |
Automatic Data Processing, Inc. | 4.4 | 4.3 |
Alliance Data Systems Corp. | 3.4 | 4.1 |
Fidelity National Information Services, Inc. | 3.2 | 0.9 |
The Western Union Co. | 3.1 | 10.8 |
| 68.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
IT Services | 97.9% |
| |
All Others* | 2.1% |
|
As of August 31, 2008 | |||
IT Services | 90.4% |
| |
Software | 2.1% |
| |
Semiconductors & Semiconductor Equipment | 1.3% |
| |
Energy Equipment & Services | 1.2% |
| |
Diversified Financial Services | 1.1% |
| |
All Others* | 3.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select IT Services Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.9% | |||
Shares | Value | ||
IT SERVICES - 97.9% | |||
Data Processing & Outsourced Services - 74.6% | |||
Affiliated Computer Services, Inc. Class A (a) | 47,200 | $ 2,200,936 | |
Alliance Data Systems Corp. (a) | 55,400 | 1,639,840 | |
Automatic Data Processing, Inc. | 61,200 | 2,089,980 | |
Broadridge Financial Solutions, Inc. | 44,700 | 714,306 | |
Cass Information Systems, Inc. | 2,200 | 56,782 | |
Computer Sciences Corp. (a) | 8,600 | 298,764 | |
Convergys Corp. (a) | 40,700 | 262,515 | |
CyberSource Corp. (a) | 96,601 | 1,190,124 | |
ExlService Holdings, Inc. (a) | 4,400 | 35,596 | |
Fidelity National Information Services, Inc. | 89,200 | 1,561,000 | |
Fiserv, Inc. (a) | 93,800 | 3,059,756 | |
Genpact Ltd. (a) | 57,500 | 455,400 | |
Gevity HR, Inc. | 6,800 | 14,484 | |
Global Cash Access Holdings, Inc. (a) | 13,800 | 38,778 | |
Global Payments, Inc. | 18,700 | 573,716 | |
Heartland Payment Systems, Inc. | 7,200 | 39,672 | |
infoGROUP, Inc. | 11,100 | 32,856 | |
Lender Processing Services, Inc. | 47,400 | 1,241,406 | |
MasterCard, Inc. Class A (d) | 37,515 | 5,928,495 | |
Metavante Holding Co. (a) | 85,400 | 1,435,574 | |
NeuStar, Inc. Class A (a) | 24,100 | 373,309 | |
Paychex, Inc. | 63,187 | 1,393,905 | |
Teletech Holdings, Inc. (a) | 43,600 | 377,576 | |
The Western Union Co. | 134,400 | 1,499,904 | |
TNS, Inc. (a) | 7,200 | 48,168 | |
VeriFone Holdings, Inc. (a)(d) | 116,700 | 506,478 | |
Visa, Inc. (d) | 129,012 | 7,316,272 | |
Wright Express Corp. (a) | 98,300 | 1,439,112 | |
| 35,824,704 | ||
IT Consulting & Other Services - 23.3% | |||
Accenture Ltd. Class A | 187,200 | 5,464,368 | |
Acxiom Corp. | 20,600 | 170,568 | |
CACI International, Inc. Class A (a) | 9,300 | 397,761 | |
China Information Security Technology, Inc. (a) | 7,800 | 19,890 | |
Ciber, Inc. (a) | 34,500 | 89,355 | |
| |||
Shares | Value | ||
Cognizant Technology Solutions Corp. Class A (a) | 116,716 | $ 2,147,574 | |
iGate Corp. | 6,900 | 20,700 | |
Integral Systems, Inc. (a) | 5,000 | 45,650 | |
ManTech International Corp. Class A (a) | 6,600 | 344,322 | |
Maximus, Inc. | 5,800 | 213,730 | |
NCI, Inc. Class A (a) | 2,200 | 59,840 | |
Ness Technologies, Inc. (a) | 11,600 | 33,988 | |
Perot Systems Corp. Class A (a) | 27,900 | 317,502 | |
RightNow Technologies, Inc. (a) | 6,400 | 50,880 | |
SAIC, Inc. (a) | 56,500 | 1,068,415 | |
Sapient Corp. (a) | 131,300 | 502,879 | |
SRA International, Inc. Class A (a) | 13,400 | 181,972 | |
Unisys Corp. (a) | 127,200 | 45,792 | |
| 11,175,186 | ||
TOTAL COMMON STOCK (Cost $57,402,719) | 46,999,890 | ||
Money Market Funds - 29.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 826,505 | 826,505 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 13,305,900 | 13,305,900 | |
TOTAL MONEY MARKET FUNDS (Cost $14,132,405) | 14,132,405 | ||
TOTAL INVESTMENT PORTFOLIO - 127.3% (Cost $71,535,124) | 61,132,295 | ||
NET OTHER ASSETS - (27.3)% | (13,093,740) | ||
NET ASSETS - 100% | $ 48,038,555 |
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 | $ 26,290 |
Fidelity Securities Lending Cash Central Fund | 36,588 |
Total | $ 62,878 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 61,132,295 | $ 61,132,295 | $ - | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.7% |
Bermuda | 12.3% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $8,723,192 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $9,120,573 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,198,144) - See accompanying schedule: Unaffiliated issuers (cost $57,402,719) | $ 46,999,890 |
|
Fidelity Central Funds (cost $14,132,405) | 14,132,405 |
|
Total Investments (cost $71,535,124) |
| $ 61,132,295 |
Receivable for fund shares sold | 372,781 | |
Dividends receivable | 14,305 | |
Distributions receivable from Fidelity Central Funds | 3,329 | |
Prepaid expenses | 575 | |
Other receivables | 8,700 | |
Total assets | 61,531,985 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 124,317 | |
Accrued management fee | 22,866 | |
Other affiliated payables | 12,598 | |
Other payables and accrued expenses | 27,749 | |
Collateral on securities loaned, at value | 13,305,900 | |
Total liabilities | 13,493,430 | |
|
|
|
Net Assets | $ 48,038,555 | |
Net Assets consist of: |
| |
Paid in capital | $ 77,926,732 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (19,483,408) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (10,404,769) | |
Net Assets, for 4,524,516 shares outstanding | $ 48,038,555 | |
Net Asset Value, offering price and redemption price per share ($48,038,555 ÷ 4,524,516 shares) | $ 10.62 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 414,030 |
Interest |
| 1,418 |
Income from Fidelity Central Funds (including $36,588 from security lending) |
| 62,878 |
Total income |
| 478,326 |
|
|
|
Expenses | ||
Management fee | $ 311,850 | |
Transfer agent fees | 153,138 | |
Accounting and security lending fees | 23,116 | |
Custodian fees and expenses | 6,489 | |
Independent trustees' compensation | 285 | |
Registration fees | 23,555 | |
Audit | 35,569 | |
Legal | 282 | |
Miscellaneous | 2,771 | |
Total expenses | 557,055 | |
Net investment income (loss) | (78,729) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (17,667,806) | |
Foreign currency transactions | (9) | |
Total net realized gain (loss) |
| (17,667,815) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (8,349,423) | |
Assets and liabilities in foreign currencies | (2,416) | |
Total change in net unrealized appreciation (depreciation) |
| (8,351,839) |
Net gain (loss) | (26,019,654) | |
Net increase (decrease) in net assets resulting from operations | $ (26,098,383) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (78,729) | $ (154,598) |
Net realized gain (loss) | (17,667,815) | 2,938,480 |
Change in net unrealized appreciation (depreciation) | (8,351,839) | (6,523,106) |
Net increase (decrease) in net assets resulting from operations | (26,098,383) | (3,739,224) |
Distributions to shareholders from net realized gain | - | (5,634,398) |
Share transactions | 94,940,325 | 55,191,810 |
Reinvestment of distributions | - | 5,422,390 |
Cost of shares redeemed | (59,676,679) | (46,509,564) |
Net increase (decrease) in net assets resulting from share transactions | 35,263,646 | 14,104,636 |
Redemption fees | 30,945 | 6,975 |
Total increase (decrease) in net assets | 9,196,208 | 4,737,989 |
|
|
|
Net Assets | ||
Beginning of period | 38,842,347 | 34,104,358 |
End of period | $ 48,038,555 | $ 38,842,347 |
Other Information Shares | ||
Sold | 6,271,982 | 3,017,956 |
Issued in reinvestment of distributions | - | 325,365 |
Redeemed | (4,378,124) | (2,673,018) |
Net increase (decrease) | 1,893,858 | 670,303 |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 14.77 | $ 17.40 | $ 17.43 | $ 15.50 | $ 14.14 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.02) | (.06) | (.07) | (.03) F | (.10) G |
Net realized and unrealized gain (loss) | (4.14) | (.25) | 1.73 | 2.59 | 1.70 |
Total from investment operations | (4.16) | (.31) | 1.66 | 2.56 | 1.60 |
Distributions from net realized gain | - | (2.32) | (1.70) | (.63) | (.24) |
Redemption fees added to paid in capital C | .01 | - J | .01 | - J | - J |
Net asset value, end of period | $ 10.62 | $ 14.77 | $ 17.40 | $ 17.43 | $ 15.50 |
Total Return A, B | (28.10)% | (2.94)% | 10.11% | 17.14% | 11.26% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | 1.00% | 1.06% | 1.19% | 1.22% | 1.24% |
Expenses net of fee waivers, if any | 1.00% | 1.06% | 1.16% | 1.22% | 1.23% |
Expenses net of all reductions | 1.00% | 1.06% | 1.15% | 1.18% | 1.21% |
Net investment income (loss) | (.14)% | (.32)% | (.42)% | (.17)% F | (.66)% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 48,039 | $ 38,842 | $ 34,104 | $ 39,392 | $ 37,165 |
Portfolio turnover rate E | 140% | 212% | 200% | 73% | 88% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Life of |
Select Networking and Infrastructure Portfolio | -38.58% | -14.58% | -22.13% |
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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Charlie Chai, Portfolio Manager of Select Networking and Infrastructure Portfolio: During the past year, the fund returned -38.58%, trailing the -37.03% return of the MSCI® US Investable Market Information Technology Index but topping the S&P 500. Versus the MSCI index, unfavorable stock selection and, to a lesser extent, a sizable overweighting in the weak-performing communications equipment segment hurt our results. In computer hardware, unfavorable stock picking and a large underweighting detracted in roughly equal amounts. Having no representation in the data processing and outsourced services group worked against us as well. On an absolute basis, the stronger U.S. dollar dampened the returns of our foreign holdings. Large overweightings in two providers of infrastructure solutions for communications networks, CommScope and ADC Telecommunications, hampered performance, as both repeatedly lowered quarterly financial guidance during the period. Elsewhere, a tougher competitive landscape for smartphones sidetracked Canada's Research In Motion, an out-of-index holding that I sold by period end. Having no stake in major benchmark component IBM (International Business Machines) further detracted. Conversely, a sizable cash position helped cushion the fund's loss considerably. Moreover, stock selection added value in semiconductors, Internet software and services, computer storage and peripherals, and systems software, although in the latter case the benefits were offset by underweighting that relatively strong-performing group. Proceeds received from litigation also contributed meaningfully to performance. The top relative contributor was Starent Networks, a provider of infrastructure hardware and software products that enable mobile operators to deliver multimedia services to their subscribers, and the fund's fourth-largest holding at period end. Arris Group, which provides cable telephony and other broadband equipment, further aided our results, as did Marvell Technology Group, which supplies chips for personal computers and other consumer electronics devices. The stock had a nice pop in spring 2008.
Note to shareholders: On November 18, 2008, the Board of Trustees agreed to present a proposal to shareholders to merge Select Networking and Infrastructure Portfolio into Select Communications Equipment Portfolio. Shareholders of Select Networking and Infrastructure Portfolio are expected to meet on May 19, 2009, to vote on the proposal. If approved, the merger is expected to be completed on or about June 19, 2009.
The foregoing is not a solicitation of any proxy. For a free copy of the Proxy Statement describing the Reorganization (and containing important information about fees, expenses and risk considerations) and a Prospectus for Select Communications Equipment Portfolio, please call 1-800-544-3198. The Prospectus/Proxy Statement also is available for free on the Securities and Exchange Commission's Web site (www.sec.gov).
The fund closed to most new accounts at the close of business on March 19, 2009.
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
Select Networking and Infrastructure Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Cisco Systems, Inc. | 7.5 | 9.1 |
Google, Inc. Class A (sub. vtg.) | 7.1 | 4.0 |
Symantec Corp. | 6.0 | 0.0 |
Starent Networks Corp. | 5.5 | 2.7 |
Tessera Technologies, Inc. | 4.0 | 1.8 |
NetApp, Inc. | 3.6 | 0.0 |
Marvell Technology Group Ltd. | 3.2 | 0.0 |
Broadcom Corp. Class A | 3.0 | 4.0 |
F5 Networks, Inc. | 2.9 | 3.0 |
Check Point Software Technologies Ltd. | 2.7 | 0.0 |
| 45.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Communications Equipment | 29.4% |
| |
Semiconductors & Semiconductor Equipment | 28.1% |
| |
Software | 14.2% |
| |
Internet Software & Services | 12.5% |
| |
Computers & Peripherals | 6.8% |
| |
All Others* | 9.0% |
|
As of August 31, 2008 | |||
Communications Equipment | 49.5% |
| |
Semiconductors & Semiconductor Equipment | 22.7% |
| |
Computers & Peripherals | 9.8% |
| |
Internet Software & Services | 5.4% |
| |
Software | 1.5% |
| |
All Others* | 11.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Networking and Infrastructure Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 29.1% | |||
Communications Equipment - 29.1% | |||
Acme Packet, Inc. (a) | 32,800 | $ 143,992 | |
ADC Telecommunications, Inc. (a) | 157,900 | 448,436 | |
Adtran, Inc. | 2,200 | 31,768 | |
ADVA AG Optical Networking (a) | 108,636 | 129,634 | |
Arris Group, Inc. (a) | 44,100 | 269,892 | |
Aruba Networks, Inc. (a) | 1,100 | 3,036 | |
Ciena Corp. (a)(d) | 19,300 | 103,641 | |
Cisco Systems, Inc. (a) | 198,400 | 2,890,685 | |
Cogo Group, Inc. (a) | 105,600 | 651,552 | |
CommScope, Inc. (a) | 15,000 | 133,950 | |
Comverse Technology, Inc. (a) | 48,700 | 265,415 | |
DragonWave, Inc. (a) | 52,400 | 64,668 | |
F5 Networks, Inc. (a) | 56,400 | 1,128,000 | |
Finisar Corp. (a) | 290,752 | 72,688 | |
Foxconn International Holdings Ltd. (a) | 39,000 | 11,314 | |
Harmonic, Inc. (a) | 95,800 | 521,152 | |
Infinera Corp. (a) | 11,800 | 84,960 | |
Juniper Networks, Inc. (a) | 4,000 | 56,840 | |
Oplink Communications, Inc. (a) | 25,800 | 190,920 | |
Powerwave Technologies, Inc. (a) | 214,000 | 72,760 | |
QUALCOMM, Inc. | 15,700 | 524,851 | |
Sandvine Corp. (a) | 166,900 | 95,773 | |
Sandvine Corp. (U.K.) (a) | 230,900 | 137,570 | |
Sonus Networks, Inc. (a) | 171,100 | 212,164 | |
Starent Networks Corp. (a) | 135,100 | 2,135,931 | |
Symmetricom, Inc. (a) | 45,100 | 152,438 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 39,100 | 319,056 | |
Tellabs, Inc. (a) | 89,500 | 340,100 | |
| 11,193,186 | ||
COMPUTERS & PERIPHERALS - 6.8% | |||
Computer Hardware - 1.0% | |||
Sun Microsystems, Inc. (a) | 85,500 | 400,140 | |
Computer Storage & Peripherals - 5.8% | |||
EMC Corp. (a) | 68,200 | 716,100 | |
Isilon Systems, Inc. (a) | 100 | 225 | |
NetApp, Inc. (a) | 104,400 | 1,403,136 | |
STEC, Inc. (a) | 18,500 | 104,340 | |
| 2,223,801 | ||
TOTAL COMPUTERS & PERIPHERALS | 2,623,941 | ||
ELECTRICAL EQUIPMENT - 0.3% | |||
Electrical Components & Equipment - 0.3% | |||
General Cable Corp. (a) | 5,900 | 91,037 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.9% | |||
Electronic Components - 0.2% | |||
Amphenol Corp. Class A | 3,200 | 81,344 | |
Chi Mei Optoelectronics Corp. | 4,245 | 1,353 | |
| 82,697 | ||
| |||
Shares | Value | ||
Electronic Equipment & Instruments - 0.3% | |||
China Security & Surveillance Technology, Inc. (a)(d) | 39,800 | $ 126,166 | |
Electronic Manufacturing Services - 0.5% | |||
Flextronics International Ltd. (a) | 64,400 | 132,664 | |
Hon Hai Precision Industry Co. Ltd. (Foxconn) | 11,442 | 22,435 | |
SMART Modular Technologies (WWH), Inc. (a) | 22,400 | 27,328 | |
| 182,427 | ||
Technology Distributors - 0.9% | |||
Arrow Electronics, Inc. (a) | 10,100 | 167,963 | |
Avnet, Inc. (a) | 10,000 | 172,700 | |
| 340,663 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 731,953 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. (a) | 100 | 2,548 | |
HOUSEHOLD DURABLES - 0.0% | |||
Consumer Electronics - 0.0% | |||
DEI Holdings, Inc. (a) | 48,100 | 4,329 | |
INTERNET SOFTWARE & SERVICES - 12.5% | |||
Internet Software & Services - 12.5% | |||
Ariba, Inc. (a) | 53,800 | 470,750 | |
Constant Contact, Inc. (a) | 100 | 1,381 | |
DivX, Inc. (a) | 100 | 463 | |
Google, Inc. Class A (sub. vtg.) (a) | 8,100 | 2,737,719 | |
Mercadolibre, Inc. (a)(d) | 35,000 | 584,850 | |
Rackspace Hosting, Inc. | 14,400 | 78,048 | |
Switch & Data Facilities Co., Inc. (a) | 2,100 | 12,915 | |
VeriSign, Inc. (a) | 46,000 | 889,180 | |
Vocus, Inc. (a) | 2,500 | 41,600 | |
| 4,816,906 | ||
MEDIA - 0.1% | |||
Advertising - 0.1% | |||
SinoMedia Holding Ltd. | 336,000 | 47,767 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 28.1% | |||
Semiconductor Equipment - 4.6% | |||
FormFactor, Inc. (a) | 10,000 | 144,600 | |
LTX-Credence Corp. (a) | 78,144 | 15,629 | |
Tessera Technologies, Inc. (a) | 142,400 | 1,537,920 | |
Verigy Ltd. (a) | 14,000 | 96,740 | |
| 1,794,889 | ||
Semiconductors - 23.5% | |||
Advanced Analogic Technologies, Inc. (a) | 293 | 923 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 26,031 | 44,253 | |
Applied Micro Circuits Corp. (a) | 51,450 | 185,735 | |
AuthenTec, Inc. (a) | 64,700 | 87,992 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Broadcom Corp. Class A (a) | 69,750 | $ 1,147,388 | |
Cavium Networks, Inc. (a) | 48,500 | 461,235 | |
Ceva, Inc. (a) | 11,200 | 65,744 | |
Cree, Inc. (a) | 3,800 | 74,632 | |
CSR PLC (a)(d) | 66,300 | 187,201 | |
Cypress Semiconductor Corp. (a) | 32,800 | 182,368 | |
Hittite Microwave Corp. (a) | 2,600 | 71,708 | |
Infineon Technologies AG sponsored ADR (a)(d) | 72,900 | 43,740 | |
International Rectifier Corp. (a) | 38,100 | 478,155 | |
Lattice Semiconductor Corp. (a) | 34,500 | 44,505 | |
LSI Corp. (a) | 164,700 | 477,630 | |
Marvell Technology Group Ltd. (a) | 165,600 | 1,243,656 | |
Mellanox Technologies Ltd. (a) | 100 | 825 | |
Micrel, Inc. | 21,500 | 142,975 | |
Mindspeed Technologies, Inc. (a)(d) | 138,426 | 109,357 | |
MIPS Technologies, Inc. (a) | 33,500 | 67,000 | |
National Semiconductor Corp. | 26,000 | 283,400 | |
Netlogic Microsystems, Inc. (a) | 8,500 | 201,535 | |
Omnivision Technologies, Inc. (a) | 12,100 | 82,159 | |
ON Semiconductor Corp. (a) | 41,627 | 152,355 | |
PMC-Sierra, Inc. (a) | 70,000 | 357,700 | |
Silicon Laboratories, Inc. (a) | 13,900 | 304,410 | |
Silicon Motion Technology Corp. sponsored ADR (a)(d) | 215,900 | 444,754 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 14,241 | 63,088 | |
SiRF Technology Holdings, Inc. (a) | 42,300 | 77,409 | |
Skyworks Solutions, Inc. (a) | 95,700 | 622,050 | |
Spreadtrum Communications, Inc. ADR (a) | 900 | 792 | |
Standard Microsystems Corp. (a) | 25,400 | 395,478 | |
Tower Semiconductor Ltd. (a) | 239,700 | 40,749 | |
TriQuint Semiconductor, Inc. (a) | 12,200 | 28,426 | |
Volterra Semiconductor Corp. (a) | 70,600 | 571,860 | |
Zoran Corp. (a) | 55,500 | 288,600 | |
| 9,031,787 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 10,826,676 | ||
SOFTWARE - 14.2% | |||
Application Software - 2.9% | |||
Cadence Design Systems, Inc. (a) | 51,900 | 217,980 | |
Synchronoss Technologies, Inc. (a) | 10,000 | 95,400 | |
TIBCO Software, Inc. (a) | 56,000 | 270,480 | |
Ulticom, Inc. (a) | 108,300 | 541,500 | |
| 1,125,360 | ||
Systems Software - 11.3% | |||
Allot Communications Ltd. (a) | 2,800 | 4,172 | |
| |||
Shares | Value | ||
Check Point Software Technologies Ltd. (a) | 46,400 | $ 1,019,408 | |
CommVault Systems, Inc. (a) | 9,600 | 104,928 | |
Double-Take Software, Inc. (a) | 12,200 | 84,424 | |
Macrovision Solutions Corp. (a) | 42 | 661 | |
McAfee, Inc. (a) | 29,300 | 818,935 | |
Symantec Corp. (a) | 167,000 | 2,309,610 | |
| 4,342,138 | ||
TOTAL SOFTWARE | 5,467,498 | ||
WIRELESS TELECOMMUNICATION SERVICES - 3.3% | |||
Wireless Telecommunication Services - 3.3% | |||
American Tower Corp. Class A (a) | 11,100 | 323,232 | |
Crown Castle International Corp. (a) | 20,800 | 364,832 | |
SBA Communications Corp. Class A (a) | 23,400 | 486,252 | |
Syniverse Holdings, Inc. (a) | 5,000 | 75,650 | |
| 1,249,966 | ||
TOTAL COMMON STOCKS (Cost $61,187,308) | 37,055,807 |
Convertible Bonds - 0.3% | ||||
| Principal Amount |
| ||
COMMUNICATIONS EQUIPMENT - 0.3% | ||||
Communications Equipment - 0.3% | ||||
Ciena Corp. 0.25% 5/1/13 | $ 230,000 | 127,811 |
Money Market Funds - 7.2% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 1,079,748 | 1,079,748 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 1,702,285 | 1,702,285 | |
TOTAL MONEY MARKET FUNDS (Cost $2,782,033) | 2,782,033 | ||
TOTAL INVESTMENT PORTFOLIO - 103.8% (Cost $64,199,341) | 39,965,651 | ||
NET OTHER ASSETS - (3.8)% | (1,474,127) | ||
NET ASSETS - 100% | $ 38,491,524 |
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 | $ 104,524 |
Fidelity Securities Lending Cash Central Fund | 29,033 |
Total | $ 133,557 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 39,965,651 | $ 39,300,566 | $ 665,085 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.2% |
Bermuda | 3.2% |
Israel | 2.8% |
Cayman Islands | 1.3% |
Others (individually less than 1%) | 3.5% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $196,789,906 of which $99,728,449, $83,559,188, $3,347,694, $1,904,449 and $8,250,126 will expire on February 28, 2010, 2011, 2013, February 29, 2016 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $6,481,839 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Networking and Infrastructure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,597,965) - See accompanying schedule: Unaffiliated issuers (cost $61,417,308) | $ 37,183,618 |
|
Fidelity Central Funds (cost $2,782,033) | 2,782,033 |
|
Total Investments (cost $64,199,341) |
| $ 39,965,651 |
Receivable for investments sold | 410,808 | |
Receivable for fund shares sold | 132,200 | |
Dividends receivable | 2,512 | |
Interest receivable | 190 | |
Distributions receivable from Fidelity Central Funds | 3,214 | |
Prepaid expenses | 365 | |
Other receivables | 355 | |
Total assets | 40,515,295 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 156,144 | |
Payable for fund shares redeemed | 108,753 | |
Accrued management fee | 18,190 | |
Other affiliated payables | 9,465 | |
Other payables and accrued expenses | 28,934 | |
Collateral on securities loaned, at value | 1,702,285 | |
Total liabilities | 2,023,771 | |
|
|
|
Net Assets | $ 38,491,524 | |
Net Assets consist of: |
| |
Paid in capital | $ 266,265,909 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (203,540,695) | |
Net unrealized appreciation (depreciation) on investments | (24,233,690) | |
Net Assets, for 31,749,823 shares outstanding | $ 38,491,524 | |
Net Asset Value, offering price and redemption price per share ($38,491,524 ÷ 31,749,823 shares) | $ 1.21 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 78,704 |
Special dividends |
| 21,030 |
Interest |
| 5,484 |
Income from Fidelity Central Funds (including $29,033 from security lending) |
| 133,557 |
Total income |
| 238,775 |
|
|
|
Expenses | ||
Management fee | $ 261,657 | |
Transfer agent fees | 138,519 | |
Accounting and security lending fees | 19,044 | |
Custodian fees and expenses | 5,543 | |
Independent trustees' compensation | 241 | |
Registration fees | 21,080 | |
Audit | 36,235 | |
Legal | 984 | |
Miscellaneous | 7,503 | |
Total expenses before reductions | 490,806 | |
Expense reductions | (27) | 490,779 |
Net investment income (loss) | (252,004) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (14,626,402) | |
Foreign currency transactions | (4,533) | |
Total net realized gain (loss) |
| (14,630,935) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (7,097,200) | |
Assets and liabilities in foreign currencies | (190) | |
Total change in net unrealized appreciation (depreciation) |
| (7,097,390) |
Net gain (loss) | (21,728,325) | |
Net increase (decrease) in net assets resulting from operations | $ (21,980,329) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (252,004) | $ (542,672) |
Net realized gain (loss) | (14,630,935) | (1,134,486) |
Change in net unrealized appreciation (depreciation) | (7,097,390) | (10,930,239) |
Net increase (decrease) in net assets resulting from operations | (21,980,329) | (12,607,397) |
Share transactions | 42,107,003 | 30,151,708 |
Cost of shares redeemed | (30,408,728) | (59,927,418) |
Net increase (decrease) in net assets resulting from share transactions | 11,698,275 | (29,775,710) |
Redemption fees | 15,455 | 12,513 |
Total increase (decrease) in net assets | (10,266,599) | (42,370,594) |
|
|
|
Net Assets | ||
Beginning of period | 48,758,123 | 91,128,717 |
End of period | $ 38,491,524 | $ 48,758,123 |
Other Information Shares | ||
Sold | 23,703,840 | 12,045,121 |
Redeemed | (16,695,427) | (23,884,149) |
Net increase (decrease) | 7,008,413 | (11,839,028) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 1.97 | $ 2.49 | $ 2.58 | $ 2.14 | $ 2.66 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.01) F | (.02) | (.02) | (.02) | (.02) |
Net realized and unrealized gain (loss) | (.75) | (.50) | (.07) | .46 | (.50) |
Total from investment operations | (.76) | (.52) | (.09) | .44 | (.52) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 1.21 | $ 1.97 | $ 2.49 | $ 2.58 | $ 2.14 |
Total Return A, B | (38.58)% | (20.88)% | (3.49)% | 20.56% | (19.55)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.05% | 1.02% | 1.09% | 1.14% | 1.17% |
Expenses net of fee waivers, if any | 1.05% | 1.02% | 1.09% | 1.14% | 1.17% |
Expenses net of all reductions | 1.05% | 1.01% | 1.08% | 1.02% | 1.07% |
Net investment income (loss) | (.54)% F | (.76)% | (.84)% | (.84)% | (.89)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 38,492 | $ 48,758 | $ 91,129 | $ 125,367 | $ 109,960 |
Portfolio turnover rate E | 116% | 37% | 136% | 201% | 160% |
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 $.00 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.58)%. 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Software and Computer Services Portfolio | -33.53% | -2.69% | 2.61% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Software and Computer Services Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Brian Lempel, who became Portfolio Manager of Select Software and Computer Services Portfolio on February 28, 2009: During the past year, the fund lost 33.53%, just shy of the MSCI® US Investable Market Software and Services Index, which declined 33.35%, but well ahead of the S&P 500. Weak stock selection, particularly in information technology (IT) consulting/other services, hurt results versus the MSCI Index. The fund also lost some ground relative to the index through its overweighting in the lagging home entertainment software group. By far the biggest detractor from our results was offshore IT services provider Satyam Computer Services, an out-of-benchmark position, which was the victim of fraud. Returns also were hurt by owning VMware, a systems software firm; outsourcing company ExlService Holdings; offshore IT services provider Cognizant Technology Solutions; and France's Ubisoft Entertainment, an out-of-index video game maker. By period end, we had sold Satyam, VMware and Ubisoft. Performance was held back further by the impact of currency fluctuations on our foreign holdings. Conversely, the fund gained from solid stock picking in home entertainment software, application software and systems software. Among the individual contributors were software giant Microsoft, which we underweighted, and video game maker Electronic Arts, a weak-performing index component we didn't own. Visa, Quest Software and BMC Software helped returns as well. A modest cash position on average during the period also boosted performance.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Portfolio
Select Software & Computer Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Google, Inc. Class A (sub. vtg.) | 13.6 | 11.7 |
Microsoft Corp. | 13.0 | 14.3 |
Oracle Corp. | 11.7 | 9.7 |
Visa, Inc. | 5.9 | 5.8 |
Cognizant Technology Solutions Corp. Class A | 4.4 | 7.6 |
MasterCard, Inc. Class A | 3.9 | 3.6 |
Symantec Corp. | 3.0 | 2.6 |
CA, Inc. | 2.2 | 1.6 |
BMC Software, Inc. | 2.1 | 0.0 |
Accenture Ltd. Class A | 1.9 | 1.4 |
| 61.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Software | 41.3% |
| |
It Services | 25.6% |
| |
Internet Software & Services | 15.5% |
| |
Professional Services | 0.9% |
| |
Diversified Consumer Services | 0.7% |
| |
All Others* | 16.0% |
|
As of August 31, 2008 | |||
Software | 48.3% |
| |
It Services | 31.2% |
| |
Internet Software & Services | 15.4% |
| |
Diversified Consumer Services | 0.9% |
| |
Communications Equipment | 0.5% |
| |
All Others* | 3.7% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Software & Computer Services Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 84.0% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 0.7% | |||
Education Services - 0.7% | |||
Educomp Solutions Ltd. | 103,835 | $ 3,299,314 | |
INTERNET SOFTWARE & SERVICES - 15.5% | |||
Internet Software & Services - 15.5% | |||
eBay, Inc. (a) | 494,800 | 5,378,476 | |
Google, Inc. Class A (sub. vtg.) (a)(d) | 196,900 | 66,550,230 | |
Open Text Corp. (a)(d) | 119,000 | 3,784,727 | |
| 75,713,433 | ||
IT SERVICES - 25.6% | |||
Data Processing & Outsourced Services - 18.0% | |||
Affiliated Computer Services, Inc. Class A (a) | 153,400 | 7,153,042 | |
Alliance Data Systems Corp. (a) | 165,700 | 4,904,720 | |
ExlService Holdings, Inc. (a) | 955,234 | 7,727,843 | |
Genpact Ltd. (a) | 381,100 | 3,018,312 | |
Lender Processing Services, Inc. | 349,248 | 9,146,805 | |
MasterCard, Inc. Class A (d) | 120,400 | 19,026,812 | |
The Western Union Co. | 385,900 | 4,306,644 | |
Visa, Inc. (d) | 509,200 | 28,876,732 | |
WNS Holdings Ltd. sponsored ADR (a) | 948,150 | 4,029,638 | |
| 88,190,548 | ||
IT Consulting & Other Services - 7.6% | |||
Accenture Ltd. Class A | 314,400 | 9,177,336 | |
Cognizant Technology Solutions Corp. Class A (a) | 1,169,300 | 21,515,120 | |
Infosys Technologies Ltd. sponsored ADR | 195,500 | 4,731,100 | |
Patni Computer Systems Ltd. sponsored ADR | 406,700 | 1,850,485 | |
| 37,274,041 | ||
TOTAL IT SERVICES | 125,464,589 | ||
PROFESSIONAL SERVICES - 0.9% | |||
Research & Consulting Services - 0.9% | |||
FTI Consulting, Inc. (a) | 115,800 | 4,231,332 | |
SOFTWARE - 41.3% | |||
Application Software - 6.4% | |||
Ansys, Inc. (a) | 218,700 | 4,411,179 | |
Autonomy Corp. PLC (a) | 314,700 | 5,423,102 | |
EPIQ Systems, Inc. (a) | 291,800 | 4,922,666 | |
Informatica Corp. (a) | 454,200 | 5,859,180 | |
| |||
Shares | Value | ||
Quest Software, Inc. (a) | 675,814 | $ 7,636,698 | |
TIBCO Software, Inc. (a) | 602,600 | 2,910,558 | |
| 31,163,383 | ||
Home Entertainment Software - 0.8% | |||
Nintendo Co. Ltd. | 14,800 | 4,173,600 | |
Systems Software - 34.1% | |||
BMC Software, Inc. (a) | 349,300 | 10,349,759 | |
CA, Inc. | 630,000 | 10,678,500 | |
McAfee, Inc. (a) | 211,000 | 5,897,450 | |
Microsoft Corp. | 3,921,900 | 63,338,685 | |
Oracle Corp. (a) | 3,691,400 | 57,364,356 | |
Sybase, Inc. (a) | 163,400 | 4,441,212 | |
Symantec Corp. (a) | 1,050,100 | 14,522,883 | |
| 166,592,845 | ||
TOTAL SOFTWARE | 201,929,828 | ||
TOTAL COMMON STOCKS (Cost $536,549,061) | 410,638,496 | ||
Money Market Funds - 28.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.59% (b) | 77,862,079 | 77,862,079 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 59,143,975 | 59,143,975 | |
TOTAL MONEY MARKET FUNDS (Cost $137,006,054) | 137,006,054 | ||
TOTAL INVESTMENT PORTFOLIO - 112.0% (Cost $673,555,115) | 547,644,550 | ||
NET OTHER ASSETS - (12.0)% | (58,664,298) | ||
NET ASSETS - 100% | $ 488,980,252 |
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 | $ 287,365 |
Fidelity Securities Lending Cash Central Fund | 917,755 |
Total | $ 1,205,120 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 547,644,550 | $ 534,748,534 | $ 12,896,016 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $40,189,483 of which $10,982,618 and $29,206,865 will expire on February 28, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $52,842,353 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $58,474,166) - See accompanying schedule: Unaffiliated issuers (cost $536,549,061) | $ 410,638,496 |
|
Fidelity Central Funds (cost $137,006,054) | 137,006,054 |
|
Total Investments (cost $673,555,115) |
| $ 547,644,550 |
Receivable for fund shares sold | 630,163 | |
Dividends receivable | 584,078 | |
Distributions receivable from Fidelity Central Funds | 53,563 | |
Prepaid expenses | 5,379 | |
Other receivables | 160,217 | |
Total assets | 549,077,950 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 536,571 | |
Accrued management fee | 242,960 | |
Other affiliated payables | 143,802 | |
Other payables and accrued expenses | 30,390 | |
Collateral on securities loaned, at value | 59,143,975 | |
Total liabilities | 60,097,698 | |
|
|
|
Net Assets | $ 488,980,252 | |
Net Assets consist of: |
| |
Paid in capital | $ 708,882,173 | |
Accumulated net investment loss | (177) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (93,951,542) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (125,950,202) | |
Net Assets, for 11,017,115 shares outstanding | $ 488,980,252 | |
Net Asset Value, offering price and redemption price per share ($488,980,252 ÷ 11,017,115 shares) | $ 44.38 |
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 3,845,607 |
Interest |
| 23,182 |
Income from Fidelity Central Funds (including $917,755 from security lending) |
| 1,205,120 |
Total income |
| 5,073,909 |
|
|
|
Expenses | ||
Management fee | $ 3,771,232 | |
Transfer agent fees | 1,667,229 | |
Accounting and security lending fees | 261,037 | |
Custodian fees and expenses | 28,781 | |
Independent trustees' compensation | 3,097 | |
Registration fees | 37,009 | |
Audit | 44,540 | |
Legal | 11,968 | |
Interest | 4,503 | |
Miscellaneous | 42,471 | |
Total expenses before reductions | 5,871,867 | |
Expense reductions | (5,596) | 5,866,271 |
Net investment income (loss) | (792,362) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (79,533,401) | |
Foreign currency transactions | 157,448 | |
Total net realized gain (loss) |
| (79,375,953) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $409,123) | (166,697,317) | |
Assets and liabilities in foreign currencies | (44,574) | |
Total change in net unrealized appreciation (depreciation) |
| (166,741,891) |
Net gain (loss) | (246,117,844) | |
Net increase (decrease) in net assets resulting from operations | $ (246,910,206) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ (792,362) | $ (2,412,479) |
Net realized gain (loss) | (79,375,953) | 52,869,759 |
Change in net unrealized appreciation (depreciation) | (166,741,891) | (37,071,087) |
Net increase (decrease) in net assets resulting from operations | (246,910,206) | 13,386,193 |
Share transactions | 173,674,255 | 321,624,565 |
Cost of shares redeemed | (205,589,713) | (491,985,679) |
Net increase (decrease) in net assets resulting from share transactions | (31,915,458) | (170,361,114) |
Redemption fees | 29,126 | 87,368 |
Total increase (decrease) in net assets | (278,796,538) | (156,887,553) |
|
|
|
Net Assets | ||
Beginning of period | 767,776,790 | 924,664,343 |
End of period (including accumulated net investment loss of $177 and accumulated net investment loss of $1,201, respectively) | $ 488,980,252 | $ 767,776,790 |
Other Information Shares | ||
Sold | 2,890,908 | 4,302,245 |
Redeemed | (3,372,645) | (6,927,231) |
Net increase (decrease) | (481,737) | (2,624,986) |
Financial Highlights
Years ended February 28, | 2009 | 2008 H | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.77 | $ 65.47 | $ 53.94 | $ 47.60 | $ 51.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.07) | (.20) | (.21) | (.25) | .53 F |
Net realized and unrealized gain (loss) | (22.32) | 1.49 | 11.73 | 6.58 | (3.79) |
Total from investment operations | (22.39) | 1.29 | 11.52 | 6.33 | (3.26) |
Distributions from net investment income | - | - | - | - | (.51) |
Redemption fees added to paid in capital C | - I | .01 | .01 | .01 | - I |
Net asset value, end of period | $ 44.38 | $ 66.77 | $ 65.47 | $ 53.94 | $ 47.60 |
Total Return A, B | (33.53)% | 1.99% | 21.38% | 13.32% | (6.43)% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | .87% | .86% | .92% | .96% | .98% |
Expenses net of fee waivers, if any | .87% | .86% | .92% | .96% | .98% |
Expenses net of all reductions | .87% | .86% | .91% | .91% | .92% |
Net investment income (loss) | (.12)% | (.27)% | (.34)% | (.49)% | 1.09% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 488,980 | $ 767,777 | $ 924,664 | $ 563,799 | $ 680,988 |
Portfolio turnover rate E | 49% | 38% | 139% | 59% | 94% |
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 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Technology 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Technology Portfolio | -44.15% | -9.64% | -4.52% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Select Technology Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Charlie Chai, Portfolio Manager of Select Technology Portfolio: During the past year, the fund returned -44.15%, trailing the - -37.03% result of the MSCI® US Investable Market Information Technology Index and also lagging the S&P 500. Both industry weightings and stock picking held back our return. For example, a combination of poor stock picks and a sizable underweighting in computer hardware undermined our results, and stock selection in communications equipment and in electrical components and equipment detracted as well. A large overweighting in the relatively weak-performing semiconductor equipment segment had a negative impact, although favorable stock selection mostly offset the damage in that case. In absolute terms, U.S. dollar appreciation had a negative impact on our foreign holdings. Among individual holdings, underweighting personal computer and printer maker Hewlett-Packard (HP) was detrimental. That said, I added to our stake in HP, which continued to execute well and had declined to a compelling valuation, in my opinion. By period end, the stock was our largest holding, at almost 7% of net assets. Other detractors included two smartphone makers, Apple and Canada's Research In Motion, as well as digital advertising provider VisionChina Media. Research In Motion and VisionChina Media were out-of-index holdings. Not owning index heavyweight IBM (International Business Machines) hurt because the stock's loss was less than half of the benchmark's. Conversely, favorable picks in systems software more than offset the negative impact of underweighting the group, which held up relatively well. A small cash position further benefited performance. At the stock level, Starent Networks, a provider of infrastructure hardware and software products that enable mobile operators to deliver multimedia services to their subscribers, was the fund's top contributor, its stock posting a flattish return during the period. The company won several lucrative contracts and in January reported solid fourth-quarter financial results while reaffirming its fiscal 2009 guidance. Fund performance also was aided by touchscreen chip maker Synaptics and Chinese Internet company Tencent Holdings, an out-of-index position that I sold.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Select Technology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Hewlett-Packard Co. | 6.8 | 0.0 |
QUALCOMM, Inc. | 6.0 | 4.6 |
Microsoft Corp. | 4.1 | 0.0 |
Cisco Systems, Inc. | 3.5 | 1.5 |
Google, Inc. Class A (sub. vtg.) | 3.3 | 0.0 |
Apple, Inc. | 3.2 | 12.0 |
Starent Networks Corp. | 3.1 | 1.7 |
Visa, Inc. | 2.9 | 2.1 |
ASML Holding NV (NY Shares) | 2.6 | 0.5 |
Intel Corp. | 1.5 | 0.0 |
| 37.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Semiconductors & Semiconductor Equipment | 27.3% |
| |
Communications Equipment | 16.7% |
| |
Software | 15.4% |
| |
Computers & Peripherals | 14.5% |
| |
Internet Software & Services | 7.1% |
| |
All Others* | 19.0% |
|
As of August 31, 2008 | |||
Communications Equipment | 21.7% |
| |
Computers & Peripherals | 19.8% |
| |
Semiconductors & Semiconductor Equipment | 15.3% |
| |
Software | 12.7% |
| |
Electrical Equipment | 4.7% |
| |
All Others* | 25.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Technology Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 16.7% | |||
Communications Equipment - 16.7% | |||
ADC Telecommunications, Inc. (a) | 552,100 | $ 1,567,964 | |
ADVA AG Optical Networking (a) | 703,356 | 839,306 | |
Alcatel-Lucent SA sponsored ADR (a) | 35,400 | 46,374 | |
Aruba Networks, Inc. (a) | 27,600 | 76,176 | |
AudioCodes Ltd. (a) | 680,400 | 762,048 | |
Balda AG (a) | 255,800 | 189,572 | |
China GrenTech Corp. Ltd. ADR (a) | 30,000 | 30,600 | |
Ciena Corp. (a) | 246,200 | 1,322,094 | |
Cisco Systems, Inc. (a) | 1,830,200 | 26,666,014 | |
Cogo Group, Inc. (a) | 573,734 | 3,539,939 | |
CommScope, Inc. (a) | 190,742 | 1,703,326 | |
Comverse Technology, Inc. (a) | 842,900 | 4,593,805 | |
Delta Networks, Inc. | 3,540,000 | 698,400 | |
F5 Networks, Inc. (a) | 131,700 | 2,634,000 | |
Harris Stratex Networks, Inc. Class A (a) | 243,940 | 958,684 | |
Infinera Corp. (a) | 276,900 | 1,993,680 | |
Motorola, Inc. | 969,300 | 3,411,936 | |
NETGEAR, Inc. (a) | 30,902 | 341,467 | |
Powerwave Technologies, Inc. (a) | 1,264,304 | 429,863 | |
QUALCOMM, Inc. | 1,398,575 | 46,754,362 | |
Research In Motion Ltd. (a) | 59,400 | 2,372,436 | |
Riverbed Technology, Inc. (a) | 100 | 1,047 | |
Sandvine Corp. (a) | 3,502,400 | 2,009,788 | |
Sandvine Corp. (U.K.) (a) | 1,941,200 | 1,156,563 | |
Sonus Networks, Inc. (a) | 417,791 | 518,061 | |
Starent Networks Corp. (a) | 1,515,082 | 23,953,446 | |
Tellabs, Inc. (a) | 96,500 | 366,700 | |
| 128,937,651 | ||
COMPUTERS & PERIPHERALS - 14.5% | |||
Computer Hardware - 12.3% | |||
Apple, Inc. (a) | 281,100 | 25,105,041 | |
Dell, Inc. (a) | 1,181,600 | 10,079,048 | |
Hewlett-Packard Co. | 1,819,700 | 52,825,890 | |
NCR Corp. (a) | 230,000 | 1,821,600 | |
Palm, Inc. (a)(d) | 241,500 | 1,748,460 | |
Stratasys, Inc. (a)(d) | 308,100 | 2,803,710 | |
Sun Microsystems, Inc. (a) | 244,000 | 1,141,920 | |
| 95,525,669 | ||
Computer Storage & Peripherals - 2.2% | |||
EMC Corp. (a) | 282,400 | 2,965,200 | |
NetApp, Inc. (a) | 164,600 | 2,212,224 | |
Netezza Corp. (a) | 47,200 | 270,928 | |
Seagate Technology | 2,307,700 | 9,923,110 | |
Synaptics, Inc. (a)(d) | 73,795 | 1,531,246 | |
| 16,902,708 | ||
TOTAL COMPUTERS & PERIPHERALS | 112,428,377 | ||
| |||
Shares | Value | ||
CONSTRUCTION & ENGINEERING - 0.1% | |||
Construction & Engineering - 0.1% | |||
Dycom Industries, Inc. (a) | 102,400 | $ 473,088 | |
MasTec, Inc. (a) | 36,300 | 343,398 | |
| 816,486 | ||
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||
Education Services - 0.0% | |||
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 1,491 | 66,752 | |
ELECTRIC UTILITIES - 0.0% | |||
Electric Utilities - 0.0% | |||
Enernoc, Inc. (a) | 8,500 | 94,180 | |
ELECTRICAL EQUIPMENT - 1.3% | |||
Electrical Components & Equipment - 1.2% | |||
centrotherm photovoltaics AG (a) | 5,038 | 93,847 | |
Energy Conversion Devices, Inc. (a) | 50,749 | 1,112,926 | |
First Solar, Inc. (a) | 10,100 | 1,067,974 | |
General Cable Corp. (a)(d) | 172,300 | 2,658,589 | |
JA Solar Holdings Co. Ltd. ADR (a) | 284,000 | 576,520 | |
Neo-Neon Holdings Ltd. | 8,456,500 | 1,170,424 | |
Q-Cells SE (a) | 3,250 | 53,846 | |
Roth & Rau AG | 6,877 | 100,375 | |
Sunpower Corp. Class B (a) | 56,647 | 1,402,580 | |
Suntech Power Holdings Co. Ltd. sponsored ADR (a)(d) | 105,800 | 644,322 | |
Yingli Green Energy Holding Co. Ltd. ADR (a)(d) | 68,000 | 264,520 | |
| 9,145,923 | ||
Heavy Electrical Equipment - 0.1% | |||
China High Speed Transmission Equipment Group Co. Ltd. | 832,000 | 1,066,892 | |
TOTAL ELECTRICAL EQUIPMENT | 10,212,815 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 5.7% | |||
Electronic Components - 1.2% | |||
Amphenol Corp. Class A | 255,500 | 6,494,810 | |
Everlight Electronics Co. Ltd. | 1,432,492 | 2,184,360 | |
Vishay Intertechnology, Inc. (a) | 131,500 | 335,325 | |
| 9,014,495 | ||
Electronic Equipment & Instruments - 0.8% | |||
Agilent Technologies, Inc. (a) | 22,700 | 314,849 | |
China Security & Surveillance Technology, Inc. (a)(d) | 655,219 | 2,077,044 | |
Chroma ATE, Inc. | 2,970,000 | 1,918,218 | |
FLIR Systems, Inc. (a) | 54,400 | 1,110,304 | |
National Instruments Corp. | 46,400 | 799,472 | |
| 6,219,887 | ||
Electronic Manufacturing Services - 1.0% | |||
Flextronics International Ltd. (a) | 1,604,400 | 3,305,064 | |
Trimble Navigation Ltd. (a) | 207,367 | 2,923,875 | |
Common Stocks - continued | |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - CONTINUED | |||
Electronic Manufacturing Services - continued | |||
TTM Technologies, Inc. (a) | 78,100 | $ 360,041 | |
Tyco Electronics Ltd. | 169,000 | 1,602,120 | |
| 8,191,100 | ||
Technology Distributors - 2.7% | |||
Anixter International, Inc. (a) | 30,500 | 897,005 | |
Arrow Electronics, Inc. (a) | 189,200 | 3,146,396 | |
Avnet, Inc. (a) | 391,100 | 6,754,297 | |
Digital China Holdings Ltd. (H Shares) | 1,926,000 | 693,884 | |
Ingram Micro, Inc. Class A (a) | 461,000 | 5,020,290 | |
Synnex Technology International Corp. | 1,108,000 | 1,254,904 | |
WPG Holding Co. Ltd. | 5,603,000 | 3,047,482 | |
| 20,814,258 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 44,239,740 | ||
ENERGY EQUIPMENT & SERVICES - 0.0% | |||
Oil & Gas Equipment & Services - 0.0% | |||
IHS, Inc. Class A (a) | 2,400 | 97,752 | |
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9% | |||
Health Care Equipment - 0.9% | |||
China Medical Technologies, Inc. sponsored ADR (d) | 224,606 | 2,926,616 | |
Golden Meditech Co. Ltd. (a) | 4,532,000 | 493,859 | |
I-Flow Corp. (a) | 96,200 | 304,954 | |
Mingyuan Medicare Development Co. Ltd. | 68,490,000 | 3,570,584 | |
| 7,296,013 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Health Care Services - 0.0% | |||
athenahealth, Inc. (a) | 1,500 | 38,220 | |
HOTELS, RESTAURANTS & LEISURE - 0.1% | |||
Hotels, Resorts & Cruise Lines - 0.1% | |||
Ctrip.com International Ltd. sponsored ADR | 41,600 | 832,000 | |
HOUSEHOLD DURABLES - 0.0% | |||
Consumer Electronics - 0.0% | |||
TomTom Group BV (a) | 100 | 354 | |
INTERNET & CATALOG RETAIL - 1.4% | |||
Internet Retail - 1.4% | |||
Amazon.com, Inc. | 54,400 | 3,524,576 | |
Expedia, Inc. (a) | 333,700 | 2,659,589 | |
Priceline.com, Inc. (a)(d) | 52,600 | 4,463,636 | |
| 10,647,801 | ||
INTERNET SOFTWARE & SERVICES - 7.1% | |||
Internet Software & Services - 7.1% | |||
Akamai Technologies, Inc. (a) | 50,500 | 913,545 | |
Ariba, Inc. (a) | 345,613 | 3,024,114 | |
| |||
Shares | Value | ||
Baidu.com, Inc. sponsored ADR (a)(d) | 23,000 | $ 3,411,360 | |
Bankrate, Inc. (a) | 44,900 | 1,001,270 | |
Blinkx PLC (a) | 500,000 | 96,614 | |
DealerTrack Holdings, Inc. (a) | 7,000 | 73,920 | |
eBay, Inc. (a) | 336,200 | 3,654,494 | |
Equinix, Inc. (a)(d) | 90,500 | 4,200,105 | |
Google, Inc. Class A (sub. vtg.) (a) | 76,100 | 25,721,039 | |
LivePerson, Inc. (a) | 551,102 | 1,047,094 | |
LoopNet, Inc. (a) | 150,000 | 879,000 | |
NetEase.com, Inc. sponsored ADR (a) | 16,700 | 342,016 | |
Omniture, Inc. (a) | 7,600 | 86,336 | |
Rackspace Hosting, Inc. | 96,053 | 520,607 | |
SAVVIS, Inc. | 22,100 | 123,981 | |
Sohu.com, Inc. (a) | 17,300 | 854,620 | |
Switch & Data Facilities Co., Inc. (a) | 31,400 | 193,110 | |
VeriSign, Inc. (a) | 189,900 | 3,670,767 | |
Vocus, Inc. (a) | 30,000 | 499,200 | |
Yahoo!, Inc. (a) | 322,800 | 4,270,644 | |
| 54,583,836 | ||
IT SERVICES - 5.3% | |||
Data Processing & Outsourced Services - 4.7% | |||
CyberSource Corp. (a) | 39,700 | 489,104 | |
Lender Processing Services, Inc. | 117,900 | 3,087,801 | |
MasterCard, Inc. Class A (d) | 61,800 | 9,766,254 | |
Visa, Inc. (d) | 402,700 | 22,837,117 | |
WNS Holdings Ltd. sponsored ADR (a) | 41,900 | 178,075 | |
| 36,358,351 | ||
IT Consulting & Other Services - 0.6% | |||
CACI International, Inc. Class A (a) | 9,200 | 393,484 | |
China Information Security Technology, Inc. (a) | 140,500 | 358,275 | |
HCL Technologies Ltd. | 474,989 | 915,537 | |
SAIC, Inc. (a) | 42,500 | 803,675 | |
Satyam Computer Services Ltd. sponsored ADR (d) | 64,005 | 83,207 | |
Yucheng Technologies Ltd. (a) | 369,800 | 1,956,242 | |
| 4,510,420 | ||
TOTAL IT SERVICES | 40,868,771 | ||
LIFE SCIENCES TOOLS & SERVICES - 0.1% | |||
Life Sciences Tools & Services - 0.1% | |||
Thermo Fisher Scientific, Inc. (a) | 10,400 | 377,104 | |
MACHINERY - 0.1% | |||
Industrial Machinery - 0.1% | |||
China Fire & Security Group, Inc. (a) | 54,500 | 360,245 | |
Toshiba Machine Co. Ltd. | 169,000 | 413,405 | |
| 773,650 | ||
MEDIA - 1.5% | |||
Advertising - 1.5% | |||
AirMedia Group, Inc. ADR (a) | 200,000 | 798,000 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Advertising - continued | |||
SinoMedia Holding Ltd. | 1,000,000 | $ 142,163 | |
VisionChina Media, Inc. ADR (a)(d) | 1,703,504 | 10,323,234 | |
| 11,263,397 | ||
METALS & MINING - 0.0% | |||
Diversified Metals & Mining - 0.0% | |||
Timminco Ltd. (a) | 13,700 | 35,431 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 26.4% | |||
Semiconductor Equipment - 8.2% | |||
Aixtron AG | 82,000 | 332,689 | |
Amkor Technology, Inc. (a) | 181,300 | 310,023 | |
Applied Materials, Inc. | 180,000 | 1,657,800 | |
ASM International NV (NASDAQ) (a) | 45,100 | 298,111 | |
ASML Holding NV (NY Shares) | 1,346,605 | 20,374,134 | |
Cymer, Inc. (a) | 265,522 | 4,904,191 | |
FormFactor, Inc. (a) | 186,600 | 2,698,236 | |
Global Unichip Corp. | 214,000 | 908,832 | |
Inotera Memories, Inc. (a) | 5,628,000 | 1,894,782 | |
Lam Research Corp. (a) | 383,675 | 7,504,683 | |
LTX-Credence Corp. (a) | 1,191,690 | 238,338 | |
MEMC Electronic Materials, Inc. (a) | 204,300 | 3,066,543 | |
MEMSIC, Inc. (a) | 338,000 | 544,180 | |
Photronics, Inc. (a) | 206,900 | 190,348 | |
Tessera Technologies, Inc. (a) | 750,450 | 8,104,860 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 419,700 | 7,659,525 | |
Verigy Ltd. (a) | 402,100 | 2,778,511 | |
| 63,465,786 | ||
Semiconductors - 18.2% | |||
Advanced Micro Devices, Inc. (a) | 170,700 | 372,126 | |
Advanced Semiconductor Engineering, Inc. sponsored ADR | 1,861,168 | 3,163,986 | |
ANADIGICS, Inc. (a) | 77,200 | 125,064 | |
Analog Devices, Inc. | 81,100 | 1,511,704 | |
Applied Micro Circuits Corp. (a) | 19,125 | 69,041 | |
ARM Holdings PLC sponsored ADR | 975,200 | 4,086,088 | |
Atheros Communications, Inc. (a) | 120,000 | 1,449,600 | |
Atmel Corp. (a) | 1,415,500 | 5,053,335 | |
AuthenTec, Inc. (a) | 107,836 | 146,657 | |
Cavium Networks, Inc. (a) | 1,031,593 | 9,810,449 | |
Cree, Inc. (a)(d) | 304,700 | 5,984,308 | |
CSR PLC (a) | 133,700 | 377,508 | |
Cypress Semiconductor Corp. (a) | 685,800 | 3,813,048 | |
Diodes, Inc. (a) | 198,100 | 1,541,218 | |
Elan Microelectronics Corp. | 453,000 | 401,628 | |
Epistar Corp. | 1,693,000 | 2,080,285 | |
Fairchild Semiconductor International, Inc. (a) | 1,188,642 | 4,160,247 | |
Himax Technologies, Inc. sponsored ADR | 159,644 | 263,413 | |
Hynix Semiconductor, Inc. (a) | 56,810 | 314,486 | |
| |||
Shares | Value | ||
Infineon Technologies AG sponsored ADR (a) | 464,100 | $ 278,460 | |
Integrated Device Technology, Inc. (a) | 43,200 | 193,536 | |
Intel Corp. | 920,006 | 11,720,876 | |
International Rectifier Corp. (a) | 484,945 | 6,086,060 | |
Intersil Corp. Class A | 315,500 | 3,189,705 | |
Kinsus Interconnect Technology Corp. | 600,000 | 701,964 | |
LSI Corp. (a) | 818,200 | 2,372,780 | |
Marvell Technology Group Ltd. (a) | 1,123,500 | 8,437,485 | |
Maxim Integrated Products, Inc. | 127,100 | 1,537,910 | |
MediaTek, Inc. | 225,000 | 1,926,496 | |
Micrel, Inc. | 109,500 | 728,175 | |
Microchip Technology, Inc. | 82,700 | 1,552,279 | |
Micron Technology, Inc. (a) | 3,358,400 | 10,814,048 | |
Microsemi Corp. (a) | 155,700 | 1,574,127 | |
Monolithic Power Systems, Inc. (a) | 129,700 | 1,679,615 | |
National Semiconductor Corp. | 348,400 | 3,797,560 | |
Netlogic Microsystems, Inc. (a) | 64,600 | 1,531,666 | |
NVIDIA Corp. (a) | 994,500 | 8,234,460 | |
O2Micro International Ltd. sponsored ADR (a) | 20,000 | 46,400 | |
Omnivision Technologies, Inc. (a) | 109,300 | 742,147 | |
PMC-Sierra, Inc. (a) | 326,800 | 1,669,948 | |
Power Integrations, Inc. | 40,900 | 750,515 | |
Powertech Technology, Inc. | 595,000 | 903,377 | |
RF Micro Devices, Inc. (a) | 138,400 | 125,944 | |
Samsung Electronics Co. Ltd. | 22,799 | 7,012,242 | |
Semtech Corp. (a) | 20,000 | 235,000 | |
Silicon Image, Inc. (a) | 100,000 | 232,000 | |
Silicon Laboratories, Inc. (a) | 35,400 | 775,260 | |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 538,800 | 2,386,884 | |
SiRF Technology Holdings, Inc. (a) | 516,800 | 945,744 | |
Skyworks Solutions, Inc. (a) | 784,600 | 5,099,900 | |
Standard Microsystems Corp. (a) | 134,400 | 2,092,608 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 2,827,000 | 3,564,430 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 261,300 | 1,970,202 | |
TriQuint Semiconductor, Inc. (a) | 409,200 | 953,436 | |
Volterra Semiconductor Corp. (a) | 21,000 | 170,100 | |
| 140,757,530 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 204,223,316 | ||
SOFTWARE - 15.4% | |||
Application Software - 6.9% | |||
Amdocs Ltd. (a) | 90,100 | 1,509,175 | |
Ansys, Inc. (a) | 2,700 | 54,459 | |
Autodesk, Inc. (a) | 4,400 | 55,836 | |
Autonomy Corp. PLC (a) | 305,200 | 5,259,392 | |
Blackboard, Inc. (a) | 50,500 | 1,385,720 | |
Cadence Design Systems, Inc. (a) | 2,634,300 | 11,064,060 | |
Callidus Software, Inc. (a) | 744,532 | 1,734,760 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Application Software - continued | |||
Citrix Systems, Inc. (a) | 90,000 | $ 1,852,200 | |
Concur Technologies, Inc. (a)(d) | 150,200 | 3,152,698 | |
Epicor Software Corp. (a) | 68,400 | 192,204 | |
Informatica Corp. (a) | 187,300 | 2,416,170 | |
Kingdee International Software Group Co. Ltd. | 6,380,000 | 644,708 | |
Longtop Financial Technologies Ltd. ADR (a) | 136,300 | 2,067,671 | |
MSC.Software Corp. (a) | 105,400 | 486,948 | |
Nuance Communications, Inc. (a) | 38,745 | 343,281 | |
Parametric Technology Corp. (a) | 233,200 | 1,898,248 | |
Quest Software, Inc. (a) | 21,011 | 237,424 | |
Salesforce.com, Inc. (a) | 275,000 | 7,700,000 | |
Smith Micro Software, Inc. (a) | 508,782 | 2,162,324 | |
SuccessFactors, Inc. (a)(d) | 598,400 | 3,039,872 | |
Synchronoss Technologies, Inc. (a)(d) | 356,506 | 3,401,067 | |
Synopsys, Inc. (a) | 4,300 | 80,109 | |
Taleo Corp. Class A (a) | 190,236 | 1,712,124 | |
Ulticom, Inc. (a) | 141,942 | 709,710 | |
| 53,160,160 | ||
Home Entertainment Software - 3.1% | |||
Activision Blizzard, Inc. (a) | 37,300 | 374,119 | |
Electronic Arts, Inc. (a) | 282,200 | 4,602,682 | |
Kingsoft Corp. Ltd. | 2,000,000 | 669,302 | |
Nintendo Co. Ltd. | 32,900 | 9,277,800 | |
Perfect World Co. Ltd. sponsored ADR Class B (a)(d) | 646,703 | 7,437,085 | |
Take-Two Interactive Software, Inc. | 231,400 | 1,432,366 | |
| 23,793,354 | ||
Systems Software - 5.4% | |||
CA, Inc. | 23,000 | 389,850 | |
Check Point Software Technologies Ltd. (a) | 3,900 | 85,683 | |
CommVault Systems, Inc. (a) | 35,600 | 389,108 | |
Insyde Software Corp. | 543,667 | 1,239,168 | |
McAfee, Inc. (a) | 13,400 | 374,530 | |
Microsoft Corp. | 1,973,880 | 31,878,162 | |
Oracle Corp. (a) | 23,600 | 366,744 | |
Phoenix Technologies Ltd. (a) | 119,200 | 278,928 | |
Red Hat, Inc. (a) | 302,000 | 4,134,380 | |
Symantec Corp. (a) | 110,500 | 1,528,215 | |
VMware, Inc. Class A (a) | 62,000 | 1,287,120 | |
| 41,951,888 | ||
TOTAL SOFTWARE | 118,905,402 | ||
| |||
Shares | Value | ||
SPECIALTY RETAIL - 0.1% | |||
Computer & Electronics Retail - 0.1% | |||
The Game Group PLC | 408,589 | $ 849,353 | |
WIRELESS TELECOMMUNICATION SERVICES - 1.9% | |||
Wireless Telecommunication Services - 1.9% | |||
American Tower Corp. Class A (a) | 205,000 | 5,969,600 | |
Crown Castle International Corp. (a) | 43,800 | 768,252 | |
SBA Communications Corp. Class A (a) | 378,700 | 7,869,386 | |
| 14,607,238 | ||
TOTAL COMMON STOCKS (Cost $1,134,136,495) | 762,195,639 |
Convertible Bonds - 0.9% | ||||
| Principal Amount |
| ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.9% | ||||
Semiconductors - 0.9% | ||||
Advanced Micro Devices, Inc. 5.75% 8/15/12 | $ 17,200,000 | 6,901,500 |
Money Market Funds - 4.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 480,831 | 480,831 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 36,997,831 | 36,997,831 | |
TOTAL MONEY MARKET FUNDS (Cost $37,478,662) | 37,478,662 | ||
TOTAL INVESTMENT PORTFOLIO - 104.3% (Cost $1,184,979,279) | 806,575,801 | ||
NET OTHER ASSETS - (4.3)% | (33,203,177) | ||
NET ASSETS - 100% | $ 773,372,624 |
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 | $ 545,467 |
Fidelity Securities Lending Cash Central Fund | 2,499,952 |
Total | $ 3,045,419 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 806,575,801 | $ 741,215,270 | $ 64,662,131 | $ 698,400 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments in Securities |
Beginning Balance | $ - |
Total Realized Gain (Loss) | (434,422) |
Total Unrealized Gain (Loss) | 135,358 |
Cost of Purchases | - |
Proceeds of Sales | (132,808) |
Amortization/Accretion | - |
Transfer in/out of Level 3 | 1,130,272 |
Ending Balance | $ 698,400 |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 79.4% |
Cayman Islands | 5.4% |
Taiwan | 4.2% |
Netherlands | 2.6% |
Bermuda | 1.7% |
United Kingdom | 1.6% |
Japan | 1.3% |
Others (individually less than 1%) | 3.8% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $2,508,155,561 of which $1,463,303,298, $778,450,488 and $266,401,775 will expire on February 28, 2010, 2011 and 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $254,482,625 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $36,097,633) - See accompanying schedule: Unaffiliated issuers (cost $1,147,500,617) | $ 769,097,139 |
|
Fidelity Central Funds (cost $37,478,662) | 37,478,662 |
|
Total Investments (cost $1,184,979,279) |
| $ 806,575,801 |
Receivable for investments sold | 18,874,031 | |
Receivable for fund shares sold | 1,467,508 | |
Dividends receivable | 737,354 | |
Interest receivable | 41,208 | |
Distributions receivable from Fidelity Central Funds | 60,181 | |
Prepaid expenses | 9,372 | |
Other receivables | 22,310 | |
Total assets | 827,787,765 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 4,089 | |
Payable for investments purchased | 15,387,525 | |
Payable for fund shares redeemed | 1,366,816 | |
Accrued management fee | 385,519 | |
Other affiliated payables | 228,246 | |
Other payables and accrued expenses | 45,115 | |
Collateral on securities loaned, at value | 36,997,831 | |
Total liabilities | 54,415,141 | |
|
|
|
Net Assets | $ 773,372,624 | |
Net Assets consist of: |
| |
Paid in capital | $ 3,941,090,186 | |
Undistributed net investment income | 579,532 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,789,885,906) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (378,411,188) | |
Net Assets, for 20,833,340 shares outstanding | $ 773,372,624 | |
Net Asset Value, offering price and redemption price per share ($773,372,624 ÷ 20,833,340 shares) | $ 37.12 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 10,588,221 |
Interest |
| 1,575,952 |
Income from Fidelity Central Funds (including $2,499,952 from security lending) |
| 3,045,419 |
|
| 15,209,592 |
Less foreign taxes withheld |
| (834,574) |
Total income |
| 14,375,018 |
|
|
|
Expenses | ||
Management fee | $ 6,961,968 | |
Transfer agent fees | 3,472,329 | |
Accounting and security lending fees | 416,526 | |
Custodian fees and expenses | 157,036 | |
Independent trustees' compensation | 6,035 | |
Registration fees | 53,682 | |
Audit | 43,741 | |
Legal | 9,283 | |
Interest | 33,832 | |
Miscellaneous | 114,495 | |
Total expenses before reductions | 11,268,927 | |
Expense reductions | (177,186) | 11,091,741 |
Net investment income (loss) | 3,283,277 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (543,396,133) | |
Foreign currency transactions | (632,686) | |
Total net realized gain (loss) |
| (544,028,819) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $197,277) | (83,883,315) | |
Assets and liabilities in foreign currencies | (8,025) | |
Total change in net unrealized appreciation (depreciation) |
| (83,891,340) |
Net gain (loss) | (627,920,159) | |
Net increase (decrease) in net assets resulting from operations | $ (624,636,882) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
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) | $ 3,283,277 | $ (8,560,204) |
Net realized gain (loss) | (544,028,819) | 273,760,807 |
Change in net unrealized appreciation (depreciation) | (83,891,340) | (368,847,786) |
Net increase (decrease) in net assets resulting from operations | (624,636,882) | (103,647,183) |
Distributions to shareholders from net investment income | (2,183,683) | - |
Share transactions | 334,156,743 | 635,529,129 |
Reinvestment of distributions | 2,090,398 | - |
Cost of shares redeemed | (485,622,379) | (678,928,628) |
Net increase (decrease) in net assets resulting from share transactions | (149,375,238) | (43,399,499) |
Redemption fees | 69,235 | 157,011 |
Total increase (decrease) in net assets | (776,126,568) | (146,889,671) |
|
|
|
Net Assets | ||
Beginning of period | 1,549,499,192 | 1,696,388,863 |
End of period (including undistributed net investment income of $579,532 and accumulated net investment loss of $1,368, respectively) | $ 773,372,624 | $ 1,549,499,192 |
Other Information Shares | ||
Sold | 5,606,157 | 7,994,554 |
Issued in reinvestment of distributions | 56,186 | - |
Redeemed | (8,076,996) | (9,035,987) |
Net increase (decrease) | (2,414,653) | (1,041,433) |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 66.65 | $ 69.84 | $ 65.24 | $ 57.62 | $ 61.94 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .15 | (.36) F | (.15) | (.27) | .11 G |
Net realized and unrealized gain (loss) | (29.57) | (2.84) | 4.75 | 7.88 | (4.28) |
Total from investment operations | (29.42) | (3.20) | 4.60 | 7.61 | (4.17) |
Distributions from net investment income | (.11) | - | - | - | (.16) |
Redemption fees added to paid in capital C | - J | .01 | - J | .01 | .01 |
Net asset value, end of period | $ 37.12 | $ 66.65 | $ 69.84 | $ 65.24 | $ 57.62 |
Total Return A, B | (44.15)% | (4.57)% | 7.05% | 13.22% | (6.73)% |
Ratios to Average Net Assets D, H |
|
|
|
|
|
Expenses before reductions | .90% | .89% | .95% | .99% | 1.01% |
Expenses net of fee waivers, if any | .90% | .89% | .95% | .99% | 1.01% |
Expenses net of all reductions | .89% | .88% | .95% | .93% | .94% |
Net investment income (loss) | .26% | (.47)% F | (.24)% | (.44)% | .20% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 773,373 | $ 1,549,499 | $ 1,696,389 | $ 1,923,316 | $ 1,954,017 |
Portfolio turnover rate E | 235% | 204% | 113% | 100% | 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 $.05 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.53)%. G 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)%. 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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
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 Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Funds indirectly bear their proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. Each Fund uses independent pricing services approved by the Board of Trustees to value their investments.
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, 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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of February 28, 2009, for each Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, certain Funds 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, passive foreign investment companies (PFIC), deferred trustees compensation, net operating losses, capital loss carryforwards, market discount and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The 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 |
Communications Equipment Portfolio | $ 238,474,225 | $ 2,566,885 | $ (108,750,946) | $ (106,184,061) |
Computers Portfolio | 353,117,410 | 2,104,989 | (143,128,392) | (141,023,403) |
Electronics Portfolio | 1,096,472,695 | 6,010,956 | (528,719,798) | (522,708,842) |
IT Services Portfolio | 73,176,710 | 1,857,527 | (13,901,942) | (12,044,415) |
Networking and Infrastructure Portfolio | 64,468,294 | 1,235,130 | (25,737,773) | (24,502,643) |
Software and Computer Services Portfolio | 674,514,459 | 23,097,917 | (149,967,826) | (126,869,909) |
Technology Portfolio | 1,211,560,277 | 17,671,523 | (422,655,999) | (404,984,476) |
| Undistributed | Capital Loss |
Communications Equipment Portfolio | $ - | $ (1,235,260,787) |
Computers Portfolio | - | (728,481,031) |
Electronics Portfolio | 1,920,972 | (2,645,400,056) |
IT Services Portfolio | - | (8,723,192) |
Networking and Infrastructure Portfolio | - | (196,789,906) |
Software and Computer Services Portfolio | - | (40,189,483) |
Technology Portfolio | - | (2,508,155,561) |
The tax character of distributions paid was as follows:
February 28, 2009 | Ordinary |
Communications Equipment Portfolio | $ 497,720 |
Electronics Portfolio | 5,135,720 |
Technology Portfolio | 2,183,683 |
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 |
Trading (Redemption) Fees. Shares in the Funds held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 ($) | Sales ($) |
Communications Equipment Portfolio | 230,375,425 | 229,366,340 |
Computers Portfolio | 602,552,459 | 666,244,734 |
Annual Report
5. Purchases and Sales of Investments - continued
| Purchases ($) | Sales ($) |
Electronics Portfolio | 852,988,798 | 1,022,075,705 |
IT Services Portfolio | 110,537,747 | 76,294,487 |
Networking and Infrastructure Portfolio | 61,481,336 | 49,444,255 |
Software and Computer Services Portfolio | 317,572,126 | 391,917,918 |
Technology Portfolio | 2,863,700,485 | 2,962,516,927 |
Communications Equipment Portfolio and 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 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 assets under management increase and increases as assets under management decrease. For the period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total |
Communications Equipment Portfolio | .30% | .26% | .56% |
Computers Portfolio | .30% | .26% | .56% |
Electronics Portfolio | .30% | .26% | .56% |
IT Services Portfolio | .30% | .26% | .56% |
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. 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 | .28% |
Electronics Portfolio | .27% |
IT Services Portfolio | .27% |
Networking and Infrastructure Portfolio | .30% |
Software and Computer Services Portfolio | .25% |
Technology Portfolio | .28% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount |
Communications Equipment Portfolio | $ 6,076 |
Computers Portfolio | 13,671 |
Electronics Portfolio | 25,047 |
IT Services Portfolio | 4,072 |
Networking and Infrastructure Portfolio | 3,881 |
Software and Computer Services Portfolio | 9,304 |
Technology Portfolio | 65,879 |
Annual Report
Notes to Financial Statements - continued
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower | Average | Weighted | Interest |
Communications Equipment Portfolio | Borrower | $ 3,861,333 | 2.18% | $ 1,400 |
Computers Portfolio | Borrower | 10,805,000 | 2.21% | 663 |
Software and Computer Services Portfolio | Borrower | 6,847,889 | 2.42% | 4,140 |
Technology Portfolio | Borrower | 15,457,273 | 2.31% | 32,682 |
7. Committed Line of Credit.
Certain Funds participate with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which is reflected in Miscellaneous Expense on the Statement of Operations, and is as follows:
Communications Equipment Portfolio | $ 635 |
Computers Portfolio | 1,092 |
Electronics Portfolio | 3,026 |
IT Services Portfolio | 193 |
Networking and Infrastructure Portfolio | 151 |
Software and Computer Services Portfolio | 2,230 |
Technology Portfolio | 3,935 |
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 | Interest |
Software and Computer Services Portfolio | $ 5,230,000 | 2.50% | $ 363 |
Technology Portfolio | 12,740,000 | 3.25% | 1,150 |
Annual Report
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 | $ 14,944 | $ - | $ 28 |
Computers Portfolio | 43,291 | 515 | 342 |
Electronics Portfolio | 93,747 | 1,802 | 2,131 |
Networking and Infrastructure Portfolio | 27 | - | - |
Software and Computer Services Portfolio | 5,005 | - | 591 |
Technology Portfolio | 166,140 | 4,434 | 6,612 |
11. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following fund:
Fund | Affiliated % |
35% |
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid each fund the following amounts, which is recorded in each applicable Fund's accompanying Statement of Operations:
Communication 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.
12. Proposed Reorganization.
On November 18, 2008, the Board of Trustees of Networking and Infrastructure Portfolio approved an Agreement and Plan of Reorganization between Networking and Infrastructure Portfolio and Communications Equipment Portfolio. The Agreement provides for the transfer of all of the assets and the assumption of all of the liabilities of Networking and Infrastructure Portfolio in exchange solely for the number of equivalent shares of Communications Equipment Portfolio having the same aggregate net asset value as the outstanding shares of Networking and Infrastructure Portfolio, on the day the reorganization is effective.
A meeting of shareholders of Networking and Infrastructure Portfolio is expected to be held on May 19, 2009 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about June 19, 2009. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by these Funds or their shareholders. Effective March 19, 2009, Networking and Infrastructure Portfolio´s shares are no longer available for purchase pending the proposed reorganization. However, existing shareholders of Networking and Infrastructure Portfolio can continue to purchase shares of Networking and Infrastructure Portfolio.
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:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Networking and Infrastructure Portfolio, Software and Computer Services Portfolio and Technology Portfolio (funds of Fidelity Select Portfolios) at February 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy call Fidelity at 1-800-544-5844.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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). |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
|
| December 2008 |
Select Communications Equipment Portfolio |
| 86% |
Select Electronics Portfolio |
| 100% |
Select Technology Portfolio |
| 89% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
|
| December 2008 |
Select Communications Equipment Portfolio |
| 85% |
Select Electronics Portfolio |
| 100% |
Select Technology Portfolio |
| 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 income tax returns.
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)
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1-800-544-5555
Press
For mutual fund and brokerage trading.
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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
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Investment Sub-Advisers
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Automated line for quickest service
SELTEC-UANN-0409
1.813668.104
Fidelity®
Select Portfolios®
Telecommunications Services Sector
Select Telecommunications Portfolio
Select Wireless Portfolio
Annual Report
February 28, 2009
(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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Telecommunications | -36.00% | -4.44% | -5.32% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000�� Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Gavin Baker, Portfolio Manager of Select Telecommunications Portfolio: For the 12-month period ending February 28, 2009, the fund's Retail Class shares returned -36.00%, underperforming the -28.37% return of the MSCI® US Investable Market Telecommunications Services Index, but outperforming the S&P 500. Relative to the MSCI index, the fund was hurt by being significantly overweighted in the poor-performing alternative carriers group. Stock selection in the home entertainment software and cable/satellite groups, two areas not represented in the MSCI index, detracted as well. Underweighting integrated telecommunication services stocks, specifically index heavyweight Verizon - due to the fund's investment limitations - hurt the fund because Verizon outperformed the benchmark. Other individual detractors included alternative carriers Global Crossing, which is based in Bermuda, and Level 3 Communications, both of which saw their stock prices drop significantly. French company Gameloft, which sells video games for cell phones, held back the fund's return as well. Lastly, our holdings in foreign stocks were hurt by the strengthening U.S. dollar. On the other hand, the fund benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel for much of 2008 and then overweighting the stock late in 2008 and early in 2009. At that time, I purchased shares of the troubled wireless company at a low price, and subsequently the value of these shares increased. Another stock that contributed to the fund's return was communications equipment company Starent Networks, in which the fund held an out-of-benchmark position. Integrated telecom services company Cbeyond also outperformed.
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, 2008 to
February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 658.90 | $ 4.94 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 657.90 | $ 6.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.50 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.40 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Telecommunications | .97% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.70 | $ 3.99 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.98 | $ 4.86 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.60 | $ 4.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Sprint Nextel Corp. | 12.7 | 3.1 |
Verizon Communications, Inc. | 11.1 | 4.3 |
AT&T, Inc. | 7.4 | 12.5 |
Global Crossing Ltd. | 6.3 | 7.7 |
Qwest Communications International, Inc. | 4.8 | 7.6 |
Virgin Media, Inc. | 4.6 | 4.8 |
Starent Networks Corp. | 4.2 | 4.0 |
Vodafone Group PLC sponsored ADR | 3.9 | 1.4 |
The DIRECTV Group, Inc. | 3.7 | 2.2 |
Cbeyond, Inc. | 3.5 | 1.9 |
| 62.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Diversified Telecommunication Services | 41.3% |
| |
Wireless Telecommunication Services | 33.9% |
| |
Media | 12.2% |
| |
Communications Equipment | 4.6% |
| |
Software | 2.5% |
| |
All Others* | 5.5% |
|
|
As of August 31, 2008 | |||
Diversified Telecommunication Services | 54.0% |
| |
Wireless Telecommunication Services | 20.0% |
| |
Media | 14.7% |
| |
Software | 5.1% |
| |
Communications Equipment | 4.4% |
| |
All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Telecommunications Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 94.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 4.6% | |||
Communications Equipment - 4.6% | |||
Aruba Networks, Inc. (a) | 392 | $ 1,082 | |
F5 Networks, Inc. (a) | 1,600 | 32,000 | |
Infinera Corp. (a)(d) | 75,300 | 542,160 | |
Juniper Networks, Inc. (a) | 2,100 | 29,841 | |
Nortel Networks Corp. (a) | 8,071 | 666 | |
Polycom, Inc. (a) | 1,700 | 22,610 | |
Sandvine Corp. (a) | 3,200 | 1,836 | |
Sonus Networks, Inc. (a) | 56,800 | 70,432 | |
Starent Networks Corp. (a) | 533,874 | 8,440,548 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 4,896 | |
| 9,146,071 | ||
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Hardware - 0.1% | |||
Apple, Inc. (a) | 1,800 | 160,758 | |
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 1,125 | |
NetApp, Inc. (a) | 700 | 9,408 | |
Synaptics, Inc. (a) | 450 | 9,338 | |
| 19,871 | ||
TOTAL COMPUTERS & PERIPHERALS | 180,629 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 41.3% | |||
Alternative Carriers - 10.3% | |||
Cable & Wireless PLC | 19,405 | 37,971 | |
Cogent Communications Group, Inc. (a) | 64,802 | 428,989 | |
Global Crossing Ltd. (a) | 1,728,486 | 12,652,518 | |
Iliad Group SA | 600 | 47,378 | |
Level 3 Communications, Inc. (a) | 1,228,676 | 982,941 | |
PAETEC Holding Corp. (a) | 73,600 | 108,192 | |
tw telecom, inc. (a) | 783,552 | 6,299,758 | |
| 20,557,747 | ||
Integrated Telecommunication Services - 31.0% | |||
AT&T, Inc. | 618,319 | 14,697,443 | |
BT Group PLC | 5,351 | 6,836 | |
Cbeyond, Inc. (a) | 491,718 | 7,085,656 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 243,300 | 2,158,071 | |
Cincinnati Bell, Inc. (a) | 225,000 | 373,500 | |
Deutsche Telekom AG (Reg.) | 1,100 | 13,189 | |
Embarq Corp. | 900 | 31,473 | |
FairPoint Communications, Inc. | 34,149 | 67,274 | |
NTELOS Holdings Corp. | 632 | 12,115 | |
PT Indosat Tbk | 1,600 | 553 | |
PT Telkomunikasi Indonesia Tbk Series B | 355,900 | 186,993 | |
Qwest Communications International, Inc. (d) | 2,841,789 | 9,633,665 | |
Telecom Italia SpA sponsored ADR | 12,500 | 150,750 | |
Telefonica SA | 400 | 7,360 | |
| |||
Shares | Value | ||
Telefonica SA sponsored ADR | 95,400 | $ 5,300,424 | |
Telenor ASA | 4,400 | 22,615 | |
Telenor ASA sponsored ADR | 4,100 | 63,878 | |
Telkom SA Ltd. | 4,400 | 43,138 | |
Verizon Communications, Inc. | 774,824 | 22,105,729 | |
Vimpel Communications sponsored ADR | 1,200 | 6,288 | |
Windstream Corp. | 1,708 | 12,742 | |
| 61,979,692 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 82,537,439 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 7,614 | |
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 30,419 | |
SAVVIS, Inc. (d) | 26,799 | 150,342 | |
| 180,761 | ||
MEDIA - 12.2% | |||
Cable & Satellite - 12.2% | |||
Comcast Corp. Class A | 320,000 | 4,179,200 | |
DISH Network Corp. Class A (a) | 321,800 | 3,620,250 | |
Dish TV India Ltd. (a) | 5,888 | 2,766 | |
Liberty Global, Inc. Class A (a) | 400 | 4,908 | |
The DIRECTV Group, Inc. (a) | 367,300 | 7,323,962 | |
Virgin Media, Inc. | 1,923,800 | 9,195,764 | |
| 24,326,850 | ||
SOFTWARE - 2.5% | |||
Application Software - 0.3% | |||
Nuance Communications, Inc. (a) | 800 | 7,088 | |
OnMobile Global Ltd. | 132,183 | 585,270 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 55,933 | |
| 648,291 | ||
Home Entertainment Software - 2.2% | |||
Gameloft (a)(d) | 2,751,486 | 4,338,746 | |
Glu Mobile, Inc. (a) | 113,614 | 53,399 | |
| 4,392,145 | ||
TOTAL SOFTWARE | 5,040,436 | ||
WIRELESS TELECOMMUNICATION SERVICES - 33.9% | |||
Wireless Telecommunication Services - 33.9% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 10,192 | |
American Tower Corp. Class A (a) | 199,900 | 5,821,088 | |
Bharti Airtel Ltd. (a) | 2,129 | 26,254 | |
Centennial Communications Corp. Class A (a) | 89,400 | 735,762 | |
Clearwire Corp. Class A (a) | 17,350 | 55,867 | |
Crown Castle International Corp. (a) | 136,183 | 2,388,650 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Idea Cellular Ltd. (a) | 3,710 | $ 3,368 | |
Leap Wireless International, Inc. (a) | 80,124 | 2,172,162 | |
MetroPCS Communications, Inc. (a) | 199,200 | 2,888,400 | |
Millicom International Cellular SA | 134,600 | 5,299,202 | |
MTN Group Ltd. | 363,625 | 3,094,681 | |
NII Holdings, Inc. (a) | 119,000 | 1,524,390 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 51,742 | |
SBA Communications Corp. Class A (a)(d) | 206,182 | 4,284,462 | |
Sprint Nextel Corp. (a) | 7,729,444 | 25,429,868 | |
Syniverse Holdings, Inc. (a) | 30,468 | 460,981 | |
Telephone & Data Systems, Inc. | 14,820 | 437,190 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 65,700 | 930,969 | |
Virgin Mobile USA, Inc. Class A (a) | 600 | 630 | |
Vivo Participacoes SA sponsored ADR (d) | 268,425 | 4,351,169 | |
Vodafone Group PLC sponsored ADR | 436,300 | 7,744,325 | |
| 67,711,352 | ||
TOTAL COMMON STOCKS (Cost $306,428,009) | 189,131,152 | ||
Money Market Funds - 12.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 11,672,763 | $ 11,672,763 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 13,043,687 | 13,043,687 | |
TOTAL MONEY MARKET FUNDS (Cost $24,716,450) | 24,716,450 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $331,144,459) | 213,847,602 | ||
NET OTHER ASSETS - (7.0)% | (14,081,868) | ||
NET ASSETS - 100% | $ 199,765,734 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 57,370 |
Fidelity Securities Lending Cash Central Fund | 470,757 |
Total | $ 528,127 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 213,847,602 | $ 208,568,303 | $ 5,279,299 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 76.3% |
Bermuda | 6.3% |
United Kingdom | 3.9% |
Spain | 2.7% |
Luxembourg | 2.7% |
Brazil | 2.7% |
France | 2.2% |
South Africa | 1.6% |
Hong Kong | 1.1% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $431,464,468 of which $205,830,514, $161,866,685, $11,764,473 and $52,002,796 will expire on February 28, 2010, February 28, 2011, February 29, 2012 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $16,930,578 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,907,578) - See accompanying schedule: Unaffiliated issuers (cost $306,428,009) | $ 189,131,152 |
|
Fidelity Central Funds (cost $24,716,450) | 24,716,450 |
|
Total Investments (cost $331,144,459) |
| $ 213,847,602 |
Receivable for investments sold | 4,630,705 | |
Receivable for fund shares sold | 1,260,367 | |
Dividends receivable | 265,377 | |
Distributions receivable from Fidelity Central Funds | 17,051 | |
Prepaid expenses | 1,865 | |
Other receivables | 71,382 | |
Total assets | 220,094,349 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,829,111 | |
Payable for fund shares redeemed | 274,730 | |
Accrued management fee | 91,887 | |
Distribution fees payable | 1,188 | |
Other affiliated payables | 54,300 | |
Other payables and accrued expenses | 33,712 | |
Collateral on securities loaned, at value | 13,043,687 | |
Total liabilities | 20,328,615 | |
|
|
|
Net Assets | $ 199,765,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 775,699,080 | |
Distributions in excess of net investment income | (1,700,123) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (456,922,603) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (117,310,620) | |
Net Assets | $ 199,765,734 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
|
|
|
Calculation of Maximum Offering Price | $ 26.66 | |
|
|
|
Maximum offering price per share (100/94.25 of $26.66) | $ 28.29 | |
Class T: | $ 26.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $26.68) | $ 27.65 | |
Class B: | $ 26.71 | |
|
|
|
Class C: | $ 26.76 | |
|
|
|
|
|
|
Telecommunications: | $ 26.74 | |
|
|
|
Institutional Class: | $ 26.73 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,166,766 |
Interest |
| 11,515 |
Income from Fidelity Central Funds (including $470,757 from security lending) |
| 528,127 |
Total income |
| 4,706,408 |
|
|
|
Expenses | ||
Management fee | $ 1,444,922 | |
Transfer agent fees | 760,912 | |
Distribution fees | 19,379 | |
Accounting and security lending fees | 109,688 | |
Custodian fees and expenses | 36,809 | |
Independent trustees' compensation | 942 | |
Registration fees | 72,431 | |
Audit | 48,049 | |
Legal | 6,748 | |
Interest | 5,788 | |
Miscellaneous | 31,134 | |
Total expenses before reductions | 2,536,802 | |
Expense reductions | (22,281) | 2,514,521 |
Net investment income (loss) | 2,191,887 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(81,003)) | (72,774,515) | |
Foreign currency transactions | 43,252 | |
Total net realized gain (loss) |
| (72,731,263) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60,644) | (37,703,361) | |
Assets and liabilities in foreign currencies | (11,091) | |
Total change in net unrealized appreciation (depreciation) |
| (37,714,452) |
Net gain (loss) | (110,445,715) | |
Net increase (decrease) in net assets resulting from operations | $ (108,253,828) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,191,887 | $ 4,604,512 |
Net realized gain (loss) | (72,731,263) | 113,362,351 |
Change in net unrealized appreciation (depreciation) | (37,714,452) | (171,837,575) |
Net increase (decrease) in net assets resulting from operations | (108,253,828) | (53,870,712) |
Distributions to shareholders from net investment income | (2,892,731) | (4,987,721) |
Distributions to shareholders from net realized gain | (1,435,678) | - |
Total distributions | (4,328,409) | (4,987,721) |
Share transactions - net increase (decrease) | (28,183,681) | (227,033,730) |
Redemption fees | 6,604 | 35,395 |
Total increase (decrease) in net assets | (140,759,314) | (285,856,768) |
|
|
|
Net Assets | ||
Beginning of period | 340,525,048 | 626,381,816 |
End of period (including distributions in excess of net investment income of $1,700,123 and undistributed net investment income of $768,284, respectively) | $ 199,765,734 | $ 340,525,048 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .26 | - K |
Net realized and unrealized gain (loss) | (15.60) | (8.08) | 3.15 |
Total from investment operations | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.35) M | (.51) | - |
Distributions from net realized gain | (.18) M | - | - |
Total distributions | (.52) L | (.51) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B,C,D | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. ECalculated 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. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | (15.56) | (8.07) | 3.14 |
Total from investment operations | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.24) M | (.42) | - |
Distributions from net realized gain | (.13) M | - | - |
Total distributions | (.37) L | (.42) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B,C,D | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | (15.49) | (8.04) | 3.11 |
Total from investment operations | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.11) M | (.20) | - |
Distributions from net realized gain | (.06) M | - | - |
Total distributions | (.17) L | (.20) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B,C,D | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | (15.50) | (8.03) | 3.14 |
Total from investment operations | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.07) M | (.22) | - |
Distributions from net realized gain | (.05) M | - | - |
Total distributions | (.11) L | (.22) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B,C,D | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
| |||||
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .30 | .43 | .61 F | .36 | .49 G |
Net realized and unrealized gain (loss) | (15.65) | (8.12) | 8.85 | 7.11 | (.96) |
Total from investment operations | (15.35) | (7.69) | 9.46 | 7.47 | (.47) |
Distributions from net investment income | (.41) L | (.52) | (.53) | (.33) | (.49) |
Distributions from net realized gain | (.20) L | - | - | - | - |
Total distributions | (.61) K | (.52) | (.53) | (.33) | (.49) |
Redemption fees added to paid in capital C | - J | - J | .01 | - J | - J |
Net asset value, end of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Total Return A,B | (36.00)% | (15.30)% | 22.69% | 21.54% | (1.40)% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .97% | .91% | .99% | 1.05% | 1.09% |
Expenses net of fee waivers, if any | .97% | .90% | .97% | 1.05% | 1.09% |
Expenses net of all reductions | .96% | .90% | .97% | .96% | 1.02% |
Net investment income (loss) | .85% | .79% | 1.34% F | .96% | 1.44% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 |
Portfolio turnover rate E | 168% | 134% | 162% | 148% | 56% |
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. K Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
| |||
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | (15.67) | (8.09) | 3.01 |
Total from investment operations | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.40) L | (.62) | - |
Distributions from net realized gain | (.20) L | - | - |
Total distributions | (.59) K | (.62) | - |
Redemption fees added to paid in capital D | - J | - J | - J |
Net asset value, end of period | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B,C | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .83% | .98% A |
Expenses net of all reductions | .90% | .83% | .97% A |
Net investment income (loss) | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences resulted in distribution reclassifications.
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, non-taxable dividends, 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 | $ 9,103,207 |
|
Unrealized depreciation | (137,029,947) |
|
Net unrealized appreciation (depreciation) | $ (127,926,740) |
|
Undistributed ordinary income | 388,578 |
|
Capital loss carryforward | (431,464,468) |
|
|
|
|
Cost for federal income tax purposes | $ 341,774,342 |
|
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 4,328,409 | $ 4,987,721 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $435,574,142 and $472,509,473, 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% | $ 3,942 | $ 497 |
Class T | .25% | .25% | 4,376 | 156 |
Class B | .75% | .25% | 5,278 | 4,045 |
Class C | .75% | .25% | 5,783 | 2,275 |
|
|
| $ 19,379 | $ 6,973 |
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
6. 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 | $ 1,768 |
Class T | 502 |
Class B* | 3,698 |
Class C* | 293 |
| $ 6,261 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 4,534 | .29 |
Class T | 2,776 | .32 |
Class B | 1,575 | .30 |
Class C | 1,724 | .30 |
Telecommunications | 749,971 | .29 |
Institutional Class | 332 | .23 |
| $ 760,912 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $9,310 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 | $ 9,204,200 | 2.26% | $ 5,788 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $834 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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.
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 $21,587 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 | $ 694 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 25,664 | $ 34,959 |
Class T | 8,592 | 17,867 |
Class B | 2,117 | 3,199 |
Class C | 1,365 | 4,260 |
Telecommunications | 4,183,665 | 4,919,180 |
Institutional Class | 1,823 | 8,256 |
Total | $ 4,223,226 | $ 4,987,721 |
From net realized gain |
|
|
Class A | $ 735 | $ - |
Class T | 357 | - |
Class B | 203 | - |
Class C | 204 | - |
Telecommunications | 103,644 | - |
Institutional Class | 40 | - |
Total | $ 105,183 | $ - |
11. 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 | 74,621 | 92,950 | $ 2,094,308 | $ 5,148,375 |
Reinvestment of distributions | 895 | 636 | 24,776 | 33,452 |
Shares redeemed | (61,881) | (40,941) | (2,346,705) | (2,000,467) |
Net increase (decrease) | 13,635 | 52,645 | $ (227,621) | $ 3,181,360 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class T |
|
|
|
|
Shares sold | 9,634 | 53,657 | $ 334,058 | $ 2,989,303 |
Reinvestment of distributions | 320 | 339 | 8,637 | 17,826 |
Shares redeemed | (16,594) | (35,109) | (641,649) | (1,688,606) |
Net increase (decrease) | (6,640) | 18,887 | $ (298,954) | $ 1,318,523 |
Class B |
|
|
|
|
Shares sold | 4,801 | 21,448 | $ 166,647 | $ 1,194,831 |
Reinvestment of distributions | 82 | 57 | 2,207 | 3,011 |
Shares redeemed | (8,780) | (9,753) | (330,007) | (488,017) |
Net increase (decrease) | (3,897) | 11,752 | $ (161,153) | $ 709,825 |
Class C |
|
|
|
|
Shares sold | 5,551 | 28,254 | $ 174,242 | $ 1,547,917 |
Reinvestment of distributions | 51 | 63 | 1,354 | 3,315 |
Shares redeemed | (12,987) | (13,594) | (456,301) | (674,972) |
Net increase (decrease) | (7,385) | 14,723 | $ (280,705) | $ 876,260 |
Telecommunications |
|
|
|
|
Shares sold | 1,724,964 | 3,678,807 | $ 54,824,085 | $ 202,863,624 |
Reinvestment of distributions | 146,701 | 89,389 | 4,105,779 | 4,711,340 |
Shares redeemed | (2,367,928) | (8,198,629) | (86,013,313) | (440,994,970) |
Net increase (decrease) | (496,263) | (4,430,433) | $ (27,083,449) | $ (233,420,006) |
Institutional Class |
|
|
|
|
Shares sold | 477 | 14,719 | $ 15,601 | $ 834,674 |
Reinvestment of distributions | 51 | 128 | 1,477 | 6,760 |
Shares redeemed | (3,964) | (11,092) | (148,877) | (541,126) |
Net increase (decrease) | (3,436) | 3,755 | $ (131,799) | $ 300,308 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134, which is recorded in the accompanying Statement of Operations.
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 28, 2009 | Past 1 | Past 5 | Life of |
Select Wireless Portfolio | -37.68% | 0.37% | -8.00% |
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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Gavin Baker, Portfolio Manager of Select Wireless Portfolio: For the 12-month period ending February 28, 2009, the fund returned -37.68%, about level with the -37.40% return of the Standard & Poor's® Custom Wireless Index, but outperforming the S&P 500. Relative to the S&P® Custom Wireless index, the fund was hurt by a handful of poor stock choices, including French home entertainment software company Gameloft and application software company Synchronoss Technologies. An underweighting in Japanese wireless company NTT DoCoMo and not holding Hutchison Telecommunications, another wireless name in the index that outperformed, also hurt the fund. British company Vodafone held back the fund's return as well. On the other hand, the fund benefited from strong stock selection in the wireless telecommunications services group. Specifically, the fund was helped by underweighting Sprint Nextel for much of 2008 and then overweighting the stock late in 2008 and early in 2009. At that time, I purchased shares of the troubled wireless company at a low price, and subsequently the value of these shares increased. Another stock that did well for the fund was communications equipment company Starent Networks, which makes gear that helps wireless telecom companies manage their mobile data traffic. An out-of-benchmark holding, Starent was a strong performer for the fund during the final three months of the review period. The fund also was helped by being underweighted in communications equipment company Motorola, which did not perform well, especially in the second half of the period.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including 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, 2008 to February 28, 2009).
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 | .95% | $ 1,000.00 | $ 643.60 | $ 3.87 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Wireless Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Sprint Nextel Corp. | 18.0 | 3.0 |
Starent Networks Corp. | 7.8 | 7.0 |
Vodafone Group PLC sponsored ADR | 6.9 | 7.6 |
QUALCOMM, Inc. | 6.5 | 11.5 |
Research In Motion Ltd. | 5.0 | 5.0 |
SBA Communications Corp. Class A | 4.7 | 3.0 |
Millicom International Cellular SA | 4.6 | 3.7 |
Gameloft | 4.2 | 7.7 |
MetroPCS Communications, Inc. | 3.3 | 0.8 |
Vivo Participacoes SA sponsored ADR | 3.2 | 0.0 |
| 64.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Wireless Telecommunication Services | 59.3% |
| |
Communications Equipment | 23.8% |
| |
Software | 5.3% |
| |
Diversified Telecommunication Services | 3.9% |
| |
Media | 3.5% |
| |
All Others* | 4.2% |
|
|
As of August 31, 2008 | |||
Wireless Telecommunication Services | 45.7% |
| |
Communications Equipment | 35.5% |
| |
Software | 9.4% |
| |
Computers & Peripherals | 4.7% |
| |
Semiconductors & Semiconductor Equipment | 2.6% |
| |
All Others* | 2.1% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Wireless Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 23.8% | |||
Communications Equipment - 23.8% | |||
Aruba Networks, Inc. (a) | 78,884 | $ 217,720 | |
Harris Corp. | 42,400 | 1,580,672 | |
Juniper Networks, Inc. (a) | 36,800 | 522,928 | |
Motorola, Inc. | 518,380 | 1,824,698 | |
Nokia Corp. sponsored ADR | 181,300 | 1,696,968 | |
Powerwave Technologies, Inc. (a) | 89,500 | 30,430 | |
QUALCOMM, Inc. | 349,450 | 11,682,114 | |
Research In Motion Ltd. (a) | 228,300 | 9,118,304 | |
Starent Networks Corp. (a)(d) | 890,012 | 14,071,090 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 281,000 | 2,292,960 | |
| 43,037,884 | ||
COMPUTERS & PERIPHERALS - 0.2% | |||
Computer Storage & Peripherals - 0.2% | |||
Synaptics, Inc. (a) | 15,900 | 329,925 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.9% | |||
Integrated Telecommunication Services - 3.9% | |||
China Unicom (Hong Kong) Ltd. sponsored ADR (d) | 648,200 | 5,749,534 | |
Deutsche Telekom AG (Reg.) | 100 | 1,199 | |
NTELOS Holdings Corp. | 51,000 | 977,670 | |
PT Indosat Tbk | 2,700 | 933 | |
PT Telkomunikasi Indonesia Tbk Series B | 448,000 | 235,384 | |
Telenor ASA | 1,000 | 5,140 | |
Telkom SA Ltd. | 6,400 | 62,746 | |
| 7,032,606 | ||
INTERNET SOFTWARE & SERVICES - 0.0% | |||
Internet Software & Services - 0.0% | |||
Openwave Systems, Inc. (a) | 15,641 | 12,826 | |
SAVVIS, Inc. | 6,200 | 34,782 | |
| 47,608 | ||
MEDIA - 3.5% | |||
Cable & Satellite - 3.5% | |||
DISH Network Corp. Class A (a) | 493,100 | 5,547,375 | |
The DIRECTV Group, Inc. (a) | 43,300 | 863,402 | |
| 6,410,777 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.3% | |||
Semiconductors - 3.3% | |||
Atheros Communications, Inc. (a) | 87,300 | 1,054,584 | |
Cree, Inc. (a) | 11,500 | 225,860 | |
Marvell Technology Group Ltd. (a) | 1,300 | 9,763 | |
| |||
Shares | Value | ||
NVIDIA Corp. (a) | 358,800 | $ 2,970,864 | |
RF Micro Devices, Inc. (a) | 409,400 | 372,554 | |
Skyworks Solutions, Inc. (a) | 218,300 | 1,418,950 | |
| 6,052,575 | ||
SOFTWARE - 5.3% | |||
Application Software - 1.0% | |||
OnMobile Global Ltd. | 259,276 | 1,148,002 | |
Synchronoss Technologies, Inc. (a) | 73,500 | 701,190 | |
| 1,849,192 | ||
Home Entertainment Software - 4.3% | |||
Gameloft (a)(d)(e) | 4,791,962 | 7,556,319 | |
Glu Mobile, Inc. (a) | 223,623 | 105,103 | |
| 7,661,422 | ||
TOTAL SOFTWARE | 9,510,614 | ||
WIRELESS TELECOMMUNICATION SERVICES - 59.3% | |||
Wireless Telecommunication Services - 59.3% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 10,192 | |
American Tower Corp. Class A (a) | 111,092 | 3,234,999 | |
Bharti Airtel Ltd. (a) | 1,124 | 13,861 | |
China Mobile (Hong Kong) Ltd. sponsored ADR | 89,800 | 3,892,830 | |
Clearwire Corp. Class A (a)(d) | 115,700 | 372,554 | |
Crown Castle International Corp. (a) | 232,400 | 4,076,296 | |
Idea Cellular Ltd. (a) | 81,905 | 74,351 | |
KDDI Corp. | 625 | 3,273,671 | |
Leap Wireless International, Inc. (a) | 74,300 | 2,014,273 | |
MetroPCS Communications, Inc. (a) | 408,000 | 5,916,000 | |
Millicom International Cellular SA | 213,100 | 8,389,747 | |
MTN Group Ltd. | 394,200 | 3,354,894 | |
NII Holdings, Inc. (a)(d) | 243,300 | 3,116,673 | |
NTT DoCoMo, Inc. | 3,023 | 4,708,567 | |
Orascom Telecom Holding SAE unit | 400 | 6,800 | |
SBA Communications Corp. Class A (a)(d) | 411,100 | 8,542,658 | |
Sprint Nextel Corp. (a) | 9,892,531 | 32,546,422 | |
Syniverse Holdings, Inc. (a) | 84,700 | 1,281,511 | |
Telephone & Data Systems, Inc. | 80,602 | 2,377,759 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 37,000 | 524,290 | |
U.S. Cellular Corp. (a) | 41,600 | 1,431,040 | |
Vivo Participacoes SA sponsored ADR (d) | 358,250 | 5,807,233 | |
Vodafone Group PLC sponsored ADR | 701,800 | 12,456,950 | |
| 107,423,571 | ||
TOTAL COMMON STOCKS (Cost $257,285,179) | 179,845,560 | ||
Money Market Funds - 12.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 6,365,594 | $ 6,365,594 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 15,355,665 | 15,355,665 | |
TOTAL MONEY MARKET FUNDS (Cost $21,721,259) | 21,721,259 | ||
TOTAL INVESTMENT PORTFOLIO - 111.3% (Cost $279,006,438) | 201,566,819 | ||
NET OTHER ASSETS - (11.3)% | (20,452,776) | ||
NET ASSETS - 100% | $ 181,114,043 |
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 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 26,208 |
Fidelity Securities Lending Cash Central Fund | 500,582 |
Total | $ 526,790 |
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, |
Gameloft | $ 2,060,363 | $ 22,410,793 | $ 210,395 | $ - | $ 7,556,319 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 201,566,819 | $ 184,549,392 | $ 17,017,427 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 61.3% |
United Kingdom | 6.9% |
Hong Kong | 5.3% |
Canada | 5.0% |
Luxembourg | 4.6% |
Japan | 4.4% |
France | 4.2% |
Brazil | 3.5% |
South Africa | 1.9% |
Sweden | 1.3% |
Others (individually less than 1%) | 1.6% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $56,850,525 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $17,435,526 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $15,043,681) - See accompanying schedule: Unaffiliated issuers (cost $231,257,383) | $ 172,289,241 |
|
Fidelity Central Funds (cost $21,721,259) | 21,721,259 |
|
Other affiliated issuers (cost $26,027,796) | 7,556,319 |
|
Total Investments (cost $279,006,438) |
| $ 201,566,819 |
Receivable for investments sold | 6,711,633 | |
Receivable for fund shares sold | 399,971 | |
Dividends receivable | 123,132 | |
Distributions receivable from Fidelity Central Funds | 12,417 | |
Prepaid expenses | 1,959 | |
Other receivables | 21,407 | |
Total assets | 208,837,338 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 11,561,266 | |
Payable for fund shares redeemed | 639,170 | |
Accrued management fee | 85,928 | |
Other affiliated payables | 50,369 | |
Other payables and accrued expenses | 30,897 | |
Collateral on securities loaned, at value | 15,355,665 | |
Total liabilities | 27,723,295 | |
|
|
|
Net Assets | $ 181,114,043 | |
Net Assets consist of: |
| |
Paid in capital | $ 344,575,603 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (86,021,980) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (77,439,580) | |
Net Assets, for 40,761,515 shares outstanding | $ 181,114,043 | |
Net Asset Value, offering price and redemption price per share ($181,114,043 ÷ 40,761,515 shares) | $ 4.44 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,485,492 |
Interest |
| 3,994 |
Income from Fidelity Central Funds (including $500,582 from security lending) |
| 526,790 |
Total income |
| 5,016,276 |
|
|
|
Expenses | ||
Management fee | $ 1,563,738 | |
Transfer agent fees | 800,766 | |
Accounting and security lending fees | 117,437 | |
Custodian fees and expenses | 51,831 | |
Independent trustees' compensation | 1,504 | |
Registration fees | 35,859 | |
Audit | 51,842 | |
Legal | 2,044 | |
Interest | 6,386 | |
Miscellaneous | 32,559 | |
Total expenses before reductions | 2,663,966 | |
Expense reductions | (33,533) | 2,630,433 |
Net investment income (loss) | 2,385,843 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(24,135)) | (54,121,460) | |
Other affiliated issuers | (200,166) |
|
Foreign currency transactions | 37,458 | |
Total net realized gain (loss) |
| (54,284,168) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $24,302) | (70,656,138) | |
Assets and liabilities in foreign currencies | 4,290 | |
Total change in net unrealized appreciation (depreciation) |
| (70,651,848) |
Net gain (loss) | (124,936,016) | |
Net increase (decrease) in net assets resulting from operations | $ (122,550,173) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,385,843 | $ 1,626,991 |
Net realized gain (loss) | (54,284,168) | (5,130,817) |
Change in net unrealized appreciation (depreciation) | (70,651,848) | (44,348,702) |
Net increase (decrease) in net assets resulting from operations | (122,550,173) | (47,852,528) |
Distributions to shareholders from net investment income | (2,419,895) | (2,415,450) |
Distributions to shareholders from net realized gain | - | (20,933,888) |
Total distributions | (2,419,895) | (23,349,338) |
Share transactions Proceeds from sales of shares | 54,809,550 | 707,896,007 |
Reinvestment of distributions | 2,321,962 | 22,404,915 |
Cost of shares redeemed | (185,981,995) | (502,708,293) |
Net increase (decrease) in net assets resulting from share transactions | (128,850,483) | 227,592,629 |
Redemption fees | 18,968 | 153,910 |
Total increase (decrease) in net assets | (253,801,583) | 156,544,673 |
|
|
|
Net Assets | ||
Beginning of period | 434,915,626 | 278,370,953 |
End of period (including undistributed net investment income of $0 and distributions in excess of net investment income of $120,251, respectively) | $ 181,114,043 | $ 434,915,626 |
Other Information Shares | ||
Sold | 9,268,630 | 79,574,545 |
Issued in reinvestment of distributions | 570,468 | 2,523,076 |
Redeemed | (29,194,679) | (61,007,591) |
Net increase (decrease) | (19,355,581) | 21,090,030 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights
Years ended February 28, | 2009 | 2008 J | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 7.23 | $ 7.13 | $ 7.20 | $ 5.69 | $ 4.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .05 | .03 F | .05 G | - K | (.01) |
Net realized and unrealized gain (loss) | (2.78) | .36 H | .32 | 1.51 | .85 |
Total from investment operations | (2.73) | .39 | .37 | 1.51 | .84 |
Distributions from net investment income | (.06) | (.03) | - | - | - |
Distributions from net realized gain | - | (.26) | (.44) | - | - |
Total distributions | (.06) | (.29) | (.44) | - | - |
Redemption fees added to paid in capital C, K | - | - | - | - | - |
Net asset value, end of period | $ 4.44 | $ 7.23 | $ 7.13 | $ 7.20 | $ 5.69 |
Total Return A, B | (37.68)% | 4.71% | 5.16% | 26.54% | 17.32% |
Ratios to Average Net Assets D, I |
|
|
|
|
|
Expenses before reductions | .95% | .91% | .97% | 1.00% | 1.04% |
Expenses net of fee waivers, if any | .95% | .91% | .97% | 1.00% | 1.04% |
Expenses net of all reductions | .94% | .91% | .96% | .89% | .97% |
Net investment income (loss) | .85% | .32% F | .69% G | .04% | (.27)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 181,114 | $ 434,916 | $ 278,371 | $ 502,702 | $ 372,705 |
Portfolio turnover rate E | 191% | 191% | 124% | 162% | 96% |
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. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Wireless Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
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.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency - continued
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, 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 | $ 12,757,202 |
|
Unrealized depreciation | (101,932,706) |
|
Net unrealized appreciation (depreciation) | (89,175,504) |
|
Capital loss carryforward | (56,850,525) |
|
|
|
|
Cost for federal income tax purposes | $ 290,742,323 |
|
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 2,419,895 | $ 5,636,048 |
Long-term Capital Gains | - | 17,713,290 |
Total | $ 2,419,895 | $ 23,349,338 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $545,254,078 and $671,495,098, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .29% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $11,339 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 | $ 8,415,818 | 2.48% | $ 6,386 |
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $867 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.
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 $32,684 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 transfer agent expense by $849.
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $26,927, which is recorded in the accompanying Statement of Operations.
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 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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). |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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). |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
The Board of Trustees of Select Telecommunications Portfolio voted to pay on April 20, 2009 to shareholders of record at the opening of business on April 17, 2009 a distribution of $0.048 per share derived from capital gains realized from sales of portfolio securities.
The fund designates 99% and 70% of the dividends distributed in April and December, respectively durign the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed in April and December, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 income tax returns.
Annual Report
Distributions (Unaudited)
The fund designates 28% 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 in December, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Corporate Headquarters
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
SELTS-UANN-0409
1.846049.102
Fidelity®
Select Portfolios®
Utilities Sector
Select Utilities Portfolio (formerly Select Utilities Growth Portfolio)
Annual Report
February 28, 2009
(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 fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
Dear Shareholder:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Select Utilities Portfolio A | -37.47% | 2.39% | -1.51% |
A Prior to October 1, 2006, Utilities 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 Portfolio on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Douglas Simmons, Portfolio Manager of Select Utilities Portfolio: The fund declined 37.47% for the year, underperforming the MSCI® US Investable Market Utilities Index - which fell 30.40% - but outperforming the S&P 500. Unfavorable stock selection among electric utilities was the main factor behind the fund's underperformance of the MSCI index. Unsuccessful security selection in gas utilities, independent power/energy traders and multi-utilities also hurt, as did poor market weighting decisions in the last two groups. On the plus side, more-successful security selection in oil/gas storage and transport helped, as did the fund's modest cash position, which added value in a down market. Detractors from performance relative to the MSCI index were Constellation Energy, an independent power producer located in Maryland; underweighting regulated electric utilities and major index components Southern Company and Dominion Resources, located in Atlanta and Virginia, respectively; New Jersey-based independent power producer NRG Energy; and Pennsylvania electric utility PPL. Contributions came from an out-of-benchmark position in Spectra Energy, a Houston-based firm that stores and transports oil and natural gas; California utility Sempra Energy; Progress Energy, an electric utility headquartered in North Carolina; and an underweighting in St. Louis-based utility Ameren. Some stocks mentioned in this report were not held at period end.
Note to shareholders: The fund's name was changed to Select Utilities Portfolio on January 16, 2009, to better reflect its investment 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.
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, 2008 to
February 28, 2009).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Actual | .92% | $ 1,000.00 | $ 656.20 | $ 3.78 |
Hypothetical (5% return per year before expenses) |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Utilities Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Exelon Corp. | 11.7 | 11.4 |
Progress Energy, Inc. | 7.2 | 2.9 |
Entergy Corp. | 6.5 | 8.1 |
Sempra Energy | 6.0 | 4.9 |
Duke Energy Corp. | 5.9 | 0.0 |
American Electric Power Co., Inc. | 5.7 | 4.9 |
PG&E Corp. | 5.4 | 5.4 |
Public Service Enterprise Group, Inc. | 4.9 | 4.9 |
FirstEnergy Corp. | 4.7 | 0.0 |
Northeast Utilities | 2.7 | 0.8 |
| 60.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Electric Utilities | 59.0% |
| |
Multi-Utilities | 26.3% |
| |
Independent Power Producers & Energy Traders | 5.3% |
| |
Gas Utilities | 4.5% |
| |
Oil, Gas & Consumable Fuels | 0.8% |
| |
All Others* | 4.1% |
|
|
As of August 31, 2008 | |||
Electric Utilities | 56.5% |
| |
Multi-Utilities | 22.0% |
| |
Independent Power Producers & Energy Traders | 13.2% |
| |
Gas Utilities | 3.6% |
| |
Electronic Equipment & Instruments | 0.5% |
| |
All Others* | 4.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Utilities Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.8% | |||
Shares | Value | ||
DIVERSIFIED FINANCIAL SERVICES - 0.3% | |||
Other Diversifed Financial Services - 0.3% | |||
Hicks Acquisition Co. I, Inc. unit (a) | 100,500 | $ 942,690 | |
ELECTRIC UTILITIES - 59.0% | |||
Electric Utilities - 59.0% | |||
Allegheny Energy, Inc. | 143,700 | 3,397,068 | |
American Electric Power Co., Inc. | 608,600 | 17,071,230 | |
DPL, Inc. | 273,800 | 5,503,380 | |
Duke Energy Corp. | 1,317,700 | 17,749,419 | |
Entergy Corp. | 291,000 | 19,610,490 | |
Exelon Corp. | 745,800 | 35,216,676 | |
FirstEnergy Corp. | 331,700 | 14,117,152 | |
FPL Group, Inc. | 129,406 | 5,865,974 | |
Northeast Utilities | 370,400 | 8,115,464 | |
NV Energy, Inc. | 547,000 | 5,070,690 | |
Pepco Holdings, Inc. | 382,000 | 5,730,000 | |
Pinnacle West Capital Corp. | 296,500 | 7,786,090 | |
PPL Corp. | 221,690 | 6,182,934 | |
Progress Energy, Inc. | 615,200 | 21,790,384 | |
Westar Energy, Inc. | 273,100 | 4,615,390 | |
| 177,822,341 | ||
ELECTRICAL EQUIPMENT - 0.2% | |||
Electrical Components & Equipment - 0.2% | |||
First Solar, Inc. (a) | 7,300 | 771,902 | |
GAS UTILITIES - 4.5% | |||
Gas Utilities - 4.5% | |||
AGL Resources, Inc. | 40,200 | 1,115,148 | |
EQT Corp. | 106,100 | 3,262,575 | |
Nicor, Inc. | 51,300 | 1,609,794 | |
Questar Corp. | 256,153 | 7,384,891 | |
Southwest Gas Corp. | 5,700 | 111,093 | |
| 13,483,501 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 5.3% | |||
Independent Power Producers & Energy Traders - 5.3% | |||
AES Corp. (a) | 824,159 | 5,192,202 | |
Black Hills Corp. | 33,800 | 601,978 | |
Constellation Energy Group, Inc. | 202,400 | 3,999,424 | |
Dynegy, Inc. Class A (a) | 1,289,700 | 1,676,610 | |
NRG Energy, Inc. (a) | 233,117 | 4,405,911 | |
| 15,876,125 | ||
MULTI-UTILITIES - 25.9% | |||
Multi-Utilities - 25.9% | |||
Alliant Energy Corp. | 107,600 | 2,488,788 | |
CMS Energy Corp. (d) | 657,700 | 7,274,162 | |
Dominion Resources, Inc. | 203,400 | 6,138,612 | |
| |||
Shares | Value | ||
OGE Energy Corp. | 310,700 | $ 6,810,544 | |
PG&E Corp. (d) | 423,151 | 16,172,831 | |
PNM Resources, Inc. | 75,791 | 582,833 | |
Public Service Enterprise Group, Inc. | 539,550 | 14,724,320 | |
Sempra Energy | 437,300 | 18,178,561 | |
Wisconsin Energy Corp. | 142,600 | 5,678,332 | |
| 78,048,983 | ||
OIL, GAS & CONSUMABLE FUELS - 0.8% | |||
Oil & Gas Storage & Transport - 0.8% | |||
Southern Union Co. | 187,700 | 2,517,057 | |
WATER UTILITIES - 0.8% | |||
Water Utilities - 0.8% | |||
Aqua America, Inc. | 125,100 | 2,301,840 | |
TOTAL COMMON STOCKS (Cost $346,766,440) | 291,764,439 |
Nonconvertible Bonds - 0.4% | ||||
| Principal Amount |
| ||
MULTI-UTILITIES - 0.4% | ||||
Multi-Utilities - 0.4% | ||||
NiSource Finance Corp. 5.45% 9/15/20 | $ 1,940,000 | 1,328,434 |
Money Market Funds - 7.8% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 4,356,339 | 4,356,339 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 19,046,250 | 19,046,250 | |
TOTAL MONEY MARKET FUNDS (Cost $23,402,589) | 23,402,589 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% (Cost $371,576,502) | 316,495,462 | ||
NET OTHER ASSETS - (5.0)% | (14,966,517) | ||
NET ASSETS - 100% | $ 301,528,945 |
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 | $ 376,807 |
Fidelity Securities Lending Cash Central Fund | 133,442 |
Total | $ 510,249 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 316,495,462 | $ 315,167,028 | $ 1,328,434 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $81,003,155 of which $15,561,006 and $65,442,149 will expire on |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $32,753,499 of losses recognized during the period November 1, |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $18,767,140) - Unaffiliated issuers (cost $348,173,913) | $ 293,092,873 |
|
Fidelity Central Funds (cost $23,402,589) | 23,402,589 |
|
Total Investments (cost $371,576,502) |
| $ 316,495,462 |
Receivable for investments sold | 15,058,288 | |
Receivable for fund shares sold | 289,722 | |
Dividends receivable | 1,697,662 | |
Interest receivable | 48,460 | |
Distributions receivable from Fidelity Central Funds | 7,144 | |
Prepaid expenses | 3,420 | |
Other receivables | 999 | |
Total assets | 333,601,157 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 11,978,251 | |
Payable for fund shares redeemed | 752,515 | |
Accrued management fee | 160,976 | |
Other affiliated payables | 105,181 | |
Other payables and accrued expenses | 29,039 | |
Collateral on securities loaned, at value | 19,046,250 | |
Total liabilities | 32,072,212 | |
|
|
|
Net Assets | $ 301,528,945 | |
Net Assets consist of: |
| |
Paid in capital | $ 486,855,414 | |
Undistributed net investment income | 1,471,324 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (131,716,753) | |
Net unrealized appreciation (depreciation) on investments | (55,081,040) | |
Net Assets, for 8,629,986 shares outstanding | $ 301,528,945 | |
Net Asset Value, offering price and redemption price per share ($301,528,945 ÷ 8,629,986 shares) | $ 34.94 |
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 12,833,679 |
Interest |
| 11,628 |
Income from Fidelity Central Funds |
| 510,249 |
Total income |
| 13,355,556 |
|
|
|
Expenses | ||
Management fee | $ 2,626,951 | |
Transfer agent fees | 1,245,753 | |
Accounting and security lending fees | 184,064 | |
Custodian fees and expenses | 17,014 | |
Independent trustees' compensation | 1,952 | |
Registration fees | 36,238 | |
Audit | 36,833 | |
Legal | 5,558 | |
Interest | 655 | |
Miscellaneous | 38,895 | |
Total expenses before reductions | 4,193,913 | |
Expense reductions | (10,655) | 4,183,258 |
Net investment income (loss) | 9,172,298 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (110,237,567) | |
Foreign currency transactions | 19,563 | |
Total net realized gain (loss) |
| (110,218,004) |
Change in net unrealized appreciation (depreciation) on investment securities | (85,736,012) | |
Net gain (loss) | (195,954,016) | |
Net increase (decrease) in net assets resulting from operations | $ (186,781,718) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 9,172,298 | $ 11,748,675 |
Net realized gain (loss) | (110,218,004) | 33,149,502 |
Change in net unrealized appreciation (depreciation) | (85,736,012) | (52,646,534) |
Net increase (decrease) in net assets resulting from operations | (186,781,718) | (7,748,357) |
Distributions to shareholders from net investment income | (7,699,468) | (14,620,352) |
Share transactions | 157,164,187 | 945,541,927 |
Reinvestment of distributions | 7,340,518 | 14,004,559 |
Cost of shares redeemed | (274,609,977) | (1,126,946,948) |
Net increase (decrease) in net assets resulting from share transactions | (110,105,272) | (167,400,462) |
Redemption fees | 32,052 | 169,692 |
Total increase (decrease) in net assets | (304,554,406) | (189,599,479) |
|
|
|
Net Assets | ||
Beginning of period | 606,083,351 | 795,682,830 |
End of period (including undistributed net investment income of $1,471,324 and distributions in excess of net investment income of $1,508, respectively) | $ 301,528,945 | $ 606,083,351 |
Other Information Shares | ||
Sold | 3,346,843 | 15,015,476 |
Issued in reinvestment of distributions | 187,785 | 213,867 |
Redeemed | (5,521,130) | (18,268,427) |
Net increase (decrease) | (1,986,502) | (3,039,084) |
Financial Highlights
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 57.09 | $ 58.27 | $ 46.44 | $ 40.04 | $ 33.94 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .99 | .84 | 1.00 | .73 | .76 F,G |
Net realized and unrealized gain (loss) | (22.29) | (.82) | 11.45 | 6.59 | 5.95 |
Total from investment operations | (21.30) | .02 | 12.45 | 7.32 | 6.71 |
Distributions from net investment income | (.85) | (1.21) | (.64) | (.93) | (.62) |
Redemption fees added to paid in capital C | - J | .01 | .02 | .01 | .01 |
Net asset value, end of period | $ 34.94 | $ 57.09 | $ 58.27 | $ 46.44 | $ 40.04 |
Total Return A,B | (37.47)% | (.22)% | 26.95% | 18.48% | 19.90% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .89% | .88% | .93% | .97% | 1.02% |
Expenses net of fee waivers, if any | .89% | .88% | .93% | .97% | 1.02% |
Expenses net of all reductions | .89% | .87% | .93% | .92% | .99% |
Net investment income (loss) | 1.95% | 1.35% | 1.93% | 1.71% | 2.06% F,G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 301,529 | $ 606,083 | $ 795,683 | $ 298,371 | $ 324,732 |
Portfolio turnover rate E | 167% | 121% | 107% | 101% | 51% |
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 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.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Fidelity Select Utilities Portfolio (the Fund) (formerly Select Utilities Growth Portfolio) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Annual Report
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, 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 | $ 1,224,420 |
|
Unrealized depreciation | (74,284,147) |
|
Net unrealized appreciation (depreciation) | (73,059,727) |
|
Undistributed ordinary income | 1,490,190 |
|
Capital loss carryforward | (81,003,155) |
|
|
|
|
Cost for federal income tax purposes | $ 389,555,189 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 7,699,468 | $ 14,620,352 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $760,589,101 and $875,268,551, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .26% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $17,902 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 | $ 7,390,000 | 3.19% | $ 655 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,558 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Annual Report
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 $133,442.
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 $7,683 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 $2,972.
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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $40,344 which is recorded in the accompanying Statement of Operations.
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 Fidelity Select Utilities Portfolio (formerly Select 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 Fidelity Select Utilities Portfolio (formerly Select Utilities Growth Portfolio) (a fund of Fidelity Select Portfolios) at February 28, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Utilities Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
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 (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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). |
Annual Report
Trustees and Officers - continued
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 (Unaudited)
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2010 of amounts for use in preparing 2009 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
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Annual Report
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Annual Report
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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 28, 2009
(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.
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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 28, 2009 | Past 1 | Past 5 years | Past 10 |
Class A (incl. 5.75% sales charge) A | -33.48% | 1.33% | 2.66% |
Class T (incl. 3.50% sales charge) B | -32.07% | 1.68% | 2.83% |
Class B (incl. contingent deferred | -33.43% | 1.83% | 3.08% |
Class C (incl. contingent deferred sales charge) D | -30.64% | 2.19% | 3.09% |
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, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Class A on February 28, 1999, 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares declined 29.43%, 29.61%, 29.96% and 29.94%, respectively (excluding sales charges), lagging the 24.11% decline of its sector benchmark, the MSCI® US Investable Market Consumer Staples Index, but beating the S&P 500. A large part of the fund's underperformance of the MSCI index came from stocks with emerging-markets exposure, a theme I've been pursuing in the portfolio for some time. While I was correct on the business fundamentals - consumer staples spending continued to grow faster in emerging markets than in developed economies - I was wrong on the direction of the equity market. In a dramatically slowing economy, investors fled to the perceived safety of consumer staples companies doing business exclusively in developed nations. The stronger dollar also hurt the performance of foreign securities when translated back into dollars, including those securities held by the fund. On an industry level, the fund suffered from stock selection in brewers and in packaged food and meats, as well as from a major underweighting in hypermarkets and super centers. In the latter area, a below-market weighting in Wal-Mart was the key culprit. The stock proved very resilient as investors expected the company to benefit from its bargain pricing strategy. Within brewing, avoiding Anheuser-Busch for much of the period hurt when its share price spiked on a takeover bid from Belgian-based InBev, another fund detractor. However, once the deal was successfully consummated, the combined Anheuser-Busch InBev entity was the top individual contributor to relative performance. Our shares in personal products maker Avon, eastern European soft drink distributor Coca-Cola Hellenic and French spirits distiller Pernod Ricard declined sharply as well. On the positive side, overweighting brewers, underweighting household products and tobacco, and good stock selection in food retail contributed. Within household products, Kimberly-Clark and Procter & Gamble were helpful due to timely ownership. Elsewhere, I underweighted tobacco giant Philip Morris International, which was hurt by its foreign-currency-based earnings. I bought bottler Coca-Cola Enterprises at an attractive valuation, and its stock rose as the firm enjoyed expanding profit margins later in the period. The fund's cash position also aided returns.
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, 2008 to Febru-ary 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 725.20 | $ 5.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 724.30 | $ 6.24 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.60 | $ 8.37 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.50 | $ 8.33 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Consumer Staples | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 4.02 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
Institutional Class | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 3.98 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.1 | 16.4 |
The Coca-Cola Co. | 9.8 | 9.7 |
PepsiCo, Inc. | 8.9 | 8.4 |
Wal-Mart Stores, Inc. | 6.5 | 2.9 |
CVS Caremark Corp. | 6.2 | 5.5 |
British American Tobacco PLC sponsored ADR | 4.1 | 3.9 |
Nestle SA (Reg.) | 4.1 | 0.0 |
Anheuser-Busch InBev NV | 3.2 | 0.0 |
Unilever NV (NY Shares) | 3.0 | 2.5 |
Walgreen Co. | 2.8 | 2.8 |
| 63.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Beverages | 33.4% |
| |
Food & Staples Retailing | 19.0% |
| |
Household Products | 18.6% |
| |
Food Products | 14.0% |
| |
Tobacco | 8.1% |
| |
All Others* | 6.9% |
|
|
As of August 31, 2008 | |||
Beverages | 32.1% |
| |
Household Products | 23.6% |
| |
Food & Staples Retailing | 15.0% |
| |
Food Products | 14.6% |
| |
Tobacco | 7.8% |
| |
All Others* | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Staples Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value | ||
BEVERAGES - 33.4% | |||
Brewers - 6.6% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 245,611 | $ 1,560,260 | |
Anheuser-Busch InBev NV | 1,050,200 | 28,692,133 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 108,200 | 4,377,772 | |
Molson Coors Brewing Co. Class B | 662,380 | 23,335,647 | |
SABMiller PLC | 127,950 | 1,852,269 | |
| 59,818,081 | ||
Distillers & Vintners - 4.6% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,604,200 | 20,934,810 | |
Diageo PLC sponsored ADR | 265,900 | 12,361,691 | |
Pernod Ricard SA (d) | 130,100 | 7,082,663 | |
Remy Cointreau SA | 35,600 | 804,202 | |
| 41,183,366 | ||
Soft Drinks - 22.2% | |||
Coca-Cola Amatil Ltd. | 260,984 | 1,489,417 | |
Coca-Cola Enterprises, Inc. | 708,200 | 8,130,136 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 116,200 | 3,620,792 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 195,510 | 2,303,108 | |
Coca-Cola Icecek AS | 517,332 | 2,145,280 | |
Cott Corp. (a) | 1,372,400 | 1,100,380 | |
Dr Pepper Snapple Group, Inc. (a) | 155,700 | 2,187,585 | |
Embotelladora Andina SA sponsored ADR | 308,241 | 4,407,846 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 77,300 | 1,780,992 | |
Pepsi Bottling Group, Inc. | 253,100 | 4,682,350 | |
PepsiCo, Inc. | 1,672,700 | 80,523,778 | |
The Coca-Cola Co. | 2,154,400 | 88,007,240 | |
| 200,378,904 | ||
TOTAL BEVERAGES | 301,380,351 | ||
FOOD & STAPLES RETAILING - 19.0% | |||
Drug Retail - 9.0% | |||
CVS Caremark Corp. | 2,177,300 | 56,043,702 | |
Walgreen Co. | 1,067,900 | 25,480,094 | |
| 81,523,796 | ||
Food Distributors - 0.1% | |||
United Natural Foods, Inc. (a) | 26,600 | 395,808 | |
Food Retail - 3.4% | |||
Kroger Co. | 651,900 | 13,474,773 | |
Safeway, Inc. | 861,500 | 15,937,750 | |
SUPERVALU, Inc. | 99,000 | 1,545,390 | |
| 30,957,913 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 6.5% | |||
Wal-Mart Stores, Inc. | 1,195,500 | $ 58,866,420 | |
TOTAL FOOD & STAPLES RETAILING | 171,743,937 | ||
FOOD PRODUCTS - 14.0% | |||
Agricultural Products - 3.2% | |||
Archer Daniels Midland Co. | 571,800 | 15,244,188 | |
Bunge Ltd. (d) | 168,602 | 7,904,062 | |
Corn Products International, Inc. | 73,300 | 1,478,461 | |
SLC Agricola SA | 343,800 | 2,024,972 | |
Viterra, Inc. (a) | 307,900 | 2,449,356 | |
| 29,101,039 | ||
Packaged Foods & Meats - 10.8% | |||
Cadbury PLC sponsored ADR | 75,612 | 2,316,752 | |
Groupe Danone | 145,100 | 6,884,552 | |
Kraft Foods, Inc. Class A | 150,600 | 3,430,668 | |
Lindt & Spruengli AG (d) | 79 | 1,468,202 | |
Nestle SA (Reg.) | 1,122,867 | 36,703,912 | |
Perdigao SA | 126,600 | 1,554,802 | |
PureCircle Ltd. (a) | 324,800 | 765,116 | |
Ralcorp Holdings, Inc. (a) | 59,100 | 3,581,460 | |
Sadia SA ADR (d) | 431,000 | 1,474,020 | |
Smithfield Foods, Inc. (a) | 118,700 | 931,795 | |
Tyson Foods, Inc. Class A | 1,175,300 | 9,907,779 | |
Unilever NV (NY Shares) | 1,417,512 | 27,088,654 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR (a)(d) | 37,600 | 1,114,088 | |
| 97,221,800 | ||
TOTAL FOOD PRODUCTS | 126,322,839 | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 329 | 33 | |
HOUSEHOLD DURABLES - 0.2% | |||
Housewares & Specialties - 0.2% | |||
Fortune Brands, Inc. | 89,600 | 2,128,000 | |
HOUSEHOLD PRODUCTS - 18.6% | |||
Household Products - 18.6% | |||
Colgate-Palmolive Co. | 331,700 | 19,961,706 | |
Kimberly-Clark Corp. | 238,000 | 11,212,180 | |
Procter & Gamble Co. | 2,828,197 | 136,234,250 | |
| 167,408,136 | ||
PERSONAL PRODUCTS - 2.8% | |||
Personal Products - 2.8% | |||
Avon Products, Inc. | 1,199,276 | 21,095,265 | |
Bare Escentuals, Inc. (a) | 199,905 | 631,700 | |
Herbalife Ltd. | 16,600 | 226,424 | |
Common Stocks - continued | |||
Shares | Value | ||
PERSONAL PRODUCTS - CONTINUED | |||
Personal Products - continued | |||
Mead Johnson Nutrition Co. Class A (a) | 80,100 | $ 2,209,959 | |
Physicians Formula Holdings, Inc. (a) | 396,456 | 927,707 | |
| 25,091,055 | ||
PHARMACEUTICALS - 1.5% | |||
Pharmaceuticals - 1.5% | |||
Johnson & Johnson | 217,400 | 10,870,000 | |
Perrigo Co. | 107,500 | 2,159,675 | |
| 13,029,675 | ||
TOBACCO - 8.1% | |||
Tobacco - 8.1% | |||
Altria Group, Inc. | 879,000 | 13,571,760 | |
British American Tobacco PLC sponsored ADR | 731,980 | 37,360,259 | |
KT&G Corp. | 990 | 50,752 | |
Lorillard, Inc. | 39,400 | 2,302,536 | |
Philip Morris International, Inc. | 532,100 | 17,809,387 | |
Souza Cruz Industria Comerico | 113,800 | 2,281,800 | |
| 73,376,494 | ||
TOTAL COMMON STOCKS (Cost $1,089,424,078) | 880,480,520 | ||
Money Market Funds - 3.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 20,026,747 | $ 20,026,747 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,982,496 | 6,982,496 | |
TOTAL MONEY MARKET FUNDS (Cost $27,009,243) | 27,009,243 |
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $1,116,433,321) | 907,489,763 |
NET OTHER ASSETS - (0.6)% | (5,656,581) | ||
NET ASSETS - 100% | $ 901,833,182 |
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 | $ 409,906 |
Fidelity Securities Lending Cash Central Fund | 422,078 |
Total | $ 831,984 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 907,489,763 | $ 821,696,512 | $ 85,793,251 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.3% |
United Kingdom | 5.9% |
Switzerland | 4.2% |
Belgium | 3.2% |
Netherlands | 3.0% |
France | 1.7% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $14,179,345 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $20,196,973 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $6,812,362) - See accompanying schedule: Unaffiliated issuers (cost $1,089,424,078) | $ 880,480,520 |
|
Fidelity Central Funds (cost $27,009,243) | 27,009,243 |
|
Total Investments (cost $1,116,433,321) |
| $ 907,489,763 |
Receivable for investments sold | 8,231,074 | |
Receivable for fund shares sold | 3,397,361 | |
Dividends receivable | 972,894 | |
Distributions receivable from Fidelity Central Funds | 25,369 | |
Prepaid expenses | 7,903 | |
Other receivables | 1,908 | |
Total assets | 920,126,272 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,844,030 | |
Payable for fund shares redeemed | 3,597,276 | |
Accrued management fee | 449,415 | |
Distribution fees payable | 95,887 | |
Other affiliated payables | 270,921 | |
Other payables and accrued expenses | 53,065 | |
Collateral on securities loaned, at value | 6,982,496 | |
Total liabilities | 18,293,090 | |
|
|
|
Net Assets | $ 901,833,182 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,160,640,517 | |
Undistributed net investment income | 512,356 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (50,373,312) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (208,946,379) | |
Net Assets | $ 901,833,182 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 43.94 | |
|
|
|
Maximum offering price per share (100/94.25 of $43.94) | $ 46.62 | |
Class T: | $ 43.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $43.75) | $ 45.34 | |
Class B: | $ 43.53 | |
|
|
|
Class C: | $ 43.46 | |
|
|
|
Consumer Staples: | $ 44.14 | |
|
|
|
Institutional Class: | $ 44.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 20,355,348 |
Interest |
| 4,760 |
Income from Fidelity Central Funds |
| 831,984 |
Total income |
| 21,192,092 |
|
|
|
Expenses | ||
Management fee | $ 4,860,293 | |
Transfer agent fees | 2,267,655 | |
Distribution fees | 694,800 | |
Accounting and security lending fees | 303,131 | |
Custodian fees and expenses | 130,860 | |
Independent trustees' compensation | 4,343 | |
Registration fees | 208,991 | |
Audit | 41,881 | |
Legal | 4,723 | |
Interest | 3,824 | |
Miscellaneous | 41,147 | |
Total expenses before reductions | 8,561,648 | |
Expense reductions | (35,242) | 8,526,406 |
Net investment income (loss) | 12,665,686 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (44,519,180) | |
Foreign currency transactions | (317,445) | |
Total net realized gain (loss) |
| (44,836,625) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (269,137,670) | |
Assets and liabilities in foreign currencies | (3,785) | |
Total change in net unrealized appreciation (depreciation) |
| (269,141,455) |
Net gain (loss) | (313,978,080) | |
Net increase (decrease) in net assets resulting from operations | $ (301,312,394) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 12,665,686 | $ 5,595,200 |
Net realized gain (loss) | (44,836,625) | 16,781,246 |
Change in net unrealized appreciation (depreciation) | (269,141,455) | 23,844,075 |
Net increase (decrease) in net assets resulting from operations | (301,312,394) | 46,220,521 |
Distributions to shareholders from net investment income | (11,887,776) | (4,297,338) |
Distributions to shareholders from net realized gain | (334,486) | (21,936,184) |
Total distributions | (12,222,262) | (26,233,522) |
Share transactions - net increase (decrease) | 494,877,505 | 323,338,123 |
Redemption fees | 113,075 | 70,107 |
Total increase (decrease) in net assets | 181,455,924 | 343,395,229 |
|
|
|
Net Assets | ||
Beginning of period | 720,377,258 | 376,982,029 |
End of period (including undistributed net investment income of $512,356 and undistributed net investment income of $1,685,304, respectively) | $ 901,833,182 | $ 720,377,258 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | (19.19) | 7.29 | 1.28 |
Total from investment operations | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.66) | (.42) | - |
Distributions from net realized gain | (.02) | (2.44) | - |
Total distributions | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B,C,D | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | (19.12) | 7.29 | 1.18 |
Total from investment operations | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.60) | (.35) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B,C,D | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | (19.01) | 7.27 | 1.18 |
Total from investment operations | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.42) | (.19) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B,C,D | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | (19.00) | 7.28 | 1.18 |
Total from investment operations | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.44) | (.29) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B,C,D | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Income from Investment Operations |
|
|
|
| �� |
Net investment income (loss) C | .88 | .71 | .56 | .50 | .29 |
Net realized and unrealized gain (loss) | (19.31) | 7.30 | 8.88 | 3.25 | 4.90 |
Total from investment operations | (18.43) | 8.01 | 9.44 | 3.75 | 5.19 |
Distributions from net investment income | (.67) | (.46) | (.32) | (.44) | (.29) |
Distributions from net realized gain | (.03) | (2.44) | (3.18) | (2.56) | - |
Total distributions | (.69) H | (2.90) | (3.50) | (3.00) | (.29) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .02 |
Net asset value, end of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Total Return A,B | (29.23)% | 13.72% | 18.43% | 7.50% | 11.24% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | .91% | 1.01% | 1.04% | 1.06% |
Expenses net of fee waivers, if any | .91% | .90% | .99% | 1.04% | 1.06% |
Expenses net of all reductions | .90% | .90% | .98% | 1.03% | 1.05% |
Net investment income (loss) | 1.55% | 1.12% | .99% | .97% | .61% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 |
Portfolio turnover rate E | 70% | 71% | 99% | 75% | 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. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | (19.23) | 7.30 | 1.16 |
Total from investment operations | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.73) | (.51) | - |
Distributions from net realized gain | (.03) | (2.44) | - |
Total distributions | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | .01 | .01 | - J |
Net asset value, end of period | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B,C | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .91% | .85% | 1.00% A |
Expenses net of all reductions | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, 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 | $ 18,490,621 |
|
Unrealized depreciation | (243,433,994) |
|
Net unrealized appreciation (depreciation) | (224,943,373) |
|
Undistributed ordinary income | 512,482 |
|
Capital loss carryforward | (14,179,345) |
|
|
|
|
Cost for federal income tax purposes | $ 1,132,433,136 |
|
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 12,222,262 | $ 15,086,000 |
Long-term Capital Gains | - | 11,147,522 |
Total | $ 12,222,262 | $ 26,233,522 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $1,076,568,804 and $588,881,981, 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, except for the Institutional Class. 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% | $ 170,841 | $ 18,484 |
Class T | .25% | .25% | 70,470 | 65 |
Class B | .75% | .25% | 102,761 | 77,156 |
Class C | .75% | .25% | 350,728 | 230,446 |
|
|
| $ 694,800 | $ 326,151 |
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 Financial Statements - continued
6. 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 | $ 206,336 |
Class T | 20,690 |
Class B* | 24,704 |
Class C* | 20,538 |
| $ 272,268 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 194,817 | .29 |
Class T | 43,106 | .31 |
Class B | 31,119 | .30 |
Class C | 96,921 | .28 |
Consumer Staples | 1,854,710 | .26 |
Institutional Class | 46,982 | .27 |
| $ 2,267,655 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,479 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 5,978,800 | 2.30% | $ 3,824 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,280 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities
Annual Report
8. Security Lending - continued
loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $422,078.
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 $33,412 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 $617. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Consumer Staples | $ 1,208 |
|
Institutional Class | 5 |
|
| $ 1,213 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
| 2009 | 2008 |
From net investment income |
|
|
Class A | $ 1,409,006 | $ 54,271 |
Class T | 273,000 | 42,873 |
Class B | 118,536 | 7,270 |
Class C | 437,729 | 46,840 |
Consumer Staples | 9,279,861 | 4,124,954 |
Institutional Class | 369,644 | 21,130 |
Total | $ 11,887,776 | $ 4,297,338 |
From net realized gain |
|
|
Class A | $ 11,953 | $ 279,894 |
Class T | - | 271,554 |
Class B | - | 90,489 |
Class C | - | 308,038 |
Consumer Staples | 317,666 | 20,893,023 |
Institutional Class | 4,867 | 93,186 |
Total | $ 334,486 | $ 21,936,184 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class A |
|
|
|
|
Shares sold | 2,896,213 | 394,208 | $ 154,503,507 | $ 25,121,582 |
Reinvestment of distributions | 27,496 | 4,833 | 1,327,859 | 319,149 |
Shares redeemed | (542,745) | (39,053) | (28,294,587) | (2,497,211) |
Net increase (decrease) | 2,380,964 | 359,988 | $ 127,536,779 | $ 22,943,520 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class T |
|
|
|
|
Shares sold | 520,546 | 195,158 | $ 27,382,626 | $ 12,251,985 |
Reinvestment of distributions | 5,430 | 4,490 | 260,678 | 296,489 |
Shares redeemed | (108,963) | (108,690) | (5,646,618) | (6,862,659) |
Net increase (decrease) | 417,013 | 90,958 | $ 21,996,686 | $ 5,685,815 |
Class B |
|
|
|
|
Shares sold | 323,554 | 76,823 | $ 17,593,411 | $ 4,855,507 |
Reinvestment of distributions | 1,967 | 1,410 | 94,022 | 92,490 |
Shares redeemed | (60,442) | (4,224) | (3,153,125) | (268,236) |
Net increase (decrease) | 265,079 | 74,009 | $ 14,534,308 | $ 4,679,761 |
Class C |
|
|
|
|
Shares sold | 1,133,018 | 328,900 | $ 59,347,217 | $ 21,121,099 |
Reinvestment of distributions | 6,095 | 4,849 | 290,992 | 319,529 |
Shares redeemed | (191,974) | (20,712) | (10,093,420) | (1,307,625) |
Net increase (decrease) | 947,139 | 313,037 | $ 49,544,789 | $ 20,133,003 |
Consumer Staples |
|
|
|
|
Shares sold | 13,482,265 | 8,600,962 | $ 765,828,751 | $ 555,032,219 |
Reinvestment of distributions | 185,893 | 360,932 | 9,096,289 | 23,544,138 |
Shares redeemed | (9,136,327) | (5,052,205) | (521,761,725) | (318,954,187) |
Net increase (decrease) | 4,531,831 | 3,909,689 | $ 253,163,315 | $ 259,622,170 |
Institutional Class |
|
|
|
|
Shares sold | 760,504 | 204,550 | $ 40,084,673 | $ 13,014,809 |
Reinvestment of distributions | 4,038 | 995 | 196,481 | 65,503 |
Shares redeemed | (227,140) | (43,560) | (12,179,526) | (2,806,458) |
Net increase (decrease) | 537,402 | 161,985 | $ 28,101,628 | $ 10,273,854 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014 which is recorded in the accompanying Statement of Operations.
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
Fidelity Advisor Gold Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -37.61% | 9.49% | 13.94% |
Class T (incl. 3.50% sales charge) B | -36.29% | 9.91% | 14.15% |
Class B (incl. contingent deferred sales charge) C | -37.57% | 10.16% | 14.42% |
Class C (incl. contingent deferred sales charge) D | -34.96% | 10.41% | 14.41% |
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, 1999, 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor Gold Fund: During the past year, the fund's Class A, Class T, Class B and Class C shares returned -33.81%, -33.98%, -34.30% and -34.30%, respectively (excluding sales charges), beating the -36.56% return of the Standard & Poor's® BMI Global Gold Index and the S&P 500. Versus the industry index, my decision to hold some gold bullion was a key positive factor, as the price of bullion held up much better than gold mining stocks. Among our equity holdings, fund performance was aided by Randgold Resources, a U.K.-based gold mining company with most of its assets in West Africa that benefited from the prospect of robust production growth, a strong management team and promising exploration opportunities. Other contributors included Royal Gold; CONSOL Energy, a producer of thermal coal; and BHP Billiton, which is based in Australia but listed in the United Kingdom and is the world's largest diversified mining company. Although I later repurchased both stocks, I sold CONSOL and BHP Billiton during the summer of 2008 to take profits. Underweighting Barrick Gold further added value, although Barrick was the fund's second-largest holding at period end, at nearly 9% of net assets. A small cash position bolstered our results as well. Conversely, performance was hindered by our positioning in precious metals and minerals, an out-of-benchmark category, and in steel, where unfavorable stock selection outweighed the positive effects of an overweighted exposure to that outperforming group. In absolute terms, a stronger U.S. dollar undermined the returns of the fund's foreign holdings. Individual detractors included two platinum mining companies that were outside the S&P® industry index: Aquarius Platinum and Impala Platinum, both with operations in South Africa. The global recession slowed automobile and truck sales as well as dampened jewelry demand. Together, those markets typically account for more than 70% of platinum's sales. Lihir Gold, headquartered in Papua New Guinea, also detracted, as did not owning index component Gold Eagle, based in Canada, whose stock jumped in response to a buyout offer for the 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
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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.17% |
|
|
|
Actual |
| $ 1,000.00 | $ 903.60 | $ 5.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.99 | $ 5.86 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 902.20 | $ 6.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Gold | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.70 | $ 4.34 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.90 | $ 4.30 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Newmont Mining Corp. | 9.8 | 10.0 |
Barrick Gold Corp. | 8.7 | 9.8 |
Goldcorp, Inc. | 7.8 | 9.6 |
Agnico-Eagle Mines Ltd. | 6.2 | 6.3 |
Newcrest Mining Ltd. | 6.0 | 7.4 |
Randgold Resources Ltd. sponsored ADR | 4.3 | 4.4 |
Kinross Gold Corp. | 4.3 | 4.9 |
Yamana Gold, Inc. | 4.2 | 4.6 |
AngloGold Ashanti Ltd. sponsored ADR | 3.8 | 3.1 |
Lihir Gold Ltd. | 3.7 | 4.1 |
| 58.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Gold | 84.7% |
| |
Precious Metals & Minerals | 3.3% |
| |
Diversified Metals & Mining | 1.5% |
| |
Coal & Consumable Fuels | 1.2% |
| |
Steel | 0.9% |
| |
All Others* | 8.4% |
|
As of August 31, 2008 | |||
Gold | 88.6% |
| |
Precious Metals & Minerals | 5.5% |
| |
Diversified Metals & Mining | 3.6% |
| |
Steel | 1.5% |
| |
Coal & Consumable Fuels | 0.6% |
| |
All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 83.7% | |||
Shares | Value | ||
Australia - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
Andean Resources Ltd. (a) | 2,884,651 | $ 2,735,233 | |
Avoca Resources Ltd. (a) | 85,000 | 93,413 | |
Centamin Egypt Ltd. (a) | 2,327,000 | 1,706,192 | |
Newcrest Mining Ltd. | 6,030,913 | 118,588,143 | |
Sino Gold Mining Ltd. (a)(d) | 3,573,231 | 11,862,926 | |
Troy Resources NL (a)(e) | 2,300,000 | 1,880,281 | |
| 136,866,188 | ||
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 3,398,027 | 8,200,450 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce (PN-A) sponsored ADR | 130,000 | 1,449,500 | |
Canada - 42.1% | |||
METALS & MINING - 42.1% | |||
Diversified Metals & Mining - 0.1% | |||
Kimber Resources, Inc. (a) | 16,100 | 8,100 | |
Kimber Resources, Inc. (a)(e) | 3,888,000 | 1,955,996 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(e) | 1,944,000 | 15 | |
| 1,964,111 | ||
Gold - 40.7% | |||
Agnico-Eagle Mines Ltd. | 2,444,000 | 122,857,996 | |
Alamos Gold, Inc. (a) | 2,238,800 | 14,958,771 | |
Aquiline Resources, Inc. (a) | 875,500 | 1,892,564 | |
Aquiline Resources, Inc. (a)(e) | 1,024,600 | 2,214,872 | |
Aurizon Mines Ltd. (a) | 1,056,700 | 4,086,754 | |
Barrick Gold Corp. | 5,660,519 | 171,085,922 | |
Detour Gold Corp. (e) | 615,000 | 5,138,899 | |
Eldorado Gold Corp. (a) | 5,817,300 | 49,066,249 | |
European Goldfields Ltd. (a) | 603,600 | 1,451,885 | |
Franco-Nevada Corp. | 1,022,300 | 21,697,206 | |
Goldcorp, Inc. (d) | 5,286,200 | 153,580,908 | |
Golden Star Resources Ltd. (a)(d) | 3,875,769 | 5,849,528 | |
Great Basin Gold Ltd. (a)(d) | 3,407,900 | 4,687,989 | |
Guyana Goldfields, Inc. (a) | 783,000 | 1,778,776 | |
IAMGOLD Corp. | 3,652,200 | 29,570,145 | |
Jaguar Mining, Inc. (a)(f) | 690,500 | 3,897,174 | |
| |||
Shares | Value | ||
Kinross Gold Corp. | 5,279,600 | $ 83,500,807 | |
New Gold, Inc. (a) | 1,075,700 | 2,054,751 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 69,060 | |
Northgate Minerals Corp. (a) | 1,307,800 | 1,572,876 | |
Osisko Mining Corp. (a)(d) | 522,000 | 1,912,133 | |
Osisko Mining Corp. (a)(e) | 2,000,000 | 7,326,179 | |
Osisko Mining Corp. warrants 11/17/09 (a)(e) | 1,000,000 | 432,340 | |
Red Back Mining, Inc. (a) | 2,470,800 | 15,246,457 | |
Red Back Mining, Inc. (a)(e) | 1,059,500 | 6,537,810 | |
San Gold Corp. (a) | 367,400 | 447,644 | |
Seabridge Gold, Inc. (a)(d) | 132,700 | 2,246,611 | |
SEMAFO, Inc. (a) | 440,000 | 612,192 | |
Western Goldfields, Inc. (a) | 1,161,200 | 2,090,279 | |
Yamana Gold, Inc. | 9,385,100 | 82,036,169 | |
| 799,900,946 | ||
Precious Metals & Minerals - 1.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 449,551 | |
Etruscan Resources, Inc. (a)(e) | 1,549,400 | 572,431 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(e) | 774,700 | 30,448 | |
Gammon Gold, Inc. (a) | 250,000 | 1,965,177 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 6,632,080 | |
Pan American Silver Corp. (a) | 500,000 | 7,200,000 | |
Silver Standard Resources, Inc. (a) | 631,300 | 9,526,320 | |
| 26,376,007 | ||
TOTAL METALS & MINING | 828,241,064 | ||
China - 1.1% | |||
METALS & MINING - 1.1% | |||
Gold - 1.1% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 41,238,000 | 21,668,390 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Shares) | 282,900 | 5,468,457 | |
Papua New Guinea - 3.7% | |||
METALS & MINING - 3.7% | |||
Gold - 3.7% | |||
Lihir Gold Ltd. (a) | 35,560,881 | 73,689,317 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 780,000 | 15,022,800 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 9.5% | |||
AngloGold Ashanti Ltd. sponsored ADR | 2,517,534 | 75,098,039 | |
Gold Fields Ltd. sponsored ADR | 5,940,459 | 60,473,873 | |
Common Stocks - continued | |||
Shares | Value | ||
South Africa - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | $ 18,689,535 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 2,658,200 | 31,845,236 | |
| 186,106,683 | ||
Precious Metals & Minerals - 0.8% | |||
Impala Platinum Holdings Ltd. | 1,338,212 | 15,704,954 | |
Northam Platinum Ltd. | 75,000 | 162,024 | |
| 15,866,978 | ||
TOTAL METALS & MINING | 201,973,661 | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 0.3% | |||
BHP Billiton PLC | 375,400 | 5,849,952 | |
Gold - 4.3% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,877,574 | 85,392,066 | |
TOTAL METALS & MINING | 91,242,018 | ||
United States of America - 13.4% | |||
METALS & MINING - 12.2% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 668,200 | 20,326,644 | |
Gold - 10.6% | |||
Allied Nevada Gold Corp. (a) | 40,000 | 160,000 | |
Newmont Mining Corp. | 4,649,750 | 193,569,091 | |
Royal Gold, Inc. (d) | 367,535 | 14,870,466 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 68,709 | |
| 208,668,266 | ||
Steel - 0.6% | |||
Cliffs Natural Resources, Inc. | 360,000 | 5,554,800 | |
Commercial Metals Co. | 549,263 | 5,607,975 | |
| 11,162,775 | ||
TOTAL METALS & MINING | 240,157,685 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 210,000 | 5,722,500 | |
Foundation Coal Holdings, Inc. | 405,400 | 6,518,832 | |
| |||
Shares | Value | ||
Massey Energy Co. | 485,929 | $ 5,612,480 | |
Walter Industries, Inc. | 324,460 | 5,895,438 | |
| 23,749,250 | ||
TOTAL UNITED STATES OF AMERICA | 263,906,935 | ||
TOTAL COMMON STOCKS (Cost $1,674,185,608) | 1,647,728,780 |
Commodities - 7.9% | ||||
Troy Ounces |
| |||
Gold Bullion (a) | 164,500 | 154,922,810 |
Money Market Funds - 13.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 177,341,280 | 177,341,280 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 79,402,696 | 79,402,696 | |
TOTAL MONEY MARKET FUNDS (Cost $256,743,976) | 256,743,976 | ||
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $2,074,807,984) | 2,059,395,566 | ||
NET OTHER ASSETS - (4.6)% | (91,331,806) | ||
NET ASSETS - 100% | $ 1,968,063,760 |
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 $26,158,331 or 1.3% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(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 $68,709 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 | $ 725,396 |
Fidelity Securities Lending Cash Central Fund | 586,066 |
Total | $ 1,311,462 |
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, |
Coral Gold Resources Ltd. | $ 2,869,001 | $ - | $ 368,605 | $ - | $ - |
US Gold Canadian Acquisition Corp. | 8,770,114 | - | 2,471,386 | - | - |
Total | $ 11,639,115 | $ - | $ 2,839,991 | $ - | $ - |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select |
|
|
|
|
|
Gold Cayman Ltd. | $ 82,233,978 | $ 134,604,641 | $ 65,550,322 | $ - | $ 154,880,326 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments | $ 2,059,395,566 | $ 1,796,374,965 | $ 262,990,153 | $ 30,448 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments |
Beginning Balance | $ 0 |
Total Realized Gain (Loss) | 0 |
Total Unrealized Gain (Loss) | (363,180) |
Cost of Purchases | 0 |
Proceeds of Sales | 0 |
Amortization/Accretion | 0 |
Transfer in/out of Level 3 | 393,628 |
Ending Balance | $ 30,448 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $88,413,227 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $39,003,106 of losses recognized during the period of November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investments, at value (including securities loaned of $76,557,301) - See accompanying schedule: Unaffiliated issuers (cost $1,674,185,608) | $ 1,647,728,780 |
|
Fidelity Central Funds (cost $256,743,976) | 256,743,976 |
|
Commodities (cost $143,878,400) | 154,922,810 |
|
Total Investments (cost $2,074,807,984) |
| $ 2,059,395,566 |
Receivable for investments sold | 24,634,669 | |
Receivable for fund shares sold | 11,263,800 | |
Dividends receivable | 655,053 | |
Distributions receivable from Fidelity Central Funds | 112,548 | |
Prepaid expenses | 12,260 | |
Receivable from investment adviser for expense reductions | 38,508 | |
Other receivables | 17,852 | |
Total assets | 2,096,130,256 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 470 | |
Payable for investments purchased | 40,831,884 | |
Delayed delivery | 1,583,933 | |
Payable for fund shares redeemed | 4,728,435 | |
Accrued management fee | 934,504 | |
Distribution fees payable | 32,445 | |
Other affiliated payables | 472,364 | |
Other payables and accrued expenses | 79,765 | |
Collateral on securities loaned, at value | 79,402,696 | |
Total liabilities | 128,066,496 | |
|
|
|
Net Assets | $ 1,968,063,760 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,187,286,957 | |
Accumulated net investment loss | (714) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (203,845,681) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (15,376,802) | |
Net Assets | $ 1,968,063,760 |
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 30.45 | |
|
|
|
Maximum offering price per share (100/94.25 of $30.45) | $ 32.31 | |
Class T: | $ 30.36 | |
|
|
|
Maximum offering price per share (100/96.50 of $30.36) | $ 31.46 | |
Class B: | $ 30.08 | |
|
|
|
Class C: | $ 30.00 | |
|
|
|
Gold: | $ 30.67 | |
|
|
|
Institutional Class: | $ 30.65 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Select Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 12,225,702 |
Income from Fidelity Central Funds |
| 1,311,462 |
Total income |
| 13,537,164 |
|
|
|
Expenses | ||
Management fee | $ 10,708,758 | |
Transfer agent fees | 4,347,722 | |
Distribution fees | 300,335 | |
Accounting and security lending fees | 831,959 | |
Custodian fees and expenses | 272,770 | |
Independent trustees' compensation | 8,217 | |
Registration fees | 219,928 | |
Audit | 60,587 | |
Legal | 28,096 | |
Interest | 26,560 | |
Miscellaneous | 75,992 | |
Total expenses before reductions | 16,880,924 | |
Expense reductions | (653,397) | 16,227,527 |
Net investment income (loss) | (2,690,363) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (161,956,379) | |
Other affiliated issuers | (12,002,969) |
|
Commodities | (6,078,300) |
|
Foreign currency transactions | 119,862 | |
Total net realized gain (loss) |
| (179,917,786) |
Change in net unrealized appreciation (depreciation) on: Investments | (711,214,605) | |
Assets and liabilities in foreign currencies | 72,318 | |
Total change in net unrealized appreciation (depreciation) |
| (711,142,287) |
Net gain (loss) | (891,060,073) | |
Net increase (decrease) in net assets resulting from operations | $ (893,750,436) |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,690,363) | $ (863,055) |
Net realized gain (loss) | (179,917,786) | 189,513,263 |
Change in net unrealized appreciation (depreciation) | (711,142,287) | 426,680,411 |
Net increase (decrease) in net assets resulting from operations | (893,750,436) | 615,330,619 |
Distributions to shareholders from net investment income | - | (7,077,865) |
Distributions to shareholders from net realized gain | (9,542,341) | (201,157,130) |
Total distributions | (9,542,341) | (208,234,995) |
Share transactions - net increase (decrease) | 430,558,697 | 554,230,717 |
Redemption fees | 852,427 | 544,215 |
Total increase (decrease) in net assets | (471,881,653) | 961,870,556 |
|
|
|
Net Assets | ||
Beginning of period | 2,439,945,413 | 1,478,074,857 |
End of period (including accumulated net investment loss of $714 and accumulated net investment loss of $3,177, respectively) | $ 1,968,063,760 | $ 2,439,945,413 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | (15.44) | 15.00 | (.07) |
Total from investment operations | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.01) | - |
Total distributions | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B,C,D | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | (15.42) | 15.05 | (.09) |
Total from investment operations | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.97) | - |
Total distributions | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B,C,D | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.34) | 14.95 | (.08) |
Total from investment operations | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.84) | - |
Total distributions | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B,C,D | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.30) | 14.91 | (.10) |
Total from investment operations | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | (.17) | - |
Distributions from net realized gain | (.17) | (4.89) | - |
Total distributions | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B,C,D | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Gold
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | (.02) | .22 F | .04 | .02 G |
Net realized and unrealized gain (loss) | (15.51) | 15.05 | 5.49 | 12.21 | .18 |
Total from investment operations | (15.55) | 15.03 | 5.71 | 12.25 | .20 |
Distributions from net investment income | - | (.18) | (.02) | (.02) | - |
Distributions from net realized gain | (.17) | (5.03) | (5.10) | (3.84) | - |
Total distributions | (.17) | (5.21) | (5.12) | (3.86) | - |
Redemption fees added to paid in capital C | .02 | .01 | .04 | .06 | .05 |
Net asset value, end of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Total Return A,B | (33.59)% | 45.10% | 16.19% | 48.84% | .92% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .89% | .85% | .90% | .97% | 1.00% |
Expenses net of fee waivers, if any | .87% | .85% | .90% | .97% | 1.00% |
Expenses net of all reductions | .86% | .81% | .87% | .82% | .89% |
Net investment income (loss) | (.13)% | (.05)% | .62% F | .13% | .07% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 |
Portfolio turnover rate E | 42% | 55% | 85% | 108% | 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 $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.08)%. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | (15.49) | 15.03 | (.08) |
Total from investment operations | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.04) | - |
Total distributions | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .02 | .01 | .01 |
Net asset value, end of period | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B,C | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .89% | .83% | .94% A |
Expenses net of all reductions | .86% | .79% | .91% A |
Net investment income (loss) | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2009
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2009, the Fund held $154,880,326 in the Subsidiary, representing 7.9% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to
Annual Report
4. Significant Accounting Policies - continued
Security Valuation - continued
readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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), controlled foreign corporation, 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:
Unrealized appreciation | $ 243,686,134 |
|
Unrealized depreciation | (335,492,281) | �� |
Net unrealized appreciation (depreciation) | (91,806,147) |
|
Capital loss carryforward | (88,413,227) |
|
|
|
|
Cost for federal income tax purposes | $ 2,151,201,713 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ - | $ 81,662,441 |
Long-term Capital Gains | 9,542,341 | 126,572,554 |
Total | $ 9,542,341 | $ 208,234,995 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. Securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term securities, aggregated $1,187,755,611 and $775,866,491, respectively.
Annual Report
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR.
The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its 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 $330,880.
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 | 0% | .25% | $ 68,735 | $ 5,104 |
Class T | .25% | .25% | 55,857 | 54 |
Class B | .75% | .25% | 63,776 | 47,880 |
Class C | .75% | .25% | 111,967 | 52,378 |
|
|
| $ 300,335 | $ 105,416 |
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 | $ 89,649 |
Class T | 13,056 |
Class B* | 21,234 |
Class C* | 11,304 |
| $ 135,243 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 82,682 | .30 |
Class T | 35,034 | .31 |
Class B | 19,275 | .30 |
Class C | 33,673 | .30 |
Gold | 4,168,247 | .23 |
Institutional Class | 8,811 | .25 |
| $ 4,347,722 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
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 $3,396 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 | $ 10,576,756 | 2.17% | $ 26,101 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $6,220 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $586,066.
10. 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 $7,138,000. The weighted average interest rate was 2.31%. The interest expense amounted to $459 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
11. 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 $313,930 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 |
|
Gold | $ 8,587 |
|
Annual Report
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 |
Institutional Class | - | 6,741 |
Total | $ - | $ 7,077,865 |
From net realized gain |
|
|
Class A | $ 120,234 | $ 955,695 |
Class T | 52,921 | 425,795 |
Class B | 30,037 | 289,226 |
Class C | 48,372 | 343,986 |
Gold | 9,277,078 | 198,940,407 |
Institutional Class | 13,699 | 202,021 |
Total | $ 9,542,341 | $ 201,157,130 |
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 | 1,309,698 | 567,655 | $ 44,660,266 | $ 23,751,338 |
Reinvestment of distributions | 2,750 | 25,125 | 115,078 | 945,727 |
Shares redeemed | (603,399) | (67,262) | (19,759,071) | (2,616,226) |
Net increase (decrease) | 709,049 | 525,518 | $ 25,016,273 | $ 22,080,839 |
Class T |
|
|
|
|
Shares sold | 490,596 | 245,988 | $ 16,725,703 | $ 10,279,473 |
Reinvestment of distributions | 1,250 | 11,403 | 52,336 | 428,815 |
Shares redeemed | (233,926) | (41,858) | (7,642,955) | (1,666,054) |
Net increase (decrease) | 257,920 | 215,533 | $ 9,135,084 | $ 9,042,234 |
Class B |
|
|
|
|
Shares sold | 268,687 | 138,954 | $ 9,041,240 | $ 5,690,539 |
Reinvestment of distributions | 619 | 7,385 | 25,767 | 276,855 |
Shares redeemed | (138,798) | (21,658) | (4,716,395) | (874,114) |
Net increase (decrease) | 130,508 | 124,681 | $ 4,350,612 | $ 5,093,280 |
Class C |
|
|
|
|
Shares sold | 585,858 | 253,353 | $ 18,965,561 | $ 10,551,196 |
Reinvestment of distributions | 1,077 | 8,652 | 44,699 | 324,140 |
Shares redeemed | (238,490) | (37,666) | (7,504,831) | (1,511,191) |
Net increase (decrease) | 348,445 | 224,339 | $ 11,505,429 | $ 9,364,145 |
Gold |
|
|
|
|
Shares sold | 46,487,078 | 30,095,254 | $ 1,611,564,135 | $ 1,246,042,833 |
Reinvestment of distributions | 212,477 | 5,273,633 | 8,930,407 | 197,489,804 |
Shares redeemed | (36,708,151) | (24,338,085) | (1,244,304,895) | (937,121,869) |
Net increase (decrease) | 9,991,404 | 11,030,802 | $ 376,189,647 | $ 506,410,768 |
Institutional Class |
|
|
|
|
Shares sold | 256,180 | 128,523 | $ 8,523,938 | $ 5,080,204 |
Reinvestment of distributions | 259 | 4,588 | 10,894 | 171,536 |
Shares redeemed | (126,881) | (75,163) | (4,173,180) | (3,012,289) |
Net increase (decrease) | 129,558 | 57,948 | $ 4,361,652 | $ 2,239,451 |
Annual Report
Notes to Consolidated Financial Statements - continued
14. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304, which is recorded in the accompanying Consolidated Statement of Operations.
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
Fidelity Advisor Materials Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -54.10% | -2.26% | 5.09% |
Class T (incl. 3.50% sales charge) B | -53.13% | -1.95% | 5.25% |
Class B (incl. contingent deferred sales charge) C | -54.09% | -1.80% | 5.51% |
Class C (incl. contingent deferred sales charge) D | -52.15% | -1.48% | 5.51% |
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, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Class A on February 28, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor Materials Fund: For the one-year period ending February 28, 2009, the fund's Class A, Class T, Class B and Class C shares returned -51.30%, -51.43%, -51.67% and -51.66%, respectively (excluding sales charges), outpacing the -53.96% return for the MSCI® US Investable Market Materials Index, but trailing the broad market S&P 500. Versus the MSCI index, strong industry selection drove performance for the period, including an overweighting in gold and sizable underweightings in some lagging industries, including aluminum, paper products and diversified chemicals. In addition, stock selection within the latter segment aided results. A modest cash allocation also was a positive in a down market. Conversely, stock selection among steel issues hurt, as did certain stock picks and an overweighting in commodity chemicals and weak results from our specialty chemicals holdings. Among individual stocks, underweightings in aluminum maker Alcoa, International Paper and diversified chemicals maker Dow Chemical helped. Here, I'd sought to underweight firms with high debt levels that were exposed to certain hard-hit end markets. Commodity chemicals firm Celanese and an underweighting in steel company Nucor detracted. Celanese struggled amid a dramatic drop in global demand, while Nucor was helped by its relatively strong financial position versus competitors. Some of the stocks I've mentioned in this update were sold at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including 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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.21% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.90 | $ 4.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.20 | $ 5.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Materials | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.60 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Institutional Class | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.70 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Select Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 15.5 | 11.9 |
Newmont Mining Corp. | 6.7 | 3.8 |
E.I. du Pont de Nemours & Co. | 6.4 | 8.3 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 5.0 | 7.0 |
Praxair, Inc. | 4.4 | 2.1 |
FMC Corp. | 2.9 | 3.0 |
Airgas, Inc. | 2.8 | 1.9 |
Weyerhaeuser Co. | 2.7 | 1.5 |
Terra Industries, Inc. | 2.5 | 1.0 |
Rohm & Haas Co. | 2.4 | 0.0 |
| 51.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Chemicals | 56.4% |
| |
Metals & Mining | 21.4% |
| |
Containers & Packaging | 10.2% |
| |
Paper & Forest Products | 2.7% |
| |
Construction Materials | 2.4% |
| |
All Others* | 6.9% |
|
As of August 31, 2008 | |||
Chemicals | 51.3% |
| |
Metals & Mining | 30.9% |
| |
Containers & Packaging | 11.3% |
| |
Marine | 1.6% |
| |
Paper & Forest Products | 1.5% |
| |
All Others* | 3.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Materials Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.9% | |||
Building Products - 0.9% | |||
Masco Corp. | 218,700 | $ 1,126,305 | |
USG Corp. (a) | 32,400 | 186,948 | |
| 1,313,253 | ||
CHEMICALS - 55.9% | |||
Commodity Chemicals - 2.1% | |||
Celanese Corp. Class A | 369,678 | 3,157,050 | |
Diversified Chemicals - 10.7% | |||
E.I. du Pont de Nemours & Co. | 517,200 | 9,702,672 | |
FMC Corp. | 110,199 | 4,455,346 | |
Solutia, Inc. (a) | 555,100 | 2,081,625 | |
| 16,239,643 | ||
Fertilizers & Agricultural Chemicals - 20.9% | |||
CF Industries Holdings, Inc. | 37,200 | 2,393,076 | |
Monsanto Co. | 309,244 | 23,586,039 | |
Terra Industries, Inc. | 147,200 | 3,796,288 | |
The Mosaic Co. | 49,500 | 2,130,975 | |
| 31,906,378 | ||
Industrial Gases - 8.7% | |||
Air Products & Chemicals, Inc. | 49,000 | 2,266,250 | |
Airgas, Inc. | 137,100 | 4,221,309 | |
Praxair, Inc. | 119,000 | 6,753,250 | |
| 13,240,809 | ||
Specialty Chemicals - 13.5% | |||
Albemarle Corp. | 181,985 | 3,521,410 | |
Ecolab, Inc. | 98,500 | 3,130,330 | |
Lubrizol Corp. | 94,800 | 2,606,052 | |
Nalco Holding Co. | 198,618 | 2,258,287 | |
OMNOVA Solutions, Inc. (a) | 124,091 | 105,477 | |
Rockwood Holdings, Inc. (a) | 190,700 | 1,123,223 | |
Rohm & Haas Co. | 70,700 | 3,681,349 | |
Valspar Corp. | 88,100 | 1,471,270 | |
W.R. Grace & Co. (a) | 466,700 | 2,613,520 | |
| 20,510,918 | ||
TOTAL CHEMICALS | 85,054,798 | ||
CONSTRUCTION MATERIALS - 2.4% | |||
Construction Materials - 2.4% | |||
Martin Marietta Materials, Inc. (d) | 46,800 | 3,583,008 | |
CONTAINERS & PACKAGING - 10.2% | |||
Metal & Glass Containers - 6.4% | |||
Ball Corp. | 71,865 | 2,895,441 | |
Crown Holdings, Inc. (a) | 148,971 | 3,140,309 | |
Myers Industries, Inc. | 16,419 | 64,855 | |
Owens-Illinois, Inc. (a) | 141,200 | 2,177,304 | |
Pactiv Corp. (a) | 87,500 | 1,385,125 | |
| 9,663,034 | ||
| |||
Shares | Value | ||
Paper Packaging - 3.8% | |||
Packaging Corp. of America | 117,100 | $ 1,240,089 | |
Rock-Tenn Co. Class A | 88,728 | 2,449,780 | |
Sealed Air Corp. | 84,200 | 939,672 | |
Temple-Inland, Inc. (d) | 241,600 | 1,147,600 | |
| 5,777,141 | ||
TOTAL CONTAINERS & PACKAGING | 15,440,175 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Homebuilding - 0.4% | |||
Centex Corp. | 93,300 | 579,393 | |
MACHINERY - 0.5% | |||
Construction & Farm Machinery & Heavy Trucks - 0.5% | |||
Deere & Co. | 27,700 | 761,473 | |
MARINE - 0.4% | |||
Marine - 0.4% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 575,543 | |
METALS & MINING - 20.4% | |||
Diversified Metals & Mining - 5.8% | |||
BHP Billiton PLC | 78,600 | 1,224,843 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 247,728 | 7,535,886 | |
| 8,760,729 | ||
Gold - 9.0% | |||
Agnico-Eagle Mines Ltd. | 8,500 | 427,288 | |
Newmont Mining Corp. | 243,900 | 10,153,557 | |
Randgold Resources Ltd. sponsored ADR | 34,700 | 1,578,156 | |
Yamana Gold, Inc. | 184,300 | 1,610,986 | |
| 13,769,987 | ||
Precious Metals & Minerals - 0.3% | |||
Impala Platinum Holdings Ltd. | 34,460 | 404,415 | |
Steel - 5.3% | |||
ArcelorMittal SA (NY Shares) Class A (d) | 67,900 | 1,312,507 | |
Cliffs Natural Resources, Inc. | 89,300 | 1,377,899 | |
Commercial Metals Co. | 164,000 | 1,674,440 | |
Reliance Steel & Aluminum Co. | 73,000 | 1,736,670 | |
Steel Dynamics, Inc. | 242,000 | 2,020,700 | |
| 8,122,216 | ||
TOTAL METALS & MINING | 31,057,347 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 24,400 | 664,900 | |
Foundation Coal Holdings, Inc. | 25,200 | 405,216 | |
Massey Energy Co. | 69,400 | 801,570 | |
| 1,871,686 | ||
PAPER & FOREST PRODUCTS - 2.7% | |||
Forest Products - 2.7% | |||
Weyerhaeuser Co. | 171,800 | 4,150,688 | |
Common Stocks - continued | |||
Shares | Value | ||
TRANSPORTATION INFRASTRUCTURE - 1.0% | |||
Marine Ports & Services - 1.0% | |||
Aegean Marine Petroleum Network, Inc. | 96,500 | $ 1,582,600 | |
TOTAL COMMON STOCKS (Cost $211,717,445) | 145,969,964 | ||
Convertible Preferred Stocks - 1.0% | |||
|
|
|
|
METALS & MINING - 1.0% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 29,000 | 1,568,523 |
Floating Rate Loans - 0.5% | ||||
| Principal Amount |
| ||
MATERIALS - 0.5% | ||||
Chemicals - 0.5% | ||||
Celanese Holding LLC term loan 2.935% 4/2/14 (e) | $ 987,487 | 809,740 | ||
TOTAL FLOATING RATE LOANS (Cost $760,558) | 809,740 |
Money Market Funds - 4.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 2,803,758 | $ 2,803,758 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,425,750 | 4,425,750 | |
TOTAL MONEY MARKET FUNDS (Cost $7,229,508) | 7,229,508 | ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $221,275,013) | 155,577,735 | ||
NET OTHER ASSETS - (2.3)% | (3,457,685) | ||
NET ASSETS - 100% | $ 152,120,050 |
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. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate 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 | $ 207,459 |
Fidelity Securities Lending Cash Central Fund | 92,601 |
Total | $ 300,060 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 155,577,735 | $ 151,974,629 | $ 3,603,106 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $47,480,166 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $26,181,120 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,349,948) - See accompanying schedule: Unaffiliated issuers (cost $214,045,505) | $ 148,348,227 |
|
Fidelity Central Funds (cost $7,229,508) | 7,229,508 |
|
Total Investments (cost $221,275,013) |
| $ 155,577,735 |
Cash | 867,252 | |
Receivable for investments sold | 5,532,571 | |
Receivable for fund shares sold | 230,578 | |
Dividends receivable | 424,015 | |
Interest receivable | 4,589 | |
Distributions receivable from Fidelity Central Funds | 7,214 | |
Prepaid expenses | 1,949 | |
Other receivables | 207 | |
Total assets | 162,646,110 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,249,567 | |
Payable for fund shares redeemed | 678,545 | |
Accrued management fee | 77,730 | |
Distribution fees payable | 11,826 | |
Other affiliated payables | 47,607 | |
Other payables and accrued expenses | 35,035 | |
Collateral on securities loaned, at value | 4,425,750 | |
Total liabilities | 10,526,060 | |
|
|
|
Net Assets | $ 152,120,050 | |
Net Assets consist of: |
| |
Paid in capital | $ 295,565,722 | |
Undistributed net investment income | 350,358 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (78,098,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (65,697,862) | |
Net Assets | $ 152,120,050 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 27.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $27.65) | $ 29.34 | |
Class T: | $ 27.56 | |
|
|
|
Maximum offering price per share (100/96.50 of $27.56) | $ 28.56 | |
Class B: | $ 27.35 | |
|
|
|
Class C: | $ 27.31 | |
|
|
|
Materials: | $ 27.66 | |
|
|
|
Institutional Class: | $ 27.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 5,062,903 |
Interest |
| 32,366 |
Income from Fidelity Central Funds |
| 300,060 |
Total income |
| 5,395,329 |
|
|
|
Expenses | ||
Management fee | $ 1,788,061 | |
Transfer agent fees | 817,591 | |
Distribution fees | 219,469 | |
Accounting and security lending fees | 128,438 | |
Custodian fees and expenses | 27,331 | |
Independent trustees' compensation | 1,640 | |
Registration fees | 101,330 | |
Audit | 40,676 | |
Legal | 1,823 | |
Miscellaneous | 22,628 | |
Total expenses before reductions | 3,148,987 | |
Expense reductions | (13,467) | 3,135,520 |
Net investment income (loss) | 2,259,809 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (75,587,496) | |
Foreign currency transactions | (80,051) | |
Total net realized gain (loss) |
| (75,667,547) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (119,409,523) | |
Assets and liabilities in foreign currencies | (289) | |
Total change in net unrealized appreciation (depreciation) |
| (119,409,812) |
Net gain (loss) | (195,077,359) | |
Net increase (decrease) in net assets resulting from operations | $ (192,817,550) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,259,809 | $ 3,953,939 |
Net realized gain (loss) | (75,667,547) | 16,077,802 |
Change in net unrealized appreciation (depreciation) | (119,409,812) | 23,232,714 |
Net increase (decrease) in net assets resulting from operations | (192,817,550) | 43,264,455 |
Distributions to shareholders from net investment income | (976,789) | (2,382,687) |
Distributions to shareholders from net realized gain | - | (14,617,568) |
Total distributions | (976,789) | (17,000,255) |
Share transactions - net increase (decrease) | (41,426,103) | 127,763,307 |
Redemption fees | 46,748 | 66,997 |
Total increase (decrease) in net assets | (235,173,694) | 154,094,504 |
|
|
|
Net Assets | ||
Beginning of period | 387,293,744 | 233,199,240 |
End of period (including undistributed net investment income of $350,358 and undistributed net investment income of $1,848,037, respectively) | $ 152,120,050 | $ 387,293,744 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | (29.46) | 8.05 | 3.93 |
Total from investment operations | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.12) | (.32) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.12) | (2.53) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B,C,D | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | (29.32) | 8.00 | 3.87 |
Total from investment operations | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.03) | (.21) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.03) | (2.42) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B,C,D | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | (29.13) | 7.98 | 3.84 |
Total from investment operations | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | - | (.04) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.25) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B,C,D | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | (29.07) | 7.97 | 3.81 |
Total from investment operations | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | - | (.12) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.33) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B,C,D | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .38 | .64 | .42 | .32 | .15 |
Net realized and unrealized gain (loss) | (29.54) | 8.01 | 9.36 | 6.40 | 5.47 |
Total from investment operations | (29.16) | 8.65 | 9.78 | 6.72 | 5.62 |
Distributions from net investment income | (.20) | (.36) | (.48) | (.25) | (.12) |
Distributions from net realized gain | - | (2.21) | (4.79) | (.93) | (.74) |
Total distributions | (.20) | (2.57) H | (5.27) | (1.18) | (.86) |
Redemption fees added to paid in capital C | .01 | .01 | .06 | .03 | .03 |
Net asset value, end of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Total Return A,B | (51.15)% | 17.10% | 22.29% | 17.01% | 16.09% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .90% | .91% | 1.01% | 1.05% | 1.06% |
Expenses net of fee waivers, if any | .90% | .90% | .98% | 1.05% | 1.06% |
Expenses net of all reductions | .90% | .89% | .96% | 1.01% | 1.02% |
Net investment income (loss) | .78% | 1.14% | .87% | .78% | .42% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 |
Portfolio turnover rate E | 117% | 77% | 185% | 124% | 89% |
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. H Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | (29.53) | 8.00 | 3.92 |
Total from investment operations | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.20) | (.36) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.20) | (2.56) J | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 |
Net asset value, end of period | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B,C | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .90% | .89% | 1.06% A |
Expenses net of all reductions | .90% | .89% | 1.04% A |
Net investment income (loss) | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G 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 Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation.
Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, market discount, passive foreign investment companies (PFIC), 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:
Unrealized appreciation | $ 14,131,142 |
|
Unrealized depreciation | (84,258,446) |
|
Net unrealized appreciation (depreciation) | (70,127,304) |
|
Undistributed ordinary income | 342,912 |
|
Capital loss carryforward | (47,480,166) |
|
|
|
|
Cost for federal income tax purposes | $ 225,705,039 |
|
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 976,789 | $ 7,456,139 |
Long-term Capital Gains | - | 9,544,116 |
Total | $ 976,789 | $ 17,000,255 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $364,235,925 and $398,230,325, 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% | $ 40,870 | $ 4,531 |
Class T | .25% | .25% | 38,434 | 176 |
Class B | .75% | .25% | 44,212 | 33,209 |
Class C | .75% | .25% | 95,953 | 46,754 |
|
|
| $ 219,469 | $ 84,670 |
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 Financial Statements - continued
6. 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 | $ 44,174 |
Class T | 9,605 |
Class B* | 8,840 |
Class C* | 4,799 |
| $ 67,418 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 49,515 | .30 |
Class T | 23,883 | .31 |
Class B | 13,428 | .30 |
Class C | 29,201 | .30 |
Materials | 697,613 | .25 |
Institutional Class | 3,951 | .25 |
| $ 817,591 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,685 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $931 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 $92,601.
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 $13,058 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, these credits reduced the Fund's transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 409 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 43,307 | $ 49,508 |
Class T | 5,182 | 17,252 |
Class B | - | 2,017 |
Class C | - | 11,702 |
Materials | 923,202 | 2,291,825 |
Institutional Class | 5,098 | 10,383 |
Total | $ 976,789 | $ 2,382,687 |
From net realized gain |
|
|
Class A | $ - | $ 297,274 |
Class T | - | 171,986 |
Class B | - | 120,699 |
Class C | - | 203,194 |
Materials | - | 13,774,394 |
Institutional Class | - | 50,021 |
Total | $ - | $ 14,617,568 |
11. 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 | 400,579 | 264,311 | $ 21,052,656 | $ 14,817,528 |
Reinvestment of distributions | 1,376 | 5,853 | 40,415 | 336,777 |
Shares redeemed | (231,192) | (70,440) | (9,966,206) | (3,880,036) |
Net increase (decrease) | 170,763 | 199,724 | $ 11,126,865 | $ 11,274,269 |
Class T |
|
|
|
|
Shares sold | 127,856 | 146,420 | $ 6,586,988 | $ 8,122,926 |
Reinvestment of distributions | 169 | 2,954 | 4,976 | 169,021 |
Shares redeemed | (69,236) | (42,653) | (3,081,211) | (2,369,950) |
Net increase (decrease) | 58,789 | 106,721 | $ 3,510,753 | $ 5,921,997 |
Class B |
|
|
|
|
Shares sold | 70,236 | 83,153 | $ 3,670,456 | $ 4,611,263 |
Reinvestment of distributions | - | 2,052 | - | 116,729 |
Shares redeemed | (48,886) | (24,486) | (2,112,869) | (1,341,792) |
Net increase (decrease) | 21,350 | 60,719 | $ 1,557,587 | $ 3,386,200 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class C |
|
|
|
|
Shares sold | 186,111 | 171,703 | $ 9,519,248 | $ 9,620,121 |
Reinvestment of distributions | (8) | 3,133 | (480) | 178,976 |
Shares redeemed | (139,135) | (30,841) | (5,956,182) | (1,682,683) |
Net increase (decrease) | 46,968 | 143,995 | $ 3,562,586 | $ 8,116,414 |
Materials |
|
|
|
|
Shares sold | 3,524,569 | 7,472,335 | $ 186,250,882 | $ 416,206,078 |
Reinvestment of distributions | 29,537 | 270,946 | 866,336 | 15,331,841 |
Shares redeemed | (5,137,192) | (6,067,742) | (248,168,306) | (334,236,130) |
Net increase (decrease) | (1,583,086) | 1,675,539 | $ (61,051,088) | $ 97,301,789 |
Institutional Class |
|
|
|
|
Shares sold | 41,845 | 88,023 | $ 2,204,347 | $ 5,168,897 |
Reinvestment of distributions | 156 | 963 | 4,588 | 55,576 |
Shares redeemed | (47,942) | (59,388) | (2,341,741) | (3,461,835) |
Net increase (decrease) | (5,941) | 29,598 | $ (132,806) | $ 1,762,638 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935, which is recorded in the accompanying Statement of Operations.
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.
13. Proposed Reorganization
On November 18, 2008, the Board of Trustees of the Fund approved an Agreement and Plan of Reorganization between the Fund and Select Paper and Forest Products Portfolio. The agreement provides for the transfer of all of the assets and the assumption of all of the liabilities of Select Paper and Forest Products Portfolio in exchange solely for the number of equivalent shares of Materials (the original, retail class of shares of Select Materials Portfolio) having the same aggregate net asset value as the outstanding shares of Select Paper and Forest Products Portfolio, on the day the reorganization is effective.
A meeting of shareholders of Select Paper and Forest Products Portfolio is expected to be held on May 19, 2009 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about June 19, 2009. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
Annual Report
Fidelity Advisor Telecommunications Fund - Class A, T, B and C
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -39.83% | -5.67% | -5.93% |
Class T (incl. 3.50% sales charge) B | -38.57% | -5.34% | -5.77% |
Class B (incl. contingent deferred sales charge) C | -39.79% | -5.23% | -5.53% |
Class C (incl. contingent deferred sales charge) D | -37.28% | -4.86% | -5.53% |
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, 1999, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Class A took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Gavin Baker, Portfolio Manager of Fidelity Advisor Telecommunications Fund: For the 12-month period ending February 28, 2009, the fund's Class A, Class T, Class B and Class C shares returned -36.16%, -36.34%, -36.64% and -36.64%, respectively (excluding sales charges), underperforming the -28.37% return of the MSCI® US Investable Market Telecommunications Services Index, but outperforming the S&P 500. Relative to the MSCI index, the fund was hurt by being significantly overweighted in the poor-performing alternative carriers group. Stock selection in the home entertainment software and cable/satellite groups, two areas not represented in the MSCI index, detracted as well. Underweighting integrated telecommunication services stocks, specifically index heavyweight Verizon - due to the fund's investment limitations - hurt the fund because Verizon outperformed the benchmark. Other individual detractors included alternative carriers Global Crossing, which is based in Bermuda, and Level 3 Communications, both of which saw their stock prices drop significantly. French company Gameloft, which sells video games for cell phones, held back the fund's return as well. Lastly, our holdings in foreign stocks were hurt by the strengthening U.S. dollar. On the other hand, the fund benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel for much of 2008 and then overweighting the stock late in 2008 and early in 2009. At that time, I purchased shares of the troubled wireless company at a low price, and subsequently the value of these shares increased. Another stock that contributed to the fund's return was communications equipment company Starent Networks, in which the fund held an out-of-benchmark position. Integrated telecom services company Cbeyond also outperformed.
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
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, 2008 to
February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 658.90 | $ 4.94 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 657.90 | $ 6.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.50 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.40 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Telecommunications | .97% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.70 | $ 3.99 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.98 | $ 4.86 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.60 | $ 4.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Sprint Nextel Corp. | 12.7 | 3.1 |
Verizon Communications, Inc. | 11.1 | 4.3 |
AT&T, Inc. | 7.4 | 12.5 |
Global Crossing Ltd. | 6.3 | 7.7 |
Qwest Communications International, Inc. | 4.8 | 7.6 |
Virgin Media, Inc. | 4.6 | 4.8 |
Starent Networks Corp. | 4.2 | 4.0 |
Vodafone Group PLC sponsored ADR | 3.9 | 1.4 |
The DIRECTV Group, Inc. | 3.7 | 2.2 |
Cbeyond, Inc. | 3.5 | 1.9 |
| 62.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Diversified Telecommunication Services | 41.3% |
| |
Wireless Telecommunication Services | 33.9% |
| |
Media | 12.2% |
| |
Communications Equipment | 4.6% |
| |
Software | 2.5% |
| |
All Others* | 5.5% |
|
|
As of August 31, 2008 | |||
Diversified Telecommunication Services | 54.0% |
| |
Wireless Telecommunication Services | 20.0% |
| |
Media | 14.7% |
| |
Software | 5.1% |
| |
Communications Equipment | 4.4% |
| |
All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Telecommunications Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 94.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 4.6% | |||
Communications Equipment - 4.6% | |||
Aruba Networks, Inc. (a) | 392 | $ 1,082 | |
F5 Networks, Inc. (a) | 1,600 | 32,000 | |
Infinera Corp. (a)(d) | 75,300 | 542,160 | |
Juniper Networks, Inc. (a) | 2,100 | 29,841 | |
Nortel Networks Corp. (a) | 8,071 | 666 | |
Polycom, Inc. (a) | 1,700 | 22,610 | |
Sandvine Corp. (a) | 3,200 | 1,836 | |
Sonus Networks, Inc. (a) | 56,800 | 70,432 | |
Starent Networks Corp. (a) | 533,874 | 8,440,548 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 4,896 | |
| 9,146,071 | ||
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Hardware - 0.1% | |||
Apple, Inc. (a) | 1,800 | 160,758 | |
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 1,125 | |
NetApp, Inc. (a) | 700 | 9,408 | |
Synaptics, Inc. (a) | 450 | 9,338 | |
| 19,871 | ||
TOTAL COMPUTERS & PERIPHERALS | 180,629 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 41.3% | |||
Alternative Carriers - 10.3% | |||
Cable & Wireless PLC | 19,405 | 37,971 | |
Cogent Communications Group, Inc. (a) | 64,802 | 428,989 | |
Global Crossing Ltd. (a) | 1,728,486 | 12,652,518 | |
Iliad Group SA | 600 | 47,378 | |
Level 3 Communications, Inc. (a) | 1,228,676 | 982,941 | |
PAETEC Holding Corp. (a) | 73,600 | 108,192 | |
tw telecom, inc. (a) | 783,552 | 6,299,758 | |
| 20,557,747 | ||
Integrated Telecommunication Services - 31.0% | |||
AT&T, Inc. | 618,319 | 14,697,443 | |
BT Group PLC | 5,351 | 6,836 | |
Cbeyond, Inc. (a) | 491,718 | 7,085,656 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 243,300 | 2,158,071 | |
Cincinnati Bell, Inc. (a) | 225,000 | 373,500 | |
Deutsche Telekom AG (Reg.) | 1,100 | 13,189 | |
Embarq Corp. | 900 | 31,473 | |
FairPoint Communications, Inc. | 34,149 | 67,274 | |
NTELOS Holdings Corp. | 632 | 12,115 | |
PT Indosat Tbk | 1,600 | 553 | |
PT Telkomunikasi Indonesia Tbk Series B | 355,900 | 186,993 | |
Qwest Communications International, Inc. (d) | 2,841,789 | 9,633,665 | |
Telecom Italia SpA sponsored ADR | 12,500 | 150,750 | |
Telefonica SA | 400 | 7,360 | |
| |||
Shares | Value | ||
Telefonica SA sponsored ADR | 95,400 | $ 5,300,424 | |
Telenor ASA | 4,400 | 22,615 | |
Telenor ASA sponsored ADR | 4,100 | 63,878 | |
Telkom SA Ltd. | 4,400 | 43,138 | |
Verizon Communications, Inc. | 774,824 | 22,105,729 | |
Vimpel Communications sponsored ADR | 1,200 | 6,288 | |
Windstream Corp. | 1,708 | 12,742 | |
| 61,979,692 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 82,537,439 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 7,614 | |
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 30,419 | |
SAVVIS, Inc. (d) | 26,799 | 150,342 | |
| 180,761 | ||
MEDIA - 12.2% | |||
Cable & Satellite - 12.2% | |||
Comcast Corp. Class A | 320,000 | 4,179,200 | |
DISH Network Corp. Class A (a) | 321,800 | 3,620,250 | |
Dish TV India Ltd. (a) | 5,888 | 2,766 | |
Liberty Global, Inc. Class A (a) | 400 | 4,908 | |
The DIRECTV Group, Inc. (a) | 367,300 | 7,323,962 | |
Virgin Media, Inc. | 1,923,800 | 9,195,764 | |
| 24,326,850 | ||
SOFTWARE - 2.5% | |||
Application Software - 0.3% | |||
Nuance Communications, Inc. (a) | 800 | 7,088 | |
OnMobile Global Ltd. | 132,183 | 585,270 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 55,933 | |
| 648,291 | ||
Home Entertainment Software - 2.2% | |||
Gameloft (a)(d) | 2,751,486 | 4,338,746 | |
Glu Mobile, Inc. (a) | 113,614 | 53,399 | |
| 4,392,145 | ||
TOTAL SOFTWARE | 5,040,436 | ||
WIRELESS TELECOMMUNICATION SERVICES - 33.9% | |||
Wireless Telecommunication Services - 33.9% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 10,192 | |
American Tower Corp. Class A (a) | 199,900 | 5,821,088 | |
Bharti Airtel Ltd. (a) | 2,129 | 26,254 | |
Centennial Communications Corp. Class A (a) | 89,400 | 735,762 | |
Clearwire Corp. Class A (a) | 17,350 | 55,867 | |
Crown Castle International Corp. (a) | 136,183 | 2,388,650 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Idea Cellular Ltd. (a) | 3,710 | $ 3,368 | |
Leap Wireless International, Inc. (a) | 80,124 | 2,172,162 | |
MetroPCS Communications, Inc. (a) | 199,200 | 2,888,400 | |
Millicom International Cellular SA | 134,600 | 5,299,202 | |
MTN Group Ltd. | 363,625 | 3,094,681 | |
NII Holdings, Inc. (a) | 119,000 | 1,524,390 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 51,742 | |
SBA Communications Corp. Class A (a)(d) | 206,182 | 4,284,462 | |
Sprint Nextel Corp. (a) | 7,729,444 | 25,429,868 | |
Syniverse Holdings, Inc. (a) | 30,468 | 460,981 | |
Telephone & Data Systems, Inc. | 14,820 | 437,190 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 65,700 | 930,969 | |
Virgin Mobile USA, Inc. Class A (a) | 600 | 630 | |
Vivo Participacoes SA sponsored ADR (d) | 268,425 | 4,351,169 | |
Vodafone Group PLC sponsored ADR | 436,300 | 7,744,325 | |
| 67,711,352 | ||
TOTAL COMMON STOCKS (Cost $306,428,009) | 189,131,152 | ||
Money Market Funds - 12.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 11,672,763 | $ 11,672,763 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 13,043,687 | 13,043,687 | |
TOTAL MONEY MARKET FUNDS (Cost $24,716,450) | 24,716,450 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $331,144,459) | 213,847,602 | ||
NET OTHER ASSETS - (7.0)% | (14,081,868) | ||
NET ASSETS - 100% | $ 199,765,734 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 57,370 |
Fidelity Securities Lending Cash Central Fund | 470,757 |
Total | $ 528,127 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 213,847,602 | $ 208,568,303 | $ 5,279,299 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 76.3% |
Bermuda | 6.3% |
United Kingdom | 3.9% |
Spain | 2.7% |
Luxembourg | 2.7% |
Brazil | 2.7% |
France | 2.2% |
South Africa | 1.6% |
Hong Kong | 1.1% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $431,464,468 of which $205,830,514, $161,866,685, $11,764,473 and $52,002,796 will expire on February 28, 2010, February 28, 2011, February 29, 2012 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $16,930,578 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,907,578) - See accompanying schedule: Unaffiliated issuers (cost $306,428,009) | $ 189,131,152 |
|
Fidelity Central Funds (cost $24,716,450) | 24,716,450 |
|
Total Investments (cost $331,144,459) |
| $ 213,847,602 |
Receivable for investments sold | 4,630,705 | |
Receivable for fund shares sold | 1,260,367 | |
Dividends receivable | 265,377 | |
Distributions receivable from Fidelity Central Funds | 17,051 | |
Prepaid expenses | 1,865 | |
Other receivables | 71,382 | |
Total assets | 220,094,349 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,829,111 | |
Payable for fund shares redeemed | 274,730 | |
Accrued management fee | 91,887 | |
Distribution fees payable | 1,188 | |
Other affiliated payables | 54,300 | |
Other payables and accrued expenses | 33,712 | |
Collateral on securities loaned, at value | 13,043,687 | |
Total liabilities | 20,328,615 | |
|
|
|
Net Assets | $ 199,765,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 775,699,080 | |
Distributions in excess of net investment income | (1,700,123) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (456,922,603) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (117,310,620) | |
Net Assets | $ 199,765,734 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
|
|
|
Calculation of Maximum Offering Price | $ 26.66 | |
|
|
|
Maximum offering price per share (100/94.25 of $26.66) | $ 28.29 | |
Class T: | $ 26.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $26.68) | $ 27.65 | |
Class B: | $ 26.71 | |
|
|
|
Class C: | $ 26.76 | |
|
|
|
|
|
|
Telecommunications: | $ 26.74 | |
|
|
|
Institutional Class: | $ 26.73 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,166,766 |
Interest |
| 11,515 |
Income from Fidelity Central Funds (including $470,757 from security lending) |
| 528,127 |
Total income |
| 4,706,408 |
|
|
|
Expenses | ||
Management fee | $ 1,444,922 | |
Transfer agent fees | 760,912 | |
Distribution fees | 19,379 | |
Accounting and security lending fees | 109,688 | |
Custodian fees and expenses | 36,809 | |
Independent trustees' compensation | 942 | |
Registration fees | 72,431 | |
Audit | 48,049 | |
Legal | 6,748 | |
Interest | 5,788 | |
Miscellaneous | 31,134 | |
Total expenses before reductions | 2,536,802 | |
Expense reductions | (22,281) | 2,514,521 |
Net investment income (loss) | 2,191,887 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(81,003)) | (72,774,515) | |
Foreign currency transactions | 43,252 | |
Total net realized gain (loss) |
| (72,731,263) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60,644) | (37,703,361) | |
Assets and liabilities in foreign currencies | (11,091) | |
Total change in net unrealized appreciation (depreciation) |
| (37,714,452) |
Net gain (loss) | (110,445,715) | |
Net increase (decrease) in net assets resulting from operations | $ (108,253,828) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,191,887 | $ 4,604,512 |
Net realized gain (loss) | (72,731,263) | 113,362,351 |
Change in net unrealized appreciation (depreciation) | (37,714,452) | (171,837,575) |
Net increase (decrease) in net assets resulting from operations | (108,253,828) | (53,870,712) |
Distributions to shareholders from net investment income | (2,892,731) | (4,987,721) |
Distributions to shareholders from net realized gain | (1,435,678) | - |
Total distributions | (4,328,409) | (4,987,721) |
Share transactions - net increase (decrease) | (28,183,681) | (227,033,730) |
Redemption fees | 6,604 | 35,395 |
Total increase (decrease) in net assets | (140,759,314) | (285,856,768) |
|
|
|
Net Assets | ||
Beginning of period | 340,525,048 | 626,381,816 |
End of period (including distributions in excess of net investment income of $1,700,123 and undistributed net investment income of $768,284, respectively) | $ 199,765,734 | $ 340,525,048 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .26 | - K |
Net realized and unrealized gain (loss) | (15.60) | (8.08) | 3.15 |
Total from investment operations | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.35) M | (.51) | - |
Distributions from net realized gain | (.18) M | - | - |
Total distributions | (.52) L | (.51) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B,C,D | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. ECalculated 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. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | (15.56) | (8.07) | 3.14 |
Total from investment operations | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.24) M | (.42) | - |
Distributions from net realized gain | (.13) M | - | - |
Total distributions | (.37) L | (.42) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B,C,D | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | (15.49) | (8.04) | 3.11 |
Total from investment operations | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.11) M | (.20) | - |
Distributions from net realized gain | (.06) M | - | - |
Total distributions | (.17) L | (.20) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B,C,D | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | (15.50) | (8.03) | 3.14 |
Total from investment operations | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.07) M | (.22) | - |
Distributions from net realized gain | (.05) M | - | - |
Total distributions | (.11) L | (.22) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B,C,D | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
| |||||
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .30 | .43 | .61 F | .36 | .49 G |
Net realized and unrealized gain (loss) | (15.65) | (8.12) | 8.85 | 7.11 | (.96) |
Total from investment operations | (15.35) | (7.69) | 9.46 | 7.47 | (.47) |
Distributions from net investment income | (.41) L | (.52) | (.53) | (.33) | (.49) |
Distributions from net realized gain | (.20) L | - | - | - | - |
Total distributions | (.61) K | (.52) | (.53) | (.33) | (.49) |
Redemption fees added to paid in capital C | - J | - J | .01 | - J | - J |
Net asset value, end of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Total Return A,B | (36.00)% | (15.30)% | 22.69% | 21.54% | (1.40)% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .97% | .91% | .99% | 1.05% | 1.09% |
Expenses net of fee waivers, if any | .97% | .90% | .97% | 1.05% | 1.09% |
Expenses net of all reductions | .96% | .90% | .97% | .96% | 1.02% |
Net investment income (loss) | .85% | .79% | 1.34% F | .96% | 1.44% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 |
Portfolio turnover rate E | 168% | 134% | 162% | 148% | 56% |
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. K Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
| |||
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | (15.67) | (8.09) | 3.01 |
Total from investment operations | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.40) L | (.62) | - |
Distributions from net realized gain | (.20) L | - | - |
Total distributions | (.59) K | (.62) | - |
Redemption fees added to paid in capital D | - J | - J | - J |
Net asset value, end of period | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B,C | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .83% | .98% A |
Expenses net of all reductions | .90% | .83% | .97% A |
Net investment income (loss) | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences resulted in distribution reclassifications.
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, non-taxable dividends, 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 | $ 9,103,207 |
|
Unrealized depreciation | (137,029,947) |
|
Net unrealized appreciation (depreciation) | $ (127,926,740) |
|
Undistributed ordinary income | 388,578 |
|
Capital loss carryforward | (431,464,468) |
|
|
|
|
Cost for federal income tax purposes | $ 341,774,342 |
|
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 4,328,409 | $ 4,987,721 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $435,574,142 and $472,509,473, 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% | $ 3,942 | $ 497 |
Class T | .25% | .25% | 4,376 | 156 |
Class B | .75% | .25% | 5,278 | 4,045 |
Class C | .75% | .25% | 5,783 | 2,275 |
|
|
| $ 19,379 | $ 6,973 |
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
6. 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 | $ 1,768 |
Class T | 502 |
Class B* | 3,698 |
Class C* | 293 |
| $ 6,261 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 4,534 | .29 |
Class T | 2,776 | .32 |
Class B | 1,575 | .30 |
Class C | 1,724 | .30 |
Telecommunications | 749,971 | .29 |
Institutional Class | 332 | .23 |
| $ 760,912 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $9,310 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 | $ 9,204,200 | 2.26% | $ 5,788 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $834 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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.
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 $21,587 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 | $ 694 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 25,664 | $ 34,959 |
Class T | 8,592 | 17,867 |
Class B | 2,117 | 3,199 |
Class C | 1,365 | 4,260 |
Telecommunications | 4,183,665 | 4,919,180 |
Institutional Class | 1,823 | 8,256 |
Total | $ 4,223,226 | $ 4,987,721 |
From net realized gain |
|
|
Class A | $ 735 | $ - |
Class T | 357 | - |
Class B | 203 | - |
Class C | 204 | - |
Telecommunications | 103,644 | - |
Institutional Class | 40 | - |
Total | $ 105,183 | $ - |
11. 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 | 74,621 | 92,950 | $ 2,094,308 | $ 5,148,375 |
Reinvestment of distributions | 895 | 636 | 24,776 | 33,452 |
Shares redeemed | (61,881) | (40,941) | (2,346,705) | (2,000,467) |
Net increase (decrease) | 13,635 | 52,645 | $ (227,621) | $ 3,181,360 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class T |
|
|
|
|
Shares sold | 9,634 | 53,657 | $ 334,058 | $ 2,989,303 |
Reinvestment of distributions | 320 | 339 | 8,637 | 17,826 |
Shares redeemed | (16,594) | (35,109) | (641,649) | (1,688,606) |
Net increase (decrease) | (6,640) | 18,887 | $ (298,954) | $ 1,318,523 |
Class B |
|
|
|
|
Shares sold | 4,801 | 21,448 | $ 166,647 | $ 1,194,831 |
Reinvestment of distributions | 82 | 57 | 2,207 | 3,011 |
Shares redeemed | (8,780) | (9,753) | (330,007) | (488,017) |
Net increase (decrease) | (3,897) | 11,752 | $ (161,153) | $ 709,825 |
Class C |
|
|
|
|
Shares sold | 5,551 | 28,254 | $ 174,242 | $ 1,547,917 |
Reinvestment of distributions | 51 | 63 | 1,354 | 3,315 |
Shares redeemed | (12,987) | (13,594) | (456,301) | (674,972) |
Net increase (decrease) | (7,385) | 14,723 | $ (280,705) | $ 876,260 |
Telecommunications |
|
|
|
|
Shares sold | 1,724,964 | 3,678,807 | $ 54,824,085 | $ 202,863,624 |
Reinvestment of distributions | 146,701 | 89,389 | 4,105,779 | 4,711,340 |
Shares redeemed | (2,367,928) | (8,198,629) | (86,013,313) | (440,994,970) |
Net increase (decrease) | (496,263) | (4,430,433) | $ (27,083,449) | $ (233,420,006) |
Institutional Class |
|
|
|
|
Shares sold | 477 | 14,719 | $ 15,601 | $ 834,674 |
Reinvestment of distributions | 51 | 128 | 1,477 | 6,760 |
Shares redeemed | (3,964) | (11,092) | (148,877) | (541,126) |
Net increase (decrease) | (3,436) | 3,755 | $ (131,799) | $ 300,308 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134, which is recorded in the accompanying Statement of Operations.
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 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 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 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 | 04/20/09 | 04/17/09 | $0.022 | $- |
Class T | 04/20/09 | 04/17/09 | $- | $- |
Class B | 04/20/09 | 04/17/09 | $- | $- |
Class C | 04/20/09 | 04/17/09 | $- | $- |
Select Gold Portfolio |
|
|
|
|
Class A | 04/20/09 | 04/17/09 | $- | $- |
Class T | 04/20/09 | 04/17/09 | $- | $- |
Class B | 04/20/09 | 04/17/09 | $- | $- |
Class C | 04/20/09 | 04/17/09 | $- | $- |
Select Materials Portfolio |
|
|
|
|
Class A | 04/20/09 | 04/17/09 | $0.052 | $- |
Class T | 04/20/09 | 04/17/09 | $0.039 | $- |
Class B | 04/20/09 | 04/17/09 | $0.014 | $- |
Class C | 04/20/09 | 04/17/09 | $0.014 | $- |
Select Telecommunications Portfolio |
|
|
|
|
Class A | 04/20/09 | 04/17/09 | $- | $0.048 |
Class T | 04/20/09 | 04/17/09 | $- | $0.028 |
Class B | 04/20/09 | 04/17/09 | $- | $0.009 |
Class C | 04/20/09 | 04/17/09 | $- | $0.023 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | -% | 100% |
Class B | -% | 100% |
Class C | -% | 100% |
Select Materials Portfolio |
|
|
Class A | -% | 100% |
Class T | -% | 100% |
Class B | -% | -% |
Class C | -% | -% |
Select Telecommunications Portfolio |
|
|
Class A | 100% | 79% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Annual Report
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 2008 | December 2008 |
Select Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | -% | 100% |
Class B | -% | 100% |
Class C | -% | 100% |
Select Materials Portfolio |
|
|
Class A | -% | 100% |
Class T | -% | 100% |
Class B | -% | -% |
Class C | -% | -% |
Select Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASGMT-UANN-0409
1.845779.102
Fidelity Advisor
Focus Funds®
Institutional Class
Fidelity Advisor Consumer Staples Fund
Fidelity Advisor Gold Fund
Fidelity Advisor Materials Fund
Fidelity Advisor Telecommunications Fund
Each Advisor fund listed above is a class
of the Fidelity® Select Portfolios®.
Annual Report
February 28, 2009
(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.
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:
The stresses on the world's capital markets have shown few signs of abating thus far in 2009. Although government programs may eventually rekindle economic growth, corporate earnings are still weaker than we would like to see them, and the valuations of many securities remain at historically low levels. While financial markets are always unpredictable, 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 28, 2009 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -29.22% | 2.66% | 3.33% |
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, the fund operated under certain different investment policies. The historical performance of the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Consumer Staples Fund - Institutional Class on February 28, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor Consumer Staples Fund: During the past year, the fund's Institutional Class shares declined 29.22%, lagging the 24.11% decline of its sector benchmark, the MSCI® US Investable Market Consumer Staples Index, but beating the S&P 500. A large part of the fund's underperformance of the MSCI index came from stocks with emerging-markets exposure, a theme I've been pursuing in the portfolio for some time. While I was correct on the business fundamentals - consumer staples spending continued to grow faster in emerging markets than in developed economies - I was wrong on the direction of the equity market. In a dramatically slowing economy, investors fled to the perceived safety of consumer staples companies doing business exclusively in developed nations. The stronger dollar also hurt the performance of foreign securities when translated back into dollars, including those securities held by the fund. On an industry level, the fund suffered from stock selection in brewers and in packaged food and meats, as well as from a major underweighting in hypermarkets and super centers. In the latter area, a below-market weighting in Wal-Mart was the key culprit. The stock proved very resilient as investors expected the company to benefit from its bargain pricing strategy. Within brewing, avoiding Anheuser-Busch for much of the period hurt when its share price spiked on a takeover bid from Belgian-based InBev, another fund detractor. However, once the deal was successfully consummated, the combined Anheuser-Busch InBev entity was the top individual contributor to relative performance. Our shares in personal products maker Avon, eastern European soft drink distributor Coca-Cola Hellenic and French spirits distiller Pernod Ricard declined sharply as well. On the positive side, overweighting brewers, underweighting household products and tobacco, and good stock selection in food retail contributed. Within household products, Kimberly-Clark and Procter & Gamble were helpful due to timely ownership. Elsewhere, I underweighted tobacco giant Philip Morris International, which was hurt by its foreign-currency-based earnings. I bought bottler Coca-Cola Enterprises at an attractive valuation, and its stock rose as the firm enjoyed expanding profit margins later in the period. The fund's cash position also aided returns.
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, 2008 to Febru-ary 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.19% |
|
|
|
Actual |
| $ 1,000.00 | $ 725.20 | $ 5.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 724.30 | $ 6.24 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.60 | $ 8.37 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.95% |
|
|
|
Actual |
| $ 1,000.00 | $ 722.50 | $ 8.33 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.12 | $ 9.74 |
Consumer Staples | .94% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 4.02 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.13 | $ 4.71 |
Institutional Class | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 726.20 | $ 3.98 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.18 | $ 4.66 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Procter & Gamble Co. | 15.1 | 16.4 |
The Coca-Cola Co. | 9.8 | 9.7 |
PepsiCo, Inc. | 8.9 | 8.4 |
Wal-Mart Stores, Inc. | 6.5 | 2.9 |
CVS Caremark Corp. | 6.2 | 5.5 |
British American Tobacco PLC sponsored ADR | 4.1 | 3.9 |
Nestle SA (Reg.) | 4.1 | 0.0 |
Anheuser-Busch InBev NV | 3.2 | 0.0 |
Unilever NV (NY Shares) | 3.0 | 2.5 |
Walgreen Co. | 2.8 | 2.8 |
| 63.7 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Beverages | 33.4% |
| |
Food & Staples Retailing | 19.0% |
| |
Household Products | 18.6% |
| |
Food Products | 14.0% |
| |
Tobacco | 8.1% |
| |
All Others* | 6.9% |
|
|
As of August 31, 2008 | |||
Beverages | 32.1% |
| |
Household Products | 23.6% |
| |
Food & Staples Retailing | 15.0% |
| |
Food Products | 14.6% |
| |
Tobacco | 7.8% |
| |
All Others* | 6.9% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Consumer Staples Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value | ||
BEVERAGES - 33.4% | |||
Brewers - 6.6% | |||
Anadolu Efes Biracilik ve Malt Sanyii AS | 245,611 | $ 1,560,260 | |
Anheuser-Busch InBev NV | 1,050,200 | 28,692,133 | |
Companhia de Bebidas das Americas (AmBev) (PN) sponsored ADR | 108,200 | 4,377,772 | |
Molson Coors Brewing Co. Class B | 662,380 | 23,335,647 | |
SABMiller PLC | 127,950 | 1,852,269 | |
| 59,818,081 | ||
Distillers & Vintners - 4.6% | |||
Constellation Brands, Inc. Class A (sub. vtg.) (a) | 1,604,200 | 20,934,810 | |
Diageo PLC sponsored ADR | 265,900 | 12,361,691 | |
Pernod Ricard SA (d) | 130,100 | 7,082,663 | |
Remy Cointreau SA | 35,600 | 804,202 | |
| 41,183,366 | ||
Soft Drinks - 22.2% | |||
Coca-Cola Amatil Ltd. | 260,984 | 1,489,417 | |
Coca-Cola Enterprises, Inc. | 708,200 | 8,130,136 | |
Coca-Cola FEMSA SAB de CV sponsored ADR | 116,200 | 3,620,792 | |
Coca-Cola Hellenic Bottling Co. SA sponsored ADR | 195,510 | 2,303,108 | |
Coca-Cola Icecek AS | 517,332 | 2,145,280 | |
Cott Corp. (a) | 1,372,400 | 1,100,380 | |
Dr Pepper Snapple Group, Inc. (a) | 155,700 | 2,187,585 | |
Embotelladora Andina SA sponsored ADR | 308,241 | 4,407,846 | |
Fomento Economico Mexicano SAB de CV sponsored ADR | 77,300 | 1,780,992 | |
Pepsi Bottling Group, Inc. | 253,100 | 4,682,350 | |
PepsiCo, Inc. | 1,672,700 | 80,523,778 | |
The Coca-Cola Co. | 2,154,400 | 88,007,240 | |
| 200,378,904 | ||
TOTAL BEVERAGES | 301,380,351 | ||
FOOD & STAPLES RETAILING - 19.0% | |||
Drug Retail - 9.0% | |||
CVS Caremark Corp. | 2,177,300 | 56,043,702 | |
Walgreen Co. | 1,067,900 | 25,480,094 | |
| 81,523,796 | ||
Food Distributors - 0.1% | |||
United Natural Foods, Inc. (a) | 26,600 | 395,808 | |
Food Retail - 3.4% | |||
Kroger Co. | 651,900 | 13,474,773 | |
Safeway, Inc. | 861,500 | 15,937,750 | |
SUPERVALU, Inc. | 99,000 | 1,545,390 | |
| 30,957,913 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 6.5% | |||
Wal-Mart Stores, Inc. | 1,195,500 | $ 58,866,420 | |
TOTAL FOOD & STAPLES RETAILING | 171,743,937 | ||
FOOD PRODUCTS - 14.0% | |||
Agricultural Products - 3.2% | |||
Archer Daniels Midland Co. | 571,800 | 15,244,188 | |
Bunge Ltd. (d) | 168,602 | 7,904,062 | |
Corn Products International, Inc. | 73,300 | 1,478,461 | |
SLC Agricola SA | 343,800 | 2,024,972 | |
Viterra, Inc. (a) | 307,900 | 2,449,356 | |
| 29,101,039 | ||
Packaged Foods & Meats - 10.8% | |||
Cadbury PLC sponsored ADR | 75,612 | 2,316,752 | |
Groupe Danone | 145,100 | 6,884,552 | |
Kraft Foods, Inc. Class A | 150,600 | 3,430,668 | |
Lindt & Spruengli AG (d) | 79 | 1,468,202 | |
Nestle SA (Reg.) | 1,122,867 | 36,703,912 | |
Perdigao SA | 126,600 | 1,554,802 | |
PureCircle Ltd. (a) | 324,800 | 765,116 | |
Ralcorp Holdings, Inc. (a) | 59,100 | 3,581,460 | |
Sadia SA ADR (d) | 431,000 | 1,474,020 | |
Smithfield Foods, Inc. (a) | 118,700 | 931,795 | |
Tyson Foods, Inc. Class A | 1,175,300 | 9,907,779 | |
Unilever NV (NY Shares) | 1,417,512 | 27,088,654 | |
Wimm-Bill-Dann Foods OJSC sponsored ADR (a)(d) | 37,600 | 1,114,088 | |
| 97,221,800 | ||
TOTAL FOOD PRODUCTS | 126,322,839 | ||
HOTELS, RESTAURANTS & LEISURE - 0.0% | |||
Restaurants - 0.0% | |||
Krispy Kreme Doughnuts, Inc. warrants 3/2/12 (a) | 329 | 33 | |
HOUSEHOLD DURABLES - 0.2% | |||
Housewares & Specialties - 0.2% | |||
Fortune Brands, Inc. | 89,600 | 2,128,000 | |
HOUSEHOLD PRODUCTS - 18.6% | |||
Household Products - 18.6% | |||
Colgate-Palmolive Co. | 331,700 | 19,961,706 | |
Kimberly-Clark Corp. | 238,000 | 11,212,180 | |
Procter & Gamble Co. | 2,828,197 | 136,234,250 | |
| 167,408,136 | ||
PERSONAL PRODUCTS - 2.8% | |||
Personal Products - 2.8% | |||
Avon Products, Inc. | 1,199,276 | 21,095,265 | |
Bare Escentuals, Inc. (a) | 199,905 | 631,700 | |
Herbalife Ltd. | 16,600 | 226,424 | |
Common Stocks - continued | |||
Shares | Value | ||
PERSONAL PRODUCTS - CONTINUED | |||
Personal Products - continued | |||
Mead Johnson Nutrition Co. Class A (a) | 80,100 | $ 2,209,959 | |
Physicians Formula Holdings, Inc. (a) | 396,456 | 927,707 | |
| 25,091,055 | ||
PHARMACEUTICALS - 1.5% | |||
Pharmaceuticals - 1.5% | |||
Johnson & Johnson | 217,400 | 10,870,000 | |
Perrigo Co. | 107,500 | 2,159,675 | |
| 13,029,675 | ||
TOBACCO - 8.1% | |||
Tobacco - 8.1% | |||
Altria Group, Inc. | 879,000 | 13,571,760 | |
British American Tobacco PLC sponsored ADR | 731,980 | 37,360,259 | |
KT&G Corp. | 990 | 50,752 | |
Lorillard, Inc. | 39,400 | 2,302,536 | |
Philip Morris International, Inc. | 532,100 | 17,809,387 | |
Souza Cruz Industria Comerico | 113,800 | 2,281,800 | |
| 73,376,494 | ||
TOTAL COMMON STOCKS (Cost $1,089,424,078) | 880,480,520 | ||
Money Market Funds - 3.0% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 20,026,747 | $ 20,026,747 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 6,982,496 | 6,982,496 | |
TOTAL MONEY MARKET FUNDS (Cost $27,009,243) | 27,009,243 |
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $1,116,433,321) | 907,489,763 |
NET OTHER ASSETS - (0.6)% | (5,656,581) | ||
NET ASSETS - 100% | $ 901,833,182 |
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 | $ 409,906 |
Fidelity Securities Lending Cash Central Fund | 422,078 |
Total | $ 831,984 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 907,489,763 | $ 821,696,512 | $ 85,793,251 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 77.3% |
United Kingdom | 5.9% |
Switzerland | 4.2% |
Belgium | 3.2% |
Netherlands | 3.0% |
France | 1.7% |
Brazil | 1.3% |
Bermuda | 1.0% |
Others (individually less than 1%) | 2.4% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $14,179,345 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $20,196,973 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $6,812,362) - See accompanying schedule: Unaffiliated issuers (cost $1,089,424,078) | $ 880,480,520 |
|
Fidelity Central Funds (cost $27,009,243) | 27,009,243 |
|
Total Investments (cost $1,116,433,321) |
| $ 907,489,763 |
Receivable for investments sold | 8,231,074 | |
Receivable for fund shares sold | 3,397,361 | |
Dividends receivable | 972,894 | |
Distributions receivable from Fidelity Central Funds | 25,369 | |
Prepaid expenses | 7,903 | |
Other receivables | 1,908 | |
Total assets | 920,126,272 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,844,030 | |
Payable for fund shares redeemed | 3,597,276 | |
Accrued management fee | 449,415 | |
Distribution fees payable | 95,887 | |
Other affiliated payables | 270,921 | |
Other payables and accrued expenses | 53,065 | |
Collateral on securities loaned, at value | 6,982,496 | |
Total liabilities | 18,293,090 | |
|
|
|
Net Assets | $ 901,833,182 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,160,640,517 | |
Undistributed net investment income | 512,356 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (50,373,312) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (208,946,379) | |
Net Assets | $ 901,833,182 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 43.94 | |
|
|
|
Maximum offering price per share (100/94.25 of $43.94) | $ 46.62 | |
Class T: | $ 43.75 | |
|
|
|
Maximum offering price per share (100/96.50 of $43.75) | $ 45.34 | |
Class B: | $ 43.53 | |
|
|
|
Class C: | $ 43.46 | |
|
|
|
Consumer Staples: | $ 44.14 | |
|
|
|
Institutional Class: | $ 44.07 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 20,355,348 |
Interest |
| 4,760 |
Income from Fidelity Central Funds |
| 831,984 |
Total income |
| 21,192,092 |
|
|
|
Expenses | ||
Management fee | $ 4,860,293 | |
Transfer agent fees | 2,267,655 | |
Distribution fees | 694,800 | |
Accounting and security lending fees | 303,131 | |
Custodian fees and expenses | 130,860 | |
Independent trustees' compensation | 4,343 | |
Registration fees | 208,991 | |
Audit | 41,881 | |
Legal | 4,723 | |
Interest | 3,824 | |
Miscellaneous | 41,147 | |
Total expenses before reductions | 8,561,648 | |
Expense reductions | (35,242) | 8,526,406 |
Net investment income (loss) | 12,665,686 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (44,519,180) | |
Foreign currency transactions | (317,445) | |
Total net realized gain (loss) |
| (44,836,625) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (269,137,670) | |
Assets and liabilities in foreign currencies | (3,785) | |
Total change in net unrealized appreciation (depreciation) |
| (269,141,455) |
Net gain (loss) | (313,978,080) | |
Net increase (decrease) in net assets resulting from operations | $ (301,312,394) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 12,665,686 | $ 5,595,200 |
Net realized gain (loss) | (44,836,625) | 16,781,246 |
Change in net unrealized appreciation (depreciation) | (269,141,455) | 23,844,075 |
Net increase (decrease) in net assets resulting from operations | (301,312,394) | 46,220,521 |
Distributions to shareholders from net investment income | (11,887,776) | (4,297,338) |
Distributions to shareholders from net realized gain | (334,486) | (21,936,184) |
Total distributions | (12,222,262) | (26,233,522) |
Share transactions - net increase (decrease) | 494,877,505 | 323,338,123 |
Redemption fees | 113,075 | 70,107 |
Total increase (decrease) in net assets | 181,455,924 | 343,395,229 |
|
|
|
Net Assets | ||
Beginning of period | 720,377,258 | 376,982,029 |
End of period (including undistributed net investment income of $512,356 and undistributed net investment income of $1,685,304, respectively) | $ 901,833,182 | $ 720,377,258 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.13 | $ 58.16 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .67 | .53 | (.01) |
Net realized and unrealized gain (loss) | (19.19) | 7.29 | 1.28 |
Total from investment operations | (18.52) | 7.82 | 1.27 |
Distributions from net investment income | (.66) | (.42) | - |
Distributions from net realized gain | (.02) | (2.44) | - |
Total distributions | (.68) L | (2.86) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.94 | $ 63.13 | $ 58.16 |
Total Return B,C,D | (29.43)% | 13.38% | 2.23% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.19% | 1.19% | 1.29% A |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.29% A |
Expenses net of all reductions | 1.18% | 1.19% | 1.28% A |
Net investment income (loss) | 1.27% | .83% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 121,193 | $ 23,796 | $ 986 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.68 per share is comprised of distributions from net investment income of $.655 and distributions from net realized gain of $.024. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.93 | $ 58.06 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .53 | .36 | (.01) |
Net realized and unrealized gain (loss) | (19.12) | 7.29 | 1.18 |
Total from investment operations | (18.59) | 7.65 | 1.17 |
Distributions from net investment income | (.60) | (.35) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.60) L | (2.79) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.75 | $ 62.93 | $ 58.06 |
Total Return B,C,D | (29.61)% | 13.11% | 2.06% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.61% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.61% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.60% A |
Net investment income (loss) | .99% | .56% | (.11)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 22,624 | $ 6,298 | $ 529 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.60 per share is comprised of distributions from net investment income of $.599 and distributions from net realized gain of $.000. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.69 | $ 58.00 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .26 | .04 | (.07) |
Net realized and unrealized gain (loss) | (19.01) | 7.27 | 1.18 |
Total from investment operations | (18.75) | 7.31 | 1.11 |
Distributions from net investment income | (.42) | (.19) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.42) L | (2.63) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.53 | $ 62.69 | $ 58.00 |
Total Return B,C,D | (29.96)% | 12.53% | 1.95% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.96% | 1.96% | 2.09% A |
Expenses net of fee waivers, if any | 1.96% | 1.96% | 2.09% A |
Expenses net of all reductions | 1.96% | 1.96% | 2.09% A |
Net investment income (loss) | .50% | .06% | (.59)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 14,929 | $ 4,884 | $ 226 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 62.61 | $ 57.99 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .28 | .06 | (.08) |
Net realized and unrealized gain (loss) | (19.00) | 7.28 | 1.18 |
Total from investment operations | (18.72) | 7.34 | 1.10 |
Distributions from net investment income | (.44) | (.29) | - |
Distributions from net realized gain | - | (2.44) | - |
Total distributions | (.44) L | (2.73) | - |
Redemption fees added to paid in capital E | .01 | .01 | - K |
Net asset value, end of period | $ 43.46 | $ 62.61 | $ 57.99 |
Total Return B,C,D | (29.94)% | 12.58% | 1.93% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.93% | 1.93% | 2.14% A |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 2.14% A |
Expenses net of all reductions | 1.93% | 1.92% | 2.14% A |
Net investment income (loss) | .52% | .09% | (.66)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 54,902 | $ 19,791 | $ 178 |
Portfolio turnover rate G | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 | $ 46.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .88 | .71 | .56 | .50 | .29 |
Net realized and unrealized gain (loss) | (19.31) | 7.30 | 8.88 | 3.25 | 4.90 |
Total from investment operations | (18.43) | 8.01 | 9.44 | 3.75 | 5.19 |
Distributions from net investment income | (.67) | (.46) | (.32) | (.44) | (.29) |
Distributions from net realized gain | (.03) | (2.44) | (3.18) | (2.56) | - |
Total distributions | (.69) H | (2.90) | (3.50) | (3.00) | (.29) |
Redemption fees added to paid in capital C | .01 | .01 | .01 | .01 | .02 |
Net asset value, end of period | $ 44.14 | $ 63.25 | $ 58.13 | $ 52.18 | $ 51.42 |
Total Return A,B | (29.23)% | 13.72% | 18.43% | 7.50% | 11.24% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .91% | .91% | 1.01% | 1.04% | 1.06% |
Expenses net of fee waivers, if any | .91% | .90% | .99% | 1.04% | 1.06% |
Expenses net of all reductions | .90% | .90% | .98% | 1.03% | 1.05% |
Net investment income (loss) | 1.55% | 1.12% | .99% | .97% | .61% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 657,263 | $ 655,224 | $ 374,930 | $ 125,007 | $ 139,328 |
Portfolio turnover rate E | 70% | 71% | 99% | 75% | 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. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 63.22 | $ 58.12 | $ 56.89 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .82 | .74 | .07 |
Net realized and unrealized gain (loss) | (19.23) | 7.30 | 1.16 |
Total from investment operations | (18.41) | 8.04 | 1.23 |
Distributions from net investment income | (.73) | (.51) | - |
Distributions from net realized gain | (.03) | (2.44) | - |
Total distributions | (.75) K | (2.95) | - |
Redemption fees added to paid in capital D | .01 | .01 | - J |
Net asset value, end of period | $ 44.07 | $ 63.22 | $ 58.12 |
Total Return B,C | (29.22)% | 13.77% | 2.16% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .85% | 1.00% A |
Expenses net of fee waivers, if any | .91% | .85% | 1.00% A |
Expenses net of all reductions | .91% | .84% | 1.00% A |
Net investment income (loss) | 1.54% | 1.17% | .57% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 30,922 | $ 10,384 | $ 132 |
Portfolio turnover rate F | 70% | 71% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.75 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $.025. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Consumer Staples and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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 is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, 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 | $ 18,490,621 |
|
Unrealized depreciation | (243,433,994) |
|
Net unrealized appreciation (depreciation) | (224,943,373) |
|
Undistributed ordinary income | 512,482 |
|
Capital loss carryforward | (14,179,345) |
|
|
|
|
Cost for federal income tax purposes | $ 1,132,433,136 |
|
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 12,222,262 | $ 15,086,000 |
Long-term Capital Gains | - | 11,147,522 |
Total | $ 12,222,262 | $ 26,233,522 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $1,076,568,804 and $588,881,981, 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, except for the Institutional Class. 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% | $ 170,841 | $ 18,484 |
Class T | .25% | .25% | 70,470 | 65 |
Class B | .75% | .25% | 102,761 | 77,156 |
Class C | .75% | .25% | 350,728 | 230,446 |
|
|
| $ 694,800 | $ 326,151 |
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 Financial Statements - continued
6. 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 | $ 206,336 |
Class T | 20,690 |
Class B* | 24,704 |
Class C* | 20,538 |
| $ 272,268 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 194,817 | .29 |
Class T | 43,106 | .31 |
Class B | 31,119 | .30 |
Class C | 96,921 | .28 |
Consumer Staples | 1,854,710 | .26 |
Institutional Class | 46,982 | .27 |
| $ 2,267,655 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $12,479 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 5,978,800 | 2.30% | $ 3,824 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,280 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities
Annual Report
8. Security Lending - continued
loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $422,078.
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 $33,412 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 $617. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent |
|
Consumer Staples | $ 1,208 |
|
Institutional Class | 5 |
|
| $ 1,213 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
| 2009 | 2008 |
From net investment income |
|
|
Class A | $ 1,409,006 | $ 54,271 |
Class T | 273,000 | 42,873 |
Class B | 118,536 | 7,270 |
Class C | 437,729 | 46,840 |
Consumer Staples | 9,279,861 | 4,124,954 |
Institutional Class | 369,644 | 21,130 |
Total | $ 11,887,776 | $ 4,297,338 |
From net realized gain |
|
|
Class A | $ 11,953 | $ 279,894 |
Class T | - | 271,554 |
Class B | - | 90,489 |
Class C | - | 308,038 |
Consumer Staples | 317,666 | 20,893,023 |
Institutional Class | 4,867 | 93,186 |
Total | $ 334,486 | $ 21,936,184 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class A |
|
|
|
|
Shares sold | 2,896,213 | 394,208 | $ 154,503,507 | $ 25,121,582 |
Reinvestment of distributions | 27,496 | 4,833 | 1,327,859 | 319,149 |
Shares redeemed | (542,745) | (39,053) | (28,294,587) | (2,497,211) |
Net increase (decrease) | 2,380,964 | 359,988 | $ 127,536,779 | $ 22,943,520 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
| 2009 | 2008 | 2009 | 2008 |
Class T |
|
|
|
|
Shares sold | 520,546 | 195,158 | $ 27,382,626 | $ 12,251,985 |
Reinvestment of distributions | 5,430 | 4,490 | 260,678 | 296,489 |
Shares redeemed | (108,963) | (108,690) | (5,646,618) | (6,862,659) |
Net increase (decrease) | 417,013 | 90,958 | $ 21,996,686 | $ 5,685,815 |
Class B |
|
|
|
|
Shares sold | 323,554 | 76,823 | $ 17,593,411 | $ 4,855,507 |
Reinvestment of distributions | 1,967 | 1,410 | 94,022 | 92,490 |
Shares redeemed | (60,442) | (4,224) | (3,153,125) | (268,236) |
Net increase (decrease) | 265,079 | 74,009 | $ 14,534,308 | $ 4,679,761 |
Class C |
|
|
|
|
Shares sold | 1,133,018 | 328,900 | $ 59,347,217 | $ 21,121,099 |
Reinvestment of distributions | 6,095 | 4,849 | 290,992 | 319,529 |
Shares redeemed | (191,974) | (20,712) | (10,093,420) | (1,307,625) |
Net increase (decrease) | 947,139 | 313,037 | $ 49,544,789 | $ 20,133,003 |
Consumer Staples |
|
|
|
|
Shares sold | 13,482,265 | 8,600,962 | $ 765,828,751 | $ 555,032,219 |
Reinvestment of distributions | 185,893 | 360,932 | 9,096,289 | 23,544,138 |
Shares redeemed | (9,136,327) | (5,052,205) | (521,761,725) | (318,954,187) |
Net increase (decrease) | 4,531,831 | 3,909,689 | $ 253,163,315 | $ 259,622,170 |
Institutional Class |
|
|
|
|
Shares sold | 760,504 | 204,550 | $ 40,084,673 | $ 13,014,809 |
Reinvestment of distributions | 4,038 | 995 | 196,481 | 65,503 |
Shares redeemed | (227,140) | (43,560) | (12,179,526) | (2,806,458) |
Net increase (decrease) | 537,402 | 161,985 | $ 28,101,628 | $ 10,273,854 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $32,014 which is recorded in the accompanying Statement of Operations.
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
Fidelity Advisor Gold Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -33.59% | 10.96% | 14.70% |
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, 1999. 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
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from S. Joseph Wickwire II, Portfolio Manager of Fidelity Advisor Gold Fund: During the past year, the fund's Institu-
tional Class shares returned -33.59%, beating the -36.56% return of the Standard & Poor's® BMI Global Gold Index and the S&P 500. Versus the industry index, my decision to hold some gold bullion was a key positive factor, as the price of bullion held up much better than gold mining stocks. Among our equity holdings, fund performance was aided by Randgold Resources, a South African gold mining company that benefited from the prospect of robust production growth, a strong management team and promising exploration opportunities. Other contributors included Royal Gold; CONSOL Energy, a producer of thermal coal; and BHP Billiton, which is based in Australia but listed in the United Kingdom and is the world's largest diversified mining company. Although I later repurchased both stocks, I sold both CONSOL and BHP Billiton during the summer of 2008 to take profits. Underweighting Barrick Gold further added value, although Barrick was the fund's second-largest holding at period end, at more than 8% of net assets. A small cash position aided our results as well. Conversely, performance was hindered by our positioning in precious metals and minerals, an out-of-benchmark category, and in steel, where unfavorable stock selection outweighed the positive effects of an overweighted exposure to that outperforming group. In absolute terms, a stronger U.S. dollar undermined the returns of the fund's foreign holdings. Individual detractors included two platinum mining companies that were outside the S&P® industry index: Aquarius Platinum and Impala Platinum. The global recession slowed automobile and truck sales as well as dampening jewelry demand. Together, those markets typically account for more than 70% of platinum's sales. Lihir Gold, headquartered in Papua New Guinea, also detracted, as did not owning index component Gold Eagle, based in Canada, whose stock jumped in response to a buyout offer for the 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
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, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.17% |
|
|
|
Actual |
| $ 1,000.00 | $ 903.60 | $ 5.52 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.99 | $ 5.86 |
Class T | 1.44% |
|
|
|
Actual |
| $ 1,000.00 | $ 902.20 | $ 6.79 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.65 | $ 7.20 |
Class B | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Class C | 1.92% |
|
|
|
Actual |
| $ 1,000.00 | $ 900.10 | $ 9.05 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.27 | $ 9.59 |
Gold | .92% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.70 | $ 4.34 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.23 | $ 4.61 |
Institutional Class | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 904.90 | $ 4.30 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Newmont Mining Corp. | 9.8 | 10.0 |
Barrick Gold Corp. | 8.7 | 9.8 |
Goldcorp, Inc. | 7.8 | 9.6 |
Agnico-Eagle Mines Ltd. | 6.2 | 6.3 |
Newcrest Mining Ltd. | 6.0 | 7.4 |
Randgold Resources Ltd. sponsored ADR | 4.3 | 4.4 |
Kinross Gold Corp. | 4.3 | 4.9 |
Yamana Gold, Inc. | 4.2 | 4.6 |
AngloGold Ashanti Ltd. sponsored ADR | 3.8 | 3.1 |
Lihir Gold Ltd. | 3.7 | 4.1 |
| 58.8 |
|
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Gold | 84.7% |
| |
Precious Metals & Minerals | 3.3% |
| |
Diversified Metals & Mining | 1.5% |
| |
Coal & Consumable Fuels | 1.2% |
| |
Steel | 0.9% |
| |
All Others* | 8.4% |
|
As of August 31, 2008 | |||
Gold | 88.6% |
| |
Precious Metals & Minerals | 5.5% |
| |
Diversified Metals & Mining | 3.6% |
| |
Steel | 1.5% |
| |
Coal & Consumable Fuels | 0.6% |
| |
All Others* | 0.2% |
|
* Includes short-term investments and net other assets. |
Annual Report
Consolidated Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 83.7% | |||
Shares | Value | ||
Australia - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
Andean Resources Ltd. (a) | 2,884,651 | $ 2,735,233 | |
Avoca Resources Ltd. (a) | 85,000 | 93,413 | |
Centamin Egypt Ltd. (a) | 2,327,000 | 1,706,192 | |
Newcrest Mining Ltd. | 6,030,913 | 118,588,143 | |
Sino Gold Mining Ltd. (a)(d) | 3,573,231 | 11,862,926 | |
Troy Resources NL (a)(e) | 2,300,000 | 1,880,281 | |
| 136,866,188 | ||
Bermuda - 0.4% | |||
METALS & MINING - 0.4% | |||
Precious Metals & Minerals - 0.4% | |||
Aquarius Platinum Ltd. (United Kingdom) | 3,398,027 | 8,200,450 | |
Brazil - 0.1% | |||
METALS & MINING - 0.1% | |||
Diversified Metals & Mining - 0.1% | |||
Companhia Vale do Rio Doce (PN-A) sponsored ADR | 130,000 | 1,449,500 | |
Canada - 42.1% | |||
METALS & MINING - 42.1% | |||
Diversified Metals & Mining - 0.1% | |||
Kimber Resources, Inc. (a) | 16,100 | 8,100 | |
Kimber Resources, Inc. (a)(e) | 3,888,000 | 1,955,996 | |
Kimber Resources, Inc. warrants 3/11/10 (a)(e) | 1,944,000 | 15 | |
| 1,964,111 | ||
Gold - 40.7% | |||
Agnico-Eagle Mines Ltd. | 2,444,000 | 122,857,996 | |
Alamos Gold, Inc. (a) | 2,238,800 | 14,958,771 | |
Aquiline Resources, Inc. (a) | 875,500 | 1,892,564 | |
Aquiline Resources, Inc. (a)(e) | 1,024,600 | 2,214,872 | |
Aurizon Mines Ltd. (a) | 1,056,700 | 4,086,754 | |
Barrick Gold Corp. | 5,660,519 | 171,085,922 | |
Detour Gold Corp. (e) | 615,000 | 5,138,899 | |
Eldorado Gold Corp. (a) | 5,817,300 | 49,066,249 | |
European Goldfields Ltd. (a) | 603,600 | 1,451,885 | |
Franco-Nevada Corp. | 1,022,300 | 21,697,206 | |
Goldcorp, Inc. (d) | 5,286,200 | 153,580,908 | |
Golden Star Resources Ltd. (a)(d) | 3,875,769 | 5,849,528 | |
Great Basin Gold Ltd. (a)(d) | 3,407,900 | 4,687,989 | |
Guyana Goldfields, Inc. (a) | 783,000 | 1,778,776 | |
IAMGOLD Corp. | 3,652,200 | 29,570,145 | |
Jaguar Mining, Inc. (a)(f) | 690,500 | 3,897,174 | |
| |||
Shares | Value | ||
Kinross Gold Corp. | 5,279,600 | $ 83,500,807 | |
New Gold, Inc. (a) | 1,075,700 | 2,054,751 | |
New Gold, Inc. warrants 4/3/12 (a)(e) | 2,928,500 | 69,060 | |
Northgate Minerals Corp. (a) | 1,307,800 | 1,572,876 | |
Osisko Mining Corp. (a)(d) | 522,000 | 1,912,133 | |
Osisko Mining Corp. (a)(e) | 2,000,000 | 7,326,179 | |
Osisko Mining Corp. warrants 11/17/09 (a)(e) | 1,000,000 | 432,340 | |
Red Back Mining, Inc. (a) | 2,470,800 | 15,246,457 | |
Red Back Mining, Inc. (a)(e) | 1,059,500 | 6,537,810 | |
San Gold Corp. (a) | 367,400 | 447,644 | |
Seabridge Gold, Inc. (a)(d) | 132,700 | 2,246,611 | |
SEMAFO, Inc. (a) | 440,000 | 612,192 | |
Western Goldfields, Inc. (a) | 1,161,200 | 2,090,279 | |
Yamana Gold, Inc. | 9,385,100 | 82,036,169 | |
| 799,900,946 | ||
Precious Metals & Minerals - 1.3% | |||
Etruscan Resources, Inc. (a) | 1,216,800 | 449,551 | |
Etruscan Resources, Inc. (a)(e) | 1,549,400 | 572,431 | |
Etruscan Resources, Inc. warrants 11/2/10 (a)(e) | 774,700 | 30,448 | |
Gammon Gold, Inc. (a) | 250,000 | 1,965,177 | |
Minefinders Corp. Ltd. (a) | 1,100,000 | 6,632,080 | |
Pan American Silver Corp. (a) | 500,000 | 7,200,000 | |
Silver Standard Resources, Inc. (a) | 631,300 | 9,526,320 | |
| 26,376,007 | ||
TOTAL METALS & MINING | 828,241,064 | ||
China - 1.1% | |||
METALS & MINING - 1.1% | |||
Gold - 1.1% | |||
Zijin Mining Group Co. Ltd. (H Shares) | 41,238,000 | 21,668,390 | |
Luxembourg - 0.3% | |||
METALS & MINING - 0.3% | |||
Steel - 0.3% | |||
ArcelorMittal SA (NY Shares) | 282,900 | 5,468,457 | |
Papua New Guinea - 3.7% | |||
METALS & MINING - 3.7% | |||
Gold - 3.7% | |||
Lihir Gold Ltd. (a) | 35,560,881 | 73,689,317 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Precious Metals & Minerals - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 780,000 | 15,022,800 | |
South Africa - 10.3% | |||
METALS & MINING - 10.3% | |||
Gold - 9.5% | |||
AngloGold Ashanti Ltd. sponsored ADR | 2,517,534 | 75,098,039 | |
Gold Fields Ltd. sponsored ADR | 5,940,459 | 60,473,873 | |
Common Stocks - continued | |||
Shares | Value | ||
South Africa - continued | |||
METALS & MINING - CONTINUED | |||
Gold - continued | |||
Harmony Gold Mining Co. Ltd. (a) | 1,549,000 | $ 18,689,535 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 2,658,200 | 31,845,236 | |
| 186,106,683 | ||
Precious Metals & Minerals - 0.8% | |||
Impala Platinum Holdings Ltd. | 1,338,212 | 15,704,954 | |
Northam Platinum Ltd. | 75,000 | 162,024 | |
| 15,866,978 | ||
TOTAL METALS & MINING | 201,973,661 | ||
United Kingdom - 4.6% | |||
METALS & MINING - 4.6% | |||
Diversified Metals & Mining - 0.3% | |||
BHP Billiton PLC | 375,400 | 5,849,952 | |
Gold - 4.3% | |||
Randgold Resources Ltd. sponsored ADR (d) | 1,877,574 | 85,392,066 | |
TOTAL METALS & MINING | 91,242,018 | ||
United States of America - 13.4% | |||
METALS & MINING - 12.2% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. Class B | 668,200 | 20,326,644 | |
Gold - 10.6% | |||
Allied Nevada Gold Corp. (a) | 40,000 | 160,000 | |
Newmont Mining Corp. | 4,649,750 | 193,569,091 | |
Royal Gold, Inc. (d) | 367,535 | 14,870,466 | |
US Gold Corp. warrants 2/22/11 (a)(g) | 364,200 | 68,709 | |
| 208,668,266 | ||
Steel - 0.6% | |||
Cliffs Natural Resources, Inc. | 360,000 | 5,554,800 | |
Commercial Metals Co. | 549,263 | 5,607,975 | |
| 11,162,775 | ||
TOTAL METALS & MINING | 240,157,685 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 210,000 | 5,722,500 | |
Foundation Coal Holdings, Inc. | 405,400 | 6,518,832 | |
| |||
Shares | Value | ||
Massey Energy Co. | 485,929 | $ 5,612,480 | |
Walter Industries, Inc. | 324,460 | 5,895,438 | |
| 23,749,250 | ||
TOTAL UNITED STATES OF AMERICA | 263,906,935 | ||
TOTAL COMMON STOCKS (Cost $1,674,185,608) | 1,647,728,780 |
Commodities - 7.9% | ||||
Troy Ounces |
| |||
Gold Bullion (a) | 164,500 | 154,922,810 |
Money Market Funds - 13.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.59% (b) | 177,341,280 | 177,341,280 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 79,402,696 | 79,402,696 | |
TOTAL MONEY MARKET FUNDS (Cost $256,743,976) | 256,743,976 | ||
TOTAL INVESTMENT PORTFOLIO - 104.6% (Cost $2,074,807,984) | 2,059,395,566 | ||
NET OTHER ASSETS - (4.6)% | (91,331,806) | ||
NET ASSETS - 100% | $ 1,968,063,760 |
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 $26,158,331 or 1.3% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(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 $68,709 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 | $ 725,396 |
Fidelity Securities Lending Cash Central Fund | 586,066 |
Total | $ 1,311,462 |
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, |
Coral Gold Resources Ltd. | $ 2,869,001 | $ - | $ 368,605 | $ - | $ - |
US Gold Canadian Acquisition Corp. | 8,770,114 | - | 2,471,386 | - | - |
Total | $ 11,639,115 | $ - | $ 2,839,991 | $ - | $ - |
Consolidated Subsidiary |
|
|
|
|
|
Fidelity Select |
|
|
|
|
|
Gold Cayman Ltd. | $ 82,233,978 | $ 134,604,641 | $ 65,550,322 | $ - | $ 154,880,326 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing investments may not be an indication of the risk associated with investing in those investments. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments | $ 2,059,395,566 | $ 1,796,374,965 | $ 262,990,153 | $ 30,448 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
| Investments |
Beginning Balance | $ 0 |
Total Realized Gain (Loss) | 0 |
Total Unrealized Gain (Loss) | (363,180) |
Cost of Purchases | 0 |
Proceeds of Sales | 0 |
Amortization/Accretion | 0 |
Transfer in/out of Level 3 | 393,628 |
Ending Balance | $ 30,448 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $88,413,227 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $39,003,106 of losses recognized during the period of November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investments, at value (including securities loaned of $76,557,301) - See accompanying schedule: Unaffiliated issuers (cost $1,674,185,608) | $ 1,647,728,780 |
|
Fidelity Central Funds (cost $256,743,976) | 256,743,976 |
|
Commodities (cost $143,878,400) | 154,922,810 |
|
Total Investments (cost $2,074,807,984) |
| $ 2,059,395,566 |
Receivable for investments sold | 24,634,669 | |
Receivable for fund shares sold | 11,263,800 | |
Dividends receivable | 655,053 | |
Distributions receivable from Fidelity Central Funds | 112,548 | |
Prepaid expenses | 12,260 | |
Receivable from investment adviser for expense reductions | 38,508 | |
Other receivables | 17,852 | |
Total assets | 2,096,130,256 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 470 | |
Payable for investments purchased | 40,831,884 | |
Delayed delivery | 1,583,933 | |
Payable for fund shares redeemed | 4,728,435 | |
Accrued management fee | 934,504 | |
Distribution fees payable | 32,445 | |
Other affiliated payables | 472,364 | |
Other payables and accrued expenses | 79,765 | |
Collateral on securities loaned, at value | 79,402,696 | |
Total liabilities | 128,066,496 | |
|
|
|
Net Assets | $ 1,968,063,760 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,187,286,957 | |
Accumulated net investment loss | (714) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (203,845,681) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (15,376,802) | |
Net Assets | $ 1,968,063,760 |
Consolidated Statement of Assets and Liabilities
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 30.45 | |
|
|
|
Maximum offering price per share (100/94.25 of $30.45) | $ 32.31 | |
Class T: | $ 30.36 | |
|
|
|
Maximum offering price per share (100/96.50 of $30.36) | $ 31.46 | |
Class B: | $ 30.08 | |
|
|
|
Class C: | $ 30.00 | |
|
|
|
Gold: | $ 30.67 | |
|
|
|
Institutional Class: | $ 30.65 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Select Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 12,225,702 |
Income from Fidelity Central Funds |
| 1,311,462 |
Total income |
| 13,537,164 |
|
|
|
Expenses | ||
Management fee | $ 10,708,758 | |
Transfer agent fees | 4,347,722 | |
Distribution fees | 300,335 | |
Accounting and security lending fees | 831,959 | |
Custodian fees and expenses | 272,770 | |
Independent trustees' compensation | 8,217 | |
Registration fees | 219,928 | |
Audit | 60,587 | |
Legal | 28,096 | |
Interest | 26,560 | |
Miscellaneous | 75,992 | |
Total expenses before reductions | 16,880,924 | |
Expense reductions | (653,397) | 16,227,527 |
Net investment income (loss) | (2,690,363) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (161,956,379) | |
Other affiliated issuers | (12,002,969) |
|
Commodities | (6,078,300) |
|
Foreign currency transactions | 119,862 | |
Total net realized gain (loss) |
| (179,917,786) |
Change in net unrealized appreciation (depreciation) on: Investments | (711,214,605) | |
Assets and liabilities in foreign currencies | 72,318 | |
Total change in net unrealized appreciation (depreciation) |
| (711,142,287) |
Net gain (loss) | (891,060,073) | |
Net increase (decrease) in net assets resulting from operations | $ (893,750,436) |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (2,690,363) | $ (863,055) |
Net realized gain (loss) | (179,917,786) | 189,513,263 |
Change in net unrealized appreciation (depreciation) | (711,142,287) | 426,680,411 |
Net increase (decrease) in net assets resulting from operations | (893,750,436) | 615,330,619 |
Distributions to shareholders from net investment income | - | (7,077,865) |
Distributions to shareholders from net realized gain | (9,542,341) | (201,157,130) |
Total distributions | (9,542,341) | (208,234,995) |
Share transactions - net increase (decrease) | 430,558,697 | 554,230,717 |
Redemption fees | 852,427 | 544,215 |
Total increase (decrease) in net assets | (471,881,653) | 961,870,556 |
|
|
|
Net Assets | ||
Beginning of period | 2,439,945,413 | 1,478,074,857 |
End of period (including accumulated net investment loss of $714 and accumulated net investment loss of $3,177, respectively) | $ 1,968,063,760 | $ 2,439,945,413 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.19 | $ 36.53 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.15) | (.15) | (.01) |
Net realized and unrealized gain (loss) | (15.44) | 15.00 | (.07) |
Total from investment operations | (15.59) | 14.85 | (.08) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.01) | - |
Total distributions | (.17) | (5.20) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.45 | $ 46.19 | $ 36.53 |
Total Return B,C,D | (33.81)% | 44.59% | (.19)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.17% | 1.13% A |
Expenses net of fee waivers, if any | 1.19% | 1.17% | 1.13% A |
Expenses net of all reductions | 1.15% | 1.13% | 1.10% A |
Net investment income (loss) | (.45)% | (.37)% | (.18)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 39,144 | $ 26,620 | $ 1,857 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.17 | $ 36.49 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.24) | (.25) | (.03) |
Net realized and unrealized gain (loss) | (15.42) | 15.05 | (.09) |
Total from investment operations | (15.66) | 14.80 | (.12) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.97) | - |
Total distributions | (.17) | (5.13) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.36 | $ 46.17 | $ 36.49 |
Total Return B,C,D | (33.98)% | 44.45% | (.30)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.47% | 1.43% | 1.46% A |
Expenses net of fee waivers, if any | 1.45% | 1.43% | 1.46% A |
Expenses net of all reductions | 1.41% | 1.39% | 1.43% A |
Net investment income (loss) | (.71)% | (.63)% | (.40)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 15,284 | $ 11,334 | $ 1,093 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.97 | $ 36.46 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.40) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.34) | 14.95 | (.08) |
Total from investment operations | (15.74) | 14.50 | (.15) |
Distributions from net investment income | - | (.16) | - |
Distributions from net realized gain | (.17) | (4.84) | - |
Total distributions | (.17) | (5.00) | - |
Redemption fees added to paid in capital E | .02 | .01 | .01 |
Net asset value, end of period | $ 30.08 | $ 45.97 | $ 36.46 |
Total Return B,C,D | (34.30)% | 43.53% | (.38)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.93% | 1.96% A |
Expenses net of fee waivers, if any | 1.95% | 1.93% | 1.96% A |
Expenses net of all reductions | 1.89% | 1.90% | 1.93% A |
Net investment income (loss) | (1.20)% | (1.14)% | (.93)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 8,421 | $ 6,869 | $ 902 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 45.85 | $ 36.44 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.39) | (.45) | (.07) |
Net realized and unrealized gain (loss) | (15.30) | 14.91 | (.10) |
Total from investment operations | (15.69) | 14.46 | (.17) |
Distributions from net investment income | - | (.17) | - |
Distributions from net realized gain | (.17) | (4.89) | - |
Total distributions | (.17) | (5.06) | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 30.00 | $ 45.85 | $ 36.44 |
Total Return B,C,D | (34.30)% | 43.49% | (.44)% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.92% | 2.02% A |
Expenses net of fee waivers, if any | 1.95% | 1.92% | 2.02% A |
Expenses net of all reductions | 1.89% | 1.89% | 1.99% A |
Net investment income (loss) | (1.20)% | (1.12)% | (1.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 17,544 | $ 10,835 | $ 437 |
Portfolio turnover rate G | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Financial Highlights - Gold
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 | $ 27.21 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | (.02) | .22 F | .04 | .02 G |
Net realized and unrealized gain (loss) | (15.51) | 15.05 | 5.49 | 12.21 | .18 |
Total from investment operations | (15.55) | 15.03 | 5.71 | 12.25 | .20 |
Distributions from net investment income | - | (.18) | (.02) | (.02) | - |
Distributions from net realized gain | (.17) | (5.03) | (5.10) | (3.84) | - |
Total distributions | (.17) | (5.21) | (5.12) | (3.86) | - |
Redemption fees added to paid in capital C | .02 | .01 | .04 | .06 | .05 |
Net asset value, end of period | $ 30.67 | $ 46.37 | $ 36.54 | $ 35.91 | $ 27.46 |
Total Return A,B | (33.59)% | 45.10% | 16.19% | 48.84% | .92% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .89% | .85% | .90% | .97% | 1.00% |
Expenses net of fee waivers, if any | .87% | .85% | .90% | .97% | 1.00% |
Expenses net of all reductions | .86% | .81% | .87% | .82% | .89% |
Net investment income (loss) | (.13)% | (.05)% | .62% F | .13% | .07% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,881,600 | $ 2,381,114 | $ 1,473,400 | $ 1,325,665 | $ 705,216 |
Portfolio turnover rate E | 42% | 55% | 85% | 108% | 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 $.08 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .40%. G Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.08)%. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 46.34 | $ 36.54 | $ 36.60 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | (.05) | (.01) | .01 |
Net realized and unrealized gain (loss) | (15.49) | 15.03 | (.08) |
Total from investment operations | (15.54) | 15.02 | (.07) |
Distributions from net investment income | - | (.19) | - |
Distributions from net realized gain | (.17) | (5.04) | - |
Total distributions | (.17) | (5.23) | - |
Redemption fees added to paid in capital D | .02 | .01 | .01 |
Net asset value, end of period | $ 30.65 | $ 46.34 | $ 36.54 |
Total Return B,C | (33.59)% | 45.10% | (.16)% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .94% A |
Expenses net of fee waivers, if any | .89% | .83% | .94% A |
Expenses net of all reductions | .86% | .79% | .91% A |
Net investment income (loss) | (.14)% | (.03)% | .12% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 6,070 | $ 3,174 | $ 385 |
Portfolio turnover rate F | 42% | 55% | 85% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Notes to Consolidated Financial Statements
For the period ended February 28, 2009
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Gold and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investment in Subsidiary
The Fund may invest in certain precious metals through its investment in the Fidelity Select Gold Cayman Ltd., a wholly owned subsidiary (the "Subsidiary"). The Subsidiary has the ability to invest in commodities and securities consistent with the investment objective of the Fund. As of February 28, 2009, the Fund held $154,880,326 in the Subsidiary, representing 7.9% of the Fund's net assets.
3. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to
Annual Report
4. Significant Accounting Policies - continued
Security Valuation - continued
readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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), controlled foreign corporation, 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:
Unrealized appreciation | $ 243,686,134 |
|
Unrealized depreciation | (335,492,281) |
|
Net unrealized appreciation (depreciation) | (91,806,147) |
|
Capital loss carryforward | (88,413,227) |
|
|
|
|
Cost for federal income tax purposes | $ 2,151,201,713 |
|
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ - | $ 81,662,441 |
Long-term Capital Gains | 9,542,341 | 126,572,554 |
Total | $ 9,542,341 | $ 208,234,995 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
5. Operating Policies.
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.
Delayed Delivery Transactions and When-Issued Securities. The Fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. Securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Consolidated Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
6. Purchases and Sales of Investments.
Purchases and sales of investments, other than short-term securities, aggregated $1,187,755,611 and $775,866,491, respectively.
Annual Report
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR.
The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual management fee rate was .56% of the Fund's average net assets.
FMR and its affiliates also provide investment management related services to the Subsidiary. The Subsidiary pays FMR a monthly management fee at the annual rate of .30% of its 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 $330,880.
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 | 0% | .25% | $ 68,735 | $ 5,104 |
Class T | .25% | .25% | 55,857 | 54 |
Class B | .75% | .25% | 63,776 | 47,880 |
Class C | .75% | .25% | 111,967 | 52,378 |
|
|
| $ 300,335 | $ 105,416 |
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 | $ 89,649 |
Class T | 13,056 |
Class B* | 21,234 |
Class C* | 11,304 |
| $ 135,243 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 82,682 | .30 |
Class T | 35,034 | .31 |
Class B | 19,275 | .30 |
Class C | 33,673 | .30 |
Gold | 4,168,247 | .23 |
Institutional Class | 8,811 | .25 |
| $ 4,347,722 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Annual Report
Notes to Consolidated Financial Statements - continued
7. Fees and Other Transactions with Affiliates - continued
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 $3,396 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 | $ 10,576,756 | 2.17% | $ 26,101 |
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $6,220 and is reflected in Miscellaneous Expense on the Consolidated Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $586,066.
10. 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 $7,138,000. The weighted average interest rate was 2.31%. The interest expense amounted to $459 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
11. 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 $313,930 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 |
|
Gold | $ 8,587 |
|
Annual Report
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 |
Institutional Class | - | 6,741 |
Total | $ - | $ 7,077,865 |
From net realized gain |
|
|
Class A | $ 120,234 | $ 955,695 |
Class T | 52,921 | 425,795 |
Class B | 30,037 | 289,226 |
Class C | 48,372 | 343,986 |
Gold | 9,277,078 | 198,940,407 |
Institutional Class | 13,699 | 202,021 |
Total | $ 9,542,341 | $ 201,157,130 |
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 | 1,309,698 | 567,655 | $ 44,660,266 | $ 23,751,338 |
Reinvestment of distributions | 2,750 | 25,125 | 115,078 | 945,727 |
Shares redeemed | (603,399) | (67,262) | (19,759,071) | (2,616,226) |
Net increase (decrease) | 709,049 | 525,518 | $ 25,016,273 | $ 22,080,839 |
Class T |
|
|
|
|
Shares sold | 490,596 | 245,988 | $ 16,725,703 | $ 10,279,473 |
Reinvestment of distributions | 1,250 | 11,403 | 52,336 | 428,815 |
Shares redeemed | (233,926) | (41,858) | (7,642,955) | (1,666,054) |
Net increase (decrease) | 257,920 | 215,533 | $ 9,135,084 | $ 9,042,234 |
Class B |
|
|
|
|
Shares sold | 268,687 | 138,954 | $ 9,041,240 | $ 5,690,539 |
Reinvestment of distributions | 619 | 7,385 | 25,767 | 276,855 |
Shares redeemed | (138,798) | (21,658) | (4,716,395) | (874,114) |
Net increase (decrease) | 130,508 | 124,681 | $ 4,350,612 | $ 5,093,280 |
Class C |
|
|
|
|
Shares sold | 585,858 | 253,353 | $ 18,965,561 | $ 10,551,196 |
Reinvestment of distributions | 1,077 | 8,652 | 44,699 | 324,140 |
Shares redeemed | (238,490) | (37,666) | (7,504,831) | (1,511,191) |
Net increase (decrease) | 348,445 | 224,339 | $ 11,505,429 | $ 9,364,145 |
Gold |
|
|
|
|
Shares sold | 46,487,078 | 30,095,254 | $ 1,611,564,135 | $ 1,246,042,833 |
Reinvestment of distributions | 212,477 | 5,273,633 | 8,930,407 | 197,489,804 |
Shares redeemed | (36,708,151) | (24,338,085) | (1,244,304,895) | (937,121,869) |
Net increase (decrease) | 9,991,404 | 11,030,802 | $ 376,189,647 | $ 506,410,768 |
Institutional Class |
|
|
|
|
Shares sold | 256,180 | 128,523 | $ 8,523,938 | $ 5,080,204 |
Reinvestment of distributions | 259 | 4,588 | 10,894 | 171,536 |
Shares redeemed | (126,881) | (75,163) | (4,173,180) | (3,012,289) |
Net increase (decrease) | 129,558 | 57,948 | $ 4,361,652 | $ 2,239,451 |
Annual Report
Notes to Consolidated Financial Statements - continued
14. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $9,304, which is recorded in the accompanying Consolidated Statement of Operations.
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
Fidelity Advisor Materials Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -51.15% | -1.02% | 5.75% |
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, the fund operated under certain different investment policies. The historical performance for the fund may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Materials Fund - Institutional Class on February 28, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor Materials Fund: For the one-year period ending February 28, 2009, the fund's Institutional Class shares returned -51.15%, outpacing the -53.96% return for the MSCI® US Investable Market Materials Index, but trailing the broad market S&P 500. Versus the MSCI index, strong industry selection drove performance for the period, including an overweighting in gold and sizable underweightings in some lagging industries, including aluminum, paper products and diversified chemicals. In addition, stock selection within the latter segment aided results. A modest cash allocation also was a positive in a down market. Conversely, stock selection among steel issues hurt, as did certain stock picks and an overweighting in commodity chemicals and weak results from our specialty chemicals holdings. Among individual stocks, underweightings in aluminum maker Alcoa, International Paper and diversified chemicals maker Dow Chemical helped. Here, I'd sought to underweight firms with high debt levels that were exposed to certain hard-hit end markets. Commodity chemicals firm Celanese and an underweighting in steel company Nucor detracted. Celanese struggled amid a dramatic drop in global demand, while Nucor was helped by its relatively strong financial position versus competitors. Some of the stocks I've mentioned in this update were sold by period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2008 to February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.21% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.90 | $ 4.50 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.79 | $ 6.06 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 498.20 | $ 5.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Class C | 1.96% |
|
|
|
Actual |
| $ 1,000.00 | $ 497.00 | $ 7.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.08 | $ 9.79 |
Materials | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.60 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
Institutional Class | .95% |
|
|
|
Actual |
| $ 1,000.00 | $ 499.70 | $ 3.53 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.08 | $ 4.76 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Portfolio/Sector
Select Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Monsanto Co. | 15.5 | 11.9 |
Newmont Mining Corp. | 6.7 | 3.8 |
E.I. du Pont de Nemours & Co. | 6.4 | 8.3 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 5.0 | 7.0 |
Praxair, Inc. | 4.4 | 2.1 |
FMC Corp. | 2.9 | 3.0 |
Airgas, Inc. | 2.8 | 1.9 |
Weyerhaeuser Co. | 2.7 | 1.5 |
Terra Industries, Inc. | 2.5 | 1.0 |
Rohm & Haas Co. | 2.4 | 0.0 |
| 51.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Chemicals | 56.4% |
| |
Metals & Mining | 21.4% |
| |
Containers & Packaging | 10.2% |
| |
Paper & Forest Products | 2.7% |
| |
Construction Materials | 2.4% |
| |
All Others* | 6.9% |
|
As of August 31, 2008 | |||
Chemicals | 51.3% |
| |
Metals & Mining | 30.9% |
| |
Containers & Packaging | 11.3% |
| |
Marine | 1.6% |
| |
Paper & Forest Products | 1.5% |
| |
All Others* | 3.4% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Materials Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 96.0% | |||
Shares | Value | ||
BUILDING PRODUCTS - 0.9% | |||
Building Products - 0.9% | |||
Masco Corp. | 218,700 | $ 1,126,305 | |
USG Corp. (a) | 32,400 | 186,948 | |
| 1,313,253 | ||
CHEMICALS - 55.9% | |||
Commodity Chemicals - 2.1% | |||
Celanese Corp. Class A | 369,678 | 3,157,050 | |
Diversified Chemicals - 10.7% | |||
E.I. du Pont de Nemours & Co. | 517,200 | 9,702,672 | |
FMC Corp. | 110,199 | 4,455,346 | |
Solutia, Inc. (a) | 555,100 | 2,081,625 | |
| 16,239,643 | ||
Fertilizers & Agricultural Chemicals - 20.9% | |||
CF Industries Holdings, Inc. | 37,200 | 2,393,076 | |
Monsanto Co. | 309,244 | 23,586,039 | |
Terra Industries, Inc. | 147,200 | 3,796,288 | |
The Mosaic Co. | 49,500 | 2,130,975 | |
| 31,906,378 | ||
Industrial Gases - 8.7% | |||
Air Products & Chemicals, Inc. | 49,000 | 2,266,250 | |
Airgas, Inc. | 137,100 | 4,221,309 | |
Praxair, Inc. | 119,000 | 6,753,250 | |
| 13,240,809 | ||
Specialty Chemicals - 13.5% | |||
Albemarle Corp. | 181,985 | 3,521,410 | |
Ecolab, Inc. | 98,500 | 3,130,330 | |
Lubrizol Corp. | 94,800 | 2,606,052 | |
Nalco Holding Co. | 198,618 | 2,258,287 | |
OMNOVA Solutions, Inc. (a) | 124,091 | 105,477 | |
Rockwood Holdings, Inc. (a) | 190,700 | 1,123,223 | |
Rohm & Haas Co. | 70,700 | 3,681,349 | |
Valspar Corp. | 88,100 | 1,471,270 | |
W.R. Grace & Co. (a) | 466,700 | 2,613,520 | |
| 20,510,918 | ||
TOTAL CHEMICALS | 85,054,798 | ||
CONSTRUCTION MATERIALS - 2.4% | |||
Construction Materials - 2.4% | |||
Martin Marietta Materials, Inc. (d) | 46,800 | 3,583,008 | |
CONTAINERS & PACKAGING - 10.2% | |||
Metal & Glass Containers - 6.4% | |||
Ball Corp. | 71,865 | 2,895,441 | |
Crown Holdings, Inc. (a) | 148,971 | 3,140,309 | |
Myers Industries, Inc. | 16,419 | 64,855 | |
Owens-Illinois, Inc. (a) | 141,200 | 2,177,304 | |
Pactiv Corp. (a) | 87,500 | 1,385,125 | |
| 9,663,034 | ||
| |||
Shares | Value | ||
Paper Packaging - 3.8% | |||
Packaging Corp. of America | 117,100 | $ 1,240,089 | |
Rock-Tenn Co. Class A | 88,728 | 2,449,780 | |
Sealed Air Corp. | 84,200 | 939,672 | |
Temple-Inland, Inc. (d) | 241,600 | 1,147,600 | |
| 5,777,141 | ||
TOTAL CONTAINERS & PACKAGING | 15,440,175 | ||
HOUSEHOLD DURABLES - 0.4% | |||
Homebuilding - 0.4% | |||
Centex Corp. | 93,300 | 579,393 | |
MACHINERY - 0.5% | |||
Construction & Farm Machinery & Heavy Trucks - 0.5% | |||
Deere & Co. | 27,700 | 761,473 | |
MARINE - 0.4% | |||
Marine - 0.4% | |||
Ultrapetrol (Bahamas) Ltd. (a) | 279,390 | 575,543 | |
METALS & MINING - 20.4% | |||
Diversified Metals & Mining - 5.8% | |||
BHP Billiton PLC | 78,600 | 1,224,843 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 247,728 | 7,535,886 | |
| 8,760,729 | ||
Gold - 9.0% | |||
Agnico-Eagle Mines Ltd. | 8,500 | 427,288 | |
Newmont Mining Corp. | 243,900 | 10,153,557 | |
Randgold Resources Ltd. sponsored ADR | 34,700 | 1,578,156 | |
Yamana Gold, Inc. | 184,300 | 1,610,986 | |
| 13,769,987 | ||
Precious Metals & Minerals - 0.3% | |||
Impala Platinum Holdings Ltd. | 34,460 | 404,415 | |
Steel - 5.3% | |||
ArcelorMittal SA (NY Shares) Class A (d) | 67,900 | 1,312,507 | |
Cliffs Natural Resources, Inc. | 89,300 | 1,377,899 | |
Commercial Metals Co. | 164,000 | 1,674,440 | |
Reliance Steel & Aluminum Co. | 73,000 | 1,736,670 | |
Steel Dynamics, Inc. | 242,000 | 2,020,700 | |
| 8,122,216 | ||
TOTAL METALS & MINING | 31,057,347 | ||
OIL, GAS & CONSUMABLE FUELS - 1.2% | |||
Coal & Consumable Fuels - 1.2% | |||
CONSOL Energy, Inc. | 24,400 | 664,900 | |
Foundation Coal Holdings, Inc. | 25,200 | 405,216 | |
Massey Energy Co. | 69,400 | 801,570 | |
| 1,871,686 | ||
PAPER & FOREST PRODUCTS - 2.7% | |||
Forest Products - 2.7% | |||
Weyerhaeuser Co. | 171,800 | 4,150,688 | |
Common Stocks - continued | |||
Shares | Value | ||
TRANSPORTATION INFRASTRUCTURE - 1.0% | |||
Marine Ports & Services - 1.0% | |||
Aegean Marine Petroleum Network, Inc. | 96,500 | $ 1,582,600 | |
TOTAL COMMON STOCKS (Cost $211,717,445) | 145,969,964 | ||
Convertible Preferred Stocks - 1.0% | |||
|
|
|
|
METALS & MINING - 1.0% | |||
Diversified Metals & Mining - 1.0% | |||
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 29,000 | 1,568,523 |
Floating Rate Loans - 0.5% | ||||
| Principal Amount |
| ||
MATERIALS - 0.5% | ||||
Chemicals - 0.5% | ||||
Celanese Holding LLC term loan 2.935% 4/2/14 (e) | $ 987,487 | 809,740 | ||
TOTAL FLOATING RATE LOANS (Cost $760,558) | 809,740 |
Money Market Funds - 4.8% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 2,803,758 | $ 2,803,758 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 4,425,750 | 4,425,750 | |
TOTAL MONEY MARKET FUNDS (Cost $7,229,508) | 7,229,508 | ||
TOTAL INVESTMENT PORTFOLIO - 102.3% (Cost $221,275,013) | 155,577,735 | ||
NET OTHER ASSETS - (2.3)% | (3,457,685) | ||
NET ASSETS - 100% | $ 152,120,050 |
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. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate 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 | $ 207,459 |
Fidelity Securities Lending Cash Central Fund | 92,601 |
Total | $ 300,060 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 155,577,735 | $ 151,974,629 | $ 3,603,106 | $ - |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $47,480,166 all of which will expire on February 28, 2017. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $26,181,120 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
Assets | ||
Investment in securities, at value (including securities loaned of $4,349,948) - See accompanying schedule: Unaffiliated issuers (cost $214,045,505) | $ 148,348,227 |
|
Fidelity Central Funds (cost $7,229,508) | 7,229,508 |
|
Total Investments (cost $221,275,013) |
| $ 155,577,735 |
Cash | 867,252 | |
Receivable for investments sold | 5,532,571 | |
Receivable for fund shares sold | 230,578 | |
Dividends receivable | 424,015 | |
Interest receivable | 4,589 | |
Distributions receivable from Fidelity Central Funds | 7,214 | |
Prepaid expenses | 1,949 | |
Other receivables | 207 | |
Total assets | 162,646,110 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,249,567 | |
Payable for fund shares redeemed | 678,545 | |
Accrued management fee | 77,730 | |
Distribution fees payable | 11,826 | |
Other affiliated payables | 47,607 | |
Other payables and accrued expenses | 35,035 | |
Collateral on securities loaned, at value | 4,425,750 | |
Total liabilities | 10,526,060 | |
|
|
|
Net Assets | $ 152,120,050 | |
Net Assets consist of: |
| |
Paid in capital | $ 295,565,722 | |
Undistributed net investment income | 350,358 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (78,098,168) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (65,697,862) | |
Net Assets | $ 152,120,050 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
Calculation of Maximum Offering Price Class A: | $ 27.65 | |
|
|
|
Maximum offering price per share (100/94.25 of $27.65) | $ 29.34 | |
Class T: | $ 27.56 | |
|
|
|
Maximum offering price per share (100/96.50 of $27.56) | $ 28.56 | |
Class B: | $ 27.35 | |
|
|
|
Class C: | $ 27.31 | |
|
|
|
Materials: | $ 27.66 | |
|
|
|
Institutional Class: | $ 27.66 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
| Year ended February 28, 2009 | |
Investment Income |
|
|
Dividends |
| $ 5,062,903 |
Interest |
| 32,366 |
Income from Fidelity Central Funds |
| 300,060 |
Total income |
| 5,395,329 |
|
|
|
Expenses | ||
Management fee | $ 1,788,061 | |
Transfer agent fees | 817,591 | |
Distribution fees | 219,469 | |
Accounting and security lending fees | 128,438 | |
Custodian fees and expenses | 27,331 | |
Independent trustees' compensation | 1,640 | |
Registration fees | 101,330 | |
Audit | 40,676 | |
Legal | 1,823 | |
Miscellaneous | 22,628 | |
Total expenses before reductions | 3,148,987 | |
Expense reductions | (13,467) | 3,135,520 |
Net investment income (loss) | 2,259,809 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (75,587,496) | |
Foreign currency transactions | (80,051) | |
Total net realized gain (loss) |
| (75,667,547) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (119,409,523) | |
Assets and liabilities in foreign currencies | (289) | |
Total change in net unrealized appreciation (depreciation) |
| (119,409,812) |
Net gain (loss) | (195,077,359) | |
Net increase (decrease) in net assets resulting from operations | $ (192,817,550) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,259,809 | $ 3,953,939 |
Net realized gain (loss) | (75,667,547) | 16,077,802 |
Change in net unrealized appreciation (depreciation) | (119,409,812) | 23,232,714 |
Net increase (decrease) in net assets resulting from operations | (192,817,550) | 43,264,455 |
Distributions to shareholders from net investment income | (976,789) | (2,382,687) |
Distributions to shareholders from net realized gain | - | (14,617,568) |
Total distributions | (976,789) | (17,000,255) |
Share transactions - net increase (decrease) | (41,426,103) | 127,763,307 |
Redemption fees | 46,748 | 66,997 |
Total increase (decrease) in net assets | (235,173,694) | 154,094,504 |
|
|
|
Net Assets | ||
Beginning of period | 387,293,744 | 233,199,240 |
End of period (including undistributed net investment income of $350,358 and undistributed net investment income of $1,848,037, respectively) | $ 152,120,050 | $ 387,293,744 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 51.01 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .46 | .17 |
Net realized and unrealized gain (loss) | (29.46) | 8.05 | 3.93 |
Total from investment operations | (29.24) | 8.51 | 4.10 |
Distributions from net investment income | (.12) | (.32) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.12) | (2.53) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.65 | $ 57.00 | $ 51.01 |
Total Return B,C,D | (51.30)% | 16.79% | 8.76% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.21% | 1.50% A |
Expenses net of fee waivers, if any | 1.21% | 1.21% | 1.40% A |
Expenses net of all reductions | 1.20% | 1.21% | 1.38% A |
Net investment income (loss) | .47% | .83% | 1.76% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 10,796 | $ 12,522 | $ 1,018 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.532 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Class T
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.80 | $ 50.89 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .10 | .32 | .11 |
Net realized and unrealized gain (loss) | (29.32) | 8.00 | 3.87 |
Total from investment operations | (29.22) | 8.32 | 3.98 |
Distributions from net investment income | (.03) | (.21) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.03) | (2.42) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.56 | $ 56.80 | $ 50.89 |
Total Return B,C,D | (51.43)% | 16.45% | 8.51% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.46% | 1.46% | 1.80% A |
Expenses net of fee waivers, if any | 1.46% | 1.46% | 1.65% A |
Expenses net of all reductions | 1.46% | 1.46% | 1.62% A |
Net investment income (loss) | .22% | .57% | 1.18% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 4,944 | $ 6,850 | $ 707 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H 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 Total distributions of $2.417 per share is comprised of distributions from net investment income of $.207 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.59 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.12) | .04 | .06 |
Net realized and unrealized gain (loss) | (29.13) | 7.98 | 3.84 |
Total from investment operations | (29.25) | 8.02 | 3.90 |
Distributions from net investment income | - | (.04) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.25) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.35 | $ 56.59 | $ 50.81 |
Total Return B,C,D | (51.67)% | 15.89% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.97% | 2.26% A |
Expenses net of fee waivers, if any | 1.95% | 1.97% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.12% A |
Net investment income (loss) | (.27)% | .07% | .60% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,601 | $ 4,173 | $ 662 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
Financial Highlights - Class C
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 56.50 | $ 50.81 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.13) | .04 | .09 |
Net realized and unrealized gain (loss) | (29.07) | 7.97 | 3.81 |
Total from investment operations | (29.20) | 8.01 | 3.90 |
Distributions from net investment income | - | (.12) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | - | (2.33) K | - |
Redemption fees added to paid in capital E | .01 | .01 | .01 |
Net asset value, end of period | $ 27.31 | $ 56.50 | $ 50.81 |
Total Return B,C,D | (51.66)% | 15.87% | 8.34% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.95% | 1.96% | 2.31% A |
Expenses net of fee waivers, if any | 1.95% | 1.96% | 2.15% A |
Expenses net of all reductions | 1.95% | 1.96% | 2.13% A |
Net investment income (loss) | (.27)% | .07% | .89% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 5,509 | $ 8,743 | $ 547 |
Portfolio turnover rate G | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2009 | 2008 G | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 | $ 35.99 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .38 | .64 | .42 | .32 | .15 |
Net realized and unrealized gain (loss) | (29.54) | 8.01 | 9.36 | 6.40 | 5.47 |
Total from investment operations | (29.16) | 8.65 | 9.78 | 6.72 | 5.62 |
Distributions from net investment income | (.20) | (.36) | (.48) | (.25) | (.12) |
Distributions from net realized gain | - | (2.21) | (4.79) | (.93) | (.74) |
Total distributions | (.20) | (2.57) H | (5.27) | (1.18) | (.86) |
Redemption fees added to paid in capital C | .01 | .01 | .06 | .03 | .03 |
Net asset value, end of period | $ 27.66 | $ 57.01 | $ 50.92 | $ 46.35 | $ 40.78 |
Total Return A,B | (51.15)% | 17.10% | 22.29% | 17.01% | 16.09% |
Ratios to Average Net Assets D,F |
|
|
|
|
|
Expenses before reductions | .90% | .91% | 1.01% | 1.05% | 1.06% |
Expenses net of fee waivers, if any | .90% | .90% | .98% | 1.05% | 1.06% |
Expenses net of all reductions | .90% | .89% | .96% | 1.01% | 1.02% |
Net investment income (loss) | .78% | 1.14% | .87% | .78% | .42% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 127,551 | $ 353,185 | $ 230,147 | $ 169,523 | $ 144,442 |
Portfolio turnover rate E | 117% | 77% | 185% | 124% | 89% |
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. H Total distributions of $2.573 per share is comprised of distributions from net investment income of $.363 and distributions from net realized gain of $2.210 per share. |
Financial Highlights - Institutional Class
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 57.00 | $ 50.91 | $ 46.90 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .38 | .64 | .08 |
Net realized and unrealized gain (loss) | (29.53) | 8.00 | 3.92 |
Total from investment operations | (29.15) | 8.64 | 4.00 |
Distributions from net investment income | (.20) | (.36) | - |
Distributions from net realized gain | - | (2.21) | - |
Total distributions | (.20) | (2.56) J | - |
Redemption fees added to paid in capital D | .01 | .01 | .01 |
Net asset value, end of period | $ 27.66 | $ 57.00 | $ 50.91 |
Total Return B,C | (51.15)% | 17.08% | 8.55% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .90% | .89% | 1.06% A |
Expenses net of fee waivers, if any | .90% | .89% | 1.06% A |
Expenses net of all reductions | .90% | .89% | 1.04% A |
Net investment income (loss) | .78% | 1.14% | .79% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 719 | $ 1,820 | $ 119 |
Portfolio turnover rate F | 117% | 77% | 185% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G 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 Total distributions of $2.565 per share is comprised of distributions from net investment income of $.355 and distributions from net realized gain of $2.210 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Materials, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation.
Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund 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, market discount, passive foreign investment companies (PFIC), 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:
Unrealized appreciation | $ 14,131,142 |
|
Unrealized depreciation | (84,258,446) |
|
Net unrealized appreciation (depreciation) | (70,127,304) |
|
Undistributed ordinary income | 342,912 |
|
Capital loss carryforward | (47,480,166) |
|
|
|
|
Cost for federal income tax purposes | $ 225,705,039 |
|
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 976,789 | $ 7,456,139 |
Long-term Capital Gains | - | 9,544,116 |
Total | $ 976,789 | $ 17,000,255 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $364,235,925 and $398,230,325, 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% | $ 40,870 | $ 4,531 |
Class T | .25% | .25% | 38,434 | 176 |
Class B | .75% | .25% | 44,212 | 33,209 |
Class C | .75% | .25% | 95,953 | 46,754 |
|
|
| $ 219,469 | $ 84,670 |
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 Financial Statements - continued
6. 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 | $ 44,174 |
Class T | 9,605 |
Class B* | 8,840 |
Class C* | 4,799 |
| $ 67,418 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 49,515 | .30 |
Class T | 23,883 | .31 |
Class B | 13,428 | .30 |
Class C | 29,201 | .30 |
Materials | 697,613 | .25 |
Institutional Class | 3,951 | .25 |
| $ 817,591 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $2,685 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $931 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 $92,601.
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 $13,058 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, these credits reduced the Fund's transfer agent expense as noted in the table below.
| Transfer Agent |
|
Materials | $ 409 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 43,307 | $ 49,508 |
Class T | 5,182 | 17,252 |
Class B | - | 2,017 |
Class C | - | 11,702 |
Materials | 923,202 | 2,291,825 |
Institutional Class | 5,098 | 10,383 |
Total | $ 976,789 | $ 2,382,687 |
From net realized gain |
|
|
Class A | $ - | $ 297,274 |
Class T | - | 171,986 |
Class B | - | 120,699 |
Class C | - | 203,194 |
Materials | - | 13,774,394 |
Institutional Class | - | 50,021 |
Total | $ - | $ 14,617,568 |
11. 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 | 400,579 | 264,311 | $ 21,052,656 | $ 14,817,528 |
Reinvestment of distributions | 1,376 | 5,853 | 40,415 | 336,777 |
Shares redeemed | (231,192) | (70,440) | (9,966,206) | (3,880,036) |
Net increase (decrease) | 170,763 | 199,724 | $ 11,126,865 | $ 11,274,269 |
Class T |
|
|
|
|
Shares sold | 127,856 | 146,420 | $ 6,586,988 | $ 8,122,926 |
Reinvestment of distributions | 169 | 2,954 | 4,976 | 169,021 |
Shares redeemed | (69,236) | (42,653) | (3,081,211) | (2,369,950) |
Net increase (decrease) | 58,789 | 106,721 | $ 3,510,753 | $ 5,921,997 |
Class B |
|
|
|
|
Shares sold | 70,236 | 83,153 | $ 3,670,456 | $ 4,611,263 |
Reinvestment of distributions | - | 2,052 | - | 116,729 |
Shares redeemed | (48,886) | (24,486) | (2,112,869) | (1,341,792) |
Net increase (decrease) | 21,350 | 60,719 | $ 1,557,587 | $ 3,386,200 |
Annual Report
Notes to Financial Statements - continued
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class C |
|
|
|
|
Shares sold | 186,111 | 171,703 | $ 9,519,248 | $ 9,620,121 |
Reinvestment of distributions | (8) | 3,133 | (480) | 178,976 |
Shares redeemed | (139,135) | (30,841) | (5,956,182) | (1,682,683) |
Net increase (decrease) | 46,968 | 143,995 | $ 3,562,586 | $ 8,116,414 |
Materials |
|
|
|
|
Shares sold | 3,524,569 | 7,472,335 | $ 186,250,882 | $ 416,206,078 |
Reinvestment of distributions | 29,537 | 270,946 | 866,336 | 15,331,841 |
Shares redeemed | (5,137,192) | (6,067,742) | (248,168,306) | (334,236,130) |
Net increase (decrease) | (1,583,086) | 1,675,539 | $ (61,051,088) | $ 97,301,789 |
Institutional Class |
|
|
|
|
Shares sold | 41,845 | 88,023 | $ 2,204,347 | $ 5,168,897 |
Reinvestment of distributions | 156 | 963 | 4,588 | 55,576 |
Shares redeemed | (47,942) | (59,388) | (2,341,741) | (3,461,835) |
Net increase (decrease) | (5,941) | 29,598 | $ (132,806) | $ 1,762,638 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $14,935, which is recorded in the accompanying Statement of Operations.
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.
13. Proposed Reorganization
On November 18, 2008, the Board of Trustees of the Fund approved an Agreement and Plan of Reorganization between the Fund and Select Paper and Forest Products Portfolio. The agreement provides for the transfer of all of the assets and the assumption of all of the liabilities of Select Paper and Forest Products Portfolio in exchange solely for the number of equivalent shares of Materials (the original, retail class of shares of Select Materials Portfolio) having the same aggregate net asset value as the outstanding shares of Select Paper and Forest Products Portfolio, on the day the reorganization is effective.
A meeting of shareholders of Select Paper and Forest Products Portfolio is expected to be held on May 19, 2009 to vote on the reorganization. If approved by shareholders, the reorganization is expected to become effective on or about June 19, 2009. The reorganization is expected to qualify as a tax-free transaction with no gain or loss recognized by the Funds or their shareholders.
Annual Report
Fidelity Advisor Telecommunications Fund - Institutional Class
Performance
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2009 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -35.99% | -4.42% | -5.31% |
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, 1999. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. The initial offering of Institutional Class shares took place on December 12, 2006. See the Average Annual Total Returns table for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity markets took it squarely on the chin during the 12 months ending February 28, 2009, battered by global recessionary fears, drum-tight credit markets and the rapid flight of capital away from risk and toward the investment sidelines. Stocks had performed reasonably well up until late last summer, in spite of high energy costs and slowing global economic growth. But beginning in September 2008, a succession of large financial institutions either collapsed, or came close to failing, as they struggled under the weight of toxic, asset-backed securities, which sent the equity markets into a turbulent downward spiral. Even as the federal government began a series of aggressive interventions to rescue the troubled financial services industry and to shore up deteriorating economic conditions, investors remained skittish and the equity markets' sell-off continued. The Standard & Poor's 500SM Index fell 43.32% for the year overall and lost more than 17% in value during the December-February time frame alone. All 10 of the S&P 500®'s market sectors landed deep in negative territory for the 12-month span. Meanwhile, the blue-chip Dow Jones Industrial AverageSM fell by a comparable 40.58% mark, and the small-cap-oriented Russell 2000® Index declined 42.38%. Elsewhere, the technology-heavy NASDAQ Composite® Index dropped 38.77%.
Comments from Gavin Baker, Portfolio Manager of Fidelity Advisor Telecommunications Fund: For the 12-month period ending February 28, 2009, the fund's Institutional Class shares returned -35.99%, underperforming the -28.37% return of the MSCI US Investable Market Telecommunications Services Index, but outperforming the S&P 500. Relative to the MSCI index, the fund was hurt by being significantly overweighted in the poor-performing alternative carriers group. Stock selection in the home entertainment software and cable/satellite groups, two areas not represented in the MSCI index, detracted as well. Underweighting integrated telecommunication services stocks, specifically index heavyweight Verizon - due to the fund's investment limitations - hurt the fund because Verizon outperformed the benchmark. Other individual detractors included alternative carriers Global Crossing, which is based in Bermuda, and Level 3 Communications, both of which saw their stock prices drop significantly. French company Gameloft, which sells video games for cell phones, held back the fund's return as well. Lastly, our holdings in foreign stocks were hurt by the strengthening U.S. dollar. On the other hand, the fund benefited from strong stock selection in the wireless telecommunication services group. Specifically, the fund was helped by underweighting Sprint Nextel for much of 2008 and then overweighting the stock late in 2008 and early in 2009. At that time I purchased shares of the troubled wireless company at a low price, and subsequently the value of these shares increased. Another stock that contributed to the fund's return was communications equipment company Starent Networks, in which the fund held an out-of-benchmark position. Integrated telecomm services company Cbeyond also outperformed.
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
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, 2008 to
February 28, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized | Beginning | Ending | Expenses Paid |
Class A | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 658.90 | $ 4.94 |
Hypothetical A |
| $ 1,000.00 | $ 1,018.84 | $ 6.01 |
Class T | 1.53% |
|
|
|
Actual |
| $ 1,000.00 | $ 657.90 | $ 6.29 |
Hypothetical A |
| $ 1,000.00 | $ 1,017.21 | $ 7.65 |
Class B | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.50 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Class C | 1.97% |
|
|
|
Actual |
| $ 1,000.00 | $ 656.40 | $ 8.09 |
Hypothetical A |
| $ 1,000.00 | $ 1,015.03 | $ 9.84 |
Telecommunications | .97% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.70 | $ 3.99 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.98 | $ 4.86 |
Institutional Class | .98% |
|
|
|
Actual |
| $ 1,000.00 | $ 659.60 | $ 4.03 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.93 | $ 4.91 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Select Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2009 | ||
| % of fund's | % of fund's net assets |
Sprint Nextel Corp. | 12.7 | 3.1 |
Verizon Communications, Inc. | 11.1 | 4.3 |
AT&T, Inc. | 7.4 | 12.5 |
Global Crossing Ltd. | 6.3 | 7.7 |
Qwest Communications International, Inc. | 4.8 | 7.6 |
Virgin Media, Inc. | 4.6 | 4.8 |
Starent Networks Corp. | 4.2 | 4.0 |
Vodafone Group PLC sponsored ADR | 3.9 | 1.4 |
The DIRECTV Group, Inc. | 3.7 | 2.2 |
Cbeyond, Inc. | 3.5 | 1.9 |
| 62.2 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2009 | |||
Diversified Telecommunication Services | 41.3% |
| |
Wireless Telecommunication Services | 33.9% |
| |
Media | 12.2% |
| |
Communications Equipment | 4.6% |
| |
Software | 2.5% |
| |
All Others* | 5.5% |
|
|
As of August 31, 2008 | |||
Diversified Telecommunication Services | 54.0% |
| |
Wireless Telecommunication Services | 20.0% |
| |
Media | 14.7% |
| |
Software | 5.1% |
| |
Communications Equipment | 4.4% |
| |
All Others* | 1.8% |
|
* Includes short-term investments and net other assets. |
Annual Report
Select Telecommunications Portfolio
Investments February 28, 2009
Showing Percentage of Net Assets
Common Stocks - 94.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 4.6% | |||
Communications Equipment - 4.6% | |||
Aruba Networks, Inc. (a) | 392 | $ 1,082 | |
F5 Networks, Inc. (a) | 1,600 | 32,000 | |
Infinera Corp. (a)(d) | 75,300 | 542,160 | |
Juniper Networks, Inc. (a) | 2,100 | 29,841 | |
Nortel Networks Corp. (a) | 8,071 | 666 | |
Polycom, Inc. (a) | 1,700 | 22,610 | |
Sandvine Corp. (a) | 3,200 | 1,836 | |
Sonus Networks, Inc. (a) | 56,800 | 70,432 | |
Starent Networks Corp. (a) | 533,874 | 8,440,548 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 600 | 4,896 | |
| 9,146,071 | ||
COMPUTERS & PERIPHERALS - 0.1% | |||
Computer Hardware - 0.1% | |||
Apple, Inc. (a) | 1,800 | 160,758 | |
Computer Storage & Peripherals - 0.0% | |||
Isilon Systems, Inc. (a) | 500 | 1,125 | |
NetApp, Inc. (a) | 700 | 9,408 | |
Synaptics, Inc. (a) | 450 | 9,338 | |
| 19,871 | ||
TOTAL COMPUTERS & PERIPHERALS | 180,629 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 41.3% | |||
Alternative Carriers - 10.3% | |||
Cable & Wireless PLC | 19,405 | 37,971 | |
Cogent Communications Group, Inc. (a) | 64,802 | 428,989 | |
Global Crossing Ltd. (a) | 1,728,486 | 12,652,518 | |
Iliad Group SA | 600 | 47,378 | |
Level 3 Communications, Inc. (a) | 1,228,676 | 982,941 | |
PAETEC Holding Corp. (a) | 73,600 | 108,192 | |
tw telecom, inc. (a) | 783,552 | 6,299,758 | |
| 20,557,747 | ||
Integrated Telecommunication Services - 31.0% | |||
AT&T, Inc. | 618,319 | 14,697,443 | |
BT Group PLC | 5,351 | 6,836 | |
Cbeyond, Inc. (a) | 491,718 | 7,085,656 | |
China Unicom (Hong Kong) Ltd. sponsored ADR | 243,300 | 2,158,071 | |
Cincinnati Bell, Inc. (a) | 225,000 | 373,500 | |
Deutsche Telekom AG (Reg.) | 1,100 | 13,189 | |
Embarq Corp. | 900 | 31,473 | |
FairPoint Communications, Inc. | 34,149 | 67,274 | |
NTELOS Holdings Corp. | 632 | 12,115 | |
PT Indosat Tbk | 1,600 | 553 | |
PT Telkomunikasi Indonesia Tbk Series B | 355,900 | 186,993 | |
Qwest Communications International, Inc. (d) | 2,841,789 | 9,633,665 | |
Telecom Italia SpA sponsored ADR | 12,500 | 150,750 | |
Telefonica SA | 400 | 7,360 | |
| |||
Shares | Value | ||
Telefonica SA sponsored ADR | 95,400 | $ 5,300,424 | |
Telenor ASA | 4,400 | 22,615 | |
Telenor ASA sponsored ADR | 4,100 | 63,878 | |
Telkom SA Ltd. | 4,400 | 43,138 | |
Verizon Communications, Inc. | 774,824 | 22,105,729 | |
Vimpel Communications sponsored ADR | 1,200 | 6,288 | |
Windstream Corp. | 1,708 | 12,742 | |
| 61,979,692 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 82,537,439 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.0% | |||
Electronic Manufacturing Services - 0.0% | |||
Trimble Navigation Ltd. (a) | 540 | 7,614 | |
INTERNET SOFTWARE & SERVICES - 0.1% | |||
Internet Software & Services - 0.1% | |||
Google, Inc. Class A (sub. vtg.) (a) | 90 | 30,419 | |
SAVVIS, Inc. (d) | 26,799 | 150,342 | |
| 180,761 | ||
MEDIA - 12.2% | |||
Cable & Satellite - 12.2% | |||
Comcast Corp. Class A | 320,000 | 4,179,200 | |
DISH Network Corp. Class A (a) | 321,800 | 3,620,250 | |
Dish TV India Ltd. (a) | 5,888 | 2,766 | |
Liberty Global, Inc. Class A (a) | 400 | 4,908 | |
The DIRECTV Group, Inc. (a) | 367,300 | 7,323,962 | |
Virgin Media, Inc. | 1,923,800 | 9,195,764 | |
| 24,326,850 | ||
SOFTWARE - 2.5% | |||
Application Software - 0.3% | |||
Nuance Communications, Inc. (a) | 800 | 7,088 | |
OnMobile Global Ltd. | 132,183 | 585,270 | |
Synchronoss Technologies, Inc. (a) | 5,863 | 55,933 | |
| 648,291 | ||
Home Entertainment Software - 2.2% | |||
Gameloft (a)(d) | 2,751,486 | 4,338,746 | |
Glu Mobile, Inc. (a) | 113,614 | 53,399 | |
| 4,392,145 | ||
TOTAL SOFTWARE | 5,040,436 | ||
WIRELESS TELECOMMUNICATION SERVICES - 33.9% | |||
Wireless Telecommunication Services - 33.9% | |||
America Movil SAB de CV Series L sponsored ADR | 400 | 10,192 | |
American Tower Corp. Class A (a) | 199,900 | 5,821,088 | |
Bharti Airtel Ltd. (a) | 2,129 | 26,254 | |
Centennial Communications Corp. Class A (a) | 89,400 | 735,762 | |
Clearwire Corp. Class A (a) | 17,350 | 55,867 | |
Crown Castle International Corp. (a) | 136,183 | 2,388,650 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
Idea Cellular Ltd. (a) | 3,710 | $ 3,368 | |
Leap Wireless International, Inc. (a) | 80,124 | 2,172,162 | |
MetroPCS Communications, Inc. (a) | 199,200 | 2,888,400 | |
Millicom International Cellular SA | 134,600 | 5,299,202 | |
MTN Group Ltd. | 363,625 | 3,094,681 | |
NII Holdings, Inc. (a) | 119,000 | 1,524,390 | |
Rogers Communications, Inc. Class B (non-vtg.) | 2,200 | 51,742 | |
SBA Communications Corp. Class A (a)(d) | 206,182 | 4,284,462 | |
Sprint Nextel Corp. (a) | 7,729,444 | 25,429,868 | |
Syniverse Holdings, Inc. (a) | 30,468 | 460,981 | |
Telephone & Data Systems, Inc. | 14,820 | 437,190 | |
TIM Participacoes SA sponsored ADR (non-vtg.) | 65,700 | 930,969 | |
Virgin Mobile USA, Inc. Class A (a) | 600 | 630 | |
Vivo Participacoes SA sponsored ADR (d) | 268,425 | 4,351,169 | |
Vodafone Group PLC sponsored ADR | 436,300 | 7,744,325 | |
| 67,711,352 | ||
TOTAL COMMON STOCKS (Cost $306,428,009) | 189,131,152 | ||
Money Market Funds - 12.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.59% (b) | 11,672,763 | $ 11,672,763 | |
Fidelity Securities Lending Cash Central Fund, 0.66% (b)(c) | 13,043,687 | 13,043,687 | |
TOTAL MONEY MARKET FUNDS (Cost $24,716,450) | 24,716,450 | ||
TOTAL INVESTMENT PORTFOLIO - 107.0% (Cost $331,144,459) | 213,847,602 | ||
NET OTHER ASSETS - (7.0)% | (14,081,868) | ||
NET ASSETS - 100% | $ 199,765,734 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 57,370 |
Fidelity Securities Lending Cash Central Fund | 470,757 |
Total | $ 528,127 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2009, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 213,847,602 | $ 208,568,303 | $ 5,279,299 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 76.3% |
Bermuda | 6.3% |
United Kingdom | 3.9% |
Spain | 2.7% |
Luxembourg | 2.7% |
Brazil | 2.7% |
France | 2.2% |
South Africa | 1.6% |
Hong Kong | 1.1% |
Others (individually less than 1%) | 0.5% |
| 100.0% |
Income Tax Information |
At February 28, 2009, the fund had a capital loss carryforward of approximately $431,464,468 of which $205,830,514, $161,866,685, $11,764,473 and $52,002,796 will expire on February 28, 2010, February 28, 2011, February 29, 2012 and February 28, 2017, respectively. |
The fund intends to elect to defer to its fiscal year ending February 28, 2010 approximately $16,930,578 of losses recognized during the period November 1, 2008 to February 28, 2009. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2009 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,907,578) - See accompanying schedule: Unaffiliated issuers (cost $306,428,009) | $ 189,131,152 |
|
Fidelity Central Funds (cost $24,716,450) | 24,716,450 |
|
Total Investments (cost $331,144,459) |
| $ 213,847,602 |
Receivable for investments sold | 4,630,705 | |
Receivable for fund shares sold | 1,260,367 | |
Dividends receivable | 265,377 | |
Distributions receivable from Fidelity Central Funds | 17,051 | |
Prepaid expenses | 1,865 | |
Other receivables | 71,382 | |
Total assets | 220,094,349 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,829,111 | |
Payable for fund shares redeemed | 274,730 | |
Accrued management fee | 91,887 | |
Distribution fees payable | 1,188 | |
Other affiliated payables | 54,300 | |
Other payables and accrued expenses | 33,712 | |
Collateral on securities loaned, at value | 13,043,687 | |
Total liabilities | 20,328,615 | |
|
|
|
Net Assets | $ 199,765,734 | |
Net Assets consist of: |
| |
Paid in capital | $ 775,699,080 | |
Distributions in excess of net investment income | (1,700,123) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (456,922,603) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (117,310,620) | |
Net Assets | $ 199,765,734 |
Statement of Assets and Liabilities - continued
| February 28, 2009 | |
|
|
|
Calculation of Maximum Offering Price | $ 26.66 | |
|
|
|
Maximum offering price per share (100/94.25 of $26.66) | $ 28.29 | |
Class T: | $ 26.68 | |
|
|
|
Maximum offering price per share (100/96.50 of $26.68) | $ 27.65 | |
Class B: | $ 26.71 | |
|
|
|
Class C: | $ 26.76 | |
|
|
|
|
|
|
Telecommunications: | $ 26.74 | |
|
|
|
Institutional Class: | $ 26.73 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Select Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2009 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,166,766 |
Interest |
| 11,515 |
Income from Fidelity Central Funds (including $470,757 from security lending) |
| 528,127 |
Total income |
| 4,706,408 |
|
|
|
Expenses | ||
Management fee | $ 1,444,922 | |
Transfer agent fees | 760,912 | |
Distribution fees | 19,379 | |
Accounting and security lending fees | 109,688 | |
Custodian fees and expenses | 36,809 | |
Independent trustees' compensation | 942 | |
Registration fees | 72,431 | |
Audit | 48,049 | |
Legal | 6,748 | |
Interest | 5,788 | |
Miscellaneous | 31,134 | |
Total expenses before reductions | 2,536,802 | |
Expense reductions | (22,281) | 2,514,521 |
Net investment income (loss) | 2,191,887 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $(81,003)) | (72,774,515) | |
Foreign currency transactions | 43,252 | |
Total net realized gain (loss) |
| (72,731,263) |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $60,644) | (37,703,361) | |
Assets and liabilities in foreign currencies | (11,091) | |
Total change in net unrealized appreciation (depreciation) |
| (37,714,452) |
Net gain (loss) | (110,445,715) | |
Net increase (decrease) in net assets resulting from operations | $ (108,253,828) |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,191,887 | $ 4,604,512 |
Net realized gain (loss) | (72,731,263) | 113,362,351 |
Change in net unrealized appreciation (depreciation) | (37,714,452) | (171,837,575) |
Net increase (decrease) in net assets resulting from operations | (108,253,828) | (53,870,712) |
Distributions to shareholders from net investment income | (2,892,731) | (4,987,721) |
Distributions to shareholders from net realized gain | (1,435,678) | - |
Total distributions | (4,328,409) | (4,987,721) |
Share transactions - net increase (decrease) | (28,183,681) | (227,033,730) |
Redemption fees | 6,604 | 35,395 |
Total increase (decrease) in net assets | (140,759,314) | (285,856,768) |
|
|
|
Net Assets | ||
Beginning of period | 340,525,048 | 626,381,816 |
End of period (including distributions in excess of net investment income of $1,700,123 and undistributed net investment income of $768,284, respectively) | $ 199,765,734 | $ 340,525,048 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.56 | $ 50.89 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .22 | .26 | - K |
Net realized and unrealized gain (loss) | (15.60) | (8.08) | 3.15 |
Total from investment operations | (15.38) | (7.82) | 3.15 |
Distributions from net investment income | (.35) M | (.51) | - |
Distributions from net realized gain | (.18) M | - | - |
Total distributions | (.52) L | (.51) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.66 | $ 42.56 | $ 50.89 |
Total Return B,C,D | (36.16)% | (15.55)% | 6.60% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.21% | 1.20% | 1.23% A |
Expenses net of fee waivers, if any | 1.21% | 1.20% | 1.23% A |
Expenses net of all reductions | 1.21% | 1.19% | 1.22% A |
Net investment income (loss) | .61% | .49% | (.03)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 2,112 | $ 2,791 | $ 658 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. ECalculated 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. L Total distributions of $.52 per share is comprised of distributions from net investment income of $.347 and distributions from net realized gain of $.175 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class T
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.49 | $ 50.86 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | .12 | .12 | (.02) |
Net realized and unrealized gain (loss) | (15.56) | (8.07) | 3.14 |
Total from investment operations | (15.44) | (7.95) | 3.12 |
Distributions from net investment income | (.24) M | (.42) | - |
Distributions from net realized gain | (.13) M | - | - |
Total distributions | (.37) L | (.42) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.68 | $ 42.49 | $ 50.86 |
Total Return B,C,D | (36.34)% | (15.78)% | 6.54% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.49% | 1.46% | 1.54% A |
Expenses net of fee waivers, if any | 1.49% | 1.46% | 1.54% A |
Expenses net of all reductions | 1.48% | 1.45% | 1.53% A |
Net investment income (loss) | .33% | .23% | (.24)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 620 | $ 1,270 | $ 560 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.37 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.127 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.80 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.05) |
Net realized and unrealized gain (loss) | (15.49) | (8.04) | 3.11 |
Total from investment operations | (15.54) | (8.18) | 3.06 |
Distributions from net investment income | (.11) M | (.20) | - |
Distributions from net realized gain | (.06) M | - | - |
Total distributions | (.17) L | (.20) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.71 | $ 42.42 | $ 50.80 |
Total Return B,C,D | (36.64)% | (16.18)% | 6.41% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.05% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.05% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.05% A |
Net investment income (loss) | (.15)% | (.26)% | (.49)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 363 | $ 741 | $ 291 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.17 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.063 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Class C
| |||
Years ended February 28, | 2009 | 2008 J | 2007 H |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.42 | $ 50.81 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) E | (.05) | (.14) | (.07) |
Net realized and unrealized gain (loss) | (15.50) | (8.03) | 3.14 |
Total from investment operations | (15.55) | (8.17) | 3.07 |
Distributions from net investment income | (.07) M | (.22) | - |
Distributions from net realized gain | (.05) M | - | - |
Total distributions | (.11) L | (.22) | - |
Redemption fees added to paid in capital E | - K | - K | - K |
Net asset value, end of period | $ 26.76 | $ 42.42 | $ 50.81 |
Total Return B,C,D | (36.64)% | (16.17)% | 6.43% |
Ratios to Average Net Assets F,I |
|
|
|
Expenses before reductions | 1.97% | 1.95% | 2.07% A |
Expenses net of fee waivers, if any | 1.97% | 1.95% | 2.07% A |
Expenses net of all reductions | 1.96% | 1.94% | 2.06% A |
Net investment income (loss) | (.14)% | (.26)% | (.65)% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 371 | $ 902 | $ 332 |
Portfolio turnover rate G | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J For the year ended February 29. K Amount represents less than $.01 per share. L Total distributions of $.11 per share is comprised of distributions from net investment income of $.068 and distributions from net realized gain of $.046 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
| |||||
Years ended February 28, | 2009 | 2008 I | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 | $ 35.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .30 | .43 | .61 F | .36 | .49 G |
Net realized and unrealized gain (loss) | (15.65) | (8.12) | 8.85 | 7.11 | (.96) |
Total from investment operations | (15.35) | (7.69) | 9.46 | 7.47 | (.47) |
Distributions from net investment income | (.41) L | (.52) | (.53) | (.33) | (.49) |
Distributions from net realized gain | (.20) L | - | - | - | - |
Total distributions | (.61) K | (.52) | (.53) | (.33) | (.49) |
Redemption fees added to paid in capital C | - J | - J | .01 | - J | - J |
Net asset value, end of period | $ 26.74 | $ 42.70 | $ 50.91 | $ 41.97 | $ 34.83 |
Total Return A,B | (36.00)% | (15.30)% | 22.69% | 21.54% | (1.40)% |
Ratios to Average Net Assets D,H |
|
|
|
|
|
Expenses before reductions | .97% | .91% | .99% | 1.05% | 1.09% |
Expenses net of fee waivers, if any | .97% | .90% | .97% | 1.05% | 1.09% |
Expenses net of all reductions | .96% | .90% | .97% | .96% | 1.02% |
Net investment income (loss) | .85% | .79% | 1.34% F | .96% | 1.44% G |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 196,231 | $ 334,565 | $ 624,427 | $ 402,334 | $ 333,642 |
Portfolio turnover rate E | 168% | 134% | 162% | 148% | 56% |
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. K Total distributions of $.61 per share is comprised of distributions from net investment income of $.408 and distributions from net realized gain of $.202 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Institutional Class
| |||
Years ended February 28, | 2009 | 2008 I | 2007 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 42.65 | $ 50.91 | $ 47.74 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .34 | .45 | .16 |
Net realized and unrealized gain (loss) | (15.67) | (8.09) | 3.01 |
Total from investment operations | (15.33) | (7.64) | 3.17 |
Distributions from net investment income | (.40) L | (.62) | - |
Distributions from net realized gain | (.20) L | - | - |
Total distributions | (.59) K | (.62) | - |
Redemption fees added to paid in capital D | - J | - J | - J |
Net asset value, end of period | $ 26.73 | $ 42.65 | $ 50.91 |
Total Return B,C | (35.99)% | (15.23)% | 6.64% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .91% | .83% | .98% A |
Expenses net of fee waivers, if any | .91% | .83% | .98% A |
Expenses net of all reductions | .90% | .83% | .97% A |
Net investment income (loss) | .91% | .86% | 1.52% A |
Supplemental Data |
|
|
|
Net assets, end of period (000 omitted) | $ 68 | $ 256 | $ 114 |
Portfolio turnover rate F | 168% | 134% | 162% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. F Amount does not include the portfolio activity of any underlying Fidelity Central Funds. G For the period December 12, 2006 (commencement of sale of shares) to February 28, 2007. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I For the year ended February 29. J Amount represents less than $.01 per share. K Total distributions of $.59 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.197 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2009
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class B, Class C, Telecommunications, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the 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 as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Annual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of February 28, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). 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. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences resulted in distribution reclassifications.
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, non-taxable dividends, 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 | $ 9,103,207 |
|
Unrealized depreciation | (137,029,947) |
|
Net unrealized appreciation (depreciation) | $ (127,926,740) |
|
Undistributed ordinary income | 388,578 |
|
Capital loss carryforward | (431,464,468) |
|
|
|
|
Cost for federal income tax purposes | $ 341,774,342 |
|
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax character of distributions paid was as follows:
| February 28, 2009 | February 29, 2008 |
Ordinary Income | $ 4,328,409 | $ 4,987,721 |
Trading (Redemption) Fees. Shares in the Fund held less than 30 days are subject to a redemption fee equal to .75% of the net asset value of shares redeemed. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
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 $435,574,142 and $472,509,473, 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% | $ 3,942 | $ 497 |
Class T | .25% | .25% | 4,376 | 156 |
Class B | .75% | .25% | 5,278 | 4,045 |
Class C | .75% | .25% | 5,783 | 2,275 |
|
|
| $ 19,379 | $ 6,973 |
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
6. 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 | $ 1,768 |
Class T | 502 |
Class B* | 3,698 |
Class C* | 293 |
| $ 6,261 |
* 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 respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 4,534 | .29 |
Class T | 2,776 | .32 |
Class B | 1,575 | .30 |
Class C | 1,724 | .30 |
Telecommunications | 749,971 | .29 |
Institutional Class | 332 | .23 |
| $ 760,912 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $9,310 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 | $ 9,204,200 | 2.26% | $ 5,788 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $834 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
Annual Report
Notes to Financial Statements - continued
8. Security Lending - continued
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.
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 $21,587 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 | $ 694 |
|
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended | Year ended |
From net investment income |
|
|
Class A | $ 25,664 | $ 34,959 |
Class T | 8,592 | 17,867 |
Class B | 2,117 | 3,199 |
Class C | 1,365 | 4,260 |
Telecommunications | 4,183,665 | 4,919,180 |
Institutional Class | 1,823 | 8,256 |
Total | $ 4,223,226 | $ 4,987,721 |
From net realized gain |
|
|
Class A | $ 735 | $ - |
Class T | 357 | - |
Class B | 203 | - |
Class C | 204 | - |
Telecommunications | 103,644 | - |
Institutional Class | 40 | - |
Total | $ 105,183 | $ - |
11. 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 | 74,621 | 92,950 | $ 2,094,308 | $ 5,148,375 |
Reinvestment of distributions | 895 | 636 | 24,776 | 33,452 |
Shares redeemed | (61,881) | (40,941) | (2,346,705) | (2,000,467) |
Net increase (decrease) | 13,635 | 52,645 | $ (227,621) | $ 3,181,360 |
Annual Report
11. Share Transactions - continued
| Shares | Dollars | ||
| Year ended | Year ended | Year ended | Year ended |
Class T |
|
|
|
|
Shares sold | 9,634 | 53,657 | $ 334,058 | $ 2,989,303 |
Reinvestment of distributions | 320 | 339 | 8,637 | 17,826 |
Shares redeemed | (16,594) | (35,109) | (641,649) | (1,688,606) |
Net increase (decrease) | (6,640) | 18,887 | $ (298,954) | $ 1,318,523 |
Class B |
|
|
|
|
Shares sold | 4,801 | 21,448 | $ 166,647 | $ 1,194,831 |
Reinvestment of distributions | 82 | 57 | 2,207 | 3,011 |
Shares redeemed | (8,780) | (9,753) | (330,007) | (488,017) |
Net increase (decrease) | (3,897) | 11,752 | $ (161,153) | $ 709,825 |
Class C |
|
|
|
|
Shares sold | 5,551 | 28,254 | $ 174,242 | $ 1,547,917 |
Reinvestment of distributions | 51 | 63 | 1,354 | 3,315 |
Shares redeemed | (12,987) | (13,594) | (456,301) | (674,972) |
Net increase (decrease) | (7,385) | 14,723 | $ (280,705) | $ 876,260 |
Telecommunications |
|
|
|
|
Shares sold | 1,724,964 | 3,678,807 | $ 54,824,085 | $ 202,863,624 |
Reinvestment of distributions | 146,701 | 89,389 | 4,105,779 | 4,711,340 |
Shares redeemed | (2,367,928) | (8,198,629) | (86,013,313) | (440,994,970) |
Net increase (decrease) | (496,263) | (4,430,433) | $ (27,083,449) | $ (233,420,006) |
Institutional Class |
|
|
|
|
Shares sold | 477 | 14,719 | $ 15,601 | $ 834,674 |
Reinvestment of distributions | 51 | 128 | 1,477 | 6,760 |
Shares redeemed | (3,964) | (11,092) | (148,877) | (541,126) |
Net increase (decrease) | (3,436) | 3,755 | $ (131,799) | $ 300,308 |
12. 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.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $74,134, which is recorded in the accompanying Statement of Operations.
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 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 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 28, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 21, 2009
Annual Report
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 223 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 381 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy call Fidelity at 1-877-208-0098.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation | |
Edward C. Johnson 3d (78) | |
| Year of Election or Appointment: 1980 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) | |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. 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 (60) | |
| 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), Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003), as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008). Currently, Mr. Dirks serves as a member of the Board of Directors for The Brookville Center for Children's Services, Inc. (2009-present). |
Alan J. Lacy (55) | |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (65) | |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. 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. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) | |
| Year of Election or Appointment: 2008 Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services 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- |
Cornelia M. Small (64) | |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000- |
William S. Stavropoulos (69) | |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) | |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) | |
| Year of Election or Appointment: 2008 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- |
Annual Report
Advisory Board Member and Executive Officers**:
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 | |
Peter S. Lynch (65) | |
| Year of Election or Appointment: 2003 Member of the Advisory Board of Fidelity's Equity and High Income Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and 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. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) | |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004- |
Brian B. Hogan (44) | |
| Year of Election or Appointment: 2007 Vice President of Sector Funds. Mr. Hogan also serves as Senior Vice President, Equity Research of FMR. Previously, Mr. Hogan served as a portfolio manager. |
Scott C. Goebel (41) | |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008- |
John B. McGinty, Jr. (46) | |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) | |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) | |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) | |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) | |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Company, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) | |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (42) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (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). |
Paul M. Murphy (61) | |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (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 (FPCMS) (1994-2007). |
Gary W. Ryan (50) | |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** 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 | 04/20/09 | 04/17/09 | $0.041 | $- |
Select Gold Portfolio |
|
|
|
|
Institutional Class | 04/20/09 | 04/17/09 | $- | $- |
Select Materials Portfolio |
|
|
|
|
Institutional Class | 04/20/09 | 04/17/09 | $0.064 | $- |
Select Telecommunications Portfolio |
|
|
|
|
Institutional Class | 04/20/09 | 04/17/09 | $- | $0.051 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2008 | December 2008 |
Select Consumer Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Select Materials Portfolio |
|
|
Institutional Class | -% | 100% |
Select Telecommunications Portfolio |
|
|
Institutional Class | 100% | 72% |
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 2008 | December 2008 |
Select Consumer Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Select Materials Portfolio |
|
|
Institutional Class | -% | 100% |
Select Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
The funds will notify shareholders in January 2010 of amounts for use in preparing 2009 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
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 Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ASGMTI-UANN-0409
1.845768.102
Item 2. Code of Ethics
As of the end of the period, February 28, 2009, Fidelity Select Portfolios (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP ("PwC") in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Environmental Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Home Finance Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Delivery Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, 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 Portfolio and Wireless Portfolio (the "Funds"):
Services Billed by PwC
February 28, 2009 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $31,000 | $- | $2,600 | $1,500 |
Automotive Portfolio | $31,000 | $- | $2,600 | $1,500 |
Banking Portfolio | $32,000 | $- | $2,600 | $1,600 |
Biotechnology Portfolio | $34,000 | $- | $2,600 | $2,400 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $3,000 | $1,900 |
Chemicals Portfolio | $32,000 | $- | $2,600 | $1,800 |
Communications Equipment Portfolio | $32,000 | $- | $2,600 | $1,600 |
Computers Portfolio | $32,000 | $- | $2,600 | $1,700 |
Construction and Housing Portfolio | $33,000 | $- | $2,600 | $1,500 |
Consumer Discretionary Portfolio | $31,000 | $- | $2,600 | $1,500 |
Consumer Staples Portfolio | $37,000 | $- | $2,600 | $2,100 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,600 | $2,200 |
Electronics Portfolio | $33,000 | $- | $2,600 | $2,300 |
Energy Portfolio | $37,000 | $- | $2,800 | $3,600 |
Energy Service Portfolio | $36,000 | $- | $2,600 | $3,100 |
Environmental Portfolio | $31,000 | $- | $2,600 | $1,500 |
Financial Services Portfolio | $32,000 | $- | $3,000 | $1,700 |
Gold Portfolio | $52,000 | $- | $6,200 | $3,000 |
Health Care Portfolio | $35,000 | $- | $2,600 | $2,800 |
Home Finance Portfolio | $32,000 | $- | $2,600 | $1,500 |
Industrial Equipment Portfolio | $35,000 | $- | $2,600 | $1,500 |
Industrials Portfolio | $32,000 | $- | $2,600 | $1,500 |
Insurance Portfolio | $32,000 | $- | $2,600 | $1,500 |
IT Services Portfolio | $31,000 | $- | $2,600 | $1,500 |
Leisure Portfolio | $32,000 | $- | $2,600 | $1,600 |
Materials Portfolio | $36,000 | $- | $2,600 | $1,700 |
Medical Delivery Portfolio | $32,000 | $- | $2,600 | $1,800 |
Medical Equipment and Systems Portfolio | $34,000 | $- | $2,600 | $2,400 |
Multimedia Portfolio | $31,000 | $- | $2,600 | $1,500 |
Natural Gas Portfolio | $35,000 | $- | $2,600 | $2,700 |
Natural Resources Portfolio | $36,000 | $- | $2,600 | $3,100 |
Networking and Infrastructure Portfolio | $31,000 | $- | $2,600 | $1,500 |
Paper and Forest Products Portfolio | $31,000 | $- | $2,600 | $1,500 |
Pharmaceuticals Portfolio | $32,000 | $- | $2,600 | $1,600 |
Retailing Portfolio | $33,000 | $- | $2,600 | $1,500 |
Software and Computer Services Portfolio | $34,000 | $- | $2,600 | $2,000 |
Technology Portfolio | $34,000 | $- | $2,600 | $2,500 |
Telecommunications Portfolio | $36,000 | $- | $2,600 | $1,700 |
Transportation Portfolio | $32,000 | $- | $2,600 | $1,500 |
Utilities Portfolio | $32,000 | $- | $2,600 | $1,800 |
Wireless Portfolio | $32,000 | $- | $2,600 | $1,700 |
February 29, 2008 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $31,000 | $- | $2,600 | $1,100 |
Automotive Portfolio | $31,000 | $- | $2,600 | $1,100 |
Banking Portfolio | $31,000 | $- | $2,600 | $1,300 |
Biotechnology Portfolio | $33,000 | $- | $2,600 | $1,900 |
Brokerage and Investment Management Portfolio | $33,000 | $- | $2,600 | $1,700 |
Chemicals Portfolio | $31,000 | $- | $2,600 | $1,200 |
Communications Equipment Portfolio | $31,000 | $- | $2,600 | $1,300 |
Computers Portfolio | $32,000 | $- | $2,600 | $1,400 |
Construction and Housing Portfolio | $31,000 | $- | $2,600 | $1,200 |
Consumer Discretionary Portfolio | $31,000 | $- | $2,600 | $1,100 |
Consumer Staples Portfolio | $35,000 | $- | $2,600 | $1,400 |
Defense and Aerospace Portfolio | $33,000 | $- | $2,600 | $1,800 |
Electronics Portfolio | $34,000 | $- | $2,600 | $2,100 |
Energy Portfolio | $36,000 | $- | $2,600 | $2,600 |
Energy Service Portfolio | $34,000 | $- | $2,600 | $2,100 |
Environmental Portfolio | $31,000 | $- | $2,600 | $1,100 |
Financial Services Portfolio | $32,000 | $- | $2,600 | $1,400 |
Gold Portfolio | $37,000 | $- | $2,600 | $2,000 |
Health Care Portfolio | $35,000 | $- | $2,600 | $2,300 |
Home Finance Portfolio | $31,000 | $- | $2,600 | $1,200 |
Industrial Equipment Portfolio | $35,000 | $- | $2,600 | $1,200 |
Industrials Portfolio | $31,000 | $- | $2,600 | $1,100 |
Insurance Portfolio | $31,000 | $- | $2,600 | $1,200 |
IT Services Portfolio | $31,000 | $- | $2,600 | $1,100 |
Leisure Portfolio | $31,000 | $- | $2,600 | $1,200 |
Materials Portfolio | $35,000 | $- | $2,600 | $1,300 |
Medical Delivery Portfolio | $32,000 | $- | $2,600 | $1,500 |
Medical Equipment and Systems Portfolio | $32,000 | $- | $2,600 | $1,600 |
Multimedia Portfolio | $32,000 | $- | $2,600 | $1,100 |
Natural Gas Portfolio | $33,000 | $- | $2,600 | $1,800 |
Natural Resources Portfolio | $34,000 | $- | $2,600 | $2,000 |
Networking and Infrastructure Portfolio | $31,000 | $- | $2,600 | $1,100 |
Paper and Forest Products Portfolio | $31,000 | $- | $2,600 | $1,100 |
Pharmaceuticals Portfolio | $31,000 | $- | $2,600 | $1,200 |
Retailing Portfolio | $31,000 | $- | $2,600 | $1,100 |
Software and Computer Services Portfolio | $33,000 | $- | $2,600 | $1,600 |
Technology Portfolio | $34,000 | $- | $2,600 | $2,100 |
Telecommunications Portfolio | $36,000 | $- | $2,600 | $1,400 |
Transportation Portfolio | $31,000 | $- | $2,600 | $1,100 |
Utilities Portfolio | $33,000 | $- | $2,600 | $1,600 |
Wireless Portfolio | $32,000 | $- | $2,600 | $1,300 |
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A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company ("FMR") and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds ("Fund Service Providers"):
Services Billed by PwC
| February 28, 2009A | February 29, 2008A |
Audit-Related Fees | $2,985,000 | $220,000B |
Tax Fees | $2,000 | $- |
All Other Fees | $- | $-B |
A Amounts may reflect rounding.
B Reflects current period presentation.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for assurance services provided to the fund or Fund Service Provider that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | February 28, 2009 A | February 29, 2008 A |
PwC | $3,600,000 | $1,680,000 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
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Date: | April 28, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
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Date: | April 28, 2009 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
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Date: | April 28, 2009 |