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)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, Secretary
245 Summer St.
Boston, Massachusetts 02210
(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, 2015 |
This report on Form N-CSR relates solely to the Registrant's Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Consumer Staples Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Gold Portfolio, IT Services Portfolio, Materials Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Software and Computer Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Utilities Portfolio and Wireless Portfolio series (each, a "Fund" and collectively, the "Funds").
Item 1. Reports to Stockholders
Fidelity®
Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
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 | |
| Consolidated Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Materials | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
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Trustees and Officers |
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Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
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To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Chemicals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Chemicals Portfolio | 7.52% | 19.26% | 12.61% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Mahmoud Sharaf, Portfolio Manager of Chemicals Portfolio: For the year, the fund returned 7.52%, behind the 11.28% gain of its industry benchmark, the MSCI U.S. IMI Chemicals 25-50 Index, and the S&P 500®. The period started out relatively well, with most markets benefiting from the slow-paced global economic recovery. However, oil prices began to decline mid-summer due to an increase in global production and anemic consumption. Then, in a surprise move in November, OPEC, the Organization of the Petroleum Exporting Countries, announced it would not cut production to ease the price decline, causing oil to plummet further. Prices continued to tumble through period end, flattening the global cost curve for commodity chemicals firms, which use crude oil in their production. As a result, this subindustry - the fund's largest overweighting versus its MSCI benchmark the past year - weighed on its relative performance. This period, many of the fund's biggest detractors were from this area, including Methanex - an out-of-index holding - and Westlake Chemical. As oil continued to decline and the U.S. dollar gained strength during the back half of the period, higher-quality, more-defensive chemicals names began to outperform. This included paint and coatings makers, which also benefited from the plummeting oil prices because these firms use oil-based raw materials. Here, an underweighting in Sherwin-Williams was the fund's biggest individual detractor. Sherwin-Williams outperformed as investors were drawn to the safe-haven stock due to firm's U.S.-focused business and its tie to the improving domestic housing market. Elsewhere, a modest cash position of roughly 2%, on average, hurt amid a relatively strong market. On the flip side, an average overweighting in biochemical and organic chemical producer Sigma-Aldrich was the fund's biggest contributor the past year and one of its largest holdings. The stock of this long-time fund holding popped in September after Germany-based Merck KgaG, a multinational chemicals, pharmaceuticals and life sciences firm, agreed to buy Sigma-Aldrich to expand its business in chemicals used in research labs and drug manufacturing. The deal was completed in December. Another multiyear holding, specialty chemical producer Ashland, lifted the fund's relative result. Ashland successfully sold one of its low-margin, low-multiple divisions and used the proceeds to buy back some of its stock. I remained to be bullish on the firm's growth potential, and Ashland remained one of the fund's biggest holdings 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
Chemicals 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, 2014 to February 28, 2015).
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 | .79% | $ 1,000.00 | $ 1,001.60 | $ 3.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Chemicals Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 14.3 | 11.9 |
Monsanto Co. | 12.3 | 8.3 |
LyondellBasell Industries NV Class A | 8.1 | 10.8 |
The Dow Chemical Co. | 6.0 | 7.3 |
Ecolab, Inc. | 5.5 | 4.3 |
Praxair, Inc. | 5.0 | 6.9 |
CF Industries Holdings, Inc. | 4.6 | 4.4 |
Ashland, Inc. | 4.3 | 3.3 |
Eastman Chemical Co. | 3.6 | 4.2 |
International Flavors & Fragrances, Inc. | 3.4 | 0.0 |
| 67.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Chemicals | 96.1% |
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![]() | All Others* | 3.9% |
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As of August 31, 2014 | |||
![]() | Chemicals | 96.3% |
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![]() | Oil, Gas & | 2.3% |
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![]() | All Others* | 1.4% |
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* Includes short-term investments and net other assets (liabilities). |
Annual Report
Chemicals Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
CHEMICALS - 96.1% | |||
Commodity Chemicals - 11.2% | |||
LyondellBasell Industries NV Class A | 1,527,322 | $ 131,212,233 | |
Methanex Corp. | 399,600 | 21,733,305 | |
Orion Engineered Carbons SA | 528,543 | 8,699,818 | |
Tronox Ltd. Class A | 423,149 | 9,156,944 | |
Westlake Chemical Corp. | 162,000 | 10,815,120 | |
Westlake Chemical Partners LP | 29,300 | 782,017 | |
| 182,399,437 | ||
Diversified Chemicals - 23.9% | |||
E.I. du Pont de Nemours & Co. | 2,977,500 | 231,798,373 | |
Eastman Chemical Co. | 784,261 | 58,396,074 | |
The Dow Chemical Co. | 1,993,606 | 98,165,159 | |
| 388,359,606 | ||
Fertilizers & Agricultural Chemicals - 17.9% | |||
CF Industries Holdings, Inc. | 242,016 | 74,112,560 | |
Monsanto Co. | 1,664,849 | 200,497,765 | |
Potash Corp. of Saskatchewan, Inc. | 438,800 | 15,742,885 | |
| 290,353,210 | ||
Industrial Gases - 10.6% | |||
Air Products & Chemicals, Inc. | 271,708 | 42,424,487 | |
Airgas, Inc. | 416,400 | 48,810,408 | |
Praxair, Inc. | 634,821 | 81,193,606 | |
| 172,428,501 | ||
Specialty Chemicals - 32.5% | |||
Albemarle Corp. U.S. | 273,792 | 15,488,413 | |
Ashland, Inc. | 551,050 | 70,325,001 | |
Axalta Coating Systems | 706,003 | 20,050,485 | |
Ecolab, Inc. | 766,531 | 88,564,992 | |
Ferro Corp. (a) | 1,564,283 | 19,944,608 | |
Innophos Holdings, Inc. | 320,406 | 17,984,389 | |
International Flavors & Fragrances, Inc. | 455,500 | 55,539,115 | |
| |||
Shares | Value | ||
NewMarket Corp. | 60,296 | $ 28,405,446 | |
PolyOne Corp. | 576,317 | 22,902,838 | |
PPG Industries, Inc. | 219,304 | 51,619,776 | |
Quaker Chemical Corp. | 25,747 | 2,090,141 | |
RPM International, Inc. | 853,879 | 43,163,583 | |
Sherwin-Williams Co. | 139,953 | 39,914,596 | |
Valspar Corp. | 491,200 | 42,562,480 | |
W.R. Grace & Co. (a) | 100,391 | 9,953,768 | |
| 528,509,631 | ||
TOTAL COMMON STOCKS (Cost $1,154,785,184) | 1,562,050,385 | ||
Money Market Funds - 3.3% | |||
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Fidelity Cash Central Fund, 0.13% (b) | 52,612,341 |
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TOTAL INVESTMENT PORTFOLIO - 99.4% (Cost $1,207,397,525) | 1,614,662,726 |
NET OTHER ASSETS (LIABILITIES) - 0.6% | 10,404,430 | ||
NET ASSETS - 100% | $ 1,625,067,156 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
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 | $ 32,724 |
Fidelity Securities Lending Cash Central Fund | 251,742 |
Total | $ 284,466 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 87.3% |
Netherlands | 8.1% |
Canada | 2.3% |
Bermuda | 1.2% |
Others (Individually Less Than 1%) | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
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Assets | ||
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $1,154,785,184) | $ 1,562,050,385 |
|
Fidelity Central Funds (cost $52,612,341) | 52,612,341 |
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Total Investments (cost $1,207,397,525) |
| $ 1,614,662,726 |
Receivable for investments sold | 12,003,000 | |
Receivable for fund shares sold | 1,853,368 | |
Dividends receivable | 3,093,725 | |
Distributions receivable from Fidelity Central Funds | 3,051 | |
Prepaid expenses | 6,251 | |
Other receivables | 29,516 | |
Total assets | 1,631,651,637 | |
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Liabilities | ||
Payable for fund shares redeemed | 5,474,940 | |
Accrued management fee | 736,857 | |
Other affiliated payables | 302,973 | |
Other payables and accrued expenses | 69,711 | |
Total liabilities | 6,584,481 | |
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Net Assets | $ 1,625,067,156 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,184,824,543 | |
Undistributed net investment income | 3,797,390 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 29,180,022 | |
Net unrealized appreciation (depreciation) on investments | 407,265,201 | |
Net Assets, for 10,597,540 shares outstanding | $ 1,625,067,156 | |
Net Asset Value, offering price and redemption price per share ($1,625,067,156 ÷ 10,597,540 shares) | $ 153.34 |
Statement of Operations
| Year ended February 28, 2015 | |
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Investment Income |
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Dividends |
| $ 30,625,548 |
Income from Fidelity Central Funds |
| 284,466 |
Total income |
| 30,910,014 |
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Expenses | ||
Management fee | $ 8,990,765 | |
Transfer agent fees | 3,243,996 | |
Accounting and security lending fees | 509,882 | |
Custodian fees and expenses | 26,708 | |
Independent trustees' compensation | 31,616 | |
Registration fees | 107,740 | |
Audit | 42,820 | |
Legal | 10,551 | |
Interest | 3,721 | |
Miscellaneous | 27,532 | |
Total expenses before reductions | 12,995,331 | |
Expense reductions | (3,515) | 12,991,816 |
Net investment income (loss) | 17,918,198 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
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Unaffiliated issuers | 49,888,942 | |
Foreign currency transactions | (6,764) | |
Redemptions in-kind with affiliated entities | 44,600,048 | |
Total net realized gain (loss) |
| 94,482,226 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 120,669 | |
Assets and liabilities in foreign currencies | 10,359 | |
Total change in net unrealized appreciation (depreciation) |
| 131,028 |
Net gain (loss) | 94,613,254 | |
Net increase (decrease) in net assets resulting from operations | $ 112,531,452 |
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) | $ 17,918,198 | $ 11,321,031 |
Net realized gain (loss) | 94,482,226 | 106,436,765 |
Change in net unrealized appreciation (depreciation) | 131,028 | 180,559,217 |
Net increase (decrease) in net assets resulting from operations | 112,531,452 | 298,317,013 |
Distributions to shareholders from net investment income | (15,536,694) | (11,058,506) |
Distributions to shareholders from net realized gain | (47,390,610) | (65,324,116) |
Total distributions | (62,927,304) | (76,382,622) |
Share transactions | 895,876,330 | 719,398,651 |
Reinvestment of distributions | 60,869,457 | 73,918,871 |
Cost of shares redeemed | (810,770,343) | (720,642,710) |
Net increase (decrease) in net assets resulting from share transactions | 145,975,444 | 72,674,812 |
Redemption fees | 53,824 | 47,042 |
Total increase (decrease) in net assets | 195,633,416 | 294,656,245 |
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|
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Net Assets | ||
Beginning of period | 1,429,433,740 | 1,134,777,495 |
End of period (including undistributed net investment income of $3,797,390 and undistributed net investment income of $2,509,218, respectively) | $ 1,625,067,156 | $ 1,429,433,740 |
Other Information Shares | ||
Sold | 5,974,565 | 5,317,546 |
Issued in reinvestment of distributions | 422,535 | 540,024 |
Redeemed | (5,443,032) | (5,441,546) |
Net increase (decrease) | 954,068 | 416,024 |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
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Net asset value, beginning of period | $ 148.23 | $ 122.98 | $ 110.52 | $ 100.85 | $ 75.43 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.64 | 1.23 | 1.84E | .76 | .69 |
Net realized and unrealized gain (loss) | 9.09 | 32.11 | 15.10 | 9.52 | 27.20 |
Total from investment operations | 10.73 | 33.34 | 16.94 | 10.28 | 27.89 |
Distributions from net investment income | (1.42) | (1.18) | (1.55) | (.62) | (.57) |
Distributions from net realized gain | (4.20) | (6.92) | (2.95) | - | (1.91) |
Total distributions | (5.62) | (8.10) | (4.49) J | (.62) | (2.47) K |
Redemption fees added to paid in capital B | - I | .01 | .01 | .01 | - I |
Net asset value, end of period | $ 153.34 | $ 148.23 | $ 122.98 | $ 110.52 | $ 100.85 |
Total ReturnA | 7.52% | 27.77% | 15.61% | 10.31% | 37.74% |
Ratios to Average Net AssetsC, F |
|
|
|
|
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Expenses before reductions | .79% | .81% | .83% | .85% | .90% |
Expenses net of fee waivers, if any | .79% | .81% | .83% | .85% | .90% |
Expenses net of all reductions | .79% | .80% | .81% | .84% | .89% |
Net investment income (loss) | 1.10% | .91% | 1.62% E | .77% | .84% |
Supplemental Data |
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|
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Net assets, end of period (000 omitted) | $ 1,625,067 | $ 1,429,434 | $ 1,134,777 | $ 861,539 | $ 692,332 |
Portfolio turnover rateD | 80% G | 109% | 60% | 119% | 108% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.30 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.35%. FExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. GPortfolio turnover rate excludes securities received or delivered in-kind. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $4.49 per share is comprised of distributions from net investment income of $1.547 and distributions from net realized gain of $2.947 per share. KTotal distributions of $2.47 per share is comprised of distributions from net investment income of $.565 and distributions from net realized gain of $1.905 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between 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 Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 409,784,548 |
Gross unrealized depreciation | (9,546,355) |
Net unrealized appreciation (depreciation) on securities | $ 400,238,193 |
|
|
Tax Cost | $ 1,214,424,533 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 3,821,941 |
Undistributed long-term capital gain | $ 36,207,029 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 400,238,193 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 39,145,206 | $ 23,947,481 |
Long-term Capital Gains | 23,782,098 | 52,435,141 |
Total | $ 62,927,304 | $ 76,382,622 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,494,917,803 and $1,272,244,611, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, 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 .20% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $26,565 for the period.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,247,590 | .33% | $ 2,928 |
Redemptions In-Kind. During the period, 624,612 shares of the Fund held by affiliated entities were redeemed for cash and investments with a value of $94,716,088. The net realized gain of $44,600,048 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,433 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. At period end, there were no security loans outstanding. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $251,742.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. 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 loan balance during the period for which loans were outstanding amounted to $8,162,833. The weighted average interest rate was .58%. The interest expense amounted to $793 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
The investment adviser reimbursed a portion of the Fund's operating expenses during the period in the amount of $3,515.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Gold Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Gold Portfolio | -17.45% | -12.27% | 1.61% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 28, 2005. 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
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from S. Joseph Wickwire II, Portfolio Manager, Gold Portfolio: For the year, the fund's Retail Class shares returned -17.45%, underperforming the -16.34% return of its industry benchmark, the S&P® Global BMI Gold Capped Index and the S&P® 500. By comparison, the broadly based MSCI ACWI (All Country World Index) Index added 7.95%. It was a difficult year for gold and gold stocks as the period saw gold prices fall from a high of $1,383 to a low of $1,141 an ounce. The fund underperformed its industry benchmark by underweighting names that outperformed, including Newmont Mining and Zinjin Mining Group, the latter of which we did not own. Overweighting names that lost ground also hurt, including B2Gold and Argonaut Gold. Some non-gold equity positions also dragged on the fund's result. Conversely, underweighting stocks that underperformed contributed to results, including Barrick Gold, which lagged on concerns about its debt level and management changes, along with uncertainty about its strategy after a failed attempt to acquire Newmont. Our bullion position also contributed, as it outperformed the gold equity benchmark.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold 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, 2014 to February 28, 2015).
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 | $ 789.50 | $ 5.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 788.20 | $ 6.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Gold | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 4.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 3.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
A 5% return per year before expenses
B Annualized expense ratio reflects consolidated expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Consolidated Investment Changes (Unaudited)
Top Ten Holdings as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.8 | 8.9 |
Randgold Resources Ltd. sponsored ADR | 7.1 | 5.6 |
Newcrest Mining Ltd. | 6.2 | 4.8 |
Gold Bullion | 6.2 | 6.3 |
Franco-Nevada Corp. | 6.1 | 4.9 |
Agnico Eagle Mines Ltd. (Canada) | 5.0 | 4.7 |
Silver Bullion | 4.2 | 5.1 |
Eldorado Gold Corp. | 4.1 | 5.1 |
Newmont Mining Corp. | 4.0 | 3.1 |
Barrick Gold Corp. | 3.8 | 5.1 |
| 55.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Gold | 87.6% |
|
![]() | Commodities & Related Investments** | 10.4% |
|
![]() | Precious Metals & Minerals | 0.1% |
|
![]() | Silver | 0.7% |
|
![]() | Diversified Metals & Mining | 0.2% |
|
![]() | Steel | 0.0% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2014 | |||
![]() | Gold | 87.0% |
|
![]() | Commodities & Related Investments** | 11.4% |
|
![]() | Precious Metals & Minerals | 0.6% |
|
![]() | Diversified Metals & Mining | 0.3% |
|
![]() | Coal & Consumable Fuels | 0.2% |
|
![]() | Silver | 0.2% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets (liabilities). |
** Includes gold bullion and/or silver bullion. |
Geographic Diversification (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Canada | 55.8% |
|
![]() | United States of America* | 19.1% |
|
![]() | Australia | 8.1% |
|
![]() | Bailiwick of Jersey | 7.9% |
|
![]() | South Africa | 6.9% |
|
![]() | Peru | 0.8% |
|
![]() | Bermuda | 0.7% |
|
![]() | Cayman Islands | 0.4% |
|
![]() | United Kingdom | 0.3% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
As of August 31, 2014 | |||
![]() | Canada | 59.0% |
|
![]() | United States of America* | 18.2% |
|
![]() | South Africa | 7.1% |
|
![]() | Australia | 6.9% |
|
![]() | Bailiwick of Jersey | 6.5% |
|
![]() | Bermuda | 0.9% |
|
![]() | Peru | 0.7% |
|
![]() | Cayman Islands | 0.5% |
|
![]() | United Kingdom | 0.2% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 88.6% | |||
Shares | Value | ||
Australia - 8.1% | |||
METALS & MINING - 8.1% | |||
Gold - 8.1% | |||
Beadell Resources Ltd. (d) | 7,687,418 | $ 1,922,223 | |
Evolution Mining Ltd. | 1,437,195 | 948,955 | |
Kingsgate Consolidated NL (a) | 78,274 | 48,319 | |
Medusa Mining Ltd. (a)(d) | 1,983,595 | 1,518,982 | |
Newcrest Mining Ltd. (a) | 6,223,650 | 69,980,874 | |
Northern Star Resources Ltd. | 4,604,518 | 8,491,210 | |
Perseus Mining Ltd.: | |||
(Australia) (a)(d) | 2,122,134 | 588,674 | |
(Canada) (a) | 1,300,000 | 369,170 | |
Regis Resources Ltd. (a)(d) | 2,525,393 | 3,759,217 | |
Resolute Mng Ltd. (a) | 2,390,161 | 616,332 | |
Saracen Mineral Holdings Ltd. (a) | 4,516,787 | 1,482,355 | |
Silver Lake Resources Ltd. (a)(d) | 4,346,985 | 696,330 | |
Troy Resources NL (a) | 195,000 | 84,567 | |
Troy Resources NL (a)(e) | 734,826 | 323,298 | |
| 90,830,506 | ||
Bailiwick of Jersey - 7.9% | |||
METALS & MINING - 7.9% | |||
Gold - 7.9% | |||
Centamin PLC | 1,848,700 | 1,878,008 | |
Lydian International Ltd. (a) | 2,325,200 | 930,006 | |
Polyus Gold International Ltd. (d) | 222,400 | 697,863 | |
Polyus Gold International Ltd. sponsored GDR | 1,509,831 | 4,620,083 | |
Randgold Resources Ltd. sponsored ADR (d) | 1,010,495 | 80,021,099 | |
| 88,147,059 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Gold - 0.7% | |||
Continental Gold Ltd. (a) | 4,907,000 | 7,850,572 | |
Steel - 0.0% | |||
African Minerals Ltd. (a)(d) | 1,718,700 | 27 | |
TOTAL METALS & MINING | 7,850,599 | ||
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Ivanhoe Mines Ltd. (a) | 2,225,300 | 1,477,481 | |
Ivanhoe Mines Ltd. Class A warrants 12/10/15 (a)(e) | 837,300 | 20,094 | |
NovaCopper, Inc. (a) | 488,333 | 293,000 | |
Sabina Gold & Silver Corp. (a)(d) | 980,000 | 301,816 | |
True Gold Mining, Inc. (a) | 191,000 | 29,794 | |
| 2,122,185 | ||
Gold - 54.8% | |||
Agnico Eagle Mines Ltd. (Canada) (d) | 1,759,901 | 56,551,654 | |
| |||
Shares | Value | ||
Alacer Gold Corp. | 2,187,363 | $ 4,741,824 | |
Alamos Gold, Inc. | 1,174,000 | 7,099,784 | |
Argonaut Gold, Inc. (a) | 4,558,862 | 7,585,340 | |
ATAC Resources Ltd. (a) | 67,200 | 32,253 | |
AuRico Gold, Inc. | 112,100 | 395,457 | |
B2Gold Corp. (a) | 22,915,693 | 38,678,596 | |
Barrick Gold Corp. (d) | 3,295,369 | 42,862,731 | |
Centerra Gold, Inc. | 1,335,600 | 6,527,891 | |
Detour Gold Corp. (a) | 2,042,100 | 19,749,611 | |
Detour Gold Corp. (a)(e) | 785,900 | 7,600,617 | |
Eldorado Gold Corp. (d) | 7,903,535 | 45,583,943 | |
Franco-Nevada Corp. | 1,297,800 | 68,476,832 | |
Gabriel Resources Ltd. (a)(d) | 1,020,600 | 661,296 | |
Goldcorp, Inc. | 4,486,700 | 98,807,176 | |
GoldQuest Mining Corp. (a) | 2,318,500 | 250,378 | |
Guyana Goldfields, Inc. (a) | 3,286,900 | 8,571,549 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 404,208 | |
IAMGOLD Corp. (a) | 2,920,000 | 7,147,588 | |
Kinross Gold Corp. (a) | 3,460,291 | 9,743,400 | |
Kirkland Lake Gold, Inc. (a)(d) | 376,000 | 1,570,050 | |
Lake Shore Gold Corp. (a)(d) | 2,806,600 | 2,559,414 | |
Midas Gold Corp. (a) | 100,500 | 40,197 | |
New Gold, Inc. (a) | 6,615,175 | 25,347,323 | |
NGEx Resources, Inc. (a) | 65,000 | 55,116 | |
Novagold Resources, Inc. (a) | 1,935,700 | 7,200,228 | |
OceanaGold Corp. | 2,842,300 | 5,434,043 | |
Orezone Gold Corp. (a) | 371,100 | 157,334 | |
Osisko Gold Royalties Ltd. | 546,193 | 7,794,643 | |
Pilot Gold, Inc. (a) | 1,418,150 | 1,225,184 | |
Premier Gold Mines Ltd. (a)(g) | 10,416,222 | 20,747,454 | |
Pretium Resources, Inc. (a) | 856,538 | 5,289,556 | |
Pretium Resources, Inc. (a)(e) | 225,000 | 1,389,489 | |
Pretium Resources, Inc. (a)(f) | 225,000 | 1,389,489 | |
Primero Mining Corp. (a)(d) | 1,506,800 | 5,351,725 | |
Richmont Mines, Inc. (a) | 239,900 | 804,080 | |
Rio Alto Mining Ltd. (a) | 2,742,235 | 8,598,961 | |
Romarco Minerals, Inc. (a) | 31,476,998 | 13,596,975 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 2,548,596 | |
Romarco Minerals, Inc. (f) | 4,600,000 | 1,788,337 | |
Roxgold, Inc. (a) | 100,000 | 51,996 | |
Rubicon Minerals Corp. (a) | 5,376,402 | 6,279,135 | |
Seabridge Gold, Inc. (a) | 659,166 | 5,121,721 | |
SEMAFO, Inc. (a) | 2,895,700 | 8,964,370 | |
Teranga Gold Corp. (a) | 85,000 | 46,916 | |
Teranga Gold Corp. CDI unit (a)(d) | 3,338,072 | 1,851,942 | |
Timmins Gold Corp. (a) | 122,600 | 106,899 | |
Torex Gold Resources, Inc. (a) | 20,093,200 | 18,484,265 | |
Yamana Gold, Inc. | 6,909,420 | 29,348,868 | |
| 614,616,434 | ||
Precious Metals & Minerals - 0.1% | |||
Chesapeake Gold Corp. (a) | 12,000 | 21,886 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Standard Ventures Corp. (a) | 2,125,400 | $ 918,099 | |
Klondex Mines Ltd. (a) | 1,000 | 2,160 | |
| 942,145 | ||
Silver - 0.7% | |||
MAG Silver Corp. (a) | 171,000 | 1,237,941 | |
Silver Wheaton Corp. | 47,700 | 1,030,238 | |
Tahoe Resources, Inc. | 426,600 | 5,968,510 | |
| 8,236,689 | ||
TOTAL METALS & MINING | 625,917,453 | ||
Cayman Islands - 0.4% | |||
METALS & MINING - 0.4% | |||
Gold - 0.4% | |||
Endeavour Mining Corp. (a) | 8,267,400 | 3,968,035 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 777,528 | 9,003,774 | |
South Africa - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
AngloGold Ashanti Ltd. sponsored ADR (a) | 3,046,508 | 34,334,145 | |
Gold Fields Ltd. sponsored ADR | 5,219,126 | 24,268,936 | |
Harmony Gold Mining Co. Ltd. (a) | 1,484,000 | 3,625,670 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,757,900 | 4,324,434 | |
Sibanye Gold Ltd. ADR | 1,023,906 | 10,843,165 | |
| 77,396,350 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Acacia Mining PLC | 837,800 | 3,559,540 | |
Pan African Resources PLC | 15,000 | 2,721 | |
| 3,562,261 | ||
United States of America - 7.7% | |||
METALS & MINING - 7.7% | |||
Gold - 7.7% | |||
Gold Resource Corp. (d) | 115,000 | 397,900 | |
McEwen Mining, Inc. (a)(d) | 679,110 | 767,394 | |
| |||
Shares | Value | ||
Newmont Mining Corp. | 1,718,500 | $ 45,248,105 | |
Royal Gold, Inc. | 552,113 | 39,807,347 | |
| 86,220,746 | ||
TOTAL COMMON STOCKS (Cost $1,340,424,123) |
| ||
Commodities - 10.4% | |||
Troy Ounces |
| ||
Gold Bullion (a) | 57,510 | 69,704,996 | |
Silver Bullion (a) | 2,837 | 47,051,645 | |
TOTAL COMMODITIES (Cost $130,172,232) |
| ||
Money Market Funds - 11.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 6,190,705 | 6,190,705 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 118,585,234 | 118,585,234 | |
TOTAL MONEY MARKET FUNDS (Cost $124,775,939) |
|
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $1,595,372,294) | 1,234,429,363 |
NET OTHER ASSETS (LIABILITIES) - (10.1)% | (112,830,851) | ||
NET ASSETS - 100% | $ 1,121,598,512 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $12,286,302 or 1.1% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,177,826 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 2,172,293 |
Romarco Minerals, Inc. | 12/12/14 | 1,987,728 |
(g) 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 | $ 9,364 |
Fidelity Securities Lending Cash Central Fund | 439,263 |
Total | $ 448,627 |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 225,764,683 | $ 65,099,608 | $ 147,759,808 | $ - | $ 116,684,748 |
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, |
Premier Gold Mines Ltd. | $ 20,772,705 | $ 1,654,461 | $ 668,621 | $ - | $ 20,747,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 992,896,783 | $ 987,434,430 | $ 5,414,007 | $ 48,346 |
Commodities | 116,756,641 | 116,756,641 | - | - |
Money Market Funds | 124,775,939 | 124,775,939 | - | - |
Total Investments in Securities: | $ 1,234,429,363 | $ 1,228,967,010 | $ 5,414,007 | $ 48,346 |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $113,727,253) - See accompanying schedule: Unaffiliated issuers (cost $1,309,030,420) | $ 972,149,329 |
|
Fidelity Central Funds (cost $124,775,939) | 124,775,939 |
|
Commodities (cost $130,172,232) | 116,756,641 |
|
Other affiliated issuers (cost $31,393,703) | 20,747,454 |
|
Total Investments (cost $1,595,372,294) |
| $ 1,234,429,363 |
Foreign currency held at value (cost $104,547) | 104,547 | |
Receivable for investments sold | 5,509,685 | |
Receivable for fund shares sold | 2,227,907 | |
Dividends receivable | 369,487 | |
Distributions receivable from Fidelity Central Funds | 21,274 | |
Prepaid expenses | 5,477 | |
Other receivables | 25,556 | |
Total assets | 1,242,693,296 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 106,570 | |
Payable for fund shares redeemed | 1,407,905 | |
Accrued management fee | 512,689 | |
Distribution and service plan fees payable | 50,874 | |
Other affiliated payables | 295,764 | |
Other payables and accrued expenses | 135,748 | |
Collateral on securities loaned, at value | 118,585,234 | |
Total liabilities | 121,094,784 | |
|
|
|
Net Assets | $ 1,121,598,512 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,578,854,710 | |
Accumulated net investment loss | (19,281) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,096,295,003) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (360,941,914) | |
Net Assets | $ 1,121,598,512 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 18.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $18.11) | $ 19.21 | |
Class T: | $ 17.83 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.83) | $ 18.48 | |
Class B: | $ 17.27 | |
|
|
|
Class C: | $ 17.20 | |
|
|
|
Gold: | $ 18.50 | |
|
|
|
Institutional Class: | $ 18.50 |
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
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,166,344 |
Income from Fidelity Central Funds (including $439,263 from security lending) |
| 448,627 |
Income before foreign taxes withheld |
| 9,614,971 |
Less foreign taxes withheld |
| (1,113,899) |
Total income |
| 8,501,072 |
|
|
|
Expenses | ||
Management fee | $ 7,307,511 | |
Transfer agent fees | 3,307,819 | |
Distribution and service plan fees | 625,615 | |
Accounting and security lending fees | 580,399 | |
Custodian fees and expenses | 283,527 | |
Independent trustees' compensation | 25,214 | |
Registration fees | 150,605 | |
Audit | 44,883 | |
Legal | 6,776 | |
Interest | 472 | |
Miscellaneous | 28,792 | |
Total expenses before reductions | 12,361,613 | |
Expense reductions | (454,642) | 11,906,971 |
Net investment income (loss) | (3,405,899) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (218,966,450) | |
Other affiliated issuers | (897,919) |
|
Commodities | (11,867,162) |
|
Foreign currency transactions | 197,792 | |
Total net realized gain (loss) |
| (231,533,739) |
Change in net unrealized appreciation (depreciation) on: Investments | (5,621,130) | |
Assets and liabilities in foreign currencies | (1,978) | |
Commodities | (13,914,448) | |
Total change in net unrealized appreciation (depreciation) |
| (19,537,556) |
Net gain (loss) | (251,071,295) | |
Net increase (decrease) in net assets resulting from operations | $ (254,477,194) |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (3,405,899) | $ 3,413,053 |
Net realized gain (loss) | (231,533,739) | (556,608,289) |
Change in net unrealized appreciation (depreciation) | (19,537,556) | (88,077,933) |
Net increase (decrease) in net assets resulting from operations | (254,477,194) | (641,273,169) |
Share transactions - net increase (decrease) | (124,744,949) | (461,130,558) |
Redemption fees | 222,335 | 396,348 |
Total increase (decrease) in net assets | (378,999,808) | (1,102,007,379) |
|
|
|
Net Assets | ||
Beginning of period | 1,500,598,320 | 2,602,605,699 |
End of period (including accumulated net investment loss of $19,281 and accumulated net investment loss of $8,084, respectively) | $ 1,121,598,512 | $ 1,500,598,320 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 I | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 | $ 40.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.10) | - A | .07 | (.13) | (.30) |
Net realized and unrealized gain (loss) | (3.80) | (8.25) | (15.19) | (2.83) | 15.28 |
Total from investment operations | (3.90) | (8.25) | (15.12) | (2.96) | 14.98 |
Distributions from net realized gain | - | - | - | (2.59) | (4.57) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.11 | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 |
Total ReturnB, C | (17.72)% | (27.24)% | (33.33)% | (6.24)% | 36.99% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.18% | 1.14% | 1.16% |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.14% | 1.15% |
Expenses net of all reductions | 1.19% | 1.18% | 1.17% | 1.14% | 1.14% |
Net investment income (loss) | (.51)% | -% G | .18% | (.28)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,898 | $ 60,270 | $ 101,202 | $ 152,969 | $ 149,178 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GAmount represents less than .01%. HExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. IFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 | $ 40.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.06) | (.03) | (.27) | (.43) |
Net realized and unrealized gain (loss) | (3.75) | (8.17) | (15.06) | (2.80) | 15.21 |
Total from investment operations | (3.90) | (8.23) | (15.09) | (3.07) | 14.78 |
Distributions from net realized gain | - | - | - | (2.57) | (4.45) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 17.83 | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 |
Total ReturnB, C | (17.95)% | (27.45)% | (33.50)% | (6.49)% | 36.62% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.50% | 1.49% | 1.45% | 1.43% | 1.44% |
Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.44% | 1.42% | 1.42% |
Expenses net of all reductions | 1.46% | 1.46% | 1.44% | 1.42% | 1.42% |
Net investment income (loss) | (.79)% | (.28)% | (.09)% | (.57)% | (.90)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 16,200 | $ 18,402 | $ 24,913 | $ 40,664 | $ 45,846 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 | $ 39.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.24) | (.16) | (.21) | (.49) | (.66) |
Net realized and unrealized gain (loss) | (3.63) | (7.98) | (14.76) | (2.76) | 15.02 |
Total from investment operations | (3.87) | (8.14) | (14.97) | (3.25) | 14.36 |
Distributions from net realized gain | - | - | - | (2.53) | (4.21) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.27 | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 |
Total ReturnB, C | (18.31)% | (27.78)% | (33.84)% | (6.95)% | 35.97% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.95% | 1.93% | 1.90% | 1.93% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.92% | 1.90% | 1.92% |
Expenses net of all reductions | 1.93% | 1.93% | 1.91% | 1.90% | 1.91% |
Net investment income (loss) | (1.26)% | (.75)% | (.57)% | (1.04)% | (1.39)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,461 | $ 4,373 | $ 9,423 | $ 20,894 | $ 26,837 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 | $ 39.75 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.23) | (.16) | (.20) | (.47) | (.64) |
Net realized and unrealized gain (loss) | (3.63) | (7.94) | (14.70) | (2.76) | 14.98 |
Total from investment operations | (3.86) | (8.10) | (14.90) | (3.23) | 14.34 |
Distributions from net realized gain | - | - | - | (2.53) | (4.28) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.20 | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 |
Total ReturnB, C | (18.33)% | (27.75)% | (33.83)% | (6.93)% | 36.01% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.96% | 1.93% | 1.87% | 1.89% |
Expenses net of fee waivers, if any | 1.92% | 1.94% | 1.92% | 1.87% | 1.88% |
Expenses net of all reductions | 1.92% | 1.93% | 1.91% | 1.87% | 1.87% |
Net investment income (loss) | (1.25)% | (.76)% | (.57)% | (1.01)% | (1.35)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,429 | $ 33,811 | $ 37,787 | $ 67,996 | $ 72,431 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 | $ 40.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.04) | .06 | .16 | (.02) | (.18) |
Net realized and unrealized gain (loss) | (3.87) | (8.38) | (15.40) | (2.85) | 15.43 |
Total from investment operations | (3.91) | (8.32) | (15.24) | (2.87) | 15.25 |
Distributions from net realized gain | - | - | - | (2.61) | (4.67) |
Redemption fees added to paid in capital B | - G | .01 | - G | - G | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 |
Total ReturnA | (17.45)% | (27.05)% | (33.16)% | (6.00)% | 37.35% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .94% | .94% | .93% | .89% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .92% | .89% | .90% |
Expenses net of all reductions | .90% | .91% | .92% | .89% | .89% |
Net investment income (loss) | (.22)% | .27% | .43% | (.03)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 992,944 | $ 1,275,913 | $ 2,301,019 | $ 3,924,440 | $ 4,250,249 |
Portfolio turnover rateD | 20% | 56% | 18% | 22% | 35% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 | $ 40.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .07 | .20 | .02 | (.15) |
Net realized and unrealized gain (loss) | (3.87) | (8.36) | (15.38) | (2.85) | 15.41 |
Total from investment operations | (3.91) | (8.29) | (15.18) | (2.83) | 15.26 |
Distributions from net realized gain | - | - | - | (2.62) | (4.72) |
Redemption fees added to paid in capital C | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 |
Total ReturnB | (17.45)% | (26.98)% | (33.09)% | (5.94)% | 37.45% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .90% | .87% | .84% | .82% | .85% |
Expenses net of fee waivers, if any | .86% | .85% | .83% | .81% | .84% |
Expenses net of all reductions | .86% | .84% | .82% | .81% | .83% |
Net investment income (loss) | (.18)% | .34% | .52% | .04% | (.31)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 23,667 | $ 107,830 | $ 128,262 | $ 168,548 | $ 137,246 |
Portfolio turnover rateE | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor 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, 2015
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd, a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2015, the Fund held an investment of $116,684,748 in the Subsidiary, representing 10.4% of the Fund's net assets.
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.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Investment Valuation - continued
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which 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, losses deferred due to wash sales and capital loss carryforwards.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 124,633,618 |
Gross unrealized depreciation | (616,152,284) |
Net unrealized appreciation (depreciation) on securities | $ (491,518,666) |
|
|
Tax Cost | $ 1,725,876,135 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (994,214,264) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (491,515,302) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
No expiration |
|
Short-term | $ (134,736,786) |
Long-term | (859,477,478) |
Total capital loss carryforward | $ (994,214,264) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
Annual Report
Notes to Consolidated Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $248,761,008 and $376,980,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 132,576 | $ 1,199 |
Class T | .25% | .25% | 85,648 | 148 |
Class B | .75% | .25% | 33,203 | 24,902 |
Class C | .75% | .25% | 374,188 | 110,290 |
|
|
| $ 625,615 | $ 136,539 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 31,220 |
Class T | 8,794 |
Class B* | 5,893 |
Class C* | 11,697 |
| $ 57,604 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 162,318 | .31 |
Class T | 56,530 | .33 |
Class B | 10,095 | .30 |
Class C | 107,920 | .29 |
Gold | 2,890,947 | .26 |
Institutional Class | 80,009 | .22 |
| $ 3,307,819 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $9,496 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 4,422,083 | .32% | $ 472 |
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,717 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds.
Annual Report
Notes to Consolidated Financial Statements - continued
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $446,754.
Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $275.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Gold and Institutional Class expenses during the period in the amount of $7,613.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,014,651 | 1,443,614 | $ 20,366,842 | $ 31,671,750 |
Shares redeemed | (1,163,476) | (2,051,264) | (22,763,258) | (45,809,186) |
Net increase (decrease) | (148,825) | (607,650) | $ (2,396,416) | $ (14,137,436) |
Class T |
|
|
|
|
Shares sold | 317,888 | 364,459 | $ 6,202,712 | $ 7,796,316 |
Shares redeemed | (256,267) | (349,602) | (4,926,125) | (7,601,870) |
Net increase (decrease) | 61,621 | 14,857 | $ 1,276,587 | $ 194,446 |
Class B |
|
|
|
|
Shares sold | 6,743 | 23,041 | $ 129,320 | $ 484,615 |
Shares redeemed | (71,044) | (138,145) | (1,326,720) | (3,024,154) |
Net increase (decrease) | (64,301) | (115,104) | $ (1,197,400) | $ (2,539,539) |
Class C |
|
|
|
|
Shares sold | 1,131,151 | 877,429 | $ 21,162,781 | $ 17,346,606 |
Shares redeemed | (444,470) | (567,911) | (8,210,673) | (12,102,759) |
Net increase (decrease) | 686,681 | 309,518 | $ 12,952,108 | $ 5,243,847 |
Gold |
|
|
|
|
Shares sold | 22,066,731 | 32,449,288 | $ 446,680,830 | $ 718,341,081 |
Shares redeemed | (25,311,740) | (50,439,253) | (508,417,315) | (1,182,529,714) |
Net increase (decrease) | (3,245,009) | (17,989,965) | $ (61,736,485) | $ (464,188,633) |
Institutional Class |
|
|
|
|
Shares sold | 1,547,691 | 2,126,861 | $ 33,198,070 | $ 46,661,254 |
Shares redeemed | (5,080,368) | (1,494,359) | (106,841,413) | (32,364,497) |
Net increase (decrease) | (3,532,677) | 632,502 | $ (73,643,343) | $ 14,296,757 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Materials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Materials Portfolio A | 2.46% | 13.11% | 11.26% |
A Prior to October 1, 2006, Materials Portfolio was named Industrial Materials Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials Portfolio, a class of the fund, on February 28, 2005. 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
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Tobias Welo, Portfolio Manager of Materials Portfolio: For the year, the fund's Retail Class shares returned 2.46%, considerably trailing the 8.95% advance of the MSCI U.S. IMI Materials 25-50 Index and also lagging the S&P 500®. Disappointing growth in both developed and emerging economies resulted in deflationary trends that dampened returns in the materials sector. These trends included falling prices for most commodities - notably, crude oil - and a surging U.S. dollar, which often accompanies weakness in commodities. Versus the MSCI index, both stock selection and market selection hampered the fund's results. Our large overweighting in diversified chemicals firm FMC, the fund's biggest relative detractor, fell victim to less-favorable fundamentals than I anticipated. In FMC's case, it was the collapse of global grain prices and subsequent disappointing sales of the firm's pesticides and herbicides. I sold a little here but maintained most of the position. A non-index position in coal producer Peabody Energy - which I sold - also worked against us, as did a sizable overweighting in Eastman Chemical and not owning strong-performing index name Air Products and Chemicals. Conversely, the two largest relative contributors were paper packaging stocks Rock-Tenn and Graphic Packaging Holding.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials 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, 2014 to February 28, 2015).
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 | 1.06% |
|
|
|
Actual |
| $ 1,000.00 | $ 976.80 | $ 5.20 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
Class T | 1.36% |
|
|
|
Actual |
| $ 1,000.00 | $ 975.40 | $ 6.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.05 | $ 6.81 |
Class B | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 972.90 | $ 9.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.44 |
Class C | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 973.20 | $ 8.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Materials | .80% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.10 | $ 3.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.83 | $ 4.01 |
Institutional Class | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.30 | $ 3.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 11.4 | 2.7 |
Monsanto Co. | 8.5 | 8.1 |
Praxair, Inc. | 5.4 | 5.5 |
Rock-Tenn Co. Class A | 5.4 | 3.7 |
Ecolab, Inc. | 5.3 | 1.3 |
Eastman Chemical Co. | 5.3 | 4.0 |
LyondellBasell Industries NV | 4.7 | 8.2 |
FMC Corp. | 4.0 | 4.2 |
CF Industries Holdings, Inc. | 3.4 | 3.9 |
Eagle Materials, Inc. | 3.1 | 2.7 |
| 56.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Chemicals | 70.0% |
|
![]() | Containers & Packaging | 16.6% |
|
![]() | Metals & Mining | 6.7% |
|
![]() | Construction Materials | 3.1% |
|
![]() | Paper & Forest Products | 1.7% |
|
![]() | All Others* | 1.9% |
|
As of August 31, 2014 | |||
![]() | Chemicals | 65.6% |
|
![]() | Metals & Mining | 14.8% |
|
![]() | Containers & Packaging | 10.4% |
|
![]() | Construction Materials | 5.2% |
|
![]() | Oil, Gas & Consumable Fuels | 2.0% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Materials Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
CHEMICALS - 70.0% | |||
Commodity Chemicals - 10.1% | |||
Axiall Corp. | 276,627 | $ 12,810,596 | |
Cabot Corp. | 807,787 | 36,447,349 | |
LyondellBasell Industries NV Class A | 1,119,596 | 96,184,492 | |
Methanex Corp. (d) | 805,800 | 43,825,568 | |
Orion Engineered Carbons SA | 1,017,837 | 16,753,597 | |
| 206,021,602 | ||
Diversified Chemicals - 21.5% | |||
E.I. du Pont de Nemours & Co. | 3,019,400 | 235,060,289 | |
Eastman Chemical Co. | 1,460,130 | 108,721,280 | |
FMC Corp. | 1,289,836 | 81,788,501 | |
Huntsman Corp. | 734,100 | 16,487,886 | |
| 442,057,956 | ||
Fertilizers & Agricultural Chemicals - 15.0% | |||
CF Industries Holdings, Inc. | 231,823 | 70,991,157 | |
Monsanto Co. | 1,449,730 | 174,590,984 | |
The Mosaic Co. | 1,184,800 | 63,102,448 | |
| 308,684,589 | ||
Industrial Gases - 8.3% | |||
Airgas, Inc. | 507,396 | 59,476,959 | |
Praxair, Inc. | 871,874 | 111,512,685 | |
| 170,989,644 | ||
Specialty Chemicals - 15.1% | |||
Albemarle Corp. U.S. (d) | 454,800 | 25,728,036 | |
Ashland, Inc. | 447,600 | 57,122,712 | |
Ecolab, Inc. | 943,220 | 108,979,639 | |
NewMarket Corp. | 95,929 | 45,192,152 | |
Sherwin-Williams Co. | 107,754 | 30,731,441 | |
W.R. Grace & Co. (a)(d) | 432,640 | 42,896,256 | |
| 310,650,236 | ||
TOTAL CHEMICALS | 1,438,404,027 | ||
CONSTRUCTION MATERIALS - 3.1% | |||
Construction Materials - 3.1% | |||
Eagle Materials, Inc. | 816,555 | 64,099,568 | |
CONTAINERS & PACKAGING - 16.6% | |||
Metal & Glass Containers - 2.9% | |||
Aptargroup, Inc. | 470,524 | 30,993,416 | |
Ball Corp. | 386,800 | 27,737,428 | |
| 58,730,844 | ||
Paper Packaging - 13.7% | |||
Avery Dennison Corp. | 414,200 | 22,180,410 | |
Graphic Packaging Holding Co. | 3,456,895 | 52,164,546 | |
MeadWestvaco Corp. | 65,100 | 3,454,206 | |
| |||
Shares | Value | ||
Packaging Corp. of America | 555,700 | $ 46,045,302 | |
Rock-Tenn Co. Class A | 1,602,442 | 109,991,619 | |
Sealed Air Corp. | 1,016,700 | 47,917,071 | |
| 281,753,154 | ||
TOTAL CONTAINERS & PACKAGING | 340,483,998 | ||
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Aspen Aerogels, Inc. (e) | 1,277,115 | 10,127,522 | |
METALS & MINING - 6.7% | |||
Diversified Metals & Mining - 0.2% | |||
Copper Mountain Mining Corp. (a) | 3,858,277 | 4,012,287 | |
Gold - 2.3% | |||
Franco-Nevada Corp. | 333,900 | 17,617,826 | |
Royal Gold, Inc. | 413,804 | 29,835,268 | |
| 47,453,094 | ||
Steel - 4.2% | |||
Nucor Corp. | 1,001,900 | 47,119,357 | |
Steel Dynamics, Inc. | 2,213,000 | 40,320,860 | |
| 87,440,217 | ||
TOTAL METALS & MINING | 138,905,598 | ||
PAPER & FOREST PRODUCTS - 1.7% | |||
Paper Products - 1.7% | |||
Domtar Corp. | 757,500 | 34,239,000 | |
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Wolseley PLC | 170,134 | 10,430,283 | |
TOTAL COMMON STOCKS (Cost $1,599,388,920) |
| ||
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 17,238,460 | 17,238,460 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 33,808,395 | 33,808,395 | |
TOTAL MONEY MARKET FUNDS (Cost $51,046,855) |
|
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $1,650,435,775) | 2,087,736,851 |
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (32,501,010) | ||
NET ASSETS - 100% | $ 2,055,235,841 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,901 |
Fidelity Securities Lending Cash Central Fund | 171,277 |
Total | $ 191,178 |
Other Affiliated Issuers | |||||
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Aspen Aerogels, Inc. | $ - | $ 9,986,520 | $ 1,418,932 | $ - | $ 10,127,522 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $33,099,127) - See accompanying schedule: Unaffiliated issuers (cost $1,590,608,784) | $ 2,026,562,474 |
|
Fidelity Central Funds (cost $51,046,855) | 51,046,855 |
|
Other affiliated issuers (cost $8,780,136) | 10,127,522 |
|
Total Investments (cost $1,650,435,775) |
| $ 2,087,736,851 |
Receivable for investments sold | 20,631,838 | |
Receivable for fund shares sold | 3,294,584 | |
Dividends receivable | 2,692,932 | |
Distributions receivable from Fidelity Central Funds | 3,536 | |
Prepaid expenses | 8,741 | |
Other receivables | 41,370 | |
Total assets | 2,114,409,852 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 20,446,041 | |
Payable for fund shares redeemed | 3,331,966 | |
Accrued management fee | 932,386 | |
Distribution and service plan fees payable | 179,392 | |
Other affiliated payables | 389,442 | |
Other payables and accrued expenses | 86,389 | |
Collateral on securities loaned, at value | 33,808,395 | |
Total liabilities | 59,174,011 | |
|
|
|
Net Assets | $ 2,055,235,841 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,634,284,846 | |
Distributions in excess of net investment income | (33,066) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (16,317,015) | |
Net unrealized appreciation (depreciation) on investments | 437,301,076 | |
Net Assets | $ 2,055,235,841 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 80.43 | |
|
|
|
Maximum offering price per share (100/94.25 of $80.43) | $ 85.34 | |
Class T: | $ 79.95 | |
|
|
|
Maximum offering price per share (100/96.50 of $79.95) | $ 82.85 | |
Class B: | $ 78.31 | |
|
|
|
Class C: | $ 78.12 | |
|
|
|
Materials: | $ 80.77 | |
|
|
|
Institutional Class: | $ 80.60 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 35,388,475 |
Interest |
| 231,020 |
Income from Fidelity Central Funds |
| 191,178 |
Total income |
| 35,810,673 |
|
|
|
Expenses | ||
Management fee | $ 11,769,676 | |
Transfer agent fees | 4,417,326 | |
Distribution and service plan fees | 2,258,375 | |
Accounting and security lending fees | 653,835 | |
Custodian fees and expenses | 36,379 | |
Independent trustees' compensation | 41,798 | |
Registration fees | 152,825 | |
Audit | 51,208 | |
Legal | 13,438 | |
Interest | 1,074 | |
Miscellaneous | 27,456 | |
Total expenses before reductions | 19,423,390 | |
Expense reductions | (27,900) | 19,395,490 |
Net investment income (loss) | 16,415,183 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,791,589 | |
Other affiliated issuers | 212,549 | |
Foreign currency transactions | (58,451) | |
Redemption in-kind with affiliated entities | 6,050,156 | |
Total net realized gain (loss) |
| 140,995,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (115,354,398) | |
Assets and liabilities in foreign currencies | 2,668 | |
Total change in net unrealized appreciation (depreciation) |
| (115,351,730) |
Net gain (loss) | 25,644,113 | |
Net increase (decrease) in net assets resulting from operations | $ 42,059,296 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 16,415,183 | $ 11,130,072 |
Net realized gain (loss) | 140,995,843 | 105,883,339 |
Change in net unrealized appreciation (depreciation) | (115,351,730) | 227,365,491 |
Net increase (decrease) in net assets resulting from operations | 42,059,296 | 344,378,902 |
Distributions to shareholders from net investment income | (14,132,791) | (9,652,596) |
Distributions to shareholders from net realized gain | (176,045,519) | (36,877,810) |
Total distributions | (190,178,310) | (46,530,406) |
Share transactions - net increase (decrease) | 139,840,860 | 29,379,358 |
Redemption fees | 59,111 | 36,980 |
Total increase (decrease) in net assets | (8,219,043) | 327,264,834 |
|
|
|
Net Assets | ||
Beginning of period | 2,063,454,884 | 1,736,190,050 |
End of period (including distributions in excess of net investment income of $33,066 and distributions in excess of net investment income of $815,927, respectively) | $ 2,055,235,841 | $ 2,063,454,884 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 | $ 52.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .51 | .36 | .70 | .40 | 1.08 F |
Net realized and unrealized gain (loss) | 1.05 | 14.56 | 5.69 | (.35) | 17.40 |
Total from investment operations | 1.56 | 14.92 | 6.39 | .05 | 18.48 |
Distributions from net investment income | (.43) | (.30) | (.63) | (.40) | (1.06) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.01) |
Total distributions | (7.59) J | (1.90) | (2.18) | (.78) | (1.07) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 80.43 | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 |
Total ReturnA, B | 2.20% | 20.46% | 9.40% | .21% | 35.33% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of fee waivers, if any | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of all reductions | 1.06% | 1.09% | 1.12% | 1.13% | 1.15% |
Net investment income (loss) | .61% | .45% | 1.02% | .61% | 1.81% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 319,740 | $ 336,777 | $ 219,627 | $ 157,781 | $ 124,160 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .41%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 | $ 52.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .25 | .12 | .50 | .21 | .90 F |
Net realized and unrealized gain (loss) | 1.06 | 14.48 | 5.66 | (.35) | 17.34 |
Total from investment operations | 1.31 | 14.60 | 6.16 | (.14) | 18.24 |
Distributions from net investment income | (.18) | (.06) | (.46) | (.25) | (.92) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | - |
Total distributions | (7.35) | (1.66) | (2.02) J | (.63) | (.92) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 79.95 | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 |
Total ReturnA, B | 1.90% | 20.10% | 9.10% | (.09)% | 34.98% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of fee waivers, if any | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of all reductions | 1.37% | 1.39% | 1.41% | 1.41% | 1.43% |
Net investment income (loss) | .31% | .15% | .73% | .33% | 1.54% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,252 | $ 45,223 | $ 37,860 | $ 28,290 | $ 25,570 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 | $ 51.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | (.28) | .16 | (.11) | .60 F |
Net realized and unrealized gain (loss) | 1.03 | 14.28 | 5.57 | (.33) | 17.13 |
Total from investment operations | .85 | 14.00 | 5.73 | (.44) | 17.73 |
Distributions from net investment income | - | - | (.10) | - | (.65) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.65) | (.38) | (.65) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.31 | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 |
Total ReturnA, B | 1.35% | 19.50% | 8.55% | (.57)% | 34.29% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of fee waivers, if any | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of all reductions | 1.89% | 1.90% | 1.91% | 1.91% | 1.92% |
Net investment income (loss) | (.22)% | (.36)% | .24% | (.17)% | 1.04% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,487 | $ 8,671 | $ 10,218 | $ 11,040 | $ 13,507 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 | $ 51.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.23) | .18 | (.10) | .61 F |
Net realized and unrealized gain (loss) | 1.03 | 14.23 | 5.55 | (.32) | 17.09 |
Total from investment operations | .91 | 14.00 | 5.73 | (.42) | 17.70 |
Distributions from net investment income | - | - | (.20) | - | (.72) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.75) | (.38) | (.72) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.12 | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 |
Total ReturnA, B | 1.43% | 19.56% | 8.58% | (.55)% | 34.29% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of fee waivers, if any | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of all reductions | 1.82% | 1.84% | 1.88% | 1.89% | 1.92% |
Net investment income (loss) | (.14)% | (.30)% | .26% | (.15)% | 1.04% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 107,697 | $ 106,879 | $ 75,007 | $ 58,296 | $ 46,525 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 | $ 52.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .73 | .58 | .90 | .60 | 1.25 E |
Net realized and unrealized gain (loss) | 1.05 | 14.63 | 5.71 | (.37) | 17.43 |
Total from investment operations | 1.78 | 15.21 | 6.61 | .23 | 18.68 |
Distributions from net investment income | (.65) | (.48) | (.79) | (.55) | (1.16) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.82) | (2.08) | (2.34) | (.93) | (1.19) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.77 | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 |
Total ReturnA | 2.46% | 20.80% | 9.71% | .49% | 35.70% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .85% | .88% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .85% | .88% |
Expenses net of all reductions | .80% | .82% | .84% | .84% | .87% |
Net investment income (loss) | .87% | .73% | 1.30% | .90% | 2.10% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,107,689 | $ 1,231,942 | $ 1,146,782 | $ 1,089,619 | $ 1,195,371 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 | $ 52.58 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .74 | .59 | .90 | .60 | 1.28 E |
Net realized and unrealized gain (loss) | 1.05 | 14.60 | 5.70 | (.36) | 17.40 |
Total from investment operations | 1.79 | 15.19 | 6.60 | .24 | 18.68 |
Distributions from net investment income | (.68) | (.50) | (.83) | (.56) | (1.19) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.85) | (2.10) | (2.38) | (.94) | (1.22) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.60 | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 |
Total ReturnA | 2.49% | 20.81% | 9.71% | .50% | 35.73% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .78% | .81% | .85% | .84% | .86% |
Expenses net of fee waivers, if any | .78% | .81% | .85% | .84% | .86% |
Expenses net of all reductions | .78% | .81% | .84% | .83% | .85% |
Net investment income (loss) | .89% | .74% | 1.30% | .91% | 2.11% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 468,371 | $ 333,963 | $ 246,696 | $ 89,299 | $ 85,130 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, in-kind transactions, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 463,512,190 |
Gross unrealized depreciation | (35,847,823) |
Net unrealized appreciation (depreciation) on securities | $ 427,664,367 |
|
|
Tax Cost | $ 1,660,072,484 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed long term capital gain | $ 895,122 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 427,664,367 |
The fund intends to elect to defer to its next fiscal year $5,660,716 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of prior fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2017 | $ (810,939) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (1,914,714) |
The Fund acquired $1,914,714 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 14,132,791 | $ 10,087,395 |
Long-term Capital Gains | 176,045,519 | 36,443,011 |
Total | $ 190,178,310 | $ 46,530,406 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,614,718,611 and $1,663,229,593, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 838,406 | $ 16,183 |
Class T | .25% | .25% | 228,842 | 240 |
Class B | .75% | .25% | 74,560 | 55,933 |
Class C | .75% | .25% | 1,116,567 | 277,171 |
|
|
| $ 2,258,375 | $ 349,527 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 150,405 |
Class T | 11,357 |
Class B* | 7,882 |
Class C* | 25,516 |
| $ 195,160 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 721,024 | .21 |
Class T | 124,541 | .27 |
Class B | 22,340 | .30 |
Class C | 247,956 | .22 |
Materials | 2,468,073 | .21 |
Institutional Class | 833,392 | .19 |
| $ 4,417,326 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $24,808 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,084,733 | .32% | $ 1,074 |
Redemptions In-Kind. During the period, 206,748 shares of the fund held by an affiliated entity were redeemed for investments with a value of $17,590,149. The net realized gain of $6,050,156 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. The Investing Funds delivered cash and investments valued at $22,792,169 in exchange for 267,891 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,260 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $171,277.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $20,813 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Materials expenses during the period in the amount of $7,087.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 1,638,100 | $ 1,076,918 |
Class T | 99,020 | 29,833 |
Materials | 8,803,568 | 6,872,385 |
Institutional Class | 3,592,103 | 1,673,460 |
Total | $ 14,132,791 | $ 9,652,596 |
Annual Report
9. Distributions to Shareholders - continued
Years ended February 28, | 2015 | 2014 |
From net realized gain |
|
|
Class A | $ 27,780,861 | $ 5,762,988 |
Class T | 3,863,168 | 809,850 |
Class B | 628,830 | 165,553 |
Class C | 9,676,799 | 1,915,182 |
Materials | 98,020,822 | 22,724,072 |
Institutional Class | 36,075,039 | 5,500,165 |
Total | $ 176,045,519 | $ 36,877,810 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,287,549 | 1,797,224 | $ 107,992,682 | $ 142,257,752 |
Reinvestment of distributions | 350,058 | 72,401 | 27,494,344 | 5,951,034 |
Shares redeemed | (1,557,532) | (965,142) | (130,043,911) | (75,392,440) |
Net increase (decrease) | 80,075 | 904,483 | $ 5,443,115 | $ 72,816,346 |
Class T |
|
|
|
|
Shares sold | 122,029 | 170,035 | $ 10,167,521 | $ 13,444,901 |
Reinvestment of distributions | 48,608 | 9,678 | 3,794,851 | 792,607 |
Shares redeemed | (130,511) | (172,106) | (10,688,592) | (13,187,903) |
Net increase (decrease) | 40,126 | 7,607 | $ 3,273,780 | $ 1,049,605 |
Class B |
|
|
|
|
Shares sold | 2,935 | 7,873 | $ 242,184 | $ 603,147 |
Reinvestment of distributions | 7,683 | 1,836 | 590,123 | 148,096 |
Shares redeemed | (30,247) | (48,755) | (2,465,575) | (3,688,524) |
Net increase (decrease) | (19,629) | (39,046) | $ (1,633,268) | $ (2,937,281) |
Class C |
|
|
|
|
Shares sold | 367,698 | 450,706 | $ 30,096,831 | $ 34,616,884 |
Reinvestment of distributions | 110,883 | 19,891 | 8,472,087 | 1,600,154 |
Shares redeemed | (366,676) | (246,286) | (29,116,038) | (18,989,979) |
Net increase (decrease) | 111,905 | 224,311 | $ 9,452,880 | $ 17,227,059 |
Materials |
|
|
|
|
Shares sold | 2,411,814 | 3,222,449 | $ 202,615,605 | $ 254,476,294 |
Reinvestment of distributions | 1,274,428 | 341,183 | 100,536,677 | 28,082,183 |
Shares redeemed | (4,164,314) | (4,936,489) | (345,204,286) | (386,209,902) |
Net increase (decrease) | (478,072) | (1,372,857) | $ (42,052,004) | $ (103,651,425) |
Institutional Class |
|
|
|
|
Shares sold | 4,739,071A | 2,646,562 | $ 400,864,210A | $ 209,408,784 |
Reinvestment of distributions | 464,747 | 73,103 | 36,366,289 | 6,019,071 |
Shares redeemed | (3,246,644)B | (2,219,316) | (271,874,142)B | (170,552,801) |
Net increase (decrease) | 1,957,174 | 500,349 | $ 165,356,357 | $ 44,875,054 |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount included in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio and Materials Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial position of Chemicals Portfolio, Gold Portfolio and Materials Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, the results of each of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
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.
Annual Report
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Chemicals Portfolio | 04/13/15 | 04/10/15 | $0.370 | $3.502 |
Gold Portfolio | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Materials Portfolio | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
Chemicals Portfolio | $51,529,095 |
Materials Portfolio | $141,502,281 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2014 | December 2014 |
Chemicals Portfolio | 9% | 100% |
Gold Portfolio | 0% | 0% |
Materials Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h) (11) of the Internal Revenue Code:
| April 2014 | December 2014 |
Chemicals Portfolio | 13% | 100% |
Gold Portfolio | 0% | 0% |
Materials Portfolio | 100% | 100% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Chemicals Portfolio
Gold Portfolio
Annual Report
Materials Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of Chemicals Portfolio's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
In its review of the total expense ratio of each class of Gold Portfolio and Materials Portfolio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that Chemicals Portfolio's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
For each of Gold Portfolio and Materials Portfolio, the Board noted that the total expense ratio of each class ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of Chemicals Portfolio and the total expense ratio of each class of Gold Portfolio and Materials Portfolio were reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
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(U.K.) Limited
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Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
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Brown Brothers Harriman & Co.
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Fidelity®
Select Portfolios®
Information Technology Sector
Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Communications Equipment Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Computers Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Electronics Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
IT Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Software and Computer Services Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Technology Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
Annual Report
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
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, 2014 to February 28, 2015).
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 | .86% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,084.50 | $ 4.44 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.53 | $ 4.31 |
Computers Portfolio | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,040.90 | $ 4.00 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
Electronics Portfolio | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,144.50 | $ 4.09 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
IT Services Portfolio | .81% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,171.10 | $ 4.36 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.78 | $ 4.06 |
Software and Computer Services Portfolio | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,087.40 | $ 3.99 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
Technology Portfolio | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,058.50 | $ 3.93 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Communications Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Communications Equipment Portfolio A | 12.49% | 11.44% | 7.37% |
A Prior to October 1, 2006, Communications Equipment Portfolio was named Developing Communications Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communications Equipment Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Ali Khan, Portfolio Manager of Communications Equipment Portfolio for most of the period covered by this report: For the year, the fund returned 12.49%, outpacing the 10.19% gain of the S&P® Custom Communications Equipment Index but lagging the S&P 500®. Compared with the broader market, modest equipment spending by telecommunications services providers helped keep a lid on the return of the industry index, although the industry played some catch-up with the S&P 500® in the period's second half. Versus the industry index, stock selection added considerable value during the period, both in the fund's primary category of communications equipment and in technology hardware, storage & peripherals, a small component of the benchmark. Not owning benchmark component ParkerVision, a designer of radio-frequency technologies for use in wireless communications products, made this stock the top contributor to relative performance. ParkerVision shares took a hit in June when the patent infringement suit the firm had filed against QUALCOMM took an unfavorable turn. Aruba Networks, a provider of network access solutions for mobile enterprise networks, also contributed, as did a non-index position in Apple, which I sold in August. Conversely, strong-performing index name Palo Alto Networks was the fund's largest relative detractor because I sold it too soon. Infinera was an index stock I reduced to a token position in the first half of the period, which resulted in missing the strong second-half gain delivered by this stock. Lastly, I'll mention index name Sierra Wireless, a maker of components for the wireless industry that detracted because the fund didn't own it. This stock was particularly strong in November, after the company blew past consensus revenue and earnings estimates for the third quarter. Additionally, although all of the companies I've mentioned in this update were domestic, the fund's foreign holdings were a drag on performance because of the strong U.S. dollar.
Note to shareholders: Colin Anderson succeeded Ali Khan as Portfolio Manager of Communications Equipment Portfolio on January 31, 2015, after serving as Co-Manager since October 2014.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Communications Equipment Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
QUALCOMM, Inc. | 18.5 | 16.2 |
Cisco Systems, Inc. | 16.7 | 17.2 |
Juniper Networks, Inc. | 5.4 | 4.7 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 4.7 | 4.7 |
Nokia Corp. sponsored ADR | 4.7 | 6.1 |
Alcatel-Lucent SA sponsored ADR | 4.1 | 3.7 |
F5 Networks, Inc. | 3.5 | 3.0 |
Motorola Solutions, Inc. | 2.6 | 2.4 |
Brocade Communications Systems, Inc. | 2.5 | 0.0 |
Riverbed Technology, Inc. | 2.3 | 3.4 |
| 65.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Communications Equipment | 89.8% |
|
![]() | Technology Hardware, Storage & Peripherals | 2.5% |
|
![]() | Software | 1.8% |
|
![]() | Internet Software & Services | 1.8% |
|
![]() | Semiconductors & Semiconductor Equipment | 1.6% |
|
![]() | All Others* | 2.5% |
|
As of August 31, 2014 | |||
![]() | Communications Equipment | 77.3% |
|
![]() | Technology Hardware, Storage & Peripherals | 9.1% |
|
![]() | Software | 4.1% |
|
![]() | Internet Software & Services | 2.9% |
|
![]() | Semiconductors & Semiconductor Equipment | 2.9% |
|
![]() | All Others* | 3.7% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Communications Equipment Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 89.8% | |||
Communications Equipment - 89.8% | |||
ADTRAN, Inc. | 146,600 | $ 3,156,298 | |
ADVA Optical Networking SE (a) | 204,816 | 793,717 | |
Alcatel-Lucent SA sponsored ADR (a) | 2,741,143 | 10,663,046 | |
Arris Group, Inc. (a) | 70,900 | 2,083,042 | |
Aruba Networks, Inc. (a) | 192,823 | 4,783,939 | |
Brocade Communications Systems, Inc. | 533,100 | 6,605,109 | |
Calix Networks, Inc. (a) | 36,000 | 314,640 | |
Ciena Corp. (a)(d) | 116,200 | 2,430,904 | |
Cisco Systems, Inc. | 1,495,276 | 44,125,595 | |
CommScope Holding Co., Inc. (a) | 176,200 | 5,550,300 | |
EchoStar Holding Corp. Class A (a) | 7,000 | 380,450 | |
F5 Networks, Inc. (a) | 78,635 | 9,287,973 | |
Finisar Corp. (a) | 244,000 | 5,126,440 | |
Harris Corp. | 42,700 | 3,316,936 | |
Infinera Corp. (a) | 3,111 | 53,043 | |
InterDigital, Inc. | 50,500 | 2,669,935 | |
Ixia (a) | 237,000 | 2,697,060 | |
JDS Uniphase Corp. (a) | 261,400 | 3,599,478 | |
Juniper Networks, Inc. | 595,712 | 14,243,474 | |
Mitel Networks Corp. (a) | 165,300 | 1,679,448 | |
Motorola Solutions, Inc. | 101,581 | 6,901,413 | |
NETGEAR, Inc. (a) | 50,750 | 1,636,180 | |
Nokia Corp. sponsored ADR | 1,542,320 | 12,353,983 | |
Plantronics, Inc. | 93,200 | 4,701,008 | |
Polycom, Inc. (a) | 99,663 | 1,377,343 | |
QUALCOMM, Inc. | 673,819 | 48,858,614 | |
Radware Ltd. (a) | 145,500 | 3,090,420 | |
Riverbed Technology, Inc. (a) | 287,642 | 6,023,223 | |
Ruckus Wireless, Inc. (a) | 467,200 | 5,914,752 | |
Sandvine Corp. (U.K.) (a) | 86,300 | 244,382 | |
ShoreTel, Inc. (a) | 187,200 | 1,394,640 | |
Sonus Networks, Inc. (a) | 135,660 | 2,314,360 | |
Spirent Communications PLC | 1,139,400 | 1,631,531 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 967,080 | 12,504,344 | |
Transmode AB | 81,400 | 851,883 | |
ViaSat, Inc. (a) | 40,400 | 2,639,736 | |
Wi-Lan, Inc. | 250,900 | 660,316 | |
| 236,658,955 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.9% | |||
Electronic Components - 0.3% | |||
II-VI, Inc. (a) | 36,700 | 641,883 | |
Electronic Manufacturing Services - 0.6% | |||
TE Connectivity Ltd. | 23,500 | 1,695,055 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 2,336,938 | ||
HEALTH CARE TECHNOLOGY - 0.3% | |||
Health Care Technology - 0.3% | |||
Vocera Communications, Inc. (a) | 77,100 | 800,298 | |
| |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 1.8% | |||
Internet Software & Services - 1.8% | |||
Google, Inc.: | |||
Class A (a) | 3,000 | $ 1,687,890 | |
Class C (a) | 2,900 | 1,619,360 | |
Rackspace Hosting, Inc. (a) | 14,900 | 740,083 | |
Web.com Group, Inc. (a) | 39,300 | 701,505 | |
| 4,748,838 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.6% | |||
Semiconductors - 1.6% | |||
Altera Corp. | 26,500 | 980,765 | |
GSI Technology, Inc. (a) | 105,900 | 603,630 | |
Marvell Technology Group Ltd. | 47,800 | 770,536 | |
Maxim Integrated Products, Inc. | 25,700 | 883,952 | |
Semtech Corp. (a) | 15,700 | 454,201 | |
Xilinx, Inc. | 15,400 | 652,498 | |
| 4,345,582 | ||
SOFTWARE - 1.8% | |||
Application Software - 0.6% | |||
BroadSoft, Inc. (a) | 25,200 | 792,792 | |
Comverse, Inc. (a) | 51,400 | 922,116 | |
| 1,714,908 | ||
Systems Software - 1.2% | |||
Infoblox, Inc. (a) | 17,600 | 409,200 | |
Oracle Corp. | 31,400 | 1,375,948 | |
Rovi Corp. (a) | 53,700 | 1,336,056 | |
| 3,121,204 | ||
TOTAL SOFTWARE | 4,836,112 | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 2.5% | |||
Technology Hardware, Storage & Peripherals - 2.5% | |||
BlackBerry Ltd. (a) | 467,200 | 5,050,432 | |
Samsung Electronics Co. Ltd. | 1,212 | 1,493,660 | |
| 6,544,092 | ||
TOTAL COMMON STOCKS (Cost $225,297,578) |
| ||
Money Market Funds - 2.3% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.13% (b) | 4,439,388 | $ 4,439,388 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 1,526,500 | 1,526,500 | |
TOTAL MONEY MARKET FUNDS (Cost $5,965,888) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $231,263,466) | 266,236,703 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (2,605,656) | ||
NET ASSETS - 100% | $ 263,631,047 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 8,694 |
Fidelity Securities Lending Cash Central Fund | 166,305 |
Total | $ 174,999 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 79.7% |
Sweden | 5.0% |
Finland | 4.7% |
France | 4.1% |
Canada | 2.9% |
Israel | 1.2% |
Others (Individually Less Than 1%) | 2.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $1,485,320) - See accompanying schedule: Unaffiliated issuers (cost $225,297,578) | $ 260,270,815 |
|
Fidelity Central Funds (cost $5,965,888) | 5,965,888 |
|
Total Investments (cost $231,263,466) |
| $ 266,236,703 |
Cash |
| 9,255 |
Receivable for investments sold | 1,725,458 | |
Receivable for fund shares sold | 129,351 | |
Dividends receivable | 124,001 | |
Distributions receivable from Fidelity Central Funds | 2,139 | |
Prepaid expenses | 1,051 | |
Other receivables | 995 | |
Total assets | 268,228,953 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,754,875 | |
Payable for fund shares redeemed | 108,694 | |
Accrued management fee | 116,517 | |
Other affiliated payables | 58,844 | |
Other payables and accrued expenses | 32,476 | |
Collateral on securities loaned, at value | 1,526,500 | |
Total liabilities | 4,597,906 | |
|
|
|
Net Assets | $ 263,631,047 | |
Net Assets consist of: |
| |
Paid in capital | $ 231,340,420 | |
Undistributed net investment income | 75,709 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,758,135) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 34,973,053 | |
Net Assets, for 7,991,869 shares outstanding | $ 263,631,047 | |
Net Asset Value, offering price and redemption price per share ($263,631,047 ÷ 7,991,869 shares) | $ 32.99 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 4,621,810 |
Income from Fidelity Central Funds (including $166,305 from security lending) |
| 174,999 |
Total income |
| 4,796,809 |
|
|
|
Expenses | ||
Management fee | $ 1,483,562 | |
Transfer agent fees | 656,851 | |
Accounting and security lending fees | 109,376 | |
Custodian fees and expenses | 76,322 | |
Independent trustees' compensation | 5,531 | |
Registration fees | 20,818 | |
Audit | 41,328 | |
Legal | 5,024 | |
Interest | 348 | |
Miscellaneous | 6,055 | |
Total expenses before reductions | 2,405,215 | |
Expense reductions | (521) | 2,404,694 |
Net investment income (loss) | 2,392,115 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 17,290,508 | |
Redemption in-kind with affiliated entities | 4,692,068 | |
Foreign currency transactions | (8,568) | |
Total net realized gain (loss) |
| 21,974,008 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 5,918,662 | |
Assets and liabilities in foreign currencies | (565) | |
Total change in net unrealized appreciation (depreciation) |
| 5,918,097 |
Net gain (loss) | 27,892,105 | |
Net increase (decrease) in net assets resulting from operations | $ 30,284,220 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Communications Equipment Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 2,392,115 | $ 2,009,004 |
Net realized gain (loss) | 21,974,008 | 40,147,168 |
Change in net unrealized appreciation (depreciation) | 5,918,097 | 30,888,802 |
Net increase (decrease) in net assets resulting from operations | 30,284,220 | 73,044,974 |
Distributions to shareholders from net investment income | (2,341,970) | (1,754,259) |
Distributions to shareholders from net realized gain | (13,481,847) | - |
Total distributions | (15,823,817) | (1,754,259) |
Share transactions | 29,367,762 | 174,276,179 |
Reinvestment of distributions | 15,205,659 | 1,683,914 |
Cost of shares redeemed | (142,751,589) | (215,924,882) |
Net increase (decrease) in net assets resulting from share transactions | (98,178,168) | (39,964,789) |
Redemption fees | 3,746 | 6,805 |
Total increase (decrease) in net assets | (83,714,019) | 31,332,731 |
|
|
|
Net Assets | ||
Beginning of period | 347,345,066 | 316,012,335 |
End of period (including undistributed net investment income of $75,709 and undistributed net investment income of $34,132, respectively) | $ 263,631,047 | $ 347,345,066 |
Other Information Shares | ||
Sold | 924,755 | 6,118,023 |
Issued in reinvestment of distributions | 482,625 | 59,126 |
Redeemed | (4,535,265) | (8,054,099) |
Net increase (decrease) | (3,127,885) | (1,876,950) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 31.24 | $ 24.31 | $ 24.50 | $ 29.60 | $ 20.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .28 | .18 | .14 E, J | .03 | (.10) |
Net realized and unrealized gain (loss) | 3.52 | 6.95 | (.14)J | (5.10) | 8.91 |
Total from investment operations | 3.80 | 7.13 | - | (5.07) | 8.81 |
Distributions from net investment income | (.30) | (.20) | (.17) | (.03) | - |
Distributions from net realized gain | (1.75) | - | - | - | - |
Tax return of capital | - | - | (.02) | - | - |
Total distributions | (2.05) | (.20) | (.19) | (.03) | - |
Redemption fees added to paid in capital B, I | - | - | - | - | - |
Net asset value, end of period | $ 32.99 | $ 31.24 | $ 24.31 | $ 24.50 | $ 29.60 |
Total ReturnA | 12.49% | 29.41% | .07% | (17.13)% | 42.38% |
Ratios to Average Net AssetsC, F |
|
|
|
|
|
Expenses before reductions | .89% | .92% | .93% | .90% | .91% |
Expenses net of fee waivers, if any | .89% | .92% | .93% | .90% | .91% |
Expenses net of all reductions | .89% | .90% | .89% | .89% | .90% |
Net investment income (loss) | .89% | .69% | .61%E | .12% | (.43)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 263,631 | $ 347,345 | $ 316,012 | $ 332,598 | $ 586,795 |
Portfolio turnover rate D | 42%G | 65% | 54% | 91% | 85% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .18%.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Portfolio turnover rate excludes securities received or delivered in-kind.
H For the year ended February 29.
I Amount represents less than $.01 per share.
J Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.06 per share. Excluding these litigation proceeds, the total return would have been (.19)%.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Computers Portfolio | 13.36% | 16.40% | 10.40% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2005. 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
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Christopher Lin, Portfolio Manager of Computers Portfolio: For the year, the fund gained 13.36%, easily outpacing the 8.73% rise of the S&P® Custom Computers & Peripherals Index but trailing the S&P 500® Index. Versus the broader market, computer stocks were hampered by underperformance in the fund's primary category of technology hardware, storage & peripherals. Even weaker results in the IT consulting & other services segment also weighed on our industry benchmark. Compared with the MSCI index, having virtually no exposure to three-dimensional printing firm 3D Systems made this index stock by far the fund's largest contributor, as it returned -60% during the period. Overweighting Apple, by far the fund's largest holding and the biggest component of the industry index, also bolstered the fund's results. I sold a sizable chunk of the fund's position in Apple during the summer but maintained a sizable overweighting here. Not owning weak-performing index component Immersion also aided relative performance. This company controls certain patents in haptic, or touch-based, technologies. A non-index position in social network provider Facebook, another contributor, was an example of my attempt to look outside the computer industry for promising stocks. Conversely, the fund's two largest relative detractors were non-index names. Audience provides audio and voice products aimed at improving the user experience in mobile devices. The company has significant exposure to Samsung Electronics and was hurt by consumers' poor reception of Samsung's latest smartphone. Internet search provider Google was another non-index stock that recorded disappointing performance. In the case of supercomputer maker Cray, I misjudged the stock earlier in the period, after competitor IBM announced plans to exit the business, much of which I thought might fall to Cray. Unfortunately, Cray's growth continued to be sluggish, and I reduced the position to an underweighting over the summer after bumping it to an overweighting earlier.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Computers Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 15.8 | 15.4 |
EMC Corp. | 7.1 | 8.4 |
Hewlett-Packard Co. | 6.6 | 8.7 |
Western Digital Corp. | 6.4 | 4.8 |
IBM Corp. | 5.6 | 7.7 |
SanDisk Corp. | 4.6 | 3.5 |
Seagate Technology LLC | 4.5 | 6.8 |
Electronics for Imaging, Inc. | 4.1 | 4.5 |
QLogic Corp. | 3.7 | 2.5 |
Lexmark International, Inc. Class A | 3.5 | 2.2 |
| 61.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Technology Hardware, Storage & Peripherals | 72.3% |
|
![]() | IT Services | 11.2% |
|
![]() | Internet Software & Services | 8.7% |
|
![]() | Communications Equipment | 2.8% |
|
![]() | Semiconductors & Semiconductor Equipment | 2.7% |
|
![]() | All Others* | 2.3% |
|
As of August 31, 2014 | |||
![]() | Technology Hardware, Storage & Peripherals | 73.2% |
|
![]() | IT Services | 11.9% |
|
![]() | Internet Software & Services | 5.7% |
|
![]() | Communications Equipment | 2.7% |
|
![]() | Semiconductors & Semiconductor Equipment | 1.2% |
|
![]() | All Others* | 5.3% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Computers Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.3% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 2.8% | |||
Communications Equipment - 2.8% | |||
QUALCOMM, Inc. | 320,700 | $ 23,253,957 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 0.6% | |||
Technology Distributors - 0.6% | |||
Ingram Micro, Inc. Class A (a) | 188,400 | 4,655,364 | |
INTERNET SOFTWARE & SERVICES - 8.7% | |||
Internet Software & Services - 8.7% | |||
Alibaba Group Holding Ltd. sponsored ADR (d) | 112,700 | 9,593,024 | |
Facebook, Inc. Class A (a) | 301,200 | 23,785,764 | |
Google, Inc.: | |||
Class A (a) | 42,900 | 24,136,827 | |
Class C (a) | 20,900 | 11,670,560 | |
Twitter, Inc. (a) | 25,300 | 1,216,424 | |
| 70,402,599 | ||
IT SERVICES - 11.2% | |||
Data Processing & Outsourced Services - 1.4% | |||
MasterCard, Inc. Class A | 43,500 | 3,920,655 | |
Visa, Inc. Class A | 28,600 | 7,759,466 | |
| 11,680,121 | ||
IT Consulting & Other Services - 9.8% | |||
Datalink Corp. (a)(e) | 1,337,687 | 15,196,124 | |
IBM Corp. | 278,348 | 45,075,675 | |
Teradata Corp. (a)(d) | 424,957 | 18,919,086 | |
| 79,190,885 | ||
TOTAL IT SERVICES | 90,871,006 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.7% | |||
Semiconductors - 2.7% | |||
Broadcom Corp. Class A | 91,100 | 4,120,453 | |
Cirrus Logic, Inc. (a) | 444,900 | 13,395,939 | |
Maxim Integrated Products, Inc. | 120,100 | 4,130,840 | |
| 21,647,232 | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 72.3% | |||
Technology Hardware, Storage & Peripherals - 72.3% | |||
3D Systems Corp. (a)(d) | 7,700 | 234,619 | |
Apple, Inc. | 994,748 | 127,785,330 | |
Cray, Inc. (a) | 383,500 | 11,455,145 | |
Diebold, Inc. | 451,500 | 16,118,550 | |
Dot Hill Systems Corp. (a) | 2,348,700 | 9,535,722 | |
Electronics for Imaging, Inc. (a) | 813,215 | 33,016,529 | |
| |||
Shares | Value | ||
EMC Corp. | 1,996,678 | $ 57,783,861 | |
Hewlett-Packard Co. | 1,540,805 | 53,681,646 | |
Imation Corp. (a) | 1,121,300 | 4,586,117 | |
Intevac, Inc. (a) | 1,142,311 | 7,836,253 | |
Lexmark International, Inc. Class A | 671,700 | 28,654,722 | |
NCR Corp. (a) | 293,900 | 8,643,599 | |
NetApp, Inc. | 314,660 | 12,161,609 | |
QLogic Corp. (a) | 1,986,100 | 29,811,361 | |
Quantum Corp. (a)(d) | 5,180,800 | 8,444,704 | |
Samsung Electronics Co. Ltd. | 16,527 | 20,367,755 | |
SanDisk Corp. | 468,700 | 37,463,191 | |
Seagate Technology LLC | 588,700 | 35,981,344 | |
Silicon Graphics International Corp. (a)(d) | 359,100 | 3,314,493 | |
Super Micro Computer, Inc. (a) | 655,350 | 26,331,963 | |
Western Digital Corp. | 481,834 | 51,546,601 | |
| 584,755,114 | ||
TOTAL COMMON STOCKS (Cost $579,798,889) |
| ||
Money Market Funds - 4.2% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 8,547,655 | 8,547,655 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 25,335,350 | 25,335,350 | |
TOTAL MONEY MARKET FUNDS (Cost $33,883,005) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.5% (Cost $613,681,894) | 829,468,277 | ||
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (20,616,685) | ||
NET ASSETS - 100% | $ 808,851,592 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,555 |
Fidelity Securities Lending Cash Central Fund | 151,715 |
Total | $ 171,270 |
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, |
Datalink Corp. | $ 9,832,530 | $ 8,630,503 | $ 16,751 | $ - | $ 15,196,124 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $24,888,236) - See accompanying schedule: Unaffiliated issuers (cost $565,133,640) | $ 780,389,148 |
|
Fidelity Central Funds (cost $33,883,005) | 33,883,005 |
|
Other affiliated issuers (cost $14,665,249). | 15,196,124 |
|
Total Investments (cost $613,681,894) |
| $ 829,468,277 |
Receivable for investments sold | 5,890,657 | |
Receivable for fund shares sold | 672,748 | |
Dividends receivable | 1,122,911 | |
Distributions receivable from Fidelity Central Funds | 3,760 | |
Prepaid expenses | 2,556 | |
Other receivables | 159,035 | |
Total assets | 837,319,944 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,227,537 | |
Payable for fund shares redeemed | 1,344,741 | |
Accrued management fee | 367,210 | |
Other affiliated payables | 147,052 | |
Other payables and accrued expenses | 46,462 | |
Collateral on securities loaned, at value | 25,335,350 | |
Total liabilities | 28,468,352 | |
|
|
|
Net Assets | $ 808,851,592 | |
Net Assets consist of: |
| |
Paid in capital | $ 595,723,434 | |
Undistributed net investment income | 774,709 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (3,351,282) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 215,704,731 | |
Net Assets, for 9,712,979 shares outstanding | $ 808,851,592 | |
Net Asset Value, offering price and redemption price per share ($808,851,592 ÷ 9,712,979 shares) | $ 83.28 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,370,912 |
Interest |
| 3 |
Income from Fidelity Central Funds (including $151,715 from security lending) |
| 171,270 |
Total income |
| 9,542,185 |
|
|
|
Expenses | ||
Management fee | $ 3,833,860 | |
Transfer agent fees | 1,366,859 | |
Accounting and security lending fees | 251,094 | |
Custodian fees and expenses | 12,146 | |
Independent trustees' compensation | 13,428 | |
Registration fees | 25,155 | |
Audit | 40,611 | |
Legal | 6,091 | |
Interest | 246 | |
Miscellaneous | 16,284 | |
Total expenses before reductions | 5,565,774 | |
Expense reductions | (1,137) | 5,564,637 |
Net investment income (loss) | 3,977,548 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 19,822,507 | |
Other affiliated issuers | (5,164) | |
Foreign currency transactions | 7,880 | |
Total net realized gain (loss) |
| 19,825,223 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 60,854,178 | |
Assets and liabilities in foreign currencies | 252 | |
Total change in net unrealized appreciation (depreciation) |
| 60,854,430 |
Net gain (loss) | 80,679,653 | |
Net increase (decrease) in net assets resulting from operations | $ 84,657,201 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Computers Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,977,548 | $ 5,858,836 |
Net realized gain (loss) | 19,825,223 | 31,279,988 |
Change in net unrealized appreciation (depreciation) | 60,854,430 | 122,751,318 |
Net increase (decrease) in net assets resulting from operations | 84,657,201 | 159,890,142 |
Distributions to shareholders from net investment income | (4,364,252) | (5,025,394) |
Distributions to shareholders from net realized gain | (16,558,901) | (50,138,396) |
Total distributions | (20,923,153) | (55,163,790) |
Share transactions | 195,542,539 | 187,959,145 |
Reinvestment of distributions | 20,358,707 | 53,769,152 |
Cost of shares redeemed | (150,113,082) | (354,252,067) |
Net increase (decrease) in net assets resulting from share transactions | 65,788,164 | (112,523,770) |
Redemption fees | 6,717 | 15,549 |
Total increase (decrease) in net assets | 129,528,929 | (7,781,869) |
|
|
|
Net Assets | ||
Beginning of period | 679,322,663 | 687,104,532 |
End of period (including undistributed net investment income of $774,709 and undistributed net investment income of $1,186,326, respectively) | $ 808,851,592 | $ 679,322,663 |
Other Information Shares | ||
Sold | 2,396,480 | 2,718,246 |
Issued in reinvestment of distributions | 245,952 | 860,063 |
Redeemed | (1,931,757) | (5,227,081) |
Net increase (decrease) | 710,675 | (1,648,772) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 75.46 | $ 64.51 | $ 64.89 | $ 59.80 | $ 43.59 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .45 | .59 | .18 | (.18) | (.25) |
Net realized and unrealized gain (loss) | 9.61 | 15.76 | (.43) | 5.27 | 16.46 |
Total from investment operations | 10.06 | 16.35 | (.25) | 5.09 | 16.21 |
Distributions from net investment income | (.47) | (.53) | (.13) | - | - |
Distributions from net realized gain | (1.77) | (4.87) | - | - | - |
Total distributions | (2.24) | (5.40) | (.13) | - | - |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 83.28 | $ 75.46 | $ 64.51 | $ 64.89 | $ 59.80 |
Total ReturnA | 13.36% | 27.13% | (.38)% | 8.51% | 37.19% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .86% | .89% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .86% | .89% |
Expenses net of all reductions | .80% | .82% | .82% | .85% | .88% |
Net investment income (loss) | .57% | .86% | .29% | (.32)% | (.50)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 808,852 | $ 679,323 | $ 687,105 | $ 758,713 | $ 609,487 |
Portfolio turnover rateD | 46% | 35% | 184% | 193% | 141% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Electronics Portfolio | 34.91% | 18.69% | 9.43% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Electronics Portfolio on February 28, 2005. 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
Electronics Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Stephen Barwikowski, Portfolio Manager of Electronics Portfolio: For the year, the fund returned 34.91%, topping the 32.28% gain of its industry benchmark, the MSCI U.S. IMI Semiconductors & Semiconductor Equipment 25-50 Index, and also outpacing the S&P 500®. Continued improvement in the macroeconomic environment, generally favorable earnings news and industry catalysts helped semiconductor stocks post a market-beating gain during the period. Compared with the MSCI index, a sizable overweighting in Freescale Semiconductor was the fund's largest relative contributor. Freescale supplies microprocessors, sensors, analog integrated circuits and other components used in the rapidly growing auto electronics market. Avoiding weak-performing index name Cree, a maker of LED components, for most of the period also was helpful. A meaningful overweighting in Broadcom further bolstered our relative results. Computer chipmaker Intel was by far the largest component of the MSCI index and the fund's fourth-largest relative contributor. I meaningfully underweighted this stock because I questioned the company's long-term growth potential, given its dependence on the stagnant PC market. Ironically, at the period's halfway mark, Intel was our largest relative detractor because the stock had outperformed to that point. Subsequently, though, underweighting Intel helped, especially late in the period, when it was relatively weak. Despite the underweighting, Intel was the fund's largest position at period end. Conversely, negligible exposure to strong-performing Avago Technologies, which I repurchased in September after selling it in July, made this index component the fund's biggest relative detractor. The fund did not own Avago at period end. Largely avoiding index name Skyworks Solutions, another outperforming provider of radio frequency semiconductors, further hampered our results. Meanwhile, the share price of wireless infrastructure maker QUALCOMM moved lower in the last six months of the period, making it a relative detractor. I took advantage of this decline to substantially boost our already overweighted position.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Electronics Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Intel Corp. | 9.3 | 14.9 |
Broadcom Corp. Class A | 7.7 | 7.9 |
QUALCOMM, Inc. | 6.4 | 4.2 |
Samsung Electronics Co. Ltd. | 4.4 | 4.4 |
Micron Technology, Inc. | 4.2 | 3.9 |
Texas Instruments, Inc. | 4.0 | 7.3 |
Maxim Integrated Products, Inc. | 4.0 | 2.4 |
Marvell Technology Group Ltd. | 3.8 | 2.2 |
Altera Corp. | 3.6 | 5.1 |
Google, Inc. Class A | 3.1 | 1.4 |
| 50.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Semiconductors & Semiconductor Equipment | 71.3% |
|
![]() | Communications Equipment | 7.5% |
|
![]() | Electronic Equipment & Components | 6.8% |
|
![]() | Technology Hardware, Storage & Peripherals | 4.9% |
|
![]() | Internet Software & Services | 3.5% |
|
![]() | All Others* | 6.0% |
|
As of August 31, 2014 | |||
![]() | Semiconductors & Semiconductor Equipment | 81.6% |
|
![]() | Communications Equipment | 5.7% |
|
![]() | Electronic Equipment & Components | 3.8% |
|
![]() | Internet Software & Services | 1.9% |
|
![]() | Software | 1.1% |
|
![]() | All Others* | 5.9% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Electronics Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 94.8% | |||
Shares | Value | ||
BIOTECHNOLOGY - 0.0% | |||
Biotechnology - 0.0% | |||
Arrowhead Research Corp. warrants 5/21/17 (a) | 285,468 | $ 3 | |
COMMUNICATIONS EQUIPMENT - 7.5% | |||
Communications Equipment - 7.5% | |||
Aruba Networks, Inc. (a) | 102,700 | 2,547,987 | |
Ciena Corp. (a) | 314,500 | 6,579,340 | |
F5 Networks, Inc. (a) | 60,600 | 7,157,769 | |
Finisar Corp. (a) | 367,100 | 7,712,771 | |
QUALCOMM, Inc. | 2,117,032 | 153,505,990 | |
Ruckus Wireless, Inc. (a) | 106,000 | 1,341,960 | |
| 178,845,817 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.3% | |||
Alternative Carriers - 0.3% | |||
Intelsat SA (a) | 586,400 | 7,253,768 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 6.4% | |||
Electronic Components - 0.1% | |||
Corning, Inc. | 22,000 | 536,800 | |
Knowles Corp. (a) | 124,500 | 2,384,175 | |
| 2,920,975 | ||
Electronic Manufacturing Services - 5.0% | |||
Jabil Circuit, Inc. | 1,852,332 | 40,695,734 | |
KEMET Corp. (a) | 174,210 | 796,140 | |
Neonode, Inc. (a)(d) | 306,693 | 941,548 | |
Plexus Corp. (a) | 485,000 | 19,521,250 | |
TTM Technologies, Inc. (a)(d)(e) | 6,123,556 | 53,948,528 | |
Viasystems Group, Inc. (a) | 154,678 | 2,708,412 | |
| 118,611,612 | ||
Technology Distributors - 1.3% | |||
Avnet, Inc. | 429,400 | 19,670,814 | |
Ingram Micro, Inc. Class A (a) | 487,200 | 12,038,712 | |
| 31,709,526 | ||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 153,242,113 | ||
INTERNET SOFTWARE & SERVICES - 3.5% | |||
Internet Software & Services - 3.5% | |||
Cornerstone OnDemand, Inc. (a) | 126,900 | 4,056,359 | |
Demand Media, Inc. (a) | 27 | 133 | |
Google, Inc.: | |||
Class A (a) | 132,550 | 74,576,607 | |
Class C (a) | 190 | 106,096 | |
Rightside Group Ltd. (a) | 27 | 191 | |
Web.com Group, Inc. (a) | 195,100 | 3,482,535 | |
Yelp, Inc. (a) | 25,000 | 1,200,000 | |
| 83,421,921 | ||
| |||
Shares | Value | ||
IT SERVICES - 0.5% | |||
Data Processing & Outsourced Services - 0.5% | |||
EVERTEC, Inc. | 583,200 | $ 12,159,720 | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 71.0% | |||
Semiconductor Equipment - 4.6% | |||
Amkor Technology, Inc. (a) | 1,549,800 | 15,079,554 | |
Entegris, Inc. (a) | 1,090,700 | 14,626,287 | |
KLA-Tencor Corp. | 140,400 | 9,119,682 | |
Lam Research Corp. | 721,573 | 59,500,910 | |
Ultratech, Inc. (a) | 527,400 | 9,514,296 | |
Xcerra Corp. (a) | 250,000 | 2,270,000 | |
| 110,110,729 | ||
Semiconductors - 66.4% | |||
Advanced Micro Devices, Inc. (d) | 3,563,500 | 11,082,485 | |
Altera Corp. | 2,323,968 | 86,010,056 | |
Analog Devices, Inc. | 566,289 | 33,150,558 | |
Applied Micro Circuits Corp. (a) | 341,670 | 1,858,685 | |
Atmel Corp. | 8,457,300 | 70,533,882 | |
Broadcom Corp. Class A | 4,080,959 | 184,581,776 | |
Cirrus Logic, Inc. (a) | 844,590 | 25,430,605 | |
Cree, Inc. (a)(d) | 600,650 | 23,581,519 | |
Cypress Semiconductor Corp. (d) | 1,937,302 | 28,575,205 | |
Exar Corp. (a) | 397,400 | 4,260,128 | |
EZchip Semiconductor Ltd. (a)(d) | 163,000 | 3,514,280 | |
Fairchild Semiconductor International, Inc. (a) | 631,015 | 11,004,902 | |
Freescale Semiconductor, Inc. (a)(d) | 1,019,238 | 36,804,684 | |
Himax Technologies, Inc. sponsored ADR | 819,500 | 5,900,400 | |
Hua Hong Semiconductor Ltd. (a) | 1,887,000 | 2,116,726 | |
Inphi Corp. (a) | 485,842 | 9,056,095 | |
Integrated Silicon Solution, Inc. | 259,000 | 4,257,960 | |
Intel Corp. | 6,667,878 | 221,706,939 | |
Intersil Corp. Class A | 3,722,231 | 58,029,581 | |
MagnaChip Semiconductor Corp. (a)(e) | 1,909,582 | 10,903,713 | |
Marvell Technology Group Ltd. | 5,670,346 | 91,405,978 | |
Maxim Integrated Products, Inc. | 2,778,575 | 95,569,087 | |
MaxLinear, Inc. Class A (a) | 2,312,224 | 19,191,459 | |
Micrel, Inc. | 652,259 | 9,738,227 | |
Microchip Technology, Inc. (d) | 1,061,400 | 54,417,978 | |
Micron Technology, Inc. (a) | 3,289,140 | 100,877,924 | |
Motech Industries, Inc. | 1 | 1 | |
NVIDIA Corp. | 1,654,220 | 36,492,093 | |
NXP Semiconductors NV (a) | 301,123 | 25,563,837 | |
O2Micro International Ltd. sponsored ADR (a) | 959,578 | 2,418,137 | |
Omnivision Technologies, Inc. (a) | 364,000 | 9,758,840 | |
ON Semiconductor Corp. (a) | 3,267,778 | 41,664,170 | |
PMC-Sierra, Inc. (a) | 3,484,074 | 33,098,703 | |
Sanken Electric Co. Ltd. | 284,000 | 2,041,714 | |
Semiconductor Manufacturing International Corp. (a) | 40,821,000 | 3,591,914 | |
Semtech Corp. (a) | 1,719,379 | 49,741,634 | |
Silicon Laboratories, Inc. (a) | 170,400 | 8,629,056 | |
Common Stocks - continued | |||
Shares | Value | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - CONTINUED | |||
Semiconductors - continued | |||
Skyworks Solutions, Inc. | 1,000 | $ 87,750 | |
STMicroelectronics NV (NY Shares) unit | 374,000 | 3,324,860 | |
Texas Instruments, Inc. | 1,649,960 | 97,017,648 | |
Xilinx, Inc. | 1,753,154 | 74,281,135 | |
| 1,591,272,324 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 1,701,383,053 | ||
SOFTWARE - 0.7% | |||
Application Software - 0.4% | |||
Comverse, Inc. (a) | 187,000 | 3,354,780 | |
Nuance Communications, Inc. (a) | 489,500 | 6,999,850 | |
| 10,354,630 | ||
Systems Software - 0.3% | |||
CommVault Systems, Inc. (a) | 115,400 | 5,570,358 | |
TOTAL SOFTWARE | 15,924,988 | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 4.9% | |||
Technology Hardware, Storage & Peripherals - 4.9% | |||
BlackBerry Ltd. (a) | 1,400 | 15,134 | |
Hewlett-Packard Co. | 375,600 | 13,085,904 | |
Samsung Electronics Co. Ltd. | 85,609 | 105,503,912 | |
| 118,604,950 | ||
TOTAL COMMON STOCKS (Cost $2,030,380,710) |
|
Corporate Bonds - 0.7% | ||||
| Principal Amount |
| ||
Convertible Bonds - 0.4% | ||||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.4% | ||||
Electronic Components - 0.4% | ||||
InvenSense, Inc. 1.75% 11/1/18 | $ 8,080,000 | 8,170,900 | ||
| ||||
| Principal Amount | Value | ||
Nonconvertible Bonds - 0.3% | ||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.3% | ||||
Semiconductors - 0.3% | ||||
Advanced Micro Devices, Inc.: | ||||
7% 7/1/24 | $ 4,785,000 | $ 4,354,350 | ||
7.75% 8/1/20 | 3,835,000 | 3,806,238 | ||
| 8,160,588 | |||
TOTAL CORPORATE BONDS (Cost $14,929,164) |
|
Money Market Funds - 10.2% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.13% (b) | 125,409,715 | 125,409,715 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 118,058,511 | 118,058,511 | |
TOTAL MONEY MARKET FUNDS (Cost $243,468,226) |
| ||
TOTAL INVESTMENT PORTFOLIO - 105.7% (Cost $2,288,778,100) | 2,530,636,047 | ||
NET OTHER ASSETS (LIABILITIES) - (5.7)% | (135,597,179) | ||
NET ASSETS - 100% | $ 2,395,038,868 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 87,256 |
Fidelity Securities Lending Cash Central Fund | 377,418 |
Total | $ 464,674 |
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, |
MagnaChip Semiconductor Corp. | $ 9,162,340 | $ 18,020,416 | $ - | $ - | $ 10,903,713 |
TTM Technologies, Inc. | 22,626,290 | 27,294,472 | 1,827,840* | - | 53,948,528 |
Total | $ 31,788,630 | $ 45,314,888 | $ 1,827,840 | $ - | $ 64,852,241 |
* Includes the value of securities delivered through in-kind transactions |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,270,836,333 | $ 2,267,244,416 | $ 3,591,917 | $ - |
Corporate Bonds | 16,331,488 | - | 16,331,488 | - |
Money Market Funds | 243,468,226 | 243,468,226 | - | - |
Total Investments in Securities: | $ 2,530,636,047 | $ 2,510,712,642 | $ 19,923,405 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 87.6% |
Bermuda | 5.3% |
Korea (South) | 4.4% |
Netherlands | 1.2% |
Others (Individually Less Than 1%) | 1.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $115,001,258) - See accompanying schedule: Unaffiliated issuers (cost $1,967,100,968) | $ 2,222,315,580 |
|
Fidelity Central Funds (cost $243,468,226) | 243,468,226 |
|
Other affiliated issuers (cost $78,208,906) | 64,852,241 |
|
Total Investments (cost $2,288,778,100) |
| $ 2,530,636,047 |
Cash |
| 58,551 |
Receivable for investments sold | 15,816,636 | |
Receivable for fund shares sold | 14,418,553 | |
Dividends receivable | 5,528,277 | |
Interest receivable | 127,726 | |
Distributions receivable from Fidelity Central Funds | 48,637 | |
Prepaid expenses | 6,783 | |
Other receivables | 90,751 | |
Total assets | 2,566,731,961 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 47,957,414 | |
Payable for fund shares redeemed | 4,116,494 | |
Accrued management fee | 1,062,272 | |
Other affiliated payables | 363,632 | |
Other payables and accrued expenses | 134,770 | |
Collateral on securities loaned, at value | 118,058,511 | |
Total liabilities | 171,693,093 | |
|
|
|
Net Assets | $ 2,395,038,868 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,042,242,595 | |
Undistributed net investment income | 1,323,381 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 109,622,792 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 241,850,100 | |
Net Assets, for 26,773,044 shares outstanding | $ 2,395,038,868 | |
Net Asset Value, offering price and redemption price per share ($2,395,038,868 ÷ 26,773,044 shares) | $ 89.46 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 24,214,596 |
Interest |
| 204,440 |
Income from Fidelity Central Funds (including $377,418 from security lending) |
| 464,674 |
Total income |
| 24,883,710 |
|
|
|
Expenses | ||
Management fee | $ 9,950,522 | |
Transfer agent fees | 3,159,446 | |
Accounting and security lending fees | 568,231 | |
Custodian fees and expenses | 135,616 | |
Independent trustees' compensation | 33,051 | |
Appreciation in deferred trustee compensation account. | 128 | |
Registration fees | 130,749 | |
Audit | 43,451 | |
Legal | 16,408 | |
Miscellaneous | 18,605 | |
Total expenses before reductions | 14,056,207 | |
Expense reductions | (88,760) | 13,967,447 |
Net investment income (loss) | 10,916,263 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 286,338,359 | |
Redemption in-kind with affiliated entities (including gain from other affiliated issuers of $174,450) | 13,991,337 |
|
Foreign currency transactions | (36,655) | |
Total net realized gain (loss) |
| 300,293,041 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 227,970,175 | |
Assets and liabilities in foreign currencies | (4,796) | |
Total change in net unrealized appreciation (depreciation) |
| 227,965,379 |
Net gain (loss) | 528,258,420 | |
Net increase (decrease) in net assets resulting from operations | $ 539,174,683 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Electronics Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 10,916,263 | $ 6,102,086 |
Net realized gain (loss) | 300,293,041 | 153,035,633 |
Change in net unrealized appreciation (depreciation) | 227,965,379 | 158,585,663 |
Net increase (decrease) in net assets resulting from operations | 539,174,683 | 317,723,382 |
Distributions to shareholders from net investment income | (10,701,038) | (4,987,449) |
Distributions to shareholders from net realized gain | (50,011,366) | (991,882) |
Total distributions | (60,712,404) | (5,979,331) |
Share transactions | 1,265,212,788 | 350,642,903 |
Reinvestment of distributions | 57,811,166 | 5,638,941 |
Cost of shares redeemed | (660,454,560) | (367,995,543) |
Net increase (decrease) in net assets resulting from share transactions | 662,569,394 | (11,713,699) |
Redemption fees | 154,050 | 38,716 |
Total increase (decrease) in net assets | 1,141,185,723 | 300,069,068 |
|
|
|
Net Assets | ||
Beginning of period | 1,253,853,145 | 953,784,077 |
End of period (including undistributed net investment income of $1,323,381 and undistributed net investment income of $1,092,221, respectively) | $ 2,395,038,868 | $ 1,253,853,145 |
Other Information Shares | ||
Sold | 16,339,638 | 5,733,283 |
Issued in reinvestment of distributions | 686,150 | 93,318 |
Redeemed | (8,604,455) | (6,619,835) |
Net increase (decrease) | 8,421,333 | (793,234) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 68.32 | $ 49.82 | $ 53.29 | $ 53.36 | $ 39.66 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .47 | .36 | .17 | .01 | .06 |
Net realized and unrealized gain (loss) | 23.21 | 18.53 | (3.49) | (.02) | 13.75 |
Total from investment operations | 23.68 | 18.89 | (3.32) | (.01) | 13.81 |
Distributions from net investment income | (.45) | (.32) | (.15) | (.06) | (.11) |
Distributions from net realized gain | (2.10) | (.06) | - | - | - |
Total distributions | (2.55) | (.39) I | (.15) | (.06) | (.11) |
Redemption fees added to paid in capital B | .01 | - H | - H | - H | - H |
Net asset value, end of period | $ 89.46 | $ 68.32 | $ 49.82 | $ 53.29 | $ 53.36 |
Total ReturnA | 34.91% | 38.01% | (6.20)% | (.01)% | 34.87% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .78% | .82% | .84% | .84% | .86% |
Expenses net of fee waivers, if any | .78% | .82% | .84% | .84% | .86% |
Expenses net of all reductions | .77% | .79% | .82% | .83% | .86% |
Net investment income (loss) | .61% | .63% | .36% | .03% | .13% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,395,039 | $ 1,253,853 | $ 953,784 | $ 1,291,741 | $ 1,387,264 |
Portfolio turnover rateD | 132% F | 186% | 118% | 137% | 101% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F Portfolio turnover rate excludes securities received or delivered in-kind.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Total distributions of $.39 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $.064 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
IT Services Portfolio A | 11.16% | 21.14% | 14.21% |
A Prior to October 1, 2006, IT Services Portfolio was named Business Service and Outsourcing Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 28, 2005. 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
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Kyle Weaver, Portfolio Manager of IT Services Portfolio: For the year, the fund returned 11.16%, a bit better than the 11.13% gain of the MSCI U.S. IMI Information Technology Services 25-50 Index but lagging the S&P 500®. Looking at the two main subindustries in the MSCI index, data processing & outsourced services returned roughly 19%, whereas IT consulting & other services posted a small decline. One decision that played out especially well was a large underweighting in weak-performing technology services provider IBM, which had an average weighting of 21% in the MSCI index and was by far the fund's largest individual contributor versus its benchmark. Other contributors included two non-index positions: Endurance International Group Holdings, a Web-hosting company, and Luxoft Holding, a provider of custom software development. Conversely, the biggest detractor by far was a non-index position in Web.com Group, a provider of Web hosting and website development services for smaller businesses. These shares were hampered when questions about greater competition arose in June about the firm's core website domain registration service. With that said, I increased the fund's allocation here. Other detractors included a non-index stake in CommVault Systems, a maker of data backup software for businesses, and a sizable underweighting in strong-performing payroll processor and index component Automatic Data Processing. I significantly reduced our stake in CommVault.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
IT Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Visa, Inc. Class A | 15.3 | 13.7 |
MasterCard, Inc. Class A | 11.0 | 9.3 |
Cognizant Technology Solutions Corp. Class A | 6.9 | 7.6 |
Fidelity National Information Services, Inc. | 4.7 | 4.9 |
Alliance Data Systems Corp. | 3.9 | 2.3 |
Accenture PLC Class A | 3.9 | 5.1 |
Endurance International Group Holdings, Inc. | 3.7 | 4.2 |
IBM Corp. | 3.6 | 2.5 |
ExlService Holdings, Inc. | 3.0 | 3.0 |
Vantiv, Inc. | 2.3 | 1.1 |
| 58.3 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | IT Services | 83.0% |
|
![]() | Internet Software & Services | 8.5% |
|
![]() | Technology Hardware, Storage & Peripherals | 2.2% |
|
![]() | Professional Services | 1.5% |
|
![]() | Software | 1.4% |
|
![]() | All Others* | 3.4% |
|
As of August 31, 2014 | |||
![]() | IT Services | 85.3% |
|
![]() | Internet Software & Services | 9.1% |
|
![]() | Software | 2.4% |
|
![]() | Professional Services | 2.0% |
|
![]() | Diversified Consumer Services | 0.7% |
|
![]() | All Others* | 0.5% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
IT Services Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 97.3% | |||
Shares | Value | ||
DIVERSIFIED CONSUMER SERVICES - 0.7% | |||
Specialized Consumer Services - 0.7% | |||
H&R Block, Inc. | 189,700 | $ 6,478,255 | |
INTERNET & CATALOG RETAIL - 0.0% | |||
Internet Retail - 0.0% | |||
Travelport Worldwide Ltd. | 4,000 | 63,760 | |
INTERNET SOFTWARE & SERVICES - 8.5% | |||
Internet Software & Services - 8.5% | |||
Cvent, Inc. (a)(d) | 128,800 | 3,728,760 | |
Endurance International Group Holdings, Inc. (a) | 1,881,032 | 35,024,816 | |
Marketo, Inc. (a)(d) | 106,300 | 2,971,085 | |
Q2 Holdings, Inc. (a) | 226,600 | 4,488,946 | |
Web.com Group, Inc. (a) | 1,125,608 | 20,092,103 | |
Wix.com Ltd. (a)(d) | 188,817 | 3,461,016 | |
Xoom Corp. (a)(d) | 602,001 | 10,264,117 | |
| 80,030,843 | ||
IT SERVICES - 83.0% | |||
Data Processing & Outsourced Services - 58.6% | |||
Alliance Data Systems Corp. (a) | 131,248 | 36,553,880 | |
Automatic Data Processing, Inc. | 1,000 | 88,840 | |
Broadridge Financial Solutions, Inc. | 7,800 | 415,194 | |
Cardtronics, Inc. (a) | 253,300 | 9,268,247 | |
Cass Information Systems, Inc. | 1,852 | 92,970 | |
Computer Sciences Corp. | 52,900 | 3,751,668 | |
Convergys Corp. | 44,300 | 990,105 | |
CoreLogic, Inc. (a) | 190,100 | 6,337,934 | |
CSG Systems International, Inc. | 100,070 | 2,993,094 | |
DST Systems, Inc. | 41,600 | 4,421,664 | |
Euronet Worldwide, Inc. (a) | 157,000 | 8,870,500 | |
EVERTEC, Inc. | 73,400 | 1,530,390 | |
ExlService Holdings, Inc. (a) | 807,570 | 28,184,193 | |
Fidelity National Information Services, Inc. | 650,300 | 43,953,777 | |
Fiserv, Inc. (a) | 229,800 | 17,940,486 | |
FleetCor Technologies, Inc. (a) | 99,100 | 15,204,913 | |
Global Cash Access Holdings, Inc. (a) | 417,300 | 2,967,003 | |
Global Payments, Inc. | 116,700 | 10,720,062 | |
Heartland Payment Systems, Inc. | 192,700 | 9,448,081 | |
Higher One Holdings, Inc. (a) | 1,286,400 | 4,245,120 | |
Jack Henry & Associates, Inc. | 1,600 | 104,800 | |
MasterCard, Inc. Class A | 1,144,000 | 103,108,720 | |
Maximus, Inc. | 83,100 | 4,922,013 | |
MoneyGram International, Inc. (a) | 199,800 | 1,697,301 | |
Neustar, Inc. Class A (a)(d) | 213,076 | 5,650,776 | |
Paychex, Inc. | 1,800 | 89,703 | |
Sabre Corp. | 41,700 | 907,392 | |
Sykes Enterprises, Inc. (a) | 37,200 | 864,900 | |
Syntel, Inc. (a) | 102,100 | 5,043,740 | |
Teletech Holdings, Inc. | 2,000 | 48,600 | |
The Western Union Co. | 5,100 | 99,552 | |
| |||
Shares | Value | ||
Total System Services, Inc. | 203,700 | $ 7,781,340 | |
Vantiv, Inc. (a) | 585,400 | 21,653,946 | |
VeriFone Systems, Inc. (a) | 489,000 | 17,207,910 | |
Visa, Inc. Class A | 532,712 | 144,530,092 | |
WEX, Inc. (a) | 162,300 | 17,364,477 | |
WNS Holdings Ltd. sponsored ADR (a) | 354,729 | 8,680,219 | |
Xerox Corp. | 335,600 | 4,580,940 | |
| 552,314,542 | ||
IT Consulting & Other Services - 24.4% | |||
Accenture PLC Class A | 404,800 | 36,444,144 | |
Acxiom Corp. (a) | 298,400 | 5,968,000 | |
Booz Allen Hamilton Holding Corp. Class A | 433,100 | 12,889,056 | |
CACI International, Inc. Class A (a) | 1,000 | 87,290 | |
Cap Gemini SA | 1,200 | 97,048 | |
Ciber, Inc. (a) | 700,200 | 2,744,784 | |
Cognizant Technology Solutions Corp. Class A (a) | 1,034,132 | 64,617,738 | |
EPAM Systems, Inc. (a) | 315,800 | 19,478,544 | |
Forrester Research, Inc. | 10,300 | 387,486 | |
Gartner, Inc. Class A (a) | 153,576 | 12,763,701 | |
IBM Corp. | 212,650 | 34,436,541 | |
iGATE Corp. (a) | 308,192 | 13,190,618 | |
Leidos Holdings, Inc. | 2,125 | 95,668 | |
Luxoft Holding, Inc. (a) | 280,850 | 14,239,095 | |
Science Applications International Corp. | 17,000 | 929,560 | |
Teradata Corp. (a) | 3,500 | 155,820 | |
Unisys Corp. (a) | 109,590 | 2,481,118 | |
Virtusa Corp. (a) | 231,298 | 9,103,889 | |
| 230,110,100 | ||
TOTAL IT SERVICES | 782,424,642 | ||
PROFESSIONAL SERVICES - 1.5% | |||
Research & Consulting Services - 1.5% | |||
ICF International, Inc. (a) | 339,911 | 14,242,271 | |
SOFTWARE - 1.4% | |||
Application Software - 0.9% | |||
CDK Global, Inc. | 66 | 3,091 | |
Globant SA (a) | 488,487 | 8,152,848 | |
| 8,155,939 | ||
Systems Software - 0.5% | |||
CommVault Systems, Inc. (a) | 34 | 1,641 | |
Fleetmatics Group PLC (a) | 32 | 1,319 | |
Rally Software Development Corp. (a) | 398,447 | 4,741,519 | |
| 4,744,479 | ||
TOTAL SOFTWARE | 12,900,418 | ||
Common Stocks - continued | |||
Shares | Value | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 2.2% | |||
Technology Hardware, Storage & Peripherals - 2.2% | |||
Electronics for Imaging, Inc. (a) | 368,300 | $ 14,952,980 | |
Nimble Storage, Inc. (a)(d) | 228,900 | 5,782,014 | |
| 20,734,994 | ||
TOTAL COMMON STOCKS (Cost $608,076,104) |
| ||
Money Market Funds - 4.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 20,027,229 | 20,027,229 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 22,330,421 | 22,330,421 | |
TOTAL MONEY MARKET FUNDS (Cost $42,357,650) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $650,433,754) | 959,232,833 | ||
NET OTHER ASSETS (LIABILITIES) - (1.8)% | (17,235,144) | ||
NET ASSETS - 100% | $ 941,997,689 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Includes investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
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 | $ 3,177 |
Fidelity Securities Lending Cash Central Fund | 855,502 |
Total | $ 858,679 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $21,436,877) - See accompanying schedule: Unaffiliated issuers (cost $608,076,104) | $ 916,875,183 |
|
Fidelity Central Funds (cost $42,357,650) | 42,357,650 |
|
Total Investments (cost $650,433,754) |
| $ 959,232,833 |
Receivable for investments sold | 8,231,950 | |
Receivable for fund shares sold | 9,206,147 | |
Dividends receivable | 481,537 | |
Distributions receivable from Fidelity Central Funds | 11,902 | |
Prepaid expenses | 4,204 | |
Other receivables | 24,086 | |
Total assets | 977,192,659 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 10,735,725 | |
Payable for fund shares redeemed | 1,489,811 | |
Accrued management fee | 416,224 | |
Other affiliated payables | 180,690 | |
Other payables and accrued expenses | 42,099 | |
Collateral on securities loaned, at value | 22,330,421 | |
Total liabilities | 35,194,970 | |
|
|
|
Net Assets | $ 941,997,689 | |
Net Assets consist of: |
| |
Paid in capital | $ 613,678,032 | |
Accumulated net investment loss | (850,482) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 20,377,289 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 308,792,850 | |
Net Assets, for 24,226,452 shares outstanding | $ 941,997,689 | |
Net Asset Value, offering price and redemption price per share ($941,997,689 ÷ 24,226,452 shares) | $ 38.88 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,896,550 |
Income from Fidelity Central Funds (including $855,502 from security lending) |
| 858,679 |
Total income |
| 7,755,229 |
|
|
|
Expenses | ||
Management fee | $ 5,820,585 | |
Transfer agent fees | 2,180,799 | |
Accounting and security lending fees | 358,420 | |
Custodian fees and expenses | 51,741 | |
Independent trustees' compensation | 22,445 | |
Registration fees | 57,041 | |
Audit | 44,179 | |
Legal | 9,438 | |
Interest | 7,103 | |
Miscellaneous | 13,206 | |
Total expenses before reductions | 8,564,957 | |
Expense reductions | (18,352) | 8,546,605 |
Net investment income (loss) | (791,376) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 112,946,782 | |
Foreign currency transactions | (32,858) | |
Total net realized gain (loss) |
| 112,913,924 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (55,301,156) | |
Assets and liabilities in foreign currencies | (524) | |
Total change in net unrealized appreciation (depreciation) |
| (55,301,680) |
Net gain (loss) | 57,612,244 | |
Net increase (decrease) in net assets resulting from operations | $ 56,820,868 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
IT Services Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (791,376) | $ (904,212) |
Net realized gain (loss) | 112,913,924 | 43,226,902 |
Change in net unrealized appreciation (depreciation) | (55,301,680) | 278,406,734 |
Net increase (decrease) in net assets resulting from operations | 56,820,868 | 320,729,424 |
Distributions to shareholders from net investment income | (115,078) | - |
Distributions to shareholders from net realized gain | (71,266,576) | (37,192,316) |
Total distributions | (71,381,654) | (37,192,316) |
Share transactions | 288,892,698 | 1,358,923,826 |
Reinvestment of distributions | 68,706,176 | 35,875,905 |
Cost of shares redeemed | (1,054,650,724) | (495,851,392) |
Net increase (decrease) in net assets resulting from share transactions | (697,051,850) | 898,948,339 |
Redemption fees | 38,282 | 124,274 |
Total increase (decrease) in net assets | (711,574,354) | 1,182,609,721 |
|
|
|
Net Assets | ||
Beginning of period | 1,653,572,043 | 470,962,322 |
End of period (including accumulated net investment loss of $850,482 and undistributed net investment income of $0, respectively) | $ 941,997,689 | $ 1,653,572,043 |
Other Information Shares | ||
Sold | 7,872,885 | 39,950,860 |
Issued in reinvestment of distributions | 1,874,758 | 999,013 |
Redeemed | (29,192,121) | (14,385,908) |
Net increase (decrease) | (19,444,478) | 26,563,965 |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.86 | $ 27.53 | $ 23.77 | $ 22.31 | $ 17.08 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.03) | (.03) | (.02) E | (.05) | (.03) |
Net realized and unrealized gain (loss) | 4.06 | 11.42 | 4.08 | 1.86 | 5.26 |
Total from investment operations | 4.03 | 11.39 | 4.06 | 1.81 | 5.23 |
Distributions from net investment income | (.01) | - | - | - | - |
Distributions from net realized gain | (3.01) | (1.06) | (.30) | (.35) | - |
Total distributions | (3.01) I | (1.06) | (.30) | (.35) | - |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 38.88 | $ 37.86 | $ 27.53 | $ 23.77 | $ 22.31 |
Total ReturnA | 11.16% | 41.66% | 17.22% | 8.18% | 30.62% |
Ratios to Average Net AssetsC, F |
|
|
|
|
|
Expenses before reductions | .81% | .84% | .86% | .91% | .94% |
Expenses net of fee waivers, if any | .81% | .84% | .86% | .91% | .94% |
Expenses net of all reductions | .81% | .83% | .85% | .91% | .94% |
Net investment income (loss) | (.07)% | (.09)% | (.09)% E | (.24)% | (.16)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 941,998 | $ 1,653,572 | $ 470,962 | $ 249,124 | $ 131,972 |
Portfolio turnover rateD | 56% | 74% | 107% | 143% | 156% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a large, non-recurring dividend which amounted to $.02 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.19)%.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Total distributions of $3.01 per share is comprised of distributions from net investment income of $.005 and distributions from net realized gain of $3.009 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Software and Computer Services Portfolio | 6.33% | 20.47% | 14.44% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and Computer Services Portfolio on February 28, 2005. 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
Software and Computer Services Portfolio
Management's Discussion of Fund Performance
Comments from Ali Khan, who became sole Portfolio Manager of Software and Computer Services Portfolio on January 31, 2015, after serving as Co-Portfolio Manager since July 2014: For the 12 months ending February 28, 2015, the fund returned 6.33%, underperforming the 9.26% advance of its industry benchmark, the MSCI U.S. IMI Software & Services 25-50 Index, and the broadly based S&P 500® Index. Stock selection among Internet software & services names was the biggest detractor versus the benchmark. On an individual basis, Internet services provider Web.com was a major drag. The company provides small businesses with services such as search-engine optimization. The stock suffered from competitive pressure, mainly influenced by concerns about Google taking market share, as well as a hiccup in Web.com's sales execution. E2Open, which provides cloud-based, on-demand software solutions, was another disappointment. This software-as-a-service (SaaS) company stumbled due to concerns about its customer base, as well as balance-sheet and negative cash-flow issues. Search-engine provider Google remains the fund's largest holding and overweighting (combining its Class A and Class C shares), even though I cut back somewhat on the position toward period end. The stock underperformed the index during the period, partly due to investors' concerns about the company's decelerating revenue growth and accelerating capital and operating investements. On the upside, two of the fund's primary relative contributors were acquisition targets: online real estate business Move and digital and technology networking company Sapient. Both companies were acquired at a premium and the fund benefited. Also helping was the fund's position in payment processor Visa. The company posted double-digit earnings growth, and the stock rose strongly.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Software and Computer Services Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Microsoft Corp. | 10.9 | 14.0 |
Google, Inc. Class C | 9.9 | 13.6 |
Google, Inc. Class A | 6.8 | 8.1 |
Visa, Inc. Class A | 6.7 | 6.5 |
Oracle Corp. | 6.2 | 5.0 |
Facebook, Inc. Class A | 4.9 | 4.6 |
MasterCard, Inc. Class A | 4.1 | 2.6 |
salesforce.com, Inc. | 3.7 | 4.1 |
MDC Partners, Inc. Class A (sub. vtg.) | 3.0 | 2.8 |
Adobe Systems, Inc. | 2.8 | 2.8 |
| 59.0 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Internet Software & Services | 31.2% |
|
![]() | Software | 31.1% |
|
![]() | IT Services | 22.0% |
|
![]() | Media | 3.0% |
|
![]() | Professional Services | 2.7% |
|
![]() | All Others* | 10.0% |
|
As of August 31, 2014 | |||
![]() | Internet Software & Services | 38.5% |
|
![]() | Software | 32.7% |
|
![]() | IT Services | 18.3% |
|
![]() | Media | 2.8% |
|
![]() | Professional Services | 2.5% |
|
![]() | All Others* | 5.2% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Software and Computer Services Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 96.7% | |||
Shares | Value | ||
COMMERCIAL SERVICES & SUPPLIES - 0.2% | |||
Security & Alarm Services - 0.2% | |||
Mix Telematics Ltd. (a) | 29,426,200 | $ 6,885,829 | |
COMMUNICATIONS EQUIPMENT - 1.0% | |||
Communications Equipment - 1.0% | |||
QUALCOMM, Inc. | 432,000 | 31,324,320 | |
CONSUMER FINANCE - 0.2% | |||
Consumer Finance - 0.2% | |||
American Express Co. | 56,100 | 4,577,199 | |
DIVERSIFIED CONSUMER SERVICES - 1.3% | |||
Education Services - 0.2% | |||
Chegg, Inc. (a) | 534,800 | 4,342,576 | |
Specialized Consumer Services - 1.1% | |||
H&R Block, Inc. | 1,002,491 | 34,235,068 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 38,577,644 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.1% | |||
Alternative Carriers - 1.1% | |||
inContact, Inc. (a) | 2,940,256 | 34,430,398 | |
ELECTRONIC EQUIPMENT & COMPONENTS - 1.5% | |||
Electronic Manufacturing Services - 1.5% | |||
Trimble Navigation Ltd. (a) | 1,698,200 | 44,390,948 | |
HEALTH CARE TECHNOLOGY - 0.3% | |||
Health Care Technology - 0.3% | |||
Veeva Systems, Inc. Class A (a)(d) | 243,303 | 7,510,764 | |
INTERNET & CATALOG RETAIL - 1.2% | |||
Internet Retail - 1.2% | |||
Groupon, Inc. Class A (a)(d) | 4,294,500 | 35,129,010 | |
INTERNET SOFTWARE & SERVICES - 31.2% | |||
Internet Software & Services - 31.2% | |||
Actua Corp. (a) | 367,789 | 6,164,144 | |
ChannelAdvisor Corp. (a)(d) | 783,112 | 7,744,978 | |
Cornerstone OnDemand, Inc. (a)(d) | 586,122 | 18,735,390 | |
Cvent, Inc. (a) | 225,000 | 6,513,750 | |
Demandware, Inc. (a)(d) | 262,250 | 16,571,578 | |
E2open, Inc. (a)(d)(e) | 1,557,466 | 13,347,484 | |
Endurance International Group Holdings, Inc. (a) | 500,000 | 9,310,000 | |
Facebook, Inc. Class A (a) | 1,868,000 | 147,515,960 | |
Five9, Inc. (d) | 635,300 | 2,477,670 | |
Google, Inc.: | |||
Class A (a) | 364,500 | 205,078,635 | |
Class C (a) | 535,400 | 298,967,360 | |
Marketo, Inc. (a) | 154,800 | 4,326,660 | |
NIC, Inc. | 187,328 | 3,278,240 | |
Opower, Inc. (d) | 350,613 | 5,266,207 | |
Pandora Media, Inc. (a)(d) | 292,300 | 4,326,040 | |
Rackspace Hosting, Inc. (a) | 375,200 | 18,636,184 | |
SciQuest, Inc. (a) | 653,157 | 11,371,463 | |
| |||
Shares | Value | ||
Textura Corp. (a) | 427,100 | $ 12,048,491 | |
Twitter, Inc. (a) | 963,300 | 46,315,464 | |
Web.com Group, Inc. (a)(e) | 2,874,134 | 51,303,292 | |
Wix.com Ltd. (a) | 306,104 | 5,610,886 | |
Yahoo!, Inc. (a) | 1,026,759 | 45,464,889 | |
| 940,374,765 | ||
IT SERVICES - 22.0% | |||
Data Processing & Outsourced Services - 18.3% | |||
EVERTEC, Inc. | 707,300 | 14,747,205 | |
ExlService Holdings, Inc. (a) | 660,310 | 23,044,819 | |
Fidelity National Information Services, Inc. | 604,400 | 40,851,396 | |
MasterCard, Inc. Class A | 1,357,200 | 122,324,436 | |
The Western Union Co. | 1,200,500 | 23,433,760 | |
Total System Services, Inc. | 612,800 | 23,408,960 | |
Vantiv, Inc. (a) | 356,400 | 13,183,236 | |
Visa, Inc. Class A | 745,530 | 202,269,744 | |
WEX, Inc. (a) | 153,200 | 16,390,868 | |
WNS Holdings Ltd. sponsored ADR (a)(e) | 2,927,854 | 71,644,587 | |
| 551,299,011 | ||
IT Consulting & Other Services - 3.7% | |||
IBM Corp. | 329,100 | 53,294,454 | |
Lionbridge Technologies, Inc. (a)(e) | 6,256,275 | 35,222,828 | |
Unisys Corp. (a) | 1,007,600 | 22,812,064 | |
| 111,329,346 | ||
TOTAL IT SERVICES | 662,628,357 | ||
MEDIA - 3.0% | |||
Advertising - 3.0% | |||
MDC Partners, Inc. Class A (sub. vtg.) (e) | 3,453,481 | 89,859,570 | |
PROFESSIONAL SERVICES - 2.7% | |||
Research & Consulting Services - 2.7% | |||
ICF International, Inc. (a)(e) | 1,938,336 | 81,216,278 | |
SOFTWARE - 30.9% | |||
Application Software - 11.4% | |||
Adobe Systems, Inc. (a) | 1,050,600 | 83,102,460 | |
Autodesk, Inc. (a) | 111,700 | 7,175,608 | |
Cadence Design Systems, Inc. (a) | 986,700 | 18,110,879 | |
Citrix Systems, Inc. (a) | 664,500 | 42,312,038 | |
Comverse, Inc. (a) | 381,500 | 6,844,110 | |
Intuit, Inc. | 189,150 | 18,466,715 | |
Nuance Communications, Inc. (a) | 328,000 | 4,690,400 | |
Parametric Technology Corp. (a) | 466,300 | 16,159,627 | |
Qlik Technologies, Inc. (a) | 473,800 | 15,370,072 | |
salesforce.com, Inc. (a) | 1,590,326 | 110,336,818 | |
Synopsys, Inc. (a) | 131,700 | 6,112,197 | |
Zendesk, Inc. (d) | 641,300 | 15,852,936 | |
| 344,533,860 | ||
Home Entertainment Software - 0.6% | |||
Activision Blizzard, Inc. | 747,900 | 17,441,028 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Systems Software - 18.9% | |||
CommVault Systems, Inc. (a) | 348,537 | $ 16,823,881 | |
Imperva, Inc. (a) | 103,974 | 4,793,201 | |
Microsoft Corp. | 7,490,200 | 328,445,268 | |
Oracle Corp. | 4,234,700 | 185,564,554 | |
Red Hat, Inc. (a) | 217,000 | 14,999,040 | |
Rovi Corp. (a) | 241,900 | 6,018,472 | |
Varonis Systems, Inc. (d) | 442,379 | 13,665,087 | |
| 570,309,503 | ||
TOTAL SOFTWARE | 932,284,391 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.1% | |||
Wireless Telecommunication Services - 0.1% | |||
RingCentral, Inc. (a) | 238,800 | 3,765,876 | |
TOTAL COMMON STOCKS (Cost $2,002,116,958) |
| ||
Convertible Preferred Stocks - 0.2% | |||
|
|
|
|
SOFTWARE - 0.2% | |||
Application Software - 0.2% | |||
Deem, Inc. (a)(f) | 159,864,333 |
| |
Money Market Funds - 5.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 83,176,150 | 83,176,150 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 75,733,875 | 75,733,875 | |
TOTAL MONEY MARKET FUNDS (Cost $158,910,025) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.2% (Cost $2,169,091,499) | 3,079,059,269 | ||
NET OTHER ASSETS (LIABILITIES) - (2.2)% | (66,267,537) | ||
NET ASSETS - 100% | $ 3,012,791,732 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,193,895 or 0.2% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Deem, Inc. | 9/19/13 | $ 8,064,516 |
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 | $ 48,472 |
Fidelity Securities Lending Cash Central Fund | 784,164 |
Total | $ 832,636 |
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, |
E2open, Inc. | $ 24,811,468 | $ 12,560,791 | $ 3,681,400 | $ - | $ 13,347,484 |
ICF International, Inc. | 65,033,476 | 14,410,783 | 1,891,705 | - | 81,216,278 |
inContact, Inc. | 30,108,363 | - | 4,539,704 | - | - |
Lionbridge Technologies, Inc. | 44,063,893 | 561,345 | - | - | 35,222,828 |
MDC Partners, Inc. Class A | - | 12,739 | 15,874 | 100 | - |
MDC Partners, Inc. Class A (sub. vtg.) | 76,723,790 | 9,200,458 | 10,625,060 | 1,327,656 | 89,859,570 |
Move, Inc. | - | 32,667,762 | 49,857,632 | - | - |
Web.com Group, Inc. | 108,103,592 | 9,195,354 | 13,488,809 | - | 51,303,292 |
WNS Holdings Ltd. sponsored ADR | 58,235,016 | - | - | - | 71,644,587 |
Total | $ 407,079,598 | $ 78,609,232 | $ 84,100,184 | $ 1,327,756 | $ 342,594,039 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,912,955,349 | $ 2,912,955,349 | $ - | $ - |
Convertible Preferred Stocks | 7,193,895 | - | - | 7,193,895 |
Money Market Funds | 158,910,025 | 158,910,025 | - | - |
Total Investments in Securities: | $ 3,079,059,269 | $ 3,071,865,374 | $ - | $ 7,193,895 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Software and Computer Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $72,593,880) - See accompanying schedule: Unaffiliated issuers (cost $1,772,768,792) | $ 2,577,555,205 |
|
Fidelity Central Funds (cost $158,910,025) | 158,910,025 |
|
Other affiliated issuers (cost $237,412,682) | 342,594,039 |
|
Total Investments (cost $2,169,091,499) |
| $ 3,079,059,269 |
Receivable for investments sold | 35,909,772 | |
Receivable for fund shares sold | 2,010,927 | |
Dividends receivable | 3,127,140 | |
Distributions receivable from Fidelity Central Funds | 43,394 | |
Prepaid expenses | 11,722 | |
Other receivables | 202,589 | |
Total assets | 3,120,364,813 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 26,353,862 | |
Payable for fund shares redeemed | 3,537,268 | |
Accrued management fee | 1,343,906 | |
Other affiliated payables | 511,992 | |
Other payables and accrued expenses | 92,178 | |
Collateral on securities loaned, at value | 75,733,875 | |
Total liabilities | 107,573,081 | |
|
|
|
Net Assets | $ 3,012,791,732 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,034,464,455 | |
Accumulated net investment loss | (55,594) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 68,481,731 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 909,901,140 | |
Net Assets, for 25,237,698 shares outstanding | $ 3,012,791,732 | |
Net Asset Value, offering price and redemption price per share ($3,012,791,732 ÷ 25,237,698 shares) | $ 119.38 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends (including $1,327,756 earned from other affiliated issuers) |
| $ 18,662,613 |
Income from Fidelity Central Funds (including $784,164 from security lending) |
| 832,636 |
Total income |
| 19,495,249 |
|
|
|
Expenses | ||
Management fee | $ 17,227,657 | |
Transfer agent fees | 5,704,216 | |
Accounting and security lending fees | 923,072 | |
Custodian fees and expenses | 67,157 | |
Independent trustees' compensation | 63,230 | |
Registration fees | 102,621 | |
Audit | 45,138 | |
Legal | 23,878 | |
Interest | 34,907 | |
Miscellaneous | 38,479 | |
Total expenses before reductions | 24,230,355 | |
Expense reductions | (58,163) | 24,172,192 |
Net investment income (loss) | (4,676,943) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 323,001,521 | |
Other affiliated issuers | 22,005,861 |
|
Foreign currency transactions | 82,937 | |
Total net realized gain (loss) |
| 345,090,319 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (213,841,702) | |
Assets and liabilities in foreign currencies | 800 | |
Total change in net unrealized appreciation (depreciation) |
| (213,840,902) |
Net gain (loss) | 131,249,417 | |
Net increase (decrease) in net assets resulting from operations | $ 126,572,474 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (4,676,943) | $ 1,629,460 |
Net realized gain (loss) | 345,090,319 | 274,573,674 |
Change in net unrealized appreciation (depreciation) | (213,840,902) | 798,762,731 |
Net increase (decrease) in net assets resulting from operations | 126,572,474 | 1,074,965,865 |
Distributions to shareholders from net realized gain | (318,048,641) | (150,730,717) |
Share transactions | 613,896,141 | 1,276,554,244 |
Reinvestment of distributions | 306,040,231 | 145,323,975 |
Cost of shares redeemed | (1,560,250,010) | (529,419,074) |
Net increase (decrease) in net assets resulting from share transactions | (640,313,638) | 892,459,145 |
Redemption fees | 76,611 | 79,660 |
Total increase (decrease) in net assets | (831,713,194) | 1,816,773,953 |
|
|
|
Net Assets | ||
Beginning of period | 3,844,504,926 | 2,027,730,973 |
End of period (including accumulated net investment loss of $55,594 and accumulated net investment loss of $17,421, respectively) | $ 3,012,791,732 | $ 3,844,504,926 |
Other Information Shares | ||
Sold | 5,243,985 | 11,648,557 |
Issued in reinvestment of distributions | 2,681,318 | 1,245,065 |
Redeemed | (13,597,758) | (5,034,535) |
Net increase (decrease) | (5,672,455) | 7,859,087 |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 124.38 | $ 87.97 | $ 89.96 | $ 91.63 | $ 72.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.17) | .06 | .04 | (.06) | (.11) |
Net realized and unrealized gain (loss) | 7.26 | 41.95 | 7.25 | 10.39 | 22.28 |
Total from investment operations | 7.09 | 42.01 | 7.29 | 10.33 | 22.17 |
Distributions from net investment income | - | - | (.78) E | - | - |
Distributions from net realized gain | (12.09) | (5.60) | (8.50) E | (12.00) | (2.83) |
Total distributions | (12.09) | (5.60) | (9.28) | (12.00) | (2.83) |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 119.38 | $ 124.38 | $ 87.97 | $ 89.96 | $ 91.63 |
Total ReturnA | 6.33% | 48.18% | 8.85% | 13.08% | 30.85% |
Ratios to Average Net AssetsC, F |
|
|
|
|
|
Expenses before reductions | .77% | .79% | .82% | .82% | .84% |
Expenses net of fee waivers, if any | .77% | .79% | .82% | .82% | .84% |
Expenses net of all reductions | .77% | .78% | .80% | .81% | .83% |
Net investment income (loss) | (.15)% | .06% | .04% | (.07)% | (.13)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 3,012,792 | $ 3,844,505 | $ 2,027,731 | $ 1,621,616 | $ 1,299,253 |
Portfolio turnover rate D | 53% | 87% | 96% | 238% | 189% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Technology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Technology Portfolio | 9.97% | 16.64% | 10.50% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2005. 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
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Charlie Chai, Portfolio Manager of Technology Portfolio: For the year, the fund returned 9.97%, considerably trailing the 20.42% gain of the MSCI U.S. IMI Information Technology 25-50 Index and also lagging the S&P 500®. Versus the broader market, tech stocks were lifted by technology hardware, storage & peripherals, semiconductors, and data processing & outsourced services, all of which were sizable components of the MSCI index that outperformed the S&P 500® by healthy margins. Internet software & services was a meaningful laggard. During the period, sluggish global growth and some unfortunate stock picking on my part created challenges on a variety of fronts - especially in Internet software & services. Additionally, a surging U.S. dollar dampened the performance of the fund's foreign holdings in dollar terms. One non-index stock exemplifying both of these trends was the fund's third-largest relative detractor: South Korea-based search portal and gaming-services operator NAVER. These shares returned about -21% for the period, as the company reported disappointing revenue during the fourth quarter of 2014, driven by lower domestic online advertising sales. Another relative detractor from the Internet software & services segment was Internet portal Yahoo!, an index component. In this case, I reduced the fund's sizable overweighting. Stock selection in a number of other groups also hurt, notably semiconductors and semiconductor equipment. For example, the fund's relative results suffered because of not owning personal computer chipmaker Intel, an index component that returned about 38%. Elsewhere, underweighting smartphone maker Apple made this stock our biggest detractor on a relative basis, even after adding meaningfully to the position during the period. Conversely, not owning technology consulting heavyweight IBM was timely, as the share price of this index component returned about -10% during the period. Underweighting and ultimately selling Microsoft in November also paid off, as the shares took a drubbing in January. Also lifting our results was Concur Technologies, which offers cloud-based travel-and-expense management solutions. This stock surged in September after German enterprise software giant SAP offered to buy the company. I sold Concur to lock in profits.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Technology Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 15.4 | 13.9 |
Facebook, Inc. Class A | 6.5 | 4.2 |
Google, Inc. Class C | 4.5 | 4.3 |
Google, Inc. Class A | 4.4 | 4.1 |
Cisco Systems, Inc. | 3.0 | 0.0 |
Yahoo!, Inc. | 2.7 | 1.2 |
Adobe Systems, Inc. | 2.6 | 1.7 |
QUALCOMM, Inc. | 2.5 | 0.2 |
Fidelity National Information Services, Inc. | 2.3 | 2.5 |
LinkedIn Corp. | 2.2 | 0.6 |
| 46.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Internet Software & Services | 29.1% |
|
![]() | Technology Hardware, Storage & Peripherals | 18.4% |
|
![]() | Software | 12.7% |
|
![]() | Semiconductors & Semiconductor Equipment | 9.1% |
|
![]() | Communications Equipment | 7.6% |
|
![]() | All Others* | 23.1% |
|
As of August 31, 2014 | |||
![]() | Internet Software & Services | 26.2% |
|
![]() | Software | 18.2% |
|
![]() | Technology Hardware, Storage & Peripherals | 17.9% |
|
![]() | Semiconductors & Semiconductor Equipment | 9.0% |
|
![]() | IT Services | 7.5% |
|
![]() | All Others* | 21.2% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Technology Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
AUTO COMPONENTS - 0.0% | |||
Auto Parts & Equipment - 0.0% | |||
Weifu High-Technology Co. Ltd. (B Shares) | 80,200 | $ 301,637 | |
AUTOMOBILES - 0.7% | |||
Automobile Manufacturers - 0.7% | |||
Tesla Motors, Inc. (a)(d) | 101,956 | 20,731,733 | |
CHEMICALS - 0.2% | |||
Industrial Gases - 0.1% | |||
Sodiff Advanced Materials Co. Ltd. | 27,733 | 2,030,024 | |
Specialty Chemicals - 0.1% | |||
Duk San Neolux Co. Ltd. (a) | 192,897 | 3,976,680 | |
TOTAL CHEMICALS | 6,006,704 | ||
COMMUNICATIONS EQUIPMENT - 7.6% | |||
Communications Equipment - 7.6% | |||
BYD Electronic International Co. Ltd. | 2,990,500 | 3,339,144 | |
Ciena Corp. (a)(d) | 503,500 | 10,533,220 | |
Cisco Systems, Inc. | 2,884,800 | 85,130,448 | |
CommScope Holding Co., Inc. (a) | 519,800 | 16,373,700 | |
Finisar Corp. (a) | 275,300 | 5,784,053 | |
Ixia (a) | 596,476 | 6,787,897 | |
Juniper Networks, Inc. | 291,556 | 6,971,104 | |
Palo Alto Networks, Inc. (a) | 300 | 42,666 | |
QUALCOMM, Inc. | 972,600 | 70,523,226 | |
Radware Ltd. (a) | 111,288 | 2,363,757 | |
Sandvine Corp. (U.K.) (a) | 2,212 | 6,264 | |
Spirent Communications PLC | 4,670,632 | 6,687,975 | |
| 214,543,454 | ||
CONSTRUCTION MATERIALS - 0.0% | |||
Construction Materials - 0.0% | |||
Universal Cement Corp. | 877,200 | 740,718 | |
DIVERSIFIED CONSUMER SERVICES - 0.0% | |||
Specialized Consumer Services - 0.0% | |||
LifeLock, Inc. (a) | 1,500 | 20,970 | |
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.2% | |||
Alternative Carriers - 0.2% | |||
8x8, Inc. (a) | 726,500 | 5,383,365 | |
ELECTRICAL EQUIPMENT - 0.5% | |||
Electrical Components & Equipment - 0.3% | |||
Lumenpulse, Inc. (a) | 40,300 | 543,845 | |
OSRAM Licht AG (d) | 147,014 | 6,741,866 | |
| 7,285,711 | ||
Heavy Electrical Equipment - 0.2% | |||
Mitsubishi Electric Corp. | 464,000 | 5,434,182 | |
TOTAL ELECTRICAL EQUIPMENT | 12,719,893 | ||
| |||
Shares | Value | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 5.3% | |||
Electronic Components - 2.1% | |||
Alps Electric Co. Ltd. | 2,100 | $ 47,223 | |
Delta Electronics, Inc. | 5,000 | 32,282 | |
Largan Precision Co. Ltd. | 19,000 | 1,619,490 | |
Ledlink Optics, Inc. | 1,493,252 | 2,274,880 | |
OMRON Corp. | 284,300 | 12,548,414 | |
Samsung Electro-Mechanics Co. Ltd. | 187,698 | 11,744,869 | |
Samsung SDI Co. Ltd. | 70,883 | 8,787,069 | |
Sunny Optical Technology Group Co. Ltd. | 2,276,000 | 3,762,129 | |
TDK Corp. | 42,000 | 2,956,238 | |
Universal Display Corp. (a)(d) | 39,900 | 1,372,161 | |
Yageo Corp. | 6,970,217 | 13,212,421 | |
Yaskawa Electric Corp. | 1,900 | 26,525 | |
| 58,383,701 | ||
Electronic Equipment & Instruments - 1.1% | |||
Chroma ATE, Inc. | 3,734,644 | 9,585,452 | |
Cognex Corp. (a) | 62,900 | 2,811,001 | |
FEI Co. | 8,700 | 687,213 | |
Keysight Technologies, Inc. (a) | 92,600 | 3,476,204 | |
PAX Global Technology Ltd. (a) | 56,000 | 51,048 | |
Posiflex Technologies, Inc. | 6,205 | 30,589 | |
TPK Holding Co. Ltd. | 2,073,000 | 14,966,319 | |
| 31,607,826 | ||
Electronic Manufacturing Services - 1.8% | |||
AAC Technology Holdings, Inc. | 142,000 | 940,161 | |
Merry Electronics Co. Ltd. | 1,264,000 | 4,341,709 | |
TE Connectivity Ltd. | 78,279 | 5,646,264 | |
Trimble Navigation Ltd. (a) | 1,466,621 | 38,337,473 | |
| 49,265,607 | ||
Technology Distributors - 0.3% | |||
Digital China Holdings Ltd. (H Shares) | 9,824,000 | 9,563,320 | |
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 148,820,454 | ||
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% | |||
Health Care Equipment - 0.4% | |||
Intai Technology Corp. | 967,000 | 5,151,469 | |
Olympus Corp. (a) | 73,400 | 2,659,887 | |
PW Medtech Group Ltd. (a) | 6,969,000 | 2,677,689 | |
| 10,489,045 | ||
HEALTH CARE PROVIDERS & SERVICES - 0.0% | |||
Managed Health Care - 0.0% | |||
HealthEquity, Inc. (a) | 1,100 | 22,297 | |
HEALTH CARE TECHNOLOGY - 1.1% | |||
Health Care Technology - 1.1% | |||
athenahealth, Inc. (a)(d) | 100,126 | 12,723,011 | |
M3, Inc. | 324,800 | 7,216,873 | |
Medidata Solutions, Inc. (a) | 232,000 | 11,161,520 | |
| 31,101,404 | ||
Common Stocks - continued | |||
Shares | Value | ||
INTERNET & CATALOG RETAIL - 4.1% | |||
Internet Retail - 4.1% | |||
Amazon.com, Inc. (a) | 21,500 | $ 8,173,440 | |
ASOS PLC (a)(d) | 6,400 | 319,738 | |
Ctrip.com International Ltd. sponsored ADR (a) | 1,071,631 | 48,619,898 | |
Groupon, Inc. Class A (a) | 3,719,800 | 30,427,964 | |
JD.com, Inc. sponsored ADR | 52,400 | 1,449,908 | |
Jumei International Holding Ltd. sponsored ADR | 161,900 | 2,209,935 | |
MySale Group PLC | 42,200 | 32,575 | |
Priceline Group, Inc. (a) | 100 | 123,748 | |
Qunar Cayman Islands Ltd. sponsored ADR (a) | 536,665 | 14,591,921 | |
Travelport Worldwide Ltd. | 137,100 | 2,185,374 | |
Vipshop Holdings Ltd. ADR (a) | 315,820 | 7,721,799 | |
zulily, Inc. Class A (a)(d) | 1,900 | 26,619 | |
| 115,882,919 | ||
INTERNET SOFTWARE & SERVICES - 28.5% | |||
Internet Software & Services - 28.5% | |||
21Vianet Group, Inc. ADR (a)(d) | 390,200 | 6,750,460 | |
58.com, Inc. ADR (a) | 404,300 | 16,851,224 | |
Alibaba Group Holding Ltd. sponsored ADR | 97,600 | 8,307,712 | |
Baidu.com, Inc. sponsored ADR (a) | 32,800 | 6,683,000 | |
ChannelAdvisor Corp. (a) | 346,200 | 3,423,918 | |
Constant Contact, Inc. (a) | 800 | 33,064 | |
Cornerstone OnDemand, Inc. (a) | 442,804 | 14,154,230 | |
Cvent, Inc. (a) | 135,564 | 3,924,578 | |
Demandware, Inc. (a)(d) | 159,974 | 10,108,757 | |
E2open, Inc. (a) | 435,745 | 3,734,335 | |
eBay, Inc. (a) | 95,300 | 5,518,823 | |
eGain Communications Corp. (a) | 129,600 | 451,008 | |
Endurance International Group Holdings, Inc. (a) | 773,220 | 14,397,356 | |
Facebook, Inc. Class A (a) | 2,323,274 | 183,468,948 | |
Google, Inc.: | |||
Class A (a) | 222,903 | 125,411,915 | |
Class C (a) | 229,116 | 127,938,374 | |
HomeAway, Inc. (a) | 301 | 9,330 | |
Hortonworks, Inc. | 2,800 | 64,484 | |
Just Dial Ltd. | 9,985 | 222,472 | |
LendingClub Corp. | 1,100 | 22,407 | |
LinkedIn Corp. (a) | 227,100 | 60,681,120 | |
Marketo, Inc. (a) | 227,964 | 6,371,594 | |
Momo, Inc. ADR (d) | 177,977 | 2,012,920 | |
NAVER Corp. | 37,989 | 22,804,923 | |
NetEase, Inc. sponsored ADR | 41,500 | 4,151,660 | |
New Relic, Inc. | 800 | 27,568 | |
NIC, Inc. | 119,768 | 2,095,940 | |
Opower, Inc. | 218,605 | 3,283,447 | |
| |||
Shares | Value | ||
Q2 Holdings, Inc. (a) | 1,400 | $ 27,734 | |
Rackspace Hosting, Inc. (a) | 55,891 | 2,776,106 | |
Rocket Internet AG (a) | 35 | 1,994 | |
Saba Software, Inc. (a) | 800,800 | 7,207,200 | |
SciQuest, Inc. (a) | 344,142 | 5,991,512 | |
Sohu.com, Inc. (a) | 58,397 | 3,072,850 | |
SouFun Holdings Ltd. ADR | 1,797,100 | 12,292,164 | |
Textura Corp. (a)(d) | 446,891 | 12,606,795 | |
Twitter, Inc. (a) | 646,800 | 31,098,144 | |
Web.com Group, Inc. (a) | 383,898 | 6,852,579 | |
Yahoo!, Inc. (a) | 1,687,700 | 74,731,356 | |
Yandex NV (a) | 1,200 | 19,740 | |
Yelp, Inc. (a)(d) | 235,824 | 11,319,552 | |
YY, Inc. ADR (a)(d) | 60,900 | 3,208,821 | |
Zillow Group, Inc. (a) | 1,998 | 229,271 | |
| 804,341,385 | ||
IT SERVICES - 6.2% | |||
Data Processing & Outsourced Services - 5.8% | |||
Euronet Worldwide, Inc. (a) | 47,901 | 2,706,407 | |
Fidelity National Information Services, Inc. | 951,368 | 64,302,963 | |
NETELLER PLC (a) | 1,465,103 | 8,402,956 | |
Total System Services, Inc. | 555,899 | 21,235,342 | |
Vantiv, Inc. (a) | 494,000 | 18,273,060 | |
Visa, Inc. Class A | 181,100 | 49,134,241 | |
| 164,054,969 | ||
IT Consulting & Other Services - 0.4% | |||
Cognizant Technology Solutions Corp. Class A (a) | 193,012 | 12,060,355 | |
EPAM Systems, Inc. (a) | 5,305 | 327,212 | |
Science Applications International Corp. | 100 | 5,468 | |
Virtusa Corp. (a) | 600 | 23,616 | |
| 12,416,651 | ||
TOTAL IT SERVICES | 176,471,620 | ||
LEISURE PRODUCTS - 0.9% | |||
Leisure Products - 0.9% | |||
Sega Sammy Holdings, Inc. | 1,577,000 | 23,979,628 | |
LIFE SCIENCES TOOLS & SERVICES - 0.4% | |||
Life Sciences Tools & Services - 0.4% | |||
WuXi PharmaTech Cayman, Inc. sponsored ADR (a) | 274,300 | 10,958,285 | |
MACHINERY - 0.1% | |||
Industrial Machinery - 0.1% | |||
Harmonic Drive Systems, Inc. (d) | 96,700 | 1,722,614 | |
Minebea Ltd. | 91,000 | 1,373,843 | |
| 3,096,457 | ||
MEDIA - 0.1% | |||
Advertising - 0.0% | |||
iCar Asia Ltd. (a) | 369,039 | 325,855 | |
Common Stocks - continued | |||
Shares | Value | ||
MEDIA - CONTINUED | |||
Cable & Satellite - 0.1% | |||
Naspers Ltd. Class N | 18,402 | $ 2,700,795 | |
Publishing - 0.0% | |||
NEXT Co. Ltd. | 97,500 | 766,144 | |
TOTAL MEDIA | 3,792,794 | ||
PROFESSIONAL SERVICES - 0.9% | |||
Human Resource & Employment Services - 0.2% | |||
51job, Inc. sponsored ADR (a) | 800 | 28,400 | |
Paylocity Holding Corp. (d) | 107,528 | 3,214,012 | |
WageWorks, Inc. (a) | 48,000 | 2,757,600 | |
| 6,000,012 | ||
Research & Consulting Services - 0.7% | |||
ICF International, Inc. (a) | 61,500 | 2,576,850 | |
Verisk Analytics, Inc. (a) | 250,995 | 18,023,951 | |
| 20,600,801 | ||
TOTAL PROFESSIONAL SERVICES | 26,600,813 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.1% | |||
Semiconductor Equipment - 0.7% | |||
Lam Research Corp. | 118,400 | 9,763,264 | |
Nanometrics, Inc. (a) | 21,591 | 386,047 | |
Rubicon Technology, Inc. (a)(d) | 1,264,318 | 5,512,426 | |
SMA Solar Technology AG (a) | 1,437 | 19,249 | |
SunEdison, Inc. (a)(d) | 1,300 | 28,782 | |
Tessera Technologies, Inc. | 520 | 20,831 | |
Ultratech, Inc. (a) | 222,400 | 4,012,096 | |
| 19,742,695 | ||
Semiconductors - 8.4% | |||
Atmel Corp. | 1,253,300 | 10,452,522 | |
Audience, Inc. (a)(d) | 381,340 | 1,860,939 | |
Broadcom Corp. Class A | 248,919 | 11,258,606 | |
Cavium, Inc. (a) | 23,800 | 1,630,062 | |
Cirrus Logic, Inc. (a) | 107,500 | 3,236,825 | |
Cree, Inc. (a) | 71,218 | 2,796,019 | |
Duksan Hi-Metal Co. Ltd. (a) | 89,174 | 708,624 | |
EPISTAR Corp. | 3,276,000 | 6,261,930 | |
Everlight Electronics Co. Ltd. | 3,926,000 | 10,101,565 | |
Freescale Semiconductor, Inc. (a)(d) | 397,336 | 14,347,803 | |
Genesis Photonics, Inc. (a) | 5,306,208 | 2,649,560 | |
Himax Technologies, Inc. sponsored ADR | 173,900 | 1,252,080 | |
Hua Hong Semiconductor Ltd. (a) | 7,223,000 | 8,102,336 | |
Infineon Technologies AG | 135,400 | 1,567,468 | |
Intermolecular, Inc. (a) | 408,605 | 731,403 | |
Intersil Corp. Class A | 308,789 | 4,814,021 | |
Lextar Electronics Corp. | 810,000 | 816,647 | |
M/A-COM Technology Solutions Holdings, Inc. (a) | 63,940 | 2,156,057 | |
MagnaChip Semiconductor Corp. (a) | 295,035 | 1,684,650 | |
Marvell Technology Group Ltd. | 1,986,100 | 32,015,932 | |
| |||
Shares | Value | ||
Maxim Integrated Products, Inc. | 892,000 | $ 30,680,340 | |
Melexis NV | 567 | 32,861 | |
Micrel, Inc. | 497,100 | 7,421,703 | |
Micron Technology, Inc. (a) | 45,600 | 1,398,552 | |
Microsemi Corp. (a) | 272,300 | 8,778,952 | |
Monolithic Power Systems, Inc. | 141,895 | 7,482,123 | |
NXP Semiconductors NV (a) | 36,387 | 3,089,074 | |
ON Semiconductor Corp. (a) | 415,900 | 5,302,725 | |
PixArt Imaging, Inc. | 41,000 | 119,054 | |
PMC-Sierra, Inc. (a) | 367,900 | 3,495,050 | |
Qorvo, Inc. (a) | 281,317 | 19,523,400 | |
Radiant Opto-Electronics Corp. | 1,651,000 | 5,434,721 | |
Sanken Electric Co. Ltd. | 848,000 | 6,096,385 | |
Semiconductor Manufacturing International Corp. (a) | 33,169,000 | 2,918,601 | |
Semtech Corp. (a) | 156,500 | 4,527,545 | |
Seoul Semiconductor Co. Ltd. | 225,742 | 3,731,239 | |
Silicon Laboratories, Inc. (a) | 57,500 | 2,911,800 | |
STMicroelectronics NV | 815,060 | 7,257,421 | |
YoungTek Electronics Corp. | 866 | 1,832 | |
| 238,648,427 | ||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 258,391,122 | ||
SOFTWARE - 12.7% | |||
Application Software - 8.2% | |||
Adobe Systems, Inc. (a) | 931,239 | 73,661,005 | |
ANSYS, Inc. (a) | 314 | 26,995 | |
Autodesk, Inc. (a) | 448,700 | 28,824,488 | |
Blackbaud, Inc. | 32,000 | 1,452,800 | |
Citrix Systems, Inc. (a) | 107,107 | 6,820,038 | |
Guidewire Software, Inc. (a) | 411 | 22,876 | |
Informatica Corp. (a) | 206,400 | 8,863,848 | |
Interactive Intelligence Group, Inc. (a) | 214,290 | 9,094,468 | |
Intuit, Inc. | 374,900 | 36,601,487 | |
Kingdee International Software Group Co. Ltd. (a) | 16,375,600 | 5,384,071 | |
Linx SA | 1,400 | 21,700 | |
Mobileye NV (a) | 100 | 3,548 | |
Parametric Technology Corp. (a) | 80,000 | 2,772,400 | |
PROS Holdings, Inc. (a) | 33,400 | 817,298 | |
Qlik Technologies, Inc. (a) | 184,300 | 5,978,692 | |
salesforce.com, Inc. (a) | 666,692 | 46,255,091 | |
SolarWinds, Inc. (a) | 536 | 27,191 | |
Splunk, Inc. (a) | 40,317 | 2,711,318 | |
Ultimate Software Group, Inc. (a) | 117 | 19,263 | |
Workiva, Inc. | 1,900 | 24,320 | |
Yodlee, inc. | 2,300 | 29,647 | |
Zendesk, Inc. | 116,075 | 2,869,374 | |
| 232,281,918 | ||
Home Entertainment Software - 1.0% | |||
Activision Blizzard, Inc. | 527,400 | 12,298,968 | |
Common Stocks - continued | |||
Shares | Value | ||
SOFTWARE - CONTINUED | |||
Home Entertainment Software - continued | |||
Nintendo Co. Ltd. | 105,000 | $ 11,217,555 | |
Ourgame International Holdings Ltd. | 6,751,000 | 3,116,194 | |
| 26,632,717 | ||
Systems Software - 3.5% | |||
Allot Communications Ltd. (a) | 528,072 | 4,948,035 | |
CommVault Systems, Inc. (a) | 44,500 | 2,148,015 | |
Fleetmatics Group PLC (a) | 565,587 | 23,307,840 | |
Imperva, Inc. (a) | 661 | 30,472 | |
Infoblox, Inc. (a) | 1,700 | 39,525 | |
NetSuite, Inc. (a)(d) | 197,484 | 19,041,407 | |
Oracle Corp. | 444,700 | 19,486,754 | |
Progress Software Corp. (a) | 152,700 | 4,174,818 | |
Red Hat, Inc. (a) | 163,712 | 11,315,773 | |
ServiceNow, Inc. (a) | 145,050 | 11,061,513 | |
Tableau Software, Inc. (a) | 6,000 | 564,060 | |
VMware, Inc. Class A (a) | 39,300 | 3,343,251 | |
| 99,461,463 | ||
TOTAL SOFTWARE | 358,376,098 | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 18.4% | |||
Technology Hardware, Storage & Peripherals - 18.4% | |||
Apple, Inc. | 3,388,597 | 435,299,167 | |
BlackBerry Ltd. (a) | 2,700 | 29,187 | |
Electronics for Imaging, Inc. (a) | 146,349 | 5,941,769 | |
EMC Corp. | 900 | 26,046 | |
Hewlett-Packard Co. | 1,172,000 | 40,832,480 | |
NEC Corp. | 883,000 | 2,686,830 | |
Nimble Storage, Inc. (a) | 9,400 | 237,444 | |
Samsung Electronics Co. Ltd. | 24,890 | 30,674,256 | |
SanDisk Corp. | 11,445 | 914,799 | |
Silicon Graphics International Corp. (a) | 439,166 | 4,053,502 | |
Stratasys Ltd. (a) | 300 | 18,618 | |
| 520,714,098 | ||
WIRELESS TELECOMMUNICATION SERVICES - 0.4% | |||
Wireless Telecommunication Services - 0.4% | |||
Bharti Infratel Ltd. | 684,635 | 4,082,234 | |
RingCentral, Inc. (a) | 409,100 | 6,451,507 | |
| 10,533,741 | ||
TOTAL COMMON STOCKS (Cost $2,268,386,943) |
| ||
Convertible Preferred Stocks - 1.0% | |||
Shares | Value | ||
INTERNET SOFTWARE & SERVICES - 0.6% | |||
Internet Software & Services - 0.6% | |||
Uber Technologies, Inc. Series D, 8.00% (e) | 515,696 | $ 17,181,753 | |
IT SERVICES - 0.1% | |||
Data Processing & Outsourced Services - 0.1% | |||
Nutanix, Inc. Series E (e) | 72,872 | 1,143,362 | |
PROFESSIONAL SERVICES - 0.3% | |||
Research & Consulting Services - 0.3% | |||
Meituan Corp. Series D (e)(f) | 1,401,081 | 8,857,214 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $17,833,462) |
| ||
Money Market Funds - 4.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 30,032,530 | 30,032,530 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 89,959,380 | 89,959,380 | |
TOTAL MONEY MARKET FUNDS (Cost $119,991,910) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.1% (Cost $2,406,212,315) | 2,911,194,873 | ||
NET OTHER ASSETS (LIABILITIES) - (3.1)% | (86,347,286) | ||
NET ASSETS - 100% | $ 2,824,847,587 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $27,182,329 or 1.0% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Meituan Corp. Series D | 1/26/15 | $ 8,857,214 |
Nutanix, Inc. Series E | 8/26/14 | $ 976,230 |
Uber Technologies, Inc. Series D, 8.00% | 6/6/14 | $ 8,000,018 |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 66,865 |
Fidelity Securities Lending Cash Central Fund | 916,452 |
Total | $ 983,317 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,764,020,634 | $ 2,746,637,412 | $ 17,383,222 | $ - |
Convertible Preferred Stocks | 27,182,329 | - | - | 27,182,329 |
Money Market Funds | 119,991,910 | 119,991,910 | - | - |
Total Investments in Securities: | $ 2,911,194,873 | $ 2,866,629,322 | $ 17,383,222 | $ 27,182,329 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 80.3% |
Cayman Islands | 6.5% |
Korea (South) | 2.9% |
Japan | 2.8% |
Taiwan | 2.4% |
Bermuda | 2.0% |
Others (Individually Less Than 1%) | 3.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $85,990,419) - See accompanying schedule: Unaffiliated issuers (cost $2,286,220,405) | $ 2,791,202,963 |
|
Fidelity Central Funds (cost $119,991,910) | 119,991,910 |
|
Total Investments (cost $2,406,212,315) |
| $ 2,911,194,873 |
Foreign currency held at value (cost $4,579,336) | 4,579,565 | |
Receivable for investments sold | 53,268,143 | |
Receivable for fund shares sold | 2,238,727 | |
Dividends receivable | 1,305,671 | |
Distributions receivable from Fidelity Central Funds | 38,744 | |
Prepaid expenses | 9,676 | |
Other receivables | 65,831 | |
Total assets | 2,972,701,230 | |
|
|
|
Liabilities | ||
Payable for investments purchased | ||
Regular delivery | $ 44,268,517 | |
Delayed delivery | 8,857,214 | |
Payable for fund shares redeemed | 2,867,894 | |
Accrued management fee | 1,261,579 | |
Other affiliated payables | 469,257 | |
Other payables and accrued expenses | 169,802 | |
Collateral on securities loaned, at value | 89,959,380 | |
Total liabilities | 147,853,643 | |
|
|
|
Net Assets | $ 2,824,847,587 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,300,163,396 | |
Distributions in excess of net investment income | (777,431) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 20,554,727 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 504,906,895 | |
Net Assets, for 23,374,885 shares outstanding | $ 2,824,847,587 | |
Net Asset Value, offering price and redemption price per share ($2,824,847,587 ÷ 23,374,885 shares) | $ 120.85 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 22,167,770 |
Income from Fidelity Central Funds (including $916,452 from security lending) |
| 983,317 |
Total income |
| 23,151,087 |
|
|
|
Expenses | ||
Management fee | $ 13,949,323 | |
Transfer agent fees | 4,635,663 | |
Accounting and security lending fees | 768,954 | |
Custodian fees and expenses | 218,227 | |
Independent trustees' compensation | 48,609 | |
Registration fees | 49,146 | |
Audit | 52,973 | |
Legal | 22,300 | |
Interest | 1,153 | |
Miscellaneous | 31,645 | |
Total expenses before reductions | 19,777,993 | |
Expense reductions | (5,375) | 19,772,618 |
Net investment income (loss) | 3,378,469 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 246,459,692 | |
Foreign currency transactions | (527,657) | |
Total net realized gain (loss) |
| 245,932,035 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $28,176) | (1,687,085) | |
Assets and liabilities in foreign currencies | (45,881) | |
Total change in net unrealized appreciation (depreciation) |
| (1,732,966) |
Net gain (loss) | 244,199,069 | |
Net increase (decrease) in net assets resulting from operations | $ 247,577,538 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 3,378,469 | $ 1,083,629 |
Net realized gain (loss) | 245,932,035 | 355,340,373 |
Change in net unrealized appreciation (depreciation) | (1,732,966) | 296,902,023 |
Net increase (decrease) in net assets resulting from operations | 247,577,538 | 653,326,025 |
Distributions to shareholders from net investment income | (3,638,905) | (1,509,202) |
Distributions to shareholders from net realized gain | (405,886,858) | (167,743,037) |
Total distributions | (409,525,763) | (169,252,239) |
Share transactions | 635,387,636 | 328,754,153 |
Reinvestment of distributions | 393,674,884 | 161,829,539 |
Cost of shares redeemed | (453,687,865) | (591,619,174) |
Net increase (decrease) in net assets resulting from share transactions | 575,374,655 | (101,035,482) |
Redemption fees | 29,839 | 29,508 |
Total increase (decrease) in net assets | 413,456,269 | 383,067,812 |
|
|
|
Net Assets | ||
Beginning of period | 2,411,391,318 | 2,028,323,506 |
End of period (including distributions in excess of net investment income of $777,431 and distributions in excess of net investment income of $12,855, respectively) | $ 2,824,847,587 | $ 2,411,391,318 |
Other Information Shares | ||
Sold | 5,243,944 | 2,760,510 |
Issued in reinvestment of distributions | 3,511,964 | 1,392,335 |
Redeemed | (3,831,448) | (5,184,105) |
Net increase (decrease) | 4,924,460 | (1,031,260) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 130.70 | $ 104.11 | $ 101.57 | $ 102.37 | $ 72.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .16 | .06 | .01 | (.27) | (.37) |
Net realized and unrealized gain (loss) | 10.26 | 36.34 | 2.53 | (.53) | 30.50 |
Total from investment operations | 10.42 | 36.40 | 2.54 | (.80) | 30.13 |
Distributions from net investment income | (.17) | (.09) E | - | - | - |
Distributions from net realized gain | (20.10) | (9.72) E | - | - | - |
Total distributions | (20.27) | (9.81) | - | - | - |
Redemption fees added to paid in capital B, H | - | - | - | - | - |
Net asset value, end of period | $ 120.85 | $ 130.70 | $ 104.11 | $ 101.57 | $ 102.37 |
Total ReturnA | 9.97% | 36.20% | 2.50% | (.78)% | 41.71% |
Ratios to Average Net AssetsC, F |
|
|
|
|
|
Expenses before reductions | .78% | .80% | .81% | .82% | .85% |
Expenses net of fee waivers, if any | .78% | .80% | .81% | .82% | .85% |
Expenses net of all reductions | .78% | .77% | .79% | .81% | .83% |
Net investment income (loss) | .13% | .05% | .01% | (.29)% | (.44)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,824,848 | $ 2,411,391 | $ 2,028,324 | $ 2,349,926 | $ 2,885,820 |
Portfolio turnover rateD | 144% | 181% | 140% | 196% | 136% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G For the year ended February 29.
H Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio, and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Computers Portfolio, Electronics Portfolio, Software and Computer Services Portfolio and Technology Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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. Technology Portfolio is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on each applicable Fund's Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications for Technology Portfolio for the period ended February 28, 2014. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
3. 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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to futures contracts, foreign currency transactions, passive foreign investment companies (PFIC), market discount, redemptions in kind, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized | Gross unrealized | Net unrealized |
Communications Equipment Portfolio | $ 232,807,614 | $ 36,746,796 | $ (3,317,707) | $ 33,429,089 |
Computers Portfolio | 616,675,645 | 243,081,364 | (30,288,732) | 212,792,632 |
Electronics Portfolio | 2,305,521,746 | 282,266,885 | (57,152,584) | 225,114,301 |
IT Services Portfolio | 656,903,147 | 323,944,220 | (21,614,534) | 302,329,686 |
Software and Computer Services Portfolio | 2,170,126,237 | 978,040,199 | (69,107,167) | 908,933,032 |
Technology Portfolio | 2,421,854,554 | 597,392,798 | (108,052,479) | 489,340,319 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed | Undistributed | Capital loss | Net unrealized |
Communications Equipment Portfolio | $ 933,646 | $ - | $ (416,259) | $ 33,428,905 |
Computers Portfolio | 786,110 | - | - | 212,710,980 |
Electronics Portfolio | 106,983,261 | 20,751,577 | - | 225,119,348 |
IT Services Portfolio | - | 30,785,850 | - | 302,323,457 |
Software and Computer Services Portfolio | 18,528,247 | 50,988,222 | - | 908,861,923 |
Technology Portfolio | 10,643,038 | 25,553,928 | - | 489,316,433 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of prior fiscal period end and is subject to adjustment.
| 2017 | Total |
Communications Equipment Portfolio | (416,259) | (416,259) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2014 to February 28, 2015, and ordinary losses recognized during the period January 1, 2015 to February 28, 2015. Loss deferrals were as follows:
|
Capital losses |
Ordinary losses |
Communications Equipment Portfolio | $ (1,655,447) | $ - |
Computers Portfolio | (357,532) | - |
IT Services Portfolio | (3,939,168) | (850,482) |
Technology Portfolio | - | (762,135) |
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, 2015 |
|
|
|
| Ordinary Income | Long-term | Total |
Communications Equipment Portfolio | $ 9,479,649 | $ 6,344,168 | $ 15,823,817 |
Computers Portfolio | 4,392,350 | 16,530,803 | 20,923,153 |
Electronics Portfolio | 60,712,404 | - | 60,712,404 |
IT Services Portfolio | 4,165,539 | 67,216,115 | 71,381,654 |
Software and Computer Services Portfolio | 76,425,484 | 241,623,157 | 318,048,641 |
Technology Portfolio | 177,853,518 | 231,672,245 | 409,525,763 |
February 28, 2014 |
|
|
|
| Ordinary Income | Long-term | Total |
Communications Equipment Portfolio | $ 1,754,259 | $ - | $ 1,754,259 |
Computers Portfolio | 5,025,394 | 50,138,396 | 55,163,790 |
Electronics Portfolio | 5,979,331 | - | 5,979,331 |
IT Services Portfolio | 22,708,765 | 14,483,551 | 37,192,316 |
Software and Computer Services Portfolio | 61,190,649 | 89,540,068 | 150,730,717 |
Technology Portfolio | 79,249,202 | 90,003,037 | 169,252,239 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Funds transacted in 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. The securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable Fund's Schedule of Investments. With respect to purchase commitments, each applicable Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the 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 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.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) |
Communications Equipment Portfolio | 111,844,246 | 197,197,368 |
Computers Portfolio | 366,518,264 | 320,128,691 |
Electronics Portfolio | 2,922,568,420 | 2,293,298,827 |
IT Services Portfolio | 600,287,624 | 1,394,315,641 |
Software and Computer Services Portfolio | 1,667,499,272 | 2,605,831,967 |
Technology Portfolio | 3,845,021,995 | 3,580,172,065 |
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized 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 Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting 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% | .25% | .55% |
Computers Portfolio | .30% | .25% | .55% |
Electronics Portfolio | .30% | .25% | .55% |
IT Services Portfolio | .30% | .25% | .55% |
Software and Computer Services Portfolio | .30% | .25% | .55% |
Technology Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Communications Equipment Portfolio | .24% |
Computers Portfolio | .20% |
Electronics Portfolio | .18% |
IT Services Portfolio | .21% |
Software and Computer Services Portfolio | .18% |
Technology Portfolio | .18% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount |
Communications Equipment Portfolio | $ 12,615 |
Computers Portfolio | 12,941 |
Electronics Portfolio | 182,200 |
IT Services Portfolio | 44,222 |
Software and Computer Services Portfolio | 54,609 |
Technology Portfolio | 65,831 |
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 or other affiliated entities of 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 Loan | Weighted Average | Interest Expense |
Communications Equipment Portfolio | Borrower | $ 13,236,333 | .32% | $ 348 |
Computers Portfolio | Borrower | 6,855,500 | .32% | 246 |
IT Services Portfolio | Borrower | 6,364,741 | .32% | 3,026 |
Software and Computer Services Portfolio | Borrower | 21,291,247 | .32% | 13,843 |
Technology Portfolio | Borrower | 7,986,067 | .35% | 1,153 |
Redemptions In-Kind. During the period, shares of the Funds held by affiliated entities were redeemed in kind for cash and investments. The net realized gain on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind - continued
redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Funds recognized no gain or loss for federal income tax purposes.
Details of these transactions with the related gain (loss) for the Funds are presented in the accompanying table:
| Value of cash | Net Realized | Shares |
Communications Equipment Portfolio | $ 23,011,171 | $ 4,692,068 | 712,640 |
Electronics Portfolio | 78,505,773 | 13,991,337 | 1,006,354 |
Other. During the period, the investment adviser reimbursed Electronics Portfolio for certain losses in the amount of $81,050.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Communications Equipment Portfolio | $ 426 |
Computers Portfolio | 1,045 |
Electronics Portfolio | 2,384 |
IT Services Portfolio | 1,883 |
Software and Computer Services Portfolio | 5,016 |
Technology Portfolio | 3,742 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent 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, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. 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 Average | Interest |
IT Services Portfolio | $ 19,467,769 | .58% | $ 4,077 |
Software and Computer Services Portfolio | 56,102,609 | .59% | 21,064 |
Annual Report
Notes to Financial Statements - continued
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service | Custody |
Electronics Portfolio | $ 87,907 | $ 10 |
IT Services Portfolio | 16,887 | - |
Software and Computer Services Portfolio | 53,292 | - |
Technology Portfolio | 1,692 | 26 |
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
| Amount |
Communications Equipment Portfolio | $ 521 |
Computers Portfolio | 1,137 |
Electronics Portfolio | 843 |
IT Services Portfolio | 1,465 |
Software and Computer Services Portfolio | 4,871 |
Technology Portfolio | 3,657 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundManagers 50% Portfolio | VIP FundManagers 60% Portfolio |
Computers Portfolio | 12% | 18% |
Technology Portfolio | -% | 11% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
Fund | % of shares held |
Computers Portfolio | 35% |
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Communications Equipment Portfolio, Computers Portfolio, Electronics Portfolio, IT Services Portfolio, Software and Computer Services Portfolio and Technology Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
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.
Annual Report
Trustees and Officers - continued
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Communications Equipment Portfolio | 04/13/15 | 04/10/15 | $0.011 | $0.110 |
Computers Portfolio | 04/13/15 | 04/10/15 | $0.085 | $0.000 |
Electronics Portfolio | 04/13/15 | 04/10/15 | $0.050 | $4.841 |
IT Services Portfolio | 04/13/15 | 04/10/15 | $0.000 | $1.190 |
Software and Computer Services Portfolio | 04/13/15 | 04/10/15 | $0.000 | $2.801 |
Technology Portfolio | 04/13/15 | 04/10/15 | $0.000 | $1.562 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
Communications Equipment Portfolio | $6,091,613 |
Computers Portfolio | $16,526,109 |
Electronics Portfolio | $20,751,577 |
IT Services Portfolio | $106,166,055 |
Software and Computer Services Portfolio | $233,494,825 |
Technology Portfolio | $129,759,797 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
| April 2014 | December 2014 |
Communications Equipment Portfolio | 95% | 27% |
Computers Portfolio | 100% | 100% |
Electronics Portfolio | 98% | 30% |
IT Services Portfolio | 39% | 100% |
Software and Computer Services Portfolio | 12% | 40% |
Technology Portfolio | 3% | 9% |
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 2014 | December 2014 |
Communications Equipment Portfolio | 95% | 29% |
Computers Portfolio | 100% | 100% |
IT Services Portfolio | 38% | 100% |
Electronics Portfolio | 99% | 34% |
Software and Computer Services Portfolio | 13% | 44% |
Technology Portfolio | 4% | 11% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Communications Equipment Portfolio
Computers Portfolio
Electronics Portfolio
IT Services Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Annual Report
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for Communications Equipment Portfolio and Software and Computer Services Portfolio in September 2014 and June 2014, respectively.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Communications Equipment Portfolio
Computers Portfolio
Annual Report
Electronics Portfolio
IT Services Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Software and Computer Services Portfolio
Technology Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Annual Report
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management (U.K.) Limited
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
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and Account Assistance 1-800-544-6666
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
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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, 2015
(Fidelity Cover Art)
Contents
Fidelity Advisor® Consumer Staples Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Gold Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Consolidated Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Fidelity Advisor Materials Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Telecommunications Fund | 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 |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Fidelity Advisor® Consumer Staples Fund - Class A, T, B and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 14.94% | 14.24% | 10.81% |
Class T (incl. 3.50% sales charge) B | 17.35% | 14.46% | 10.80% |
Class B (incl. contingent deferred | 16.01% | 14.45% | 10.83% |
Class C (incl. contingent deferred sales charge) D | 20.03% | 14.74% | 10.77% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class C shares' contingent deferred sales charges 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 was named Food and Agriculture Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance 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, 2005, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period. See footnote A for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned 21.95%, 21.60%, 21.01% and 21.03%, respectively (excluding sales charges), straddling the 21.28% gain of its sector benchmark, the MSCI U.S. IMI Consumer Staples 25-50 Index, and outpacing the S&P 500®. The sector put up a strong absolute return and outpaced the broader market, as long-term trends supported continued growth in consumer staples sales, even amid an increasingly challenging global macroeconomic backdrop. In addition, many companies remained focused on cost cutting, which helped account for decent earnings results, while merger-and-acquisition activity among a handful of names added a bit of a spark. Versus the MSCI index, food retail was a sweet spot for the fund the past year, with grocer Kroger by far our biggest contributor and one of our largest holdings. Shares of the grocery and retail giant steadily rose during the period, as consumers continued to gravitate toward its customer-friendly stores, which boasted a bevy of locations and discounted private-label goods. As a result, the company reported consecutive quarters of better-than-expected sales and earnings growth, including expanding revenue and profits. Whole Foods Market was another winner in this space, due to timely ownership. Elsewhere, Monster Beverage, which I added to the fund during the year, helped. The fund was overweighted the energy-drink manufacturer when its shares soared in August after beverage giant Coca-Cola acquired a 17% stake in the firm. As part of the new partnership, Coca-Cola transferred its energy drink lineup to Monster in exchange for Monster's non-energy drink business, to include its natural soft drinks and juices. The exchange gave Monster an immediate sales boost and expanded international presence. Additionally, the firm launched new energy products late in 2014, and it plans to expand its lineup and international expansion in 2015. On the flip side, the fund's stake in British American Tobacco (BAT), our largest position, hurt. Slowing sales of BAT's cigarette brands, driven lower by a shaky global economy that has limited consumer spending in some markets, as well as heightened competition from e-cigarette makers, caused the stock to decline. Stock selection in distillers & vintners also hurt, including non-index stakes in the U.K.'s Diageo and French firms Pernod Ricard and Remy Cointreau. Cognac had been a popular gift for Chinese government officials prior to 2013, but the category took a hit last year amid the country's crackdown on corruption that banned lavish gifts, including high-end spirits, for civil servants. This weighed on the earnings and sales of all three firms over the year. I sold Pernod from the fund by period end. Of note, the fund's cash position also hindered our relative result amid a strong market, as did some of its foreign investments due to an appreciating dollar.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer 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, 2014 to February 28, 2015).
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 | 1.05% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,106.30 | $ 5.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.59 | $ 5.26 |
Class T | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,104.80 | $ 6.89 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.25 | $ 6.61 |
Class B | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.10 | $ 9.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Class C | 1.80% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.20 | $ 9.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.87 | $ 9.00 |
Consumer Staples | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.02 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
Institutional Class | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.13 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
British American Tobacco PLC sponsored ADR | 11.0 | 11.7 |
Procter & Gamble Co. | 9.1 | 8.8 |
CVS Health Corp. | 9.0 | 7.5 |
Wal-Mart Stores, Inc. | 7.0 | 4.6 |
Kroger Co. | 6.0 | 4.9 |
The Coca-Cola Co. | 4.8 | 11.5 |
Mead Johnson Nutrition Co. | 4.5 | 4.0 |
Lorillard, Inc. | 4.3 | 1.2 |
PepsiCo, Inc. | 4.2 | 2.5 |
Colgate-Palmolive Co. | 3.0 | 1.8 |
| 62.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Food & Staples Retailing | 26.7% |
|
![]() | Tobacco | 19.7% |
|
![]() | Beverages | 18.8% |
|
![]() | Food Products | 16.7% |
|
![]() | Household Products | 12.3% |
|
![]() | All Others* | 5.8% |
|
As of August 31, 2014 | |||
![]() | Beverages | 25.7% |
|
![]() | Food & Staples Retailing | 22.4% |
|
![]() | Tobacco | 20.4% |
|
![]() | Food Products | 14.9% |
|
![]() | Household Products | 10.8% |
|
![]() | All Others* | 5.8% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.4% | |||
Shares | Value | ||
BEVERAGES - 18.6% | |||
Brewers - 2.9% | |||
Anheuser-Busch InBev SA NV | 367,590 | $ 46,632,487 | |
SABMiller PLC | 799,384 | 45,354,240 | |
| 91,986,727 | ||
Distillers & Vintners - 2.5% | |||
C&C Group PLC | 1,359,200 | 5,872,630 | |
Diageo PLC sponsored ADR | 384,326 | 45,677,145 | |
Remy Cointreau SA (d) | 359,676 | 26,415,775 | |
| 77,965,550 | ||
Soft Drinks - 13.2% | |||
Coca-Cola Bottling Co. Consolidated | 135,295 | 14,123,445 | |
Coca-Cola Central Japan Co. Ltd. | 450,500 | 7,931,060 | |
Coca-Cola FEMSA S.A.B. de CV sponsored ADR (d) | 52,529 | 4,533,253 | |
Coca-Cola Icecek Sanayi A/S | 567,162 | 11,021,305 | |
Embotelladora Andina SA: | |||
ADR | 376,112 | 5,205,390 | |
sponsored ADR | 188,900 | 3,141,407 | |
Fomento Economico Mexicano S.A.B. de CV sponsored ADR (a) | 87,387 | 8,324,486 | |
Monster Beverage Corp. (a) | 522,900 | 73,791,648 | |
PepsiCo, Inc. | 1,321,623 | 130,814,245 | |
The Coca-Cola Co. | 3,485,118 | 150,905,609 | |
| 409,791,848 | ||
TOTAL BEVERAGES | 579,744,125 | ||
BIOTECHNOLOGY - 0.1% | |||
Biotechnology - 0.1% | |||
Enzymotec Ltd. (a) | 507,078 | 4,183,394 | |
CHEMICALS - 0.1% | |||
Specialty Chemicals - 0.1% | |||
Senomyx, Inc. (a)(d) | 422,200 | 2,246,104 | |
FOOD & STAPLES RETAILING - 26.7% | |||
Drug Retail - 9.2% | |||
CVS Health Corp. | 2,693,976 | 279,823,287 | |
Drogasil SA (a) | 634,100 | 6,366,129 | |
| 286,189,416 | ||
Food Distributors - 0.9% | |||
Chefs' Warehouse Holdings (a) | 412,669 | 8,360,674 | |
United Natural Foods, Inc. (a) | 247,081 | 20,517,606 | |
| 28,878,280 | ||
Food Retail - 8.7% | |||
Fresh Market, Inc. (a)(d) | 413,324 | 15,731,111 | |
Kroger Co. | 2,638,018 | 187,694,981 | |
Sprouts Farmers Market LLC (a) | 312,929 | 11,518,916 | |
Whole Foods Market, Inc. | 980,100 | 55,365,849 | |
| 270,310,857 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 7.9% | |||
Costco Wholesale Corp. | 190,350 | $ 27,973,836 | |
Wal-Mart Stores, Inc. | 2,577,756 | 216,351,061 | |
| 244,324,897 | ||
TOTAL FOOD & STAPLES RETAILING | 829,703,450 | ||
FOOD PRODUCTS - 16.7% | |||
Agricultural Products - 4.6% | |||
Archer Daniels Midland Co. | 1,129,316 | 54,071,650 | |
Bunge Ltd. | 999,813 | 81,764,707 | |
SLC Agricola SA | 1,281,200 | 6,232,804 | |
| 142,069,161 | ||
Packaged Foods & Meats - 12.1% | |||
Dean Foods Co. | 969,979 | 15,636,061 | |
General Mills, Inc. | 1,287,100 | 69,233,109 | |
Inner Mongoli Yili Industries Co. Ltd. | 1,222,221 | 5,505,219 | |
Keurig Green Mountain, Inc. | 543,483 | 69,337,561 | |
Lindt & Spruengli AG | 90 | 5,864,373 | |
Mead Johnson Nutrition Co. Class A | 1,336,416 | 140,002,940 | |
Nestle SA | 385,109 | 30,097,732 | |
The Hain Celestial Group, Inc. (a) | 334,978 | 20,946,174 | |
Ulker Biskuvi Sanayi A/S | 820,525 | 6,361,546 | |
Unilever NV (NY Reg.) | 339,798 | 14,771,019 | |
| 377,755,734 | ||
TOTAL FOOD PRODUCTS | 519,824,895 | ||
HOTELS, RESTAURANTS & LEISURE - 1.5% | |||
Restaurants - 1.5% | |||
ARAMARK Holdings Corp. | 1,444,628 | 45,722,476 | |
HOUSEHOLD DURABLES - 0.4% | |||
Household Appliances - 0.2% | |||
SodaStream International Ltd. (a)(d) | 240,515 | 4,310,029 | |
Housewares & Specialties - 0.2% | |||
Tupperware Brands Corp. | 94,600 | 6,754,440 | |
TOTAL HOUSEHOLD DURABLES | 11,064,469 | ||
HOUSEHOLD PRODUCTS - 12.3% | |||
Household Products - 12.3% | |||
Colgate-Palmolive Co. | 1,341,075 | 94,974,932 | |
Procter & Gamble Co. | 3,324,865 | 283,045,757 | |
Svenska Cellulosa AB (SCA) (B Shares) | 257,500 | 6,405,841 | |
| 384,426,530 | ||
PERSONAL PRODUCTS - 1.9% | |||
Personal Products - 1.9% | |||
Herbalife Ltd. | 428,610 | 13,291,196 | |
L'Oreal SA | 181,900 | 33,026,830 | |
Nu Skin Enterprises, Inc. Class A (d) | 216,667 | 11,739,018 | |
| 58,057,044 | ||
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - 0.2% | |||
Pharmaceuticals - 0.2% | |||
Perrigo Co. PLC | 37,306 | $ 5,762,658 | |
TEXTILES, APPAREL & LUXURY GOODS - 0.2% | |||
Textiles - 0.2% | |||
Japan Tobacco, Inc. | 251,700 | 7,936,572 | |
TOBACCO - 19.7% | |||
Tobacco - 19.7% | |||
Altria Group, Inc. | 1,263,045 | 71,096,803 | |
British American Tobacco PLC sponsored ADR | 2,931,545 | 341,437,048 | |
ITC Ltd. (a) | 1,820,070 | 11,621,381 | |
Lorillard, Inc. | 1,985,503 | 135,848,115 | |
Philip Morris International, Inc. | 476,158 | 39,502,068 | |
Souza Cruz SA | 1,603,500 | 14,324,882 | |
| 613,830,297 | ||
TOTAL COMMON STOCKS (Cost $2,170,373,161) |
| ||
Nonconvertible Preferred Stocks - 0.2% | |||
|
|
|
|
BEVERAGES - 0.2% | |||
Brewers - 0.2% | |||
Ambev SA sponsored ADR | 923,810 |
| |
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.13% (b) | 23,231,539 | $ 23,231,539 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 29,423,466 | 29,423,466 | |
TOTAL MONEY MARKET FUNDS (Cost $52,655,005) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $2,225,337,178) | 3,121,115,594 | ||
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (9,018,217) | ||
NET ASSETS - 100% | $ 3,112,097,377 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 77,785 |
Fidelity Securities Lending Cash Central Fund | 366,992 |
Total | $ 444,777 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section at the end of this listing. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 3,062,502,014 | $ 2,985,771,795 | $ 76,730,219 | $ - |
Nonconvertible Preferred Stocks | 5,958,575 | 5,958,575 | - | - |
Money Market Funds | 52,655,005 | 52,655,005 | - | - |
Total Investments in Securities: | $ 3,121,115,594 | $ 3,044,385,375 | $ 76,730,219 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited):fff |
United States of America | 73.8% |
United Kingdom | 13.9% |
Bermuda | 2.6% |
France | 1.9% |
Belgium | 1.5% |
Switzerland | 1.1% |
Brazil | 1.0% |
Others (Individually Less Than 1%) | 4.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,392,984) - See accompanying schedule: Unaffiliated issuers (cost $2,172,682,173) | $ 3,068,460,589 |
|
Fidelity Central Funds (cost $52,655,005) | 52,655,005 |
|
Total Investments (cost $2,225,337,178) |
| $ 3,121,115,594 |
Receivable for investments sold | 31,872,606 | |
Receivable for fund shares sold | 4,689,917 | |
Dividends receivable | 3,822,729 | |
Distributions receivable from Fidelity Central Funds | 22,132 | |
Prepaid expenses | 9,071 | |
Other receivables | 47,028 | |
Total assets | 3,161,579,077 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,312,834 | |
Payable for fund shares redeemed | 3,358,162 | |
Accrued management fee | 1,406,922 | |
Distribution and service plan fees payable | 314,215 | |
Other affiliated payables | 520,163 | |
Other payables and accrued expenses | 145,938 | |
Collateral on securities loaned, at value | 29,423,466 | |
Total liabilities | 49,481,700 | |
|
|
|
Net Assets | $ 3,112,097,377 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,123,703,221 | |
Undistributed net investment income | 5,947,947 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 86,712,312 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 895,733,897 | |
Net Assets | $ 3,112,097,377 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 101.33 | |
|
|
|
Maximum offering price per share (100/94.25 of $101.33) | $ 107.51 | |
Class T: | $ 100.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $100.61) | $ 104.26 | |
Class B: | $ 100.13 | |
|
|
|
Class C: | $ 99.27 | |
|
|
|
Consumer Staples: | $ 102.03 | |
|
|
|
Institutional Class: | $ 101.91 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 63,157,453 |
Income from Fidelity Central Funds |
| 444,777 |
Total income |
| 63,602,230 |
|
|
|
Expenses | ||
Management fee | $ 14,005,834 | |
Transfer agent fees | 4,714,815 | |
Distribution and service plan fees | 3,266,375 | |
Accounting and security lending fees | 767,701 | |
Custodian fees and expenses | 94,879 | |
Independent trustees' compensation | 47,435 | |
Registration fees | 182,600 | |
Audit | 51,473 | |
Legal | 12,495 | |
Miscellaneous | 38,709 | |
Total expenses before reductions | 23,182,316 | |
Expense reductions | (12,904) | 23,169,412 |
Net investment income (loss) | 40,432,818 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,877,861 | |
Redemptions in-kind with affiliated entities | 20,812,198 | |
Foreign currency transactions | (31,090) | |
Total net realized gain (loss) |
| 155,658,969 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $13,239) | 315,419,939 | |
Assets and liabilities in foreign currencies | (37,629) | |
Total change in net unrealized appreciation (depreciation) |
| 315,382,310 |
Net gain (loss) | 471,041,279 | |
Net increase (decrease) in net assets resulting from operations | $ 511,474,097 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 40,432,818 | $ 41,894,781 |
Net realized gain (loss) | 155,658,969 | 171,640,518 |
Change in net unrealized appreciation (depreciation) | 315,382,310 | 26,588,951 |
Net increase (decrease) in net assets resulting from operations | 511,474,097 | 240,124,250 |
Distributions to shareholders from net investment income | (39,618,532) | (38,989,125) |
Distributions to shareholders from net realized gain | (102,399,285) | (137,187,027) |
Total distributions | (142,017,817) | (176,176,152) |
Share transactions - net increase (decrease) | 686,786,861 | (294,831,730) |
Redemption fees | 51,833 | 32,907 |
Total increase (decrease) in net assets | 1,056,294,974 | (230,850,725) |
|
|
|
Net Assets | ||
Beginning of period | 2,055,802,403 | 2,286,653,128 |
End of period (including undistributed net investment income of $5,947,947 and undistributed net investment income of $5,732,152, respectively) | $ 3,112,097,377 | $ 2,055,802,403 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 | $ 61.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.37 | 1.43 | 1.26 | 1.22 | .98 |
Net realized and unrealized gain (loss) | 17.28 | 7.51 | 11.73 | 8.73 | 7.10 |
Total from investment operations | 18.65 | 8.94 | 12.99 | 9.95 | 8.08 |
Distributions from net investment income | (1.28) | (1.44) | (1.08) | (1.06) | (.83) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.25) J | (6.68) | (2.22) | (2.70) | (1.49) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 101.33 | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 |
Total ReturnA, B | 21.95% | 10.53% | 17.60% | 15.00% | 13.27% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of fee waivers, if any | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of all reductions | 1.05% | 1.06% | 1.08% | 1.09% | 1.11% |
Net investment income (loss) | 1.45% | 1.61% | 1.58% | 1.74% | 1.53% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 414,151 | $ 329,459 | $ 277,329 | $ 205,851 | $ 160,526 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 per share.
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 | $ 60.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.10 | 1.18 | 1.03 | 1.01 | .79 |
Net realized and unrealized gain (loss) | 17.15 | 7.46 | 11.68 | 8.68 | 7.05 |
Total from investment operations | 18.25 | 8.64 | 12.71 | 9.69 | 7.84 |
Distributions from net investment income | (1.04) | (1.21) | (.88) | (.86) | (.65) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.01) J | (6.45) | (2.02) | (2.50) | (1.31) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.61 | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 |
Total ReturnA, B | 21.60% | 10.23% | 17.29% | 14.67% | 12.93% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of fee waivers, if any | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of all reductions | 1.32% | 1.33% | 1.35% | 1.38% | 1.40% |
Net investment income (loss) | 1.18% | 1.34% | 1.30% | 1.45% | 1.24% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,489 | $ 61,421 | $ 52,024 | $ 39,047 | $ 31,496 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 | $ 60.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .63 | .71 | .61 | .64 | .46 |
Net realized and unrealized gain (loss) | 17.06 | 7.40 | 11.61 | 8.61 | 6.98 |
Total from investment operations | 17.69 | 8.11 | 12.22 | 9.25 | 7.44 |
Distributions from net investment income | (.48) | (.69) | (.37) | (.43) | (.32) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.46) | (5.93) | (1.51) | (2.07) | (.98) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.13 | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 |
Total ReturnA, B | 21.01% | 9.63% | 16.68% | 14.06% | 12.35% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of fee waivers, if any | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of all reductions | 1.82% | 1.86% | 1.88% | 1.90% | 1.91% |
Net investment income (loss) | .68% | .81% | .78% | .93% | .73% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,799 | $ 17,388 | $ 18,548 | $ 19,330 | $ 20,033 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 | $ 60.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .65 | .75 | .65 | .68 | .49 |
Net realized and unrealized gain (loss) | 16.93 | 7.36 | 11.55 | 8.59 | 7.00 |
Total from investment operations | 17.58 | 8.11 | 12.20 | 9.27 | 7.49 |
Distributions from net investment income | (.65) | (.84) | (.53) | (.59) | (.41) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.63) | (6.07) J | (1.67) | (2.23) | (1.07) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 99.27 | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 |
Total ReturnA, B | 21.03% | 9.70% | 16.73% | 14.14% | 12.44% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of all reductions | 1.80% | 1.81% | 1.82% | 1.84% | 1.85% |
Net investment income (loss) | .70% | .85% | .83% | .99% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 228,151 | $ 164,669 | $ 134,966 | $ 102,321 | $ 81,239 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 | $ 61.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.64 | 1.69 | 1.48 | 1.42 | 1.14 |
Net realized and unrealized gain (loss) | 17.40 | 7.55 | 11.82 | 8.76 | 7.14 |
Total from investment operations | 19.04 | 9.24 | 13.30 | 10.18 | 8.28 |
Distributions from net investment income | (1.54) | (1.66) | (1.28) | (1.24) | (.98) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.52) | (6.90) | (2.42) | (2.87) I | (1.64) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 102.03 | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 |
Total ReturnA | 22.27% | 10.82% | 17.94% | 15.30% | 13.55% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .77% | .79% | .81% | .83% | .86% |
Expenses net of fee waivers, if any | .77% | .79% | .81% | .83% | .86% |
Expenses net of all reductions | .77% | .79% | .80% | .82% | .86% |
Net investment income (loss) | 1.73% | 1.88% | 1.85% | 2.01% | 1.78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,173,970 | $ 1,328,594 | $ 1,425,055 | $ 1,202,440 | $ 877,548 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 | $ 61.26 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.59 | 1.66 | 1.45 | 1.39 | 1.15 |
Net realized and unrealized gain (loss) | 17.40 | 7.53 | 11.79 | 8.73 | 7.13 |
Total from investment operations | 18.99 | 9.19 | 13.24 | 10.12 | 8.28 |
Distributions from net investment income | (1.44) | (1.54) | (1.32) | (1.19) | (1.04) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.41) I | (6.78) | (2.46) | (2.82) J | (1.70) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 101.91 | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 |
Total ReturnA | 22.26% | 10.80% | 17.90% | 15.24% | 13.57% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .87% | .87% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .87% | .87% |
Expenses net of all reductions | .80% | .82% | .84% | .87% | .87% |
Net investment income (loss) | 1.70% | 1.85% | 1.81% | 1.96% | 1.77% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 198,538 | $ 154,271 | $ 378,731 | $ 163,544 | $ 237,883 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
J Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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, 2015
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, redemption in kind, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 926,318,732 |
Gross unrealized depreciation | (39,470,234) |
Net unrealized appreciation (depreciation) on securities | $ 886,848,498 |
|
|
Tax Cost | $ 2,234,267,096 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 19,540,825 |
Undistributed long-term capital gain | $ 82,071,386 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 886,821,686 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 43,895,099 | $ 40,643,236 |
Long-term Capital Gains | 98,122,718 | 135,532,916 |
Total | $ 142,017,817 | $ 176,176,152 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,618,121,721 and $1,046,857,746, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 887,388 | $ 8,962 |
Class T | .25% | .25% | 349,080 | 259 |
Class B | .75% | .25% | 167,656 | 125,772 |
Class C | .75% | .25% | 1,862,251 | 335,223 |
|
|
| $ 3,266,375 | $ 470,216 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 197,186 |
Class T | 27,506 |
Class B* | 9,631 |
Class C* | 13,925 |
| $ 248,248 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 711,350 | .20 |
Class T | 156,755 | .22 |
Class B | 37,489 | .22 |
Class C | 376,017 | .20 |
Consumer Staples | 2,989,524 | .18 |
Institutional Class | 443,680 | .20 |
| $ 4,714,815 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $14,678 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 523,611 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $47,287,323. The net realized gain of $20,812,198 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. Then Investing Funds delivered cash and investments valued at $64,348,425 in exchange for 712,528 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,649 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $366,992.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $9,955 for the period.
The investment adviser reimbursed a portion of the Fund's operating expenses, including certain Consumer Staples expenses during the period in the amount of $2,949.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 4,812,004 | $ 5,205,524 |
Class T | 776,331 | 826,286 |
Class B | 83,556 | 138,623 |
Class C | 1,335,126 | 1,548,556 |
Consumer Staples | 29,856,743 | 26,141,452 |
Institutional Class | 2,754,772 | 5,128,684 |
Total | $ 39,618,532 | $ 38,989,125 |
From net realized gain |
|
|
Class A | $ 14,768,867 | $ 18,454,866 |
Class T | 2,841,831 | 3,478,167 |
Class B | 743,976 | 1,077,295 |
Class C | 7,778,566 | 9,334,082 |
Consumer Staples | 65,408,817 | 84,245,287 |
Institutional Class | 10,857,228 | 20,597,330 |
Total | $ 102,399,285 | $ 137,187,027 |
Annual Report
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,066,097 | 1,297,946 | $ 101,322,941 | $ 115,706,038 |
Reinvestment of distributions | 205,710 | 234,768 | 18,829,531 | 20,739,532 |
Shares redeemed | (931,333) | (1,022,897) | (86,559,239) | (90,649,691) |
Net increase (decrease) | 340,474 | 509,817 | $ 33,593,233 | $ 45,795,879 |
Class T |
|
|
|
|
Shares sold | 215,514 | 171,739 | $ 20,203,421 | $ 15,157,502 |
Reinvestment of distributions | 38,102 | 46,535 | 3,463,287 | 4,086,883 |
Shares redeemed | (146,712) | (126,021) | (13,666,581) | (11,017,450) |
Net increase (decrease) | 106,904 | 92,253 | $ 10,000,127 | $ 8,226,935 |
Class B |
|
|
|
|
Shares sold | 7,270 | 16,325 | $ 675,777 | $ 1,431,261 |
Reinvestment of distributions | 8,161 | 11,472 | 730,673 | 1,003,061 |
Shares redeemed | (57,733) | (46,659) | (5,359,510) | (4,085,147) |
Net increase (decrease) | (42,302) | (18,862) | $ (3,953,060) | $ (1,650,825) |
Class C |
|
|
|
|
Shares sold | 636,469 | 622,483 | $ 59,593,472 | $ 54,501,354 |
Reinvestment of distributions | 86,847 | 101,164 | 7,772,854 | 8,787,354 |
Shares redeemed | (332,705) | (417,359) | (30,479,924) | (36,266,564) |
Net increase (decrease) | 390,611 | 306,288 | $ 36,886,402 | $ 27,022,144 |
Consumer Staples |
|
|
|
|
Shares sold | 8,889,529 | 3,438,166 | $ 838,041,591 | $ 309,005,043 |
Reinvestment of distributions | 985,926 | 1,188,981 | 91,713,079 | 105,681,529 |
Shares redeemed | (3,580,043) | (6,154,349) | (340,719,360) | (548,691,818) |
Net increase (decrease) | 6,295,412 | (1,527,202) | $ 589,035,310 | $ (134,005,246) |
Institutional Class |
|
|
|
|
Shares sold | 3,870,748 A | 2,006,485 | $ 354,438,000A | $ 181,066,529 |
Reinvestment of distributions | 135,150 | 271,028 | 12,187,732 | 24,047,781 |
Shares redeemed | (3,804,175)B | (4,939,085) | (345,400,883)B | (445,334,927) |
Net increase (decrease) | 201,723 | (2,661,572) | $ 21,224,849 | $ (240,220,617) |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Annual Report
Fidelity Advisor Gold Fund - Class A, T, B and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -22.45% | -13.54% | 0.78% |
Class T (incl. 3.50% sales charge) B | -20.82% | -13.37% | 0.80% |
Class B (incl. contingent deferred sales charge) C | -22.39% | -13.47% | 0.84% |
Class C (incl. contingent deferred sales charge) D | -19.15% | -13.14% | 0.75% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class C shares' contingent deferred sales charges 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, 2005, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. See footnote A for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from S. Joseph Wickwire II, Portfolio Manager, Fidelity Advisor® Gold Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned -17.72%, -17.95%, -18.31% and -18.33%, respectively (excluding sales charges), underperforming the -16.34% return of its industry benchmark, the S&P® Global BMI Gold Capped Index, and the S&P® 500. By comparison, the broadly based MSCI ACWI (All Country World Index) Index added 7.95%. It was a difficult year for gold and gold stocks as the period saw gold prices fall from a high of $1,383 to a low of $1,141 an ounce during the period. The fund underperformed its industry benchmark by underweighting names that outperformed, including Newmont Mining and Zinjin Mining Group, the latter of which we did not own. Overweighting names that lost ground also hurt, including B2Gold and Argonaut Gold. Some non-gold equity positions also dragged on the fund's result. Conversely, underweighting stocks that underperformed contributed to results, including Barrick Gold, which lagged on concerns about its debt level and management changes, along with uncertainty about its strategy after a failed attempt to acquire Newmont. Our bullion position also contributed, as it outperformed the gold equity benchmark.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold 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, 2014 to February 28, 2015).
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 | $ 789.50 | $ 5.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 788.20 | $ 6.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Gold | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 4.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 3.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
A 5% return per year before expenses
B Annualized expense ratio reflects consolidated expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Consolidated Investment Changes (Unaudited)
Top Ten Holdings as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.8 | 8.9 |
Randgold Resources Ltd. sponsored ADR | 7.1 | 5.6 |
Newcrest Mining Ltd. | 6.2 | 4.8 |
Gold Bullion | 6.2 | 6.3 |
Franco-Nevada Corp. | 6.1 | 4.9 |
Agnico Eagle Mines Ltd. (Canada) | 5.0 | 4.7 |
Silver Bullion | 4.2 | 5.1 |
Eldorado Gold Corp. | 4.1 | 5.1 |
Newmont Mining Corp. | 4.0 | 3.1 |
Barrick Gold Corp. | 3.8 | 5.1 |
| 55.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Gold | 87.6% |
|
![]() | Commodities & Related Investments** | 10.4% |
|
![]() | Precious Metals & Minerals | 0.1% |
|
![]() | Silver | 0.7% |
|
![]() | Diversified Metals & Mining | 0.2% |
|
![]() | Steel | 0.0% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2014 | |||
![]() | Gold | 87.0% |
|
![]() | Commodities & Related Investments** | 11.4% |
|
![]() | Precious Metals & Minerals | 0.6% |
|
![]() | Diversified Metals & Mining | 0.3% |
|
![]() | Coal & Consumable Fuels | 0.2% |
|
![]() | Silver | 0.2% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets (liabilities). |
** Includes gold bullion and/or silver bullion. |
Geographic Diversification (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Canada | 55.8% |
|
![]() | United States of America* | 19.1% |
|
![]() | Australia | 8.1% |
|
![]() | Bailiwick of Jersey | 7.9% |
|
![]() | South Africa | 6.9% |
|
![]() | Peru | 0.8% |
|
![]() | Bermuda | 0.7% |
|
![]() | Cayman Islands | 0.4% |
|
![]() | United Kingdom | 0.3% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
As of August 31, 2014 | |||
![]() | Canada | 59.0% |
|
![]() | United States of America* | 18.2% |
|
![]() | South Africa | 7.1% |
|
![]() | Australia | 6.9% |
|
![]() | Bailiwick of Jersey | 6.5% |
|
![]() | Bermuda | 0.9% |
|
![]() | Peru | 0.7% |
|
![]() | Cayman Islands | 0.5% |
|
![]() | United Kingdom | 0.2% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 88.6% | |||
Shares | Value | ||
Australia - 8.1% | |||
METALS & MINING - 8.1% | |||
Gold - 8.1% | |||
Beadell Resources Ltd. (d) | 7,687,418 | $ 1,922,223 | |
Evolution Mining Ltd. | 1,437,195 | 948,955 | |
Kingsgate Consolidated NL (a) | 78,274 | 48,319 | |
Medusa Mining Ltd. (a)(d) | 1,983,595 | 1,518,982 | |
Newcrest Mining Ltd. (a) | 6,223,650 | 69,980,874 | |
Northern Star Resources Ltd. | 4,604,518 | 8,491,210 | |
Perseus Mining Ltd.: | |||
(Australia) (a)(d) | 2,122,134 | 588,674 | |
(Canada) (a) | 1,300,000 | 369,170 | |
Regis Resources Ltd. (a)(d) | 2,525,393 | 3,759,217 | |
Resolute Mng Ltd. (a) | 2,390,161 | 616,332 | |
Saracen Mineral Holdings Ltd. (a) | 4,516,787 | 1,482,355 | |
Silver Lake Resources Ltd. (a)(d) | 4,346,985 | 696,330 | |
Troy Resources NL (a) | 195,000 | 84,567 | |
Troy Resources NL (a)(e) | 734,826 | 323,298 | |
| 90,830,506 | ||
Bailiwick of Jersey - 7.9% | |||
METALS & MINING - 7.9% | |||
Gold - 7.9% | |||
Centamin PLC | 1,848,700 | 1,878,008 | |
Lydian International Ltd. (a) | 2,325,200 | 930,006 | |
Polyus Gold International Ltd. (d) | 222,400 | 697,863 | |
Polyus Gold International Ltd. sponsored GDR | 1,509,831 | 4,620,083 | |
Randgold Resources Ltd. sponsored ADR (d) | 1,010,495 | 80,021,099 | |
| 88,147,059 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Gold - 0.7% | |||
Continental Gold Ltd. (a) | 4,907,000 | 7,850,572 | |
Steel - 0.0% | |||
African Minerals Ltd. (a)(d) | 1,718,700 | 27 | |
TOTAL METALS & MINING | 7,850,599 | ||
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Ivanhoe Mines Ltd. (a) | 2,225,300 | 1,477,481 | |
Ivanhoe Mines Ltd. Class A warrants 12/10/15 (a)(e) | 837,300 | 20,094 | |
NovaCopper, Inc. (a) | 488,333 | 293,000 | |
Sabina Gold & Silver Corp. (a)(d) | 980,000 | 301,816 | |
True Gold Mining, Inc. (a) | 191,000 | 29,794 | |
| 2,122,185 | ||
Gold - 54.8% | |||
Agnico Eagle Mines Ltd. (Canada) (d) | 1,759,901 | 56,551,654 | |
| |||
Shares | Value | ||
Alacer Gold Corp. | 2,187,363 | $ 4,741,824 | |
Alamos Gold, Inc. | 1,174,000 | 7,099,784 | |
Argonaut Gold, Inc. (a) | 4,558,862 | 7,585,340 | |
ATAC Resources Ltd. (a) | 67,200 | 32,253 | |
AuRico Gold, Inc. | 112,100 | 395,457 | |
B2Gold Corp. (a) | 22,915,693 | 38,678,596 | |
Barrick Gold Corp. (d) | 3,295,369 | 42,862,731 | |
Centerra Gold, Inc. | 1,335,600 | 6,527,891 | |
Detour Gold Corp. (a) | 2,042,100 | 19,749,611 | |
Detour Gold Corp. (a)(e) | 785,900 | 7,600,617 | |
Eldorado Gold Corp. (d) | 7,903,535 | 45,583,943 | |
Franco-Nevada Corp. | 1,297,800 | 68,476,832 | |
Gabriel Resources Ltd. (a)(d) | 1,020,600 | 661,296 | |
Goldcorp, Inc. | 4,486,700 | 98,807,176 | |
GoldQuest Mining Corp. (a) | 2,318,500 | 250,378 | |
Guyana Goldfields, Inc. (a) | 3,286,900 | 8,571,549 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 404,208 | |
IAMGOLD Corp. (a) | 2,920,000 | 7,147,588 | |
Kinross Gold Corp. (a) | 3,460,291 | 9,743,400 | |
Kirkland Lake Gold, Inc. (a)(d) | 376,000 | 1,570,050 | |
Lake Shore Gold Corp. (a)(d) | 2,806,600 | 2,559,414 | |
Midas Gold Corp. (a) | 100,500 | 40,197 | |
New Gold, Inc. (a) | 6,615,175 | 25,347,323 | |
NGEx Resources, Inc. (a) | 65,000 | 55,116 | |
Novagold Resources, Inc. (a) | 1,935,700 | 7,200,228 | |
OceanaGold Corp. | 2,842,300 | 5,434,043 | |
Orezone Gold Corp. (a) | 371,100 | 157,334 | |
Osisko Gold Royalties Ltd. | 546,193 | 7,794,643 | |
Pilot Gold, Inc. (a) | 1,418,150 | 1,225,184 | |
Premier Gold Mines Ltd. (a)(g) | 10,416,222 | 20,747,454 | |
Pretium Resources, Inc. (a) | 856,538 | 5,289,556 | |
Pretium Resources, Inc. (a)(e) | 225,000 | 1,389,489 | |
Pretium Resources, Inc. (a)(f) | 225,000 | 1,389,489 | |
Primero Mining Corp. (a)(d) | 1,506,800 | 5,351,725 | |
Richmont Mines, Inc. (a) | 239,900 | 804,080 | |
Rio Alto Mining Ltd. (a) | 2,742,235 | 8,598,961 | |
Romarco Minerals, Inc. (a) | 31,476,998 | 13,596,975 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 2,548,596 | |
Romarco Minerals, Inc. (f) | 4,600,000 | 1,788,337 | |
Roxgold, Inc. (a) | 100,000 | 51,996 | |
Rubicon Minerals Corp. (a) | 5,376,402 | 6,279,135 | |
Seabridge Gold, Inc. (a) | 659,166 | 5,121,721 | |
SEMAFO, Inc. (a) | 2,895,700 | 8,964,370 | |
Teranga Gold Corp. (a) | 85,000 | 46,916 | |
Teranga Gold Corp. CDI unit (a)(d) | 3,338,072 | 1,851,942 | |
Timmins Gold Corp. (a) | 122,600 | 106,899 | |
Torex Gold Resources, Inc. (a) | 20,093,200 | 18,484,265 | |
Yamana Gold, Inc. | 6,909,420 | 29,348,868 | |
| 614,616,434 | ||
Precious Metals & Minerals - 0.1% | |||
Chesapeake Gold Corp. (a) | 12,000 | 21,886 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Standard Ventures Corp. (a) | 2,125,400 | $ 918,099 | |
Klondex Mines Ltd. (a) | 1,000 | 2,160 | |
| 942,145 | ||
Silver - 0.7% | |||
MAG Silver Corp. (a) | 171,000 | 1,237,941 | |
Silver Wheaton Corp. | 47,700 | 1,030,238 | |
Tahoe Resources, Inc. | 426,600 | 5,968,510 | |
| 8,236,689 | ||
TOTAL METALS & MINING | 625,917,453 | ||
Cayman Islands - 0.4% | |||
METALS & MINING - 0.4% | |||
Gold - 0.4% | |||
Endeavour Mining Corp. (a) | 8,267,400 | 3,968,035 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 777,528 | 9,003,774 | |
South Africa - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
AngloGold Ashanti Ltd. sponsored ADR (a) | 3,046,508 | 34,334,145 | |
Gold Fields Ltd. sponsored ADR | 5,219,126 | 24,268,936 | |
Harmony Gold Mining Co. Ltd. (a) | 1,484,000 | 3,625,670 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,757,900 | 4,324,434 | |
Sibanye Gold Ltd. ADR | 1,023,906 | 10,843,165 | |
| 77,396,350 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Acacia Mining PLC | 837,800 | 3,559,540 | |
Pan African Resources PLC | 15,000 | 2,721 | |
| 3,562,261 | ||
United States of America - 7.7% | |||
METALS & MINING - 7.7% | |||
Gold - 7.7% | |||
Gold Resource Corp. (d) | 115,000 | 397,900 | |
McEwen Mining, Inc. (a)(d) | 679,110 | 767,394 | |
| |||
Shares | Value | ||
Newmont Mining Corp. | 1,718,500 | $ 45,248,105 | |
Royal Gold, Inc. | 552,113 | 39,807,347 | |
| 86,220,746 | ||
TOTAL COMMON STOCKS (Cost $1,340,424,123) |
| ||
Commodities - 10.4% | |||
Troy Ounces |
| ||
Gold Bullion (a) | 57,510 | 69,704,996 | |
Silver Bullion (a) | 2,837 | 47,051,645 | |
TOTAL COMMODITIES (Cost $130,172,232) |
| ||
Money Market Funds - 11.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 6,190,705 | 6,190,705 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 118,585,234 | 118,585,234 | |
TOTAL MONEY MARKET FUNDS (Cost $124,775,939) |
|
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $1,595,372,294) | 1,234,429,363 |
NET OTHER ASSETS (LIABILITIES) - (10.1)% | (112,830,851) | ||
NET ASSETS - 100% | $ 1,121,598,512 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $12,286,302 or 1.1% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,177,826 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 2,172,293 |
Romarco Minerals, Inc. | 12/12/14 | 1,987,728 |
(g) 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 | $ 9,364 |
Fidelity Securities Lending Cash Central Fund | 439,263 |
Total | $ 448,627 |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 225,764,683 | $ 65,099,608 | $ 147,759,808 | $ - | $ 116,684,748 |
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, |
Premier Gold Mines Ltd. | $ 20,772,705 | $ 1,654,461 | $ 668,621 | $ - | $ 20,747,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 992,896,783 | $ 987,434,430 | $ 5,414,007 | $ 48,346 |
Commodities | 116,756,641 | 116,756,641 | - | - |
Money Market Funds | 124,775,939 | 124,775,939 | - | - |
Total Investments in Securities: | $ 1,234,429,363 | $ 1,228,967,010 | $ 5,414,007 | $ 48,346 |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $113,727,253) - See accompanying schedule: Unaffiliated issuers (cost $1,309,030,420) | $ 972,149,329 |
|
Fidelity Central Funds (cost $124,775,939) | 124,775,939 |
|
Commodities (cost $130,172,232) | 116,756,641 |
|
Other affiliated issuers (cost $31,393,703) | 20,747,454 |
|
Total Investments (cost $1,595,372,294) |
| $ 1,234,429,363 |
Foreign currency held at value (cost $104,547) | 104,547 | |
Receivable for investments sold | 5,509,685 | |
Receivable for fund shares sold | 2,227,907 | |
Dividends receivable | 369,487 | |
Distributions receivable from Fidelity Central Funds | 21,274 | |
Prepaid expenses | 5,477 | |
Other receivables | 25,556 | |
Total assets | 1,242,693,296 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 106,570 | |
Payable for fund shares redeemed | 1,407,905 | |
Accrued management fee | 512,689 | |
Distribution and service plan fees payable | 50,874 | |
Other affiliated payables | 295,764 | |
Other payables and accrued expenses | 135,748 | |
Collateral on securities loaned, at value | 118,585,234 | |
Total liabilities | 121,094,784 | |
|
|
|
Net Assets | $ 1,121,598,512 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,578,854,710 | |
Accumulated net investment loss | (19,281) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,096,295,003) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (360,941,914) | |
Net Assets | $ 1,121,598,512 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 18.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $18.11) | $ 19.21 | |
Class T: | $ 17.83 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.83) | $ 18.48 | |
Class B: | $ 17.27 | |
|
|
|
Class C: | $ 17.20 | |
|
|
|
Gold: | $ 18.50 | |
|
|
|
Institutional Class: | $ 18.50 |
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
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,166,344 |
Income from Fidelity Central Funds (including $439,263 from security lending) |
| 448,627 |
Income before foreign taxes withheld |
| 9,614,971 |
Less foreign taxes withheld |
| (1,113,899) |
Total income |
| 8,501,072 |
|
|
|
Expenses | ||
Management fee | $ 7,307,511 | |
Transfer agent fees | 3,307,819 | |
Distribution and service plan fees | 625,615 | |
Accounting and security lending fees | 580,399 | |
Custodian fees and expenses | 283,527 | |
Independent trustees' compensation | 25,214 | |
Registration fees | 150,605 | |
Audit | 44,883 | |
Legal | 6,776 | |
Interest | 472 | |
Miscellaneous | 28,792 | |
Total expenses before reductions | 12,361,613 | |
Expense reductions | (454,642) | 11,906,971 |
Net investment income (loss) | (3,405,899) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (218,966,450) | |
Other affiliated issuers | (897,919) |
|
Commodities | (11,867,162) |
|
Foreign currency transactions | 197,792 | |
Total net realized gain (loss) |
| (231,533,739) |
Change in net unrealized appreciation (depreciation) on: Investments | (5,621,130) | |
Assets and liabilities in foreign currencies | (1,978) | |
Commodities | (13,914,448) | |
Total change in net unrealized appreciation (depreciation) |
| (19,537,556) |
Net gain (loss) | (251,071,295) | |
Net increase (decrease) in net assets resulting from operations | $ (254,477,194) |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (3,405,899) | $ 3,413,053 |
Net realized gain (loss) | (231,533,739) | (556,608,289) |
Change in net unrealized appreciation (depreciation) | (19,537,556) | (88,077,933) |
Net increase (decrease) in net assets resulting from operations | (254,477,194) | (641,273,169) |
Share transactions - net increase (decrease) | (124,744,949) | (461,130,558) |
Redemption fees | 222,335 | 396,348 |
Total increase (decrease) in net assets | (378,999,808) | (1,102,007,379) |
|
|
|
Net Assets | ||
Beginning of period | 1,500,598,320 | 2,602,605,699 |
End of period (including accumulated net investment loss of $19,281 and accumulated net investment loss of $8,084, respectively) | $ 1,121,598,512 | $ 1,500,598,320 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 I | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 | $ 40.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.10) | - A | .07 | (.13) | (.30) |
Net realized and unrealized gain (loss) | (3.80) | (8.25) | (15.19) | (2.83) | 15.28 |
Total from investment operations | (3.90) | (8.25) | (15.12) | (2.96) | 14.98 |
Distributions from net realized gain | - | - | - | (2.59) | (4.57) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.11 | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 |
Total ReturnB, C | (17.72)% | (27.24)% | (33.33)% | (6.24)% | 36.99% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.18% | 1.14% | 1.16% |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.14% | 1.15% |
Expenses net of all reductions | 1.19% | 1.18% | 1.17% | 1.14% | 1.14% |
Net investment income (loss) | (.51)% | -% G | .18% | (.28)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,898 | $ 60,270 | $ 101,202 | $ 152,969 | $ 149,178 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GAmount represents less than .01%. HExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. IFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 | $ 40.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.06) | (.03) | (.27) | (.43) |
Net realized and unrealized gain (loss) | (3.75) | (8.17) | (15.06) | (2.80) | 15.21 |
Total from investment operations | (3.90) | (8.23) | (15.09) | (3.07) | 14.78 |
Distributions from net realized gain | - | - | - | (2.57) | (4.45) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 17.83 | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 |
Total ReturnB, C | (17.95)% | (27.45)% | (33.50)% | (6.49)% | 36.62% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.50% | 1.49% | 1.45% | 1.43% | 1.44% |
Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.44% | 1.42% | 1.42% |
Expenses net of all reductions | 1.46% | 1.46% | 1.44% | 1.42% | 1.42% |
Net investment income (loss) | (.79)% | (.28)% | (.09)% | (.57)% | (.90)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 16,200 | $ 18,402 | $ 24,913 | $ 40,664 | $ 45,846 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 | $ 39.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.24) | (.16) | (.21) | (.49) | (.66) |
Net realized and unrealized gain (loss) | (3.63) | (7.98) | (14.76) | (2.76) | 15.02 |
Total from investment operations | (3.87) | (8.14) | (14.97) | (3.25) | 14.36 |
Distributions from net realized gain | - | - | - | (2.53) | (4.21) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.27 | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 |
Total ReturnB, C | (18.31)% | (27.78)% | (33.84)% | (6.95)% | 35.97% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.95% | 1.93% | 1.90% | 1.93% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.92% | 1.90% | 1.92% |
Expenses net of all reductions | 1.93% | 1.93% | 1.91% | 1.90% | 1.91% |
Net investment income (loss) | (1.26)% | (.75)% | (.57)% | (1.04)% | (1.39)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,461 | $ 4,373 | $ 9,423 | $ 20,894 | $ 26,837 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 | $ 39.75 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.23) | (.16) | (.20) | (.47) | (.64) |
Net realized and unrealized gain (loss) | (3.63) | (7.94) | (14.70) | (2.76) | 14.98 |
Total from investment operations | (3.86) | (8.10) | (14.90) | (3.23) | 14.34 |
Distributions from net realized gain | - | - | - | (2.53) | (4.28) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.20 | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 |
Total ReturnB, C | (18.33)% | (27.75)% | (33.83)% | (6.93)% | 36.01% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.96% | 1.93% | 1.87% | 1.89% |
Expenses net of fee waivers, if any | 1.92% | 1.94% | 1.92% | 1.87% | 1.88% |
Expenses net of all reductions | 1.92% | 1.93% | 1.91% | 1.87% | 1.87% |
Net investment income (loss) | (1.25)% | (.76)% | (.57)% | (1.01)% | (1.35)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,429 | $ 33,811 | $ 37,787 | $ 67,996 | $ 72,431 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 | $ 40.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.04) | .06 | .16 | (.02) | (.18) |
Net realized and unrealized gain (loss) | (3.87) | (8.38) | (15.40) | (2.85) | 15.43 |
Total from investment operations | (3.91) | (8.32) | (15.24) | (2.87) | 15.25 |
Distributions from net realized gain | - | - | - | (2.61) | (4.67) |
Redemption fees added to paid in capital B | - G | .01 | - G | - G | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 |
Total ReturnA | (17.45)% | (27.05)% | (33.16)% | (6.00)% | 37.35% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .94% | .94% | .93% | .89% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .92% | .89% | .90% |
Expenses net of all reductions | .90% | .91% | .92% | .89% | .89% |
Net investment income (loss) | (.22)% | .27% | .43% | (.03)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 992,944 | $ 1,275,913 | $ 2,301,019 | $ 3,924,440 | $ 4,250,249 |
Portfolio turnover rateD | 20% | 56% | 18% | 22% | 35% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 | $ 40.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .07 | .20 | .02 | (.15) |
Net realized and unrealized gain (loss) | (3.87) | (8.36) | (15.38) | (2.85) | 15.41 |
Total from investment operations | (3.91) | (8.29) | (15.18) | (2.83) | 15.26 |
Distributions from net realized gain | - | - | - | (2.62) | (4.72) |
Redemption fees added to paid in capital C | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 |
Total ReturnB | (17.45)% | (26.98)% | (33.09)% | (5.94)% | 37.45% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .90% | .87% | .84% | .82% | .85% |
Expenses net of fee waivers, if any | .86% | .85% | .83% | .81% | .84% |
Expenses net of all reductions | .86% | .84% | .82% | .81% | .83% |
Net investment income (loss) | (.18)% | .34% | .52% | .04% | (.31)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 23,667 | $ 107,830 | $ 128,262 | $ 168,548 | $ 137,246 |
Portfolio turnover rateE | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor 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, 2015
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd, a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2015, the Fund held an investment of $116,684,748 in the Subsidiary, representing 10.4% of the Fund's net assets.
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.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Investment Valuation - continued
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which 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, losses deferred due to wash sales and capital loss carryforwards.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 124,633,618 |
Gross unrealized depreciation | (616,152,284) |
Net unrealized appreciation (depreciation) on securities | $ (491,518,666) |
|
|
Tax Cost | $ 1,725,876,135 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (994,214,264) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (491,515,302) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
No expiration |
|
Short-term | $ (134,736,786) |
Long-term | (859,477,478) |
Total capital loss carryforward | $ (994,214,264) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
Annual Report
Notes to Consolidated Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $248,761,008 and $376,980,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 132,576 | $ 1,199 |
Class T | .25% | .25% | 85,648 | 148 |
Class B | .75% | .25% | 33,203 | 24,902 |
Class C | .75% | .25% | 374,188 | 110,290 |
|
|
| $ 625,615 | $ 136,539 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 31,220 |
Class T | 8,794 |
Class B* | 5,893 |
Class C* | 11,697 |
| $ 57,604 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 162,318 | .31 |
Class T | 56,530 | .33 |
Class B | 10,095 | .30 |
Class C | 107,920 | .29 |
Gold | 2,890,947 | .26 |
Institutional Class | 80,009 | .22 |
| $ 3,307,819 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $9,496 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 4,422,083 | .32% | $ 472 |
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,717 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds.
Annual Report
Notes to Consolidated Financial Statements - continued
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $446,754.
Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $275.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Gold and Institutional Class expenses during the period in the amount of $7,613.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,014,651 | 1,443,614 | $ 20,366,842 | $ 31,671,750 |
Shares redeemed | (1,163,476) | (2,051,264) | (22,763,258) | (45,809,186) |
Net increase (decrease) | (148,825) | (607,650) | $ (2,396,416) | $ (14,137,436) |
Class T |
|
|
|
|
Shares sold | 317,888 | 364,459 | $ 6,202,712 | $ 7,796,316 |
Shares redeemed | (256,267) | (349,602) | (4,926,125) | (7,601,870) |
Net increase (decrease) | 61,621 | 14,857 | $ 1,276,587 | $ 194,446 |
Class B |
|
|
|
|
Shares sold | 6,743 | 23,041 | $ 129,320 | $ 484,615 |
Shares redeemed | (71,044) | (138,145) | (1,326,720) | (3,024,154) |
Net increase (decrease) | (64,301) | (115,104) | $ (1,197,400) | $ (2,539,539) |
Class C |
|
|
|
|
Shares sold | 1,131,151 | 877,429 | $ 21,162,781 | $ 17,346,606 |
Shares redeemed | (444,470) | (567,911) | (8,210,673) | (12,102,759) |
Net increase (decrease) | 686,681 | 309,518 | $ 12,952,108 | $ 5,243,847 |
Gold |
|
|
|
|
Shares sold | 22,066,731 | 32,449,288 | $ 446,680,830 | $ 718,341,081 |
Shares redeemed | (25,311,740) | (50,439,253) | (508,417,315) | (1,182,529,714) |
Net increase (decrease) | (3,245,009) | (17,989,965) | $ (61,736,485) | $ (464,188,633) |
Institutional Class |
|
|
|
|
Shares sold | 1,547,691 | 2,126,861 | $ 33,198,070 | $ 46,661,254 |
Shares redeemed | (5,080,368) | (1,494,359) | (106,841,413) | (32,364,497) |
Net increase (decrease) | (3,532,677) | 632,502 | $ (73,643,343) | $ 14,296,757 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Class A, T, B and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | -3.67% | 11.48% | 10.38% |
Class T (incl. 3.50% sales charge) B | -1.67% | 11.68% | 10.36% |
Class B (incl. contingent deferred sales charge) C | -3.27% | 11.66% | 10.41% |
Class C (incl. contingent deferred sales charge) D | 0.51% | 11.95% | 10.32% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class C shares' contingent deferred sales charges 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 was named Industrial Materials Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance 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, 2005, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. See footnote A for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Class A, Class T, Class B and Class C shares returned 2.20%, 1.90%, 1.35% and 1.43%, respectively (excluding sales charges), considerably trailing the 8.95% advance of the MSCI U.S. IMI Materials 25-50 Index and also lagging the S&P 500®. Disappointing growth in both developed and emerging economies resulted in deflationary trends that dampened returns in the materials sector. These trends included falling prices for most commodities - notably, crude oil - and a surging U.S. dollar, which often accompanies weakness in commodities. Versus the MSCI index, both stock selection and market selection hampered the fund's results. Our large overweighting in diversified chemicals firm FMC, the fund's biggest relative detractor, fell victim to less-favorable fundamentals than I anticipated. In FMC's case, it was the collapse of global grain prices and subsequent disappointing sales of the firm's pesticides and herbicides. I sold a little here but maintained most of the position. A non-index position in coal producer Peabody Energy - which I sold - also worked against us, as did a sizable overweighting in Eastman Chemical and not owning strong-performing index name Air Products and Chemicals. Conversely, the two largest relative contributors were paper packaging stocks Rock-Tenn and Graphic Packaging Holding.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials 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, 2014 to February 28, 2015).
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 | 1.06% |
|
|
|
Actual |
| $ 1,000.00 | $ 976.80 | $ 5.20 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
Class T | 1.36% |
|
|
|
Actual |
| $ 1,000.00 | $ 975.40 | $ 6.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.05 | $ 6.81 |
Class B | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 972.90 | $ 9.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.44 |
Class C | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 973.20 | $ 8.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Materials | .80% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.10 | $ 3.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.83 | $ 4.01 |
Institutional Class | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.30 | $ 3.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 11.4 | 2.7 |
Monsanto Co. | 8.5 | 8.1 |
Praxair, Inc. | 5.4 | 5.5 |
Rock-Tenn Co. Class A | 5.4 | 3.7 |
Ecolab, Inc. | 5.3 | 1.3 |
Eastman Chemical Co. | 5.3 | 4.0 |
LyondellBasell Industries NV | 4.7 | 8.2 |
FMC Corp. | 4.0 | 4.2 |
CF Industries Holdings, Inc. | 3.4 | 3.9 |
Eagle Materials, Inc. | 3.1 | 2.7 |
| 56.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Chemicals | 70.0% |
|
![]() | Containers & Packaging | 16.6% |
|
![]() | Metals & Mining | 6.7% |
|
![]() | Construction Materials | 3.1% |
|
![]() | Paper & Forest Products | 1.7% |
|
![]() | All Others* | 1.9% |
|
As of August 31, 2014 | |||
![]() | Chemicals | 65.6% |
|
![]() | Metals & Mining | 14.8% |
|
![]() | Containers & Packaging | 10.4% |
|
![]() | Construction Materials | 5.2% |
|
![]() | Oil, Gas & Consumable Fuels | 2.0% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Materials Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
CHEMICALS - 70.0% | |||
Commodity Chemicals - 10.1% | |||
Axiall Corp. | 276,627 | $ 12,810,596 | |
Cabot Corp. | 807,787 | 36,447,349 | |
LyondellBasell Industries NV Class A | 1,119,596 | 96,184,492 | |
Methanex Corp. (d) | 805,800 | 43,825,568 | |
Orion Engineered Carbons SA | 1,017,837 | 16,753,597 | |
| 206,021,602 | ||
Diversified Chemicals - 21.5% | |||
E.I. du Pont de Nemours & Co. | 3,019,400 | 235,060,289 | |
Eastman Chemical Co. | 1,460,130 | 108,721,280 | |
FMC Corp. | 1,289,836 | 81,788,501 | |
Huntsman Corp. | 734,100 | 16,487,886 | |
| 442,057,956 | ||
Fertilizers & Agricultural Chemicals - 15.0% | |||
CF Industries Holdings, Inc. | 231,823 | 70,991,157 | |
Monsanto Co. | 1,449,730 | 174,590,984 | |
The Mosaic Co. | 1,184,800 | 63,102,448 | |
| 308,684,589 | ||
Industrial Gases - 8.3% | |||
Airgas, Inc. | 507,396 | 59,476,959 | |
Praxair, Inc. | 871,874 | 111,512,685 | |
| 170,989,644 | ||
Specialty Chemicals - 15.1% | |||
Albemarle Corp. U.S. (d) | 454,800 | 25,728,036 | |
Ashland, Inc. | 447,600 | 57,122,712 | |
Ecolab, Inc. | 943,220 | 108,979,639 | |
NewMarket Corp. | 95,929 | 45,192,152 | |
Sherwin-Williams Co. | 107,754 | 30,731,441 | |
W.R. Grace & Co. (a)(d) | 432,640 | 42,896,256 | |
| 310,650,236 | ||
TOTAL CHEMICALS | 1,438,404,027 | ||
CONSTRUCTION MATERIALS - 3.1% | |||
Construction Materials - 3.1% | |||
Eagle Materials, Inc. | 816,555 | 64,099,568 | |
CONTAINERS & PACKAGING - 16.6% | |||
Metal & Glass Containers - 2.9% | |||
Aptargroup, Inc. | 470,524 | 30,993,416 | |
Ball Corp. | 386,800 | 27,737,428 | |
| 58,730,844 | ||
Paper Packaging - 13.7% | |||
Avery Dennison Corp. | 414,200 | 22,180,410 | |
Graphic Packaging Holding Co. | 3,456,895 | 52,164,546 | |
MeadWestvaco Corp. | 65,100 | 3,454,206 | |
| |||
Shares | Value | ||
Packaging Corp. of America | 555,700 | $ 46,045,302 | |
Rock-Tenn Co. Class A | 1,602,442 | 109,991,619 | |
Sealed Air Corp. | 1,016,700 | 47,917,071 | |
| 281,753,154 | ||
TOTAL CONTAINERS & PACKAGING | 340,483,998 | ||
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Aspen Aerogels, Inc. (e) | 1,277,115 | 10,127,522 | |
METALS & MINING - 6.7% | |||
Diversified Metals & Mining - 0.2% | |||
Copper Mountain Mining Corp. (a) | 3,858,277 | 4,012,287 | |
Gold - 2.3% | |||
Franco-Nevada Corp. | 333,900 | 17,617,826 | |
Royal Gold, Inc. | 413,804 | 29,835,268 | |
| 47,453,094 | ||
Steel - 4.2% | |||
Nucor Corp. | 1,001,900 | 47,119,357 | |
Steel Dynamics, Inc. | 2,213,000 | 40,320,860 | |
| 87,440,217 | ||
TOTAL METALS & MINING | 138,905,598 | ||
PAPER & FOREST PRODUCTS - 1.7% | |||
Paper Products - 1.7% | |||
Domtar Corp. | 757,500 | 34,239,000 | |
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Wolseley PLC | 170,134 | 10,430,283 | |
TOTAL COMMON STOCKS (Cost $1,599,388,920) |
| ||
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 17,238,460 | 17,238,460 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 33,808,395 | 33,808,395 | |
TOTAL MONEY MARKET FUNDS (Cost $51,046,855) |
|
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $1,650,435,775) | 2,087,736,851 |
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (32,501,010) | ||
NET ASSETS - 100% | $ 2,055,235,841 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,901 |
Fidelity Securities Lending Cash Central Fund | 171,277 |
Total | $ 191,178 |
Other Affiliated Issuers | |||||
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Aspen Aerogels, Inc. | $ - | $ 9,986,520 | $ 1,418,932 | $ - | $ 10,127,522 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $33,099,127) - See accompanying schedule: Unaffiliated issuers (cost $1,590,608,784) | $ 2,026,562,474 |
|
Fidelity Central Funds (cost $51,046,855) | 51,046,855 |
|
Other affiliated issuers (cost $8,780,136) | 10,127,522 |
|
Total Investments (cost $1,650,435,775) |
| $ 2,087,736,851 |
Receivable for investments sold | 20,631,838 | |
Receivable for fund shares sold | 3,294,584 | |
Dividends receivable | 2,692,932 | |
Distributions receivable from Fidelity Central Funds | 3,536 | |
Prepaid expenses | 8,741 | |
Other receivables | 41,370 | |
Total assets | 2,114,409,852 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 20,446,041 | |
Payable for fund shares redeemed | 3,331,966 | |
Accrued management fee | 932,386 | |
Distribution and service plan fees payable | 179,392 | |
Other affiliated payables | 389,442 | |
Other payables and accrued expenses | 86,389 | |
Collateral on securities loaned, at value | 33,808,395 | |
Total liabilities | 59,174,011 | |
|
|
|
Net Assets | $ 2,055,235,841 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,634,284,846 | |
Distributions in excess of net investment income | (33,066) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (16,317,015) | |
Net unrealized appreciation (depreciation) on investments | 437,301,076 | |
Net Assets | $ 2,055,235,841 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 80.43 | |
|
|
|
Maximum offering price per share (100/94.25 of $80.43) | $ 85.34 | |
Class T: | $ 79.95 | |
|
|
|
Maximum offering price per share (100/96.50 of $79.95) | $ 82.85 | |
Class B: | $ 78.31 | |
|
|
|
Class C: | $ 78.12 | |
|
|
|
Materials: | $ 80.77 | |
|
|
|
Institutional Class: | $ 80.60 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 35,388,475 |
Interest |
| 231,020 |
Income from Fidelity Central Funds |
| 191,178 |
Total income |
| 35,810,673 |
|
|
|
Expenses | ||
Management fee | $ 11,769,676 | |
Transfer agent fees | 4,417,326 | |
Distribution and service plan fees | 2,258,375 | |
Accounting and security lending fees | 653,835 | |
Custodian fees and expenses | 36,379 | |
Independent trustees' compensation | 41,798 | |
Registration fees | 152,825 | |
Audit | 51,208 | |
Legal | 13,438 | |
Interest | 1,074 | |
Miscellaneous | 27,456 | |
Total expenses before reductions | 19,423,390 | |
Expense reductions | (27,900) | 19,395,490 |
Net investment income (loss) | 16,415,183 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,791,589 | |
Other affiliated issuers | 212,549 | |
Foreign currency transactions | (58,451) | |
Redemption in-kind with affiliated entities | 6,050,156 | |
Total net realized gain (loss) |
| 140,995,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (115,354,398) | |
Assets and liabilities in foreign currencies | 2,668 | |
Total change in net unrealized appreciation (depreciation) |
| (115,351,730) |
Net gain (loss) | 25,644,113 | |
Net increase (decrease) in net assets resulting from operations | $ 42,059,296 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 16,415,183 | $ 11,130,072 |
Net realized gain (loss) | 140,995,843 | 105,883,339 |
Change in net unrealized appreciation (depreciation) | (115,351,730) | 227,365,491 |
Net increase (decrease) in net assets resulting from operations | 42,059,296 | 344,378,902 |
Distributions to shareholders from net investment income | (14,132,791) | (9,652,596) |
Distributions to shareholders from net realized gain | (176,045,519) | (36,877,810) |
Total distributions | (190,178,310) | (46,530,406) |
Share transactions - net increase (decrease) | 139,840,860 | 29,379,358 |
Redemption fees | 59,111 | 36,980 |
Total increase (decrease) in net assets | (8,219,043) | 327,264,834 |
|
|
|
Net Assets | ||
Beginning of period | 2,063,454,884 | 1,736,190,050 |
End of period (including distributions in excess of net investment income of $33,066 and distributions in excess of net investment income of $815,927, respectively) | $ 2,055,235,841 | $ 2,063,454,884 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 | $ 52.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .51 | .36 | .70 | .40 | 1.08 F |
Net realized and unrealized gain (loss) | 1.05 | 14.56 | 5.69 | (.35) | 17.40 |
Total from investment operations | 1.56 | 14.92 | 6.39 | .05 | 18.48 |
Distributions from net investment income | (.43) | (.30) | (.63) | (.40) | (1.06) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.01) |
Total distributions | (7.59) J | (1.90) | (2.18) | (.78) | (1.07) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 80.43 | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 |
Total ReturnA, B | 2.20% | 20.46% | 9.40% | .21% | 35.33% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of fee waivers, if any | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of all reductions | 1.06% | 1.09% | 1.12% | 1.13% | 1.15% |
Net investment income (loss) | .61% | .45% | 1.02% | .61% | 1.81% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 319,740 | $ 336,777 | $ 219,627 | $ 157,781 | $ 124,160 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .41%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 | $ 52.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .25 | .12 | .50 | .21 | .90 F |
Net realized and unrealized gain (loss) | 1.06 | 14.48 | 5.66 | (.35) | 17.34 |
Total from investment operations | 1.31 | 14.60 | 6.16 | (.14) | 18.24 |
Distributions from net investment income | (.18) | (.06) | (.46) | (.25) | (.92) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | - |
Total distributions | (7.35) | (1.66) | (2.02) J | (.63) | (.92) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 79.95 | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 |
Total ReturnA, B | 1.90% | 20.10% | 9.10% | (.09)% | 34.98% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of fee waivers, if any | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of all reductions | 1.37% | 1.39% | 1.41% | 1.41% | 1.43% |
Net investment income (loss) | .31% | .15% | .73% | .33% | 1.54% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,252 | $ 45,223 | $ 37,860 | $ 28,290 | $ 25,570 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 | $ 51.86 |
Income from Investment Operations |
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Net investment income (loss) C | (.18) | (.28) | .16 | (.11) | .60 F |
Net realized and unrealized gain (loss) | 1.03 | 14.28 | 5.57 | (.33) | 17.13 |
Total from investment operations | .85 | 14.00 | 5.73 | (.44) | 17.73 |
Distributions from net investment income | - | - | (.10) | - | (.65) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.65) | (.38) | (.65) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.31 | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 |
Total ReturnA, B | 1.35% | 19.50% | 8.55% | (.57)% | 34.29% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of fee waivers, if any | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of all reductions | 1.89% | 1.90% | 1.91% | 1.91% | 1.92% |
Net investment income (loss) | (.22)% | (.36)% | .24% | (.17)% | 1.04% F |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 6,487 | $ 8,671 | $ 10,218 | $ 11,040 | $ 13,507 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 | $ 51.79 |
Income from Investment Operations |
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Net investment income (loss) C | (.12) | (.23) | .18 | (.10) | .61 F |
Net realized and unrealized gain (loss) | 1.03 | 14.23 | 5.55 | (.32) | 17.09 |
Total from investment operations | .91 | 14.00 | 5.73 | (.42) | 17.70 |
Distributions from net investment income | - | - | (.20) | - | (.72) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.75) | (.38) | (.72) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.12 | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 |
Total ReturnA, B | 1.43% | 19.56% | 8.58% | (.55)% | 34.29% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of fee waivers, if any | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of all reductions | 1.82% | 1.84% | 1.88% | 1.89% | 1.92% |
Net investment income (loss) | (.14)% | (.30)% | .26% | (.15)% | 1.04% F |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 107,697 | $ 106,879 | $ 75,007 | $ 58,296 | $ 46,525 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 | $ 52.61 |
Income from Investment Operations |
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Net investment income (loss) B | .73 | .58 | .90 | .60 | 1.25 E |
Net realized and unrealized gain (loss) | 1.05 | 14.63 | 5.71 | (.37) | 17.43 |
Total from investment operations | 1.78 | 15.21 | 6.61 | .23 | 18.68 |
Distributions from net investment income | (.65) | (.48) | (.79) | (.55) | (1.16) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.82) | (2.08) | (2.34) | (.93) | (1.19) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.77 | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 |
Total ReturnA | 2.46% | 20.80% | 9.71% | .49% | 35.70% |
Ratios to Average Net Assets C, F |
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Expenses before reductions | .80% | .82% | .85% | .85% | .88% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .85% | .88% |
Expenses net of all reductions | .80% | .82% | .84% | .84% | .87% |
Net investment income (loss) | .87% | .73% | 1.30% | .90% | 2.10% E |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 1,107,689 | $ 1,231,942 | $ 1,146,782 | $ 1,089,619 | $ 1,195,371 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 | $ 52.58 |
Income from Investment Operations |
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Net investment income (loss) B | .74 | .59 | .90 | .60 | 1.28 E |
Net realized and unrealized gain (loss) | 1.05 | 14.60 | 5.70 | (.36) | 17.40 |
Total from investment operations | 1.79 | 15.19 | 6.60 | .24 | 18.68 |
Distributions from net investment income | (.68) | (.50) | (.83) | (.56) | (1.19) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.85) | (2.10) | (2.38) | (.94) | (1.22) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.60 | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 |
Total ReturnA | 2.49% | 20.81% | 9.71% | .50% | 35.73% |
Ratios to Average Net Assets C, F |
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Expenses before reductions | .78% | .81% | .85% | .84% | .86% |
Expenses net of fee waivers, if any | .78% | .81% | .85% | .84% | .86% |
Expenses net of all reductions | .78% | .81% | .84% | .83% | .85% |
Net investment income (loss) | .89% | .74% | 1.30% | .91% | 2.11% E |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 468,371 | $ 333,963 | $ 246,696 | $ 89,299 | $ 85,130 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, in-kind transactions, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 463,512,190 |
Gross unrealized depreciation | (35,847,823) |
Net unrealized appreciation (depreciation) on securities | $ 427,664,367 |
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Tax Cost | $ 1,660,072,484 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed long term capital gain | $ 895,122 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 427,664,367 |
The fund intends to elect to defer to its next fiscal year $5,660,716 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of prior fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2017 | $ (810,939) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (1,914,714) |
The Fund acquired $1,914,714 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 14,132,791 | $ 10,087,395 |
Long-term Capital Gains | 176,045,519 | 36,443,011 |
Total | $ 190,178,310 | $ 46,530,406 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,614,718,611 and $1,663,229,593, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 838,406 | $ 16,183 |
Class T | .25% | .25% | 228,842 | 240 |
Class B | .75% | .25% | 74,560 | 55,933 |
Class C | .75% | .25% | 1,116,567 | 277,171 |
|
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| $ 2,258,375 | $ 349,527 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 150,405 |
Class T | 11,357 |
Class B* | 7,882 |
Class C* | 25,516 |
| $ 195,160 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 721,024 | .21 |
Class T | 124,541 | .27 |
Class B | 22,340 | .30 |
Class C | 247,956 | .22 |
Materials | 2,468,073 | .21 |
Institutional Class | 833,392 | .19 |
| $ 4,417,326 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $24,808 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,084,733 | .32% | $ 1,074 |
Redemptions In-Kind. During the period, 206,748 shares of the fund held by an affiliated entity were redeemed for investments with a value of $17,590,149. The net realized gain of $6,050,156 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. The Investing Funds delivered cash and investments valued at $22,792,169 in exchange for 267,891 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,260 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $171,277.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $20,813 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Materials expenses during the period in the amount of $7,087.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 1,638,100 | $ 1,076,918 |
Class T | 99,020 | 29,833 |
Materials | 8,803,568 | 6,872,385 |
Institutional Class | 3,592,103 | 1,673,460 |
Total | $ 14,132,791 | $ 9,652,596 |
Annual Report
9. Distributions to Shareholders - continued
Years ended February 28, | 2015 | 2014 |
From net realized gain |
|
|
Class A | $ 27,780,861 | $ 5,762,988 |
Class T | 3,863,168 | 809,850 |
Class B | 628,830 | 165,553 |
Class C | 9,676,799 | 1,915,182 |
Materials | 98,020,822 | 22,724,072 |
Institutional Class | 36,075,039 | 5,500,165 |
Total | $ 176,045,519 | $ 36,877,810 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,287,549 | 1,797,224 | $ 107,992,682 | $ 142,257,752 |
Reinvestment of distributions | 350,058 | 72,401 | 27,494,344 | 5,951,034 |
Shares redeemed | (1,557,532) | (965,142) | (130,043,911) | (75,392,440) |
Net increase (decrease) | 80,075 | 904,483 | $ 5,443,115 | $ 72,816,346 |
Class T |
|
|
|
|
Shares sold | 122,029 | 170,035 | $ 10,167,521 | $ 13,444,901 |
Reinvestment of distributions | 48,608 | 9,678 | 3,794,851 | 792,607 |
Shares redeemed | (130,511) | (172,106) | (10,688,592) | (13,187,903) |
Net increase (decrease) | 40,126 | 7,607 | $ 3,273,780 | $ 1,049,605 |
Class B |
|
|
|
|
Shares sold | 2,935 | 7,873 | $ 242,184 | $ 603,147 |
Reinvestment of distributions | 7,683 | 1,836 | 590,123 | 148,096 |
Shares redeemed | (30,247) | (48,755) | (2,465,575) | (3,688,524) |
Net increase (decrease) | (19,629) | (39,046) | $ (1,633,268) | $ (2,937,281) |
Class C |
|
|
|
|
Shares sold | 367,698 | 450,706 | $ 30,096,831 | $ 34,616,884 |
Reinvestment of distributions | 110,883 | 19,891 | 8,472,087 | 1,600,154 |
Shares redeemed | (366,676) | (246,286) | (29,116,038) | (18,989,979) |
Net increase (decrease) | 111,905 | 224,311 | $ 9,452,880 | $ 17,227,059 |
Materials |
|
|
|
|
Shares sold | 2,411,814 | 3,222,449 | $ 202,615,605 | $ 254,476,294 |
Reinvestment of distributions | 1,274,428 | 341,183 | 100,536,677 | 28,082,183 |
Shares redeemed | (4,164,314) | (4,936,489) | (345,204,286) | (386,209,902) |
Net increase (decrease) | (478,072) | (1,372,857) | $ (42,052,004) | $ (103,651,425) |
Institutional Class |
|
|
|
|
Shares sold | 4,739,071A | 2,646,562 | $ 400,864,210A | $ 209,408,784 |
Reinvestment of distributions | 464,747 | 73,103 | 36,366,289 | 6,019,071 |
Shares redeemed | (3,246,644)B | (2,219,316) | (271,874,142)B | (170,552,801) |
Net increase (decrease) | 1,957,174 | 500,349 | $ 165,356,357 | $ 44,875,054 |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount included in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Telecommunications Fund - Class A, T, B and C
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow. Returns reflect the conversion of Class B shares to Class A shares after a maximum of seven years.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Class A (incl. 5.75% sales charge) A | 5.12% | 11.89% | 7.19% |
Class T (incl. 3.50% sales charge) B | 7.30% | 12.09% | 7.19% |
Class B (incl. contingent deferred sales charge) C | 5.67% | 12.12% | 7.26% |
Class C (incl. contingent deferred sales charge) D | 9.75% | 12.41% | 7.18% |
A Class A shares bear a 0.25% 12b-1 fee. The initial offering of Class A shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
B Class T shares bear a 0.50% 12b-1 fee. The initial offering of Class T shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class T's shares' 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower.
C Class B shares bear a 1.00% 12b-1 fee. The initial offering of Class B shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class B shares' contingent deferred sales charges included in the past one year, past five years, and past ten years total return figures are 5%, 2%, and 0%, respectively.
D Class C shares bear a 1.00% 12b-1 fee. The initial offering of Class C shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund, which has no 12b-1 fee. Had Class C's 12b-1 fee been reflected, returns prior to December 12, 2006, would have been lower. Class C shares' contingent deferred sales charges 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, 2005, and the current 5.75% sales charge was paid. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period. See footnote A for additional information regarding the performance of Class A.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Matthew Drukker, Portfolio Manager of Fidelity Advisor® Telecommunications Portfolio: For the year, the fund's Class A, Class T, Class B and Class C shares rose 11.54%, 11.19%, 10.67% and 10.75%, respectively (excluding sales charges), underperforming the 12.66% gain of the MSCI U.S. IMI Telecommunications Services 25-50 Index and the S&P 500®. Telecom stocks had a strong absolute return, but they lagged the broad market due in part to a decline in consumer spending and a high debt-equity ratio for the sector. Further weighing on the sector were falling net profit margins, given continued competition among major wireless carriers - namely Verizon Communications, Sprint, AT&T and T-Mobile - and rising expenses at firms looking to expand and improve their networks. Despite these negative factors, increased demand for wireless helped support the sector, as did yield-hungry investors attracted to the dividends typically paid by telecom firms. From an industry perspective, the fund's positioning in wireless telecom services hurt the most versus the MSCI index. Looking at individual stocks, the fund's non-index position in U.K.-based Vodafone Group was the biggest relative detractor. The stock stumbled the past year amid the firm's announcement of disappointing fourth-quarter sales and expected declines in 2015 core earnings because of investment spending needed for its business. I sold a significant portion of our holdings in the stock during the period to invest in more-promising opportunities. On the flip side, positioning in alternative carriers was a plus, including an average overweighting in telecom and Internet service provider Level 3 Communications, the fund's biggest contributor and one of its largest holdings. I increased our stake in Level 3 to an overweighting as the period progressed, and its shares rose when the firm acquired competitor tw telecom in October and reported better-than-expected quarterly earnings in November.
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
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, 2014 to February 28, 2015).
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 | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,045.40 | $ 5.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,043.80 | $ 7.45 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.50 | $ 9.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.80 | $ 9.37 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Telecommunications | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.20 | $ 4.16 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.73 | $ 4.11 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.10 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Verizon Communications, Inc. | 19.9 | 23.0 |
AT&T, Inc. | 7.5 | 10.0 |
Level 3 Communications, Inc. | 6.4 | 3.1 |
DIRECTV | 6.4 | 5.2 |
SBA Communications Corp. | 4.3 | 3.4 |
Cogent Communications Group, Inc. | 4.3 | 4.0 |
T-Mobile U.S., Inc. | 4.3 | 4.3 |
CenturyLink, Inc. | 3.3 | 5.6 |
Telephone & Data Systems, Inc. | 3.2 | 3.5 |
Frontier Communications Corp. | 3.0 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Diversified Telecommunication Services | 62.8% |
|
![]() | Wireless Telecommunication Services | 19.8% |
|
![]() | Media | 9.8% |
|
![]() | Real Estate Investment Trusts | 2.7% |
|
![]() | Internet Software & Services | 1.0% |
|
![]() | All Others* | 3.9% |
|
As of August 31, 2014 | |||
![]() | Diversified Telecommunication Services | 67.3% |
|
![]() | Wireless Telecommunication Services | 17.0% |
|
![]() | Media | 8.3% |
|
![]() | Real Estate Investment Trusts | 2.8% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 3.4% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Telecommunications Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.9% | |||
Communications Equipment - 0.9% | |||
Arris Group, Inc. (a) | 42,900 | $ 1,260,402 | |
Ruckus Wireless, Inc. (a) | 151,400 | 1,916,724 | |
| 3,177,126 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 62.3% | |||
Alternative Carriers - 23.2% | |||
8x8, Inc. (a) | 867,186 | 6,425,848 | |
Cogent Communications Group, Inc. | 435,968 | 16,008,745 | |
Globalstar, Inc. (a)(d) | 2,760,500 | 7,122,090 | |
Iliad SA | 15,015 | 3,899,028 | |
inContact, Inc. (a) | 664,423 | 7,780,393 | |
Inmarsat PLC | 80,100 | 1,083,282 | |
Iridium Communications, Inc. (a)(d) | 397,876 | 3,811,652 | |
Level 3 Communications, Inc. (a) | 445,367 | 23,987,467 | |
Lumos Networks Corp. | 439,578 | 7,569,533 | |
Premiere Global Services, Inc. (a) | 416,883 | 4,060,440 | |
Towerstream Corp. (a)(d) | 807,024 | 1,823,874 | |
Vonage Holdings Corp. (a) | 617,271 | 2,802,410 | |
| 86,374,762 | ||
Integrated Telecommunication Services - 39.1% | |||
AT&T, Inc. | 801,550 | 27,701,568 | |
Atlantic Tele-Network, Inc. | 86,900 | 5,981,327 | |
Bezeq The Israel Telecommunication Corp. Ltd. | 1,411,100 | 2,262,889 | |
CenturyLink, Inc. | 321,078 | 12,156,013 | |
Cincinnati Bell, Inc. (a) | 697,514 | 2,336,672 | |
Consolidated Communications Holdings, Inc. | 218,398 | 4,647,509 | |
Frontier Communications Corp. (d) | 1,388,383 | 11,079,296 | |
General Communications, Inc. | 35,596 | 493,717 | |
IDT Corp. Class B | 159,981 | 3,367,600 | |
Telecom Italia SpA (a)(d) | 974,800 | 1,164,980 | |
Verizon Communications, Inc. | 1,500,997 | 74,224,304 | |
Windstream Holdings, Inc. (d) | 1,882 | 14,849 | |
| 145,430,724 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 231,805,486 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Technology Distributors - 0.2% | |||
Ingram Micro, Inc. Class A (a) | 32,200 | 795,662 | |
INTERNET SOFTWARE & SERVICES - 1.0% | |||
Internet Software & Services - 1.0% | |||
Gogo, Inc. (a)(d) | 95,700 | 1,720,686 | |
Rackspace Hosting, Inc. (a) | 42,300 | 2,101,041 | |
| 3,821,727 | ||
| |||
Shares | Value | ||
IT SERVICES - 0.9% | |||
IT Consulting & Other Services - 0.9% | |||
Interxion Holding N.V. (a) | 100,100 | $ 3,190,187 | |
MEDIA - 9.8% | |||
Cable & Satellite - 9.8% | |||
DIRECTV (a) | 270,000 | 23,922,000 | |
Liberty Global PLC Class C | 31,636 | 1,650,450 | |
Time Warner Cable, Inc. | 71,500 | 11,014,575 | |
| 36,587,025 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.7% | |||
Office REITs - 0.1% | |||
CyrusOne, Inc. | 18,300 | 543,876 | |
Specialized REITs - 2.6% | |||
American Tower Corp. | 86,590 | 8,584,533 | |
Crown Castle International Corp. | 11,600 | 1,001,196 | |
| 9,585,729 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 10,129,605 | ||
SOFTWARE - 0.7% | |||
Application Software - 0.6% | |||
Comverse, Inc. (a) | 47,900 | 859,326 | |
Interactive Intelligence Group, Inc. (a) | 30,700 | 1,302,908 | |
| 2,162,234 | ||
Systems Software - 0.1% | |||
Rovi Corp. (a) | 25,600 | 636,928 | |
TOTAL SOFTWARE | 2,799,162 | ||
WIRELESS TELECOMMUNICATION SERVICES - 19.5% | |||
Wireless Telecommunication Services - 19.5% | |||
Bharti Infratel Ltd. | 379,493 | 2,262,781 | |
KDDI Corp. | 48,400 | 3,354,115 | |
Leap Wireless International, Inc. rights (a) | 400 | 1,008 | |
Mobistar SA (a) | 200 | 4,715 | |
NTELOS Holdings Corp. | 88 | 398 | |
RingCentral, Inc. (a) | 247,300 | 3,899,921 | |
SBA Communications Corp. Class A (a) | 129,456 | 16,144,458 | |
Shenandoah Telecommunications Co. | 66,626 | 1,938,150 | |
SoftBank Corp. | 62,000 | 3,829,158 | |
Sprint Corp. (a)(d) | 1,149,685 | 5,886,387 | |
T-Mobile U.S., Inc. (a) | 480,197 | 15,860,907 | |
Telephone & Data Systems, Inc. | 466,964 | 11,879,564 | |
U.S. Cellular Corp. (a) | 55,900 | 2,120,287 | |
Vodafone Group PLC sponsored ADR | 161,300 | 5,574,528 | |
| 72,756,377 | ||
TOTAL COMMON STOCKS (Cost $300,622,254) |
| ||
Nonconvertible Preferred Stocks - 0.8% | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||
Integrated Telecommunication Services - 0.5% | |||
Telefonica Brasil SA sponsored ADR (d) | 87,000 | $ 1,612,980 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
TIM Participacoes SA sponsored ADR | 57,300 | 1,207,884 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $3,366,705) |
| ||
Money Market Funds - 8.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 2,667,472 | 2,667,472 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 28,288,110 | 28,288,110 | |
TOTAL MONEY MARKET FUNDS (Cost $30,955,582) |
|
TOTAL INVESTMENT PORTFOLIO - 107.1% (Cost $334,944,541) | 398,838,803 | |
NET OTHER ASSETS (LIABILITIES) - (7.1)% | (26,529,439) | |
NET ASSETS - 100% | $ 372,309,364 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,724 |
Fidelity Securities Lending Cash Central Fund | 241,214 |
Total | $ 247,938 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 365,062,357 | $ 360,067,211 | $ 4,994,138 | $ 1,008 |
Nonconvertible Preferred Stocks | 2,820,864 | 2,820,864 | - | - |
Money Market Funds | 30,955,582 | 30,955,582 | - | - |
Total Investments in Securities: | $ 398,838,803 | $ 393,843,657 | $ 4,994,138 | $ 1,008 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
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|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,251,018) - See accompanying schedule: Unaffiliated issuers (cost $303,988,959) | $ 367,883,221 |
|
Fidelity Central Funds (cost $30,955,582) | 30,955,582 |
|
Total Investments (cost $334,944,541) |
| $ 398,838,803 |
Receivable for investments sold | 5,117,986 | |
Receivable for fund shares sold | 262,644 | |
Dividends receivable | 169,798 | |
Distributions receivable from Fidelity Central Funds | 30,499 | |
Prepaid expenses | 1,685 | |
Other receivables | 12,404 | |
Total assets | 404,433,819 | |
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|
|
Liabilities | ||
Payable for investments purchased | $ 2,377,669 | |
Payable for fund shares redeemed | 1,164,103 | |
Accrued management fee | 170,813 | |
Distribution and service plan fees payable | 10,377 | |
Other affiliated payables | 72,823 | |
Other payables and accrued expenses | 40,560 | |
Collateral on securities loaned, at value | 28,288,110 | |
Total liabilities | 32,124,455 | |
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|
|
Net Assets | $ 372,309,364 | |
Net Assets consist of: |
| |
Paid in capital | $ 314,390,827 | |
Undistributed net investment income | 262,486 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,235,407) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 63,891,458 | |
Net Assets | $ 372,309,364 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
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|
Calculation of Maximum Offering Price Class A: | $ 63.26 | |
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Maximum offering price per share (100/94.25 of $63.26) | $ 67.12 | |
Class T: | $ 63.04 | |
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Maximum offering price per share (100/96.50 of $63.04) | $ 65.33 | |
Class B: | $ 63.45 | |
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Class C: | $ 63.04 | |
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Telecommunications: | $ 63.54 | |
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Institutional Class: | $ 63.38 |
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, 2015 | |
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|
|
Investment Income |
|
|
Dividends |
| $ 9,359,019 |
Income from Fidelity Central Funds |
| 247,938 |
Total income |
| 9,606,957 |
|
|
|
Expenses | ||
Management fee | $ 2,193,042 | |
Transfer agent fees | 811,199 | |
Distribution and service plan fees | 113,904 | |
Accounting and security lending fees | 159,536 | |
Custodian fees and expenses | 20,266 | |
Independent trustees' compensation | 7,823 | |
Registration fees | 81,435 | |
Audit | 44,165 | |
Legal | 3,236 | |
Interest | 466 | |
Miscellaneous | 5,823 | |
Total expenses before reductions | 3,440,895 | |
Expense reductions | (27,807) | 3,413,088 |
Net investment income (loss) | 6,193,869 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,972,473 | |
Redemption in-kind with affiliated entities | 2,885,287 | |
Foreign currency transactions | (28,453) | |
Total net realized gain (loss) |
| 7,829,307 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 28,385,962 | |
Assets and liabilities in foreign currencies | 1,342 | |
Total change in net unrealized appreciation (depreciation) |
| 28,387,304 |
Net gain (loss) | 36,216,611 | |
Net increase (decrease) in net assets resulting from operations | $ 42,410,480 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 6,193,869 | $ 14,968,972 |
Net realized gain (loss) | 7,829,307 | 2,159,537 |
Change in net unrealized appreciation (depreciation) | 28,387,304 | 48,829,048 |
Net increase (decrease) in net assets resulting from operations | 42,410,480 | 65,957,557 |
Distributions to shareholders from net investment income | (13,679,321) | (8,506,759) |
Distributions to shareholders from net realized gain | - | (32,511) |
Total distributions | (13,679,321) | (8,539,270) |
Share transactions - net increase (decrease) | (19,703,086) | (90,264,976) |
Redemption fees | 3,706 | 26,413 |
Total increase (decrease) in net assets | 9,031,779 | (32,820,276) |
|
|
|
Net Assets | ||
Beginning of period | 363,277,585 | 396,097,861 |
End of period (including undistributed net investment income of $262,486 and undistributed net investment income of $7,778,471, respectively) | $ 372,309,364 | $ 363,277,585 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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|
|
Net asset value, beginning of period | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 | $ 37.64 |
Income from Investment Operations |
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|
|
Net investment income (loss) C | .76 | 1.76F | .99 | .56 | .57 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.43 | (.86) | 9.49 |
Total from investment operations | 6.59 | 8.24 | 6.42 | (.30) | 10.06 |
Distributions from net investment income | (2.04) | (1.11) | (.96) | (.51) | (.77) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.04) | (1.11) J | (.96) | (.51) | (.77) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.26 | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 |
Total ReturnA, B | 11.54% | 16.00% | 13.97% | (.54)% | 26.87% |
Ratios to Average Net Assets D, G |
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|
Expenses before reductions | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of fee waivers, if any | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of all reductions | 1.15% | 1.15% | 1.17% | 1.18% | 1.18% |
Net investment income (loss) | 1.26% | 3.08% F | 2.01% | 1.21% | 1.35% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 11,052 | $ 7,712 | $ 6,449 | $ 4,677 | $ 4,305 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.43%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 | $ 37.55 |
Income from Investment Operations |
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Net investment income (loss) C | .57 | 1.59F | .85 | .42 | .45 |
Net realized and unrealized gain (loss) | 5.81 | 6.44 | 5.39 | (.84) | 9.47 |
Total from investment operations | 6.38 | 8.03 | 6.24 | (.42) | 9.92 |
Distributions from net investment income | (1.84) | (.94) | (.84) | (.38) | (.66) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.84) | (.94) J | (.84) | (.38) | (.66) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 |
Total ReturnA, B | 11.19% | 15.64% | 13.61% | (.82)% | 26.54% |
Ratios to Average Net Assets D, G |
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|
Expenses before reductions | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of fee waivers, if any | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of all reductions | 1.46% | 1.45% | 1.46% | 1.47% | 1.46% |
Net investment income (loss) | .94% | 2.78% F | 1.72% | .92% | 1.06% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 5,095 | $ 4,344 | $ 4,237 | $ 2,702 | $ 2,882 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.13%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 | $ 37.60 |
Income from Investment Operations |
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Net investment income (loss) C | .29 | 1.33F | .62 | .21 | .25 |
Net realized and unrealized gain (loss) | 5.84 | 6.48 | 5.42 | (.83) | 9.48 |
Total from investment operations | 6.13 | 7.81 | 6.04 | (.62) | 9.73 |
Distributions from net investment income | (1.45) | (.66) | (.55) | (.17) | (.40) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.45) | (.67) | (.55) | (.17) | (.40) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.45 | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 |
Total ReturnA, B | 10.67% | 15.13% | 13.11% | (1.29)% | 25.96% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of all reductions | 1.92% | 1.91% | 1.92% | 1.93% | 1.93% |
Net investment income (loss) | .49% | 2.32% F | 1.26% | .47% | .60% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 409 | $ 546 | $ 576 | $ 596 | $ 706 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .67%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
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|
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Net asset value, beginning of period | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 | $ 37.61 |
Income from Investment Operations |
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Net investment income (loss) C | .34 | 1.36F | .63 | .22 | .26 |
Net realized and unrealized gain (loss) | 5.80 | 6.46 | 5.41 | (.84) | 9.46 |
Total from investment operations | 6.14 | 7.82 | 6.04 | (.62) | 9.72 |
Distributions from net investment income | (1.64) | (.74) | (.59) | (.25) | (.44) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.64) | (.75) | (.59) | (.25) | (.44) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 |
Total ReturnA, B | 10.75% | 15.20% | 13.14% | (1.27)% | 25.95% |
Ratios to Average Net Assets D, G |
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Expenses before reductions | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of fee waivers, if any | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of all reductions | 1.85% | 1.85% | 1.89% | 1.91% | 1.92% |
Net investment income (loss) | .56% | 2.38% F | 1.29% | .48% | .61% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 7,074 | $ 5,523 | $ 4,353 | $ 3,514 | $ 3,035 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .73%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
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Net asset value, beginning of period | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 | $ 37.73 |
Income from Investment Operations |
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|
|
Net investment income (loss) B | .96 | 1.96E | 1.15 | .70 | .69 |
Net realized and unrealized gain (loss) | 5.85 | 6.51 | 5.43 | (.86) | 9.52 |
Total from investment operations | 6.81 | 8.47 | 6.58 | (.16) | 10.21 |
Distributions from net investment income | (2.21) | (1.28) | (1.09) | (.65) | (.87) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.21) | (1.28) I | (1.09) | (.65) | (.87) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.54 | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 |
Total ReturnA | 11.90% | 16.40% | 14.30% | (.23)% | 27.24% |
Ratios to Average Net Assets C, F |
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Expenses before reductions | .83% | .85% | .87% | .90% | .92% |
Expenses net of fee waivers, if any | .83% | .85% | .87% | .90% | .92% |
Expenses net of all reductions | .82% | .82% | .85% | .88% | .91% |
Net investment income (loss) | 1.58% | 3.41% E | 2.33% | 1.52% | 1.62% |
Supplemental Data |
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Net assets, end of period (000 omitted) | $ 346,174 | $ 343,548 | $ 377,841 | $ 342,262 | $ 354,938 |
Portfolio turnover rateD | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.76%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. ITotal distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
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|
|
|
|
Net asset value, beginning of period | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 | $ 37.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .94 | 1.93E | 1.17 | .70 | .71 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.42 | (.88) | 9.50 |
Total from investment operations | 6.77 | 8.41 | 6.59 | (.18) | 10.21 |
Distributions from net investment income | (2.19) | (1.25) | (1.14) | (.64) | (.88) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.19) | (1.26) | (1.14) | (.64) | (.88) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.38 | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 |
Total ReturnA | 11.85% | 16.30% | 14.33% | (.26)% | 27.27% |
Ratios to Average Net Assets C, F |
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|
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|
|
Expenses before reductions | .86% | .91% | .85% | .89% | .91% |
Expenses net of fee waivers, if any | .86% | .91% | .85% | .89% | .91% |
Expenses net of all reductions | .85% | .88% | .83% | .87% | .89% |
Net investment income (loss) | 1.55% | 3.35% E | 2.35% | 1.52% | 1.64% |
Supplemental Data |
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|
|
|
|
Net assets, end of period (000 omitted) | $ 2,505 | $ 1,604 | $ 2,641 | $ 1,022 | $ 1,743 |
Portfolio turnover rateD | 94% I | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transaction, in-kind transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 67,489,038 |
Gross unrealized depreciation | (5,485,717) |
Net unrealized appreciation (depreciation) on securities | $ 62,003,321 |
|
|
Tax Cost | $ 336,835,482 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 262,994 |
Capital loss carryforward | $ (2,739,258) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 62,000,362 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2018 | $ (2,739,258) |
The Fund elected to defer to its next fiscal year approximately $1,605,208 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 13,679,321 | $ 8,539,270 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $369,250,039 and $374,869,443, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 23,518 | $ 1,136 |
Class T | .25% | .25% | 24,040 | 2 |
Class B | .75% | .25% | 4,565 | 3,425 |
Class C | .75% | .25% | 61,781 | 12,901 |
|
|
| $ 113,904 | $ 17,464 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 12,354 |
Class T | 3,257 |
Class B* | 41 |
Class C* | 721 |
| $ 16,373 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 25,757 | .27 |
Class T | 16,249 | .34 |
Class B | 1,364 | .30 |
Class C | 13,731 | .22 |
Telecommunications | 749,337 | .20 |
Institutional Class | 4,761 | .23 |
| $ 811,199 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $16,650 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,435,667 | .33% | $ 466 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 198,779 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $12,187,185. The net realized gain of $2,885,287 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $615 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $241,214.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $27,389 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Telecommunications expenses during the period in the amount of $418.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 309,863 | $ 137,021 |
Class T | 143,116 | 71,145 |
Class B | 12,248 | 6,457 |
Class C | 161,299 | 68,251 |
Telecommunications | 12,985,170 | 8,194,747 |
Institutional Class | 67,625 | 29,138 |
Total | $ 13,679,321 | $ 8,506,759 |
From net realized gain |
|
|
Class A | $ - | $ 617 |
Class T | - | 373 |
Class B | - | 48 |
Class C | - | 466 |
Telecommunications | - | 30,889 |
Institutional Class | - | 118 |
Total | $ - | $ 32,511 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 79,279 | 62,389 | $ 4,786,534 | $ 3,565,235 |
Reinvestment of distributions | 5,091 | 2,113 | 297,550 | 123,157 |
Shares redeemed | (41,031) | (58,169) | (2,466,354) | (3,308,571) |
Net increase (decrease) | 43,339 | 6,333 | $ 2,617,730 | $ 379,821 |
Class T |
|
|
|
|
Shares sold | 20,637 | 23,341 | $ 1,237,395 | $ 1,331,922 |
Reinvestment of distributions | 2,409 | 1,193 | 139,987 | 69,243 |
Shares redeemed | (16,465) | (32,706) | (994,017) | (1,852,992) |
Net increase (decrease) | 6,581 | (8,172) | $ 383,365 | $ (451,827) |
Class B |
|
|
|
|
Shares sold | 45 | 135 | $ 2,624 | $ 7,819 |
Reinvestment of distributions | 197 | 103 | 11,445 | 6,030 |
Shares redeemed | (3,091) | (2,095) | (186,477) | (116,496) |
Net increase (decrease) | (2,849) | (1,857) | $ (172,408) | $ (102,647) |
Class C |
|
|
|
|
Shares sold | 28,734 | 31,217 | $ 1,731,696 | $ 1,769,477 |
Reinvestment of distributions | 2,043 | 819 | 118,683 | 47,679 |
Shares redeemed | (12,919) | (22,263) | (773,747) | (1,264,412) |
Net increase (decrease) | 17,858 | 9,773 | $ 1,076,632 | $ 552,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,400,370 | 3,045,047 | $ 205,982,254 | $ 171,993,078 |
Reinvestment of distributions | 212,695 | 136,279 | 12,494,070 | 7,951,397 |
Shares redeemed | (3,993,893)A | (4,653,020) | (242,841,980)A | (269,388,514) |
Net increase (decrease) | (380,828) | (1,471,694) | $ (24,365,656) | $ (89,444,039) |
Institutional Class |
|
|
|
|
Shares sold | 29,046 | 22,305 | $ 1,764,278 | $ 1,294,531 |
Reinvestment of distributions | 956 | 405 | 56,138 | 23,701 |
Shares redeemed | (17,754) | (46,560) | (1,063,165) | (2,517,260) |
Net increase (decrease) | 12,248 | (23,850) | $ 757,251 | $ (1,199,028) |
A Amount includes in-kind redemptions (See note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Strategic Advisers Core Fund was the owner of record of approximately 18% of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 20% of the total outstanding shares of the Fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial position of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, the results of each of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/13/15 | 04/10/15 | $0.178 | $3.152 |
Class T | 04/13/15 | 04/10/15 | $0.134 | $3.152 |
Class B | 04/13/15 | 04/10/15 | $0.033 | $3.152 |
Class C | 04/13/15 | 04/10/15 | $0.064 | $3.152 |
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Class T | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Class B | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Class C | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
Class T | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
Class B | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
Class C | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Class A | 04/13/15 | 04/10/15 | $0.022 | $0.000 |
Class T | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Class B | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Class C | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 2015, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Consumer Staples Portfolio | $112,892,370 |
Materials Portfolio | $141,502,281 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends-received deduction for corporate shareholders:
| April 2014 | December 2014 |
Consumer Staples Portfolio |
|
|
Class A | 85% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Gold Portfolio |
|
|
Class A | 0% | 0% |
Class T | 0% | 0% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 0% | 0% |
Class C | 0% | 0% |
| April 2014 | December 2014 |
Telecommunications Portfolio |
|
|
Class A | 21% | 100% |
Class T | 21% | 100% |
Class B | 22% | 100% |
Class C | 22% | 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 2014 | December 2014 |
Consumer Staples Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
Gold Portfolio |
|
|
Class A | 0% | 0% |
Class T | 0% | 0% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Materials Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 0% | 0% |
Class C | 0% | 0% |
Telecommunications Portfolio |
|
|
Class A | 100% | 100% |
Class T | 100% | 100% |
Class B | 100% | 100% |
Class C | 100% | 100% |
The fund will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Consumer Staples Portfolio and Telecommunications Portfolio each underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Consumer Staples Portfolio
Gold Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Materials Portfolio
Telecommunications Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of the total expense ratio of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
For each of Consumer Staples Portfolio, Gold Portfolio, and Materials Portfolio, the Board noted that the total expense ratio of each class ranked below its competitive median for the 12-month period ended June 30, 2014.
Annual Report
The Board noted that the total expense ratio of each of Class A, Class B, Class C, Institutional Class, and the retail class of Telecommunications Portfolio ranked below its competitive median for the 12-month period ended June 30, 2014 and the total expense ratio of Class T ranked above its competitive median for the 12-month period ended June 30, 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T as compared to most competitor funds. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that, although the expense ratio of Class T of Telecommunications Portfolio was above the median of the universe presented for comparison, the total expense ratio of each class of each fund was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
245 Summer St., Boston, MA 02210
www.fidelity.com
ASGMT-UANN-0415
1.845779.108
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, 2015
(Fidelity Cover Art)
Contents
Fidelity Advisor® Consumer Staples Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Gold Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Consolidated Investment Changes | |
| Consolidated Investments | |
| Consolidated Financial Statements | |
| Notes to the Consolidated Financial Statements | |
Fidelity Advisor Materials Fund | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Fidelity Advisor Telecommunications Fund | 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 |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Fidelity Advisor® Consumer Staples Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 22.26% | 15.89% | 11.69% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Consumer Staples Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund was named Food and Agriculture Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance 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, 2005. 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. See footnote A for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Robert Lee, Portfolio Manager of Fidelity Advisor® Consumer Staples Fund: For the year, the fund's Institutional Class shares returned 22.26%, outperforming the 21.28% gain of its sector benchmark, the MSCI U.S. IMI Consumer Staples 25-50 Index, and the S&P 500®. The sector put up a strong absolute return and outpaced the broader market, as long-term trends supported continued growth in consumer staples sales, even amid an increasingly challenging global macroeconomic backdrop. In addition, many companies remained focused on cost cutting, which helped account for decent earnings results, while merger-and-acquisition activity among a handful of names added a bit of a spark. Versus the MSCI index, food retail was a sweet spot for the fund the past year, with grocer Kroger by far our biggest contributor and one of our largest holdings. Shares of the grocery and retail giant steadily rose during the period, as consumers continued to gravitate toward its customer-friendly stores, which boasted a bevy of locations and discounted private-label goods. As a result, the company reported consecutive quarters of better-than-expected sales and earnings growth, including expanding revenue and profits. Whole Foods Market was another winner in this space, due to timely ownership. Elsewhere, Monster Beverage, which I added to the fund during the year, helped. The fund was overweighted the energy-drink manufacturer when its shares soared in August after beverage giant Coca-Cola acquired a 17% stake in the firm. As part of the new partnership, Coca-Cola transferred its energy drink lineup to Monster in exchange for Monster's non-energy drink business, to include its natural soft drinks and juices. The exchange gave Monster an immediate sales boost and expanded international presence. Additionally, the firm launched new energy products late in 2014, and it plans to expand its lineup and international expansion in 2015. On the flip side, the fund's stake in British American Tobacco (BAT), our largest position, hurt. Slowing sales of BAT's cigarette brands, driven lower by a shaky global economy that has limited consumer spending in some markets, as well as heightened competition from e-cigarette makers, caused the stock to decline. Stock selection in distillers & vintners also hurt, including non-index stakes in the U.K.'s Diageo and French firms Pernod Ricard and Remy Cointreau. Cognac had been a popular gift for Chinese government officials prior to 2013, but the category took a hit last year amid the country's crackdown on corruption that banned lavish gifts, including high-end spirits, for civil servants. This weighed on the earnings and sales of all three firms over the year. I sold Pernod from the fund by period end. Of note, the fund's cash position also hindered our relative result amid a strong market, as did some of its foreign investments due to an appreciating dollar.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer 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, 2014 to February 28, 2015).
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 | 1.05% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,106.30 | $ 5.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.59 | $ 5.26 |
Class T | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,104.80 | $ 6.89 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.25 | $ 6.61 |
Class B | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.10 | $ 9.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Class C | 1.80% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.20 | $ 9.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.87 | $ 9.00 |
Consumer Staples | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.02 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
Institutional Class | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.13 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
British American Tobacco PLC sponsored ADR | 11.0 | 11.7 |
Procter & Gamble Co. | 9.1 | 8.8 |
CVS Health Corp. | 9.0 | 7.5 |
Wal-Mart Stores, Inc. | 7.0 | 4.6 |
Kroger Co. | 6.0 | 4.9 |
The Coca-Cola Co. | 4.8 | 11.5 |
Mead Johnson Nutrition Co. | 4.5 | 4.0 |
Lorillard, Inc. | 4.3 | 1.2 |
PepsiCo, Inc. | 4.2 | 2.5 |
Colgate-Palmolive Co. | 3.0 | 1.8 |
| 62.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Food & Staples Retailing | 26.7% |
|
![]() | Tobacco | 19.7% |
|
![]() | Beverages | 18.8% |
|
![]() | Food Products | 16.7% |
|
![]() | Household Products | 12.3% |
|
![]() | All Others* | 5.8% |
|
As of August 31, 2014 | |||
![]() | Beverages | 25.7% |
|
![]() | Food & Staples Retailing | 22.4% |
|
![]() | Tobacco | 20.4% |
|
![]() | Food Products | 14.9% |
|
![]() | Household Products | 10.8% |
|
![]() | All Others* | 5.8% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.4% | |||
Shares | Value | ||
BEVERAGES - 18.6% | |||
Brewers - 2.9% | |||
Anheuser-Busch InBev SA NV | 367,590 | $ 46,632,487 | |
SABMiller PLC | 799,384 | 45,354,240 | |
| 91,986,727 | ||
Distillers & Vintners - 2.5% | |||
C&C Group PLC | 1,359,200 | 5,872,630 | |
Diageo PLC sponsored ADR | 384,326 | 45,677,145 | |
Remy Cointreau SA (d) | 359,676 | 26,415,775 | |
| 77,965,550 | ||
Soft Drinks - 13.2% | |||
Coca-Cola Bottling Co. Consolidated | 135,295 | 14,123,445 | |
Coca-Cola Central Japan Co. Ltd. | 450,500 | 7,931,060 | |
Coca-Cola FEMSA S.A.B. de CV sponsored ADR (d) | 52,529 | 4,533,253 | |
Coca-Cola Icecek Sanayi A/S | 567,162 | 11,021,305 | |
Embotelladora Andina SA: | |||
ADR | 376,112 | 5,205,390 | |
sponsored ADR | 188,900 | 3,141,407 | |
Fomento Economico Mexicano S.A.B. de CV sponsored ADR (a) | 87,387 | 8,324,486 | |
Monster Beverage Corp. (a) | 522,900 | 73,791,648 | |
PepsiCo, Inc. | 1,321,623 | 130,814,245 | |
The Coca-Cola Co. | 3,485,118 | 150,905,609 | |
| 409,791,848 | ||
TOTAL BEVERAGES | 579,744,125 | ||
BIOTECHNOLOGY - 0.1% | |||
Biotechnology - 0.1% | |||
Enzymotec Ltd. (a) | 507,078 | 4,183,394 | |
CHEMICALS - 0.1% | |||
Specialty Chemicals - 0.1% | |||
Senomyx, Inc. (a)(d) | 422,200 | 2,246,104 | |
FOOD & STAPLES RETAILING - 26.7% | |||
Drug Retail - 9.2% | |||
CVS Health Corp. | 2,693,976 | 279,823,287 | |
Drogasil SA (a) | 634,100 | 6,366,129 | |
| 286,189,416 | ||
Food Distributors - 0.9% | |||
Chefs' Warehouse Holdings (a) | 412,669 | 8,360,674 | |
United Natural Foods, Inc. (a) | 247,081 | 20,517,606 | |
| 28,878,280 | ||
Food Retail - 8.7% | |||
Fresh Market, Inc. (a)(d) | 413,324 | 15,731,111 | |
Kroger Co. | 2,638,018 | 187,694,981 | |
Sprouts Farmers Market LLC (a) | 312,929 | 11,518,916 | |
Whole Foods Market, Inc. | 980,100 | 55,365,849 | |
| 270,310,857 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 7.9% | |||
Costco Wholesale Corp. | 190,350 | $ 27,973,836 | |
Wal-Mart Stores, Inc. | 2,577,756 | 216,351,061 | |
| 244,324,897 | ||
TOTAL FOOD & STAPLES RETAILING | 829,703,450 | ||
FOOD PRODUCTS - 16.7% | |||
Agricultural Products - 4.6% | |||
Archer Daniels Midland Co. | 1,129,316 | 54,071,650 | |
Bunge Ltd. | 999,813 | 81,764,707 | |
SLC Agricola SA | 1,281,200 | 6,232,804 | |
| 142,069,161 | ||
Packaged Foods & Meats - 12.1% | |||
Dean Foods Co. | 969,979 | 15,636,061 | |
General Mills, Inc. | 1,287,100 | 69,233,109 | |
Inner Mongoli Yili Industries Co. Ltd. | 1,222,221 | 5,505,219 | |
Keurig Green Mountain, Inc. | 543,483 | 69,337,561 | |
Lindt & Spruengli AG | 90 | 5,864,373 | |
Mead Johnson Nutrition Co. Class A | 1,336,416 | 140,002,940 | |
Nestle SA | 385,109 | 30,097,732 | |
The Hain Celestial Group, Inc. (a) | 334,978 | 20,946,174 | |
Ulker Biskuvi Sanayi A/S | 820,525 | 6,361,546 | |
Unilever NV (NY Reg.) | 339,798 | 14,771,019 | |
| 377,755,734 | ||
TOTAL FOOD PRODUCTS | 519,824,895 | ||
HOTELS, RESTAURANTS & LEISURE - 1.5% | |||
Restaurants - 1.5% | |||
ARAMARK Holdings Corp. | 1,444,628 | 45,722,476 | |
HOUSEHOLD DURABLES - 0.4% | |||
Household Appliances - 0.2% | |||
SodaStream International Ltd. (a)(d) | 240,515 | 4,310,029 | |
Housewares & Specialties - 0.2% | |||
Tupperware Brands Corp. | 94,600 | 6,754,440 | |
TOTAL HOUSEHOLD DURABLES | 11,064,469 | ||
HOUSEHOLD PRODUCTS - 12.3% | |||
Household Products - 12.3% | |||
Colgate-Palmolive Co. | 1,341,075 | 94,974,932 | |
Procter & Gamble Co. | 3,324,865 | 283,045,757 | |
Svenska Cellulosa AB (SCA) (B Shares) | 257,500 | 6,405,841 | |
| 384,426,530 | ||
PERSONAL PRODUCTS - 1.9% | |||
Personal Products - 1.9% | |||
Herbalife Ltd. | 428,610 | 13,291,196 | |
L'Oreal SA | 181,900 | 33,026,830 | |
Nu Skin Enterprises, Inc. Class A (d) | 216,667 | 11,739,018 | |
| 58,057,044 | ||
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - 0.2% | |||
Pharmaceuticals - 0.2% | |||
Perrigo Co. PLC | 37,306 | $ 5,762,658 | |
TEXTILES, APPAREL & LUXURY GOODS - 0.2% | |||
Textiles - 0.2% | |||
Japan Tobacco, Inc. | 251,700 | 7,936,572 | |
TOBACCO - 19.7% | |||
Tobacco - 19.7% | |||
Altria Group, Inc. | 1,263,045 | 71,096,803 | |
British American Tobacco PLC sponsored ADR | 2,931,545 | 341,437,048 | |
ITC Ltd. (a) | 1,820,070 | 11,621,381 | |
Lorillard, Inc. | 1,985,503 | 135,848,115 | |
Philip Morris International, Inc. | 476,158 | 39,502,068 | |
Souza Cruz SA | 1,603,500 | 14,324,882 | |
| 613,830,297 | ||
TOTAL COMMON STOCKS (Cost $2,170,373,161) |
| ||
Nonconvertible Preferred Stocks - 0.2% | |||
|
|
|
|
BEVERAGES - 0.2% | |||
Brewers - 0.2% | |||
Ambev SA sponsored ADR | 923,810 |
| |
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.13% (b) | 23,231,539 | $ 23,231,539 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 29,423,466 | 29,423,466 | |
TOTAL MONEY MARKET FUNDS (Cost $52,655,005) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $2,225,337,178) | 3,121,115,594 | ||
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (9,018,217) | ||
NET ASSETS - 100% | $ 3,112,097,377 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 77,785 |
Fidelity Securities Lending Cash Central Fund | 366,992 |
Total | $ 444,777 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section at the end of this listing. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 3,062,502,014 | $ 2,985,771,795 | $ 76,730,219 | $ - |
Nonconvertible Preferred Stocks | 5,958,575 | 5,958,575 | - | - |
Money Market Funds | 52,655,005 | 52,655,005 | - | - |
Total Investments in Securities: | $ 3,121,115,594 | $ 3,044,385,375 | $ 76,730,219 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 73.8% |
United Kingdom | 13.9% |
Bermuda | 2.6% |
France | 1.9% |
Belgium | 1.5% |
Switzerland | 1.1% |
Brazil | 1.0% |
Others (Individually Less Than 1%) | 4.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,392,984) - See accompanying schedule: Unaffiliated issuers (cost $2,172,682,173) | $ 3,068,460,589 |
|
Fidelity Central Funds (cost $52,655,005) | 52,655,005 |
|
Total Investments (cost $2,225,337,178) |
| $ 3,121,115,594 |
Receivable for investments sold | 31,872,606 | |
Receivable for fund shares sold | 4,689,917 | |
Dividends receivable | 3,822,729 | |
Distributions receivable from Fidelity Central Funds | 22,132 | |
Prepaid expenses | 9,071 | |
Other receivables | 47,028 | |
Total assets | 3,161,579,077 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,312,834 | |
Payable for fund shares redeemed | 3,358,162 | |
Accrued management fee | 1,406,922 | |
Distribution and service plan fees payable | 314,215 | |
Other affiliated payables | 520,163 | |
Other payables and accrued expenses | 145,938 | |
Collateral on securities loaned, at value | 29,423,466 | |
Total liabilities | 49,481,700 | |
|
|
|
Net Assets | $ 3,112,097,377 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,123,703,221 | |
Undistributed net investment income | 5,947,947 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 86,712,312 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 895,733,897 | |
Net Assets | $ 3,112,097,377 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 101.33 | |
|
|
|
Maximum offering price per share (100/94.25 of $101.33) | $ 107.51 | |
Class T: | $ 100.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $100.61) | $ 104.26 | |
Class B: | $ 100.13 | |
|
|
|
Class C: | $ 99.27 | |
|
|
|
Consumer Staples: | $ 102.03 | |
|
|
|
Institutional Class: | $ 101.91 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 63,157,453 |
Income from Fidelity Central Funds |
| 444,777 |
Total income |
| 63,602,230 |
|
|
|
Expenses | ||
Management fee | $ 14,005,834 | |
Transfer agent fees | 4,714,815 | |
Distribution and service plan fees | 3,266,375 | |
Accounting and security lending fees | 767,701 | |
Custodian fees and expenses | 94,879 | |
Independent trustees' compensation | 47,435 | |
Registration fees | 182,600 | |
Audit | 51,473 | |
Legal | 12,495 | |
Miscellaneous | 38,709 | |
Total expenses before reductions | 23,182,316 | |
Expense reductions | (12,904) | 23,169,412 |
Net investment income (loss) | 40,432,818 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,877,861 | |
Redemptions in-kind with affiliated entities | 20,812,198 | |
Foreign currency transactions | (31,090) | |
Total net realized gain (loss) |
| 155,658,969 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $13,239) | 315,419,939 | |
Assets and liabilities in foreign currencies | (37,629) | |
Total change in net unrealized appreciation (depreciation) |
| 315,382,310 |
Net gain (loss) | 471,041,279 | |
Net increase (decrease) in net assets resulting from operations | $ 511,474,097 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 40,432,818 | $ 41,894,781 |
Net realized gain (loss) | 155,658,969 | 171,640,518 |
Change in net unrealized appreciation (depreciation) | 315,382,310 | 26,588,951 |
Net increase (decrease) in net assets resulting from operations | 511,474,097 | 240,124,250 |
Distributions to shareholders from net investment income | (39,618,532) | (38,989,125) |
Distributions to shareholders from net realized gain | (102,399,285) | (137,187,027) |
Total distributions | (142,017,817) | (176,176,152) |
Share transactions - net increase (decrease) | 686,786,861 | (294,831,730) |
Redemption fees | 51,833 | 32,907 |
Total increase (decrease) in net assets | 1,056,294,974 | (230,850,725) |
|
|
|
Net Assets | ||
Beginning of period | 2,055,802,403 | 2,286,653,128 |
End of period (including undistributed net investment income of $5,947,947 and undistributed net investment income of $5,732,152, respectively) | $ 3,112,097,377 | $ 2,055,802,403 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 | $ 61.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.37 | 1.43 | 1.26 | 1.22 | .98 |
Net realized and unrealized gain (loss) | 17.28 | 7.51 | 11.73 | 8.73 | 7.10 |
Total from investment operations | 18.65 | 8.94 | 12.99 | 9.95 | 8.08 |
Distributions from net investment income | (1.28) | (1.44) | (1.08) | (1.06) | (.83) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.25) J | (6.68) | (2.22) | (2.70) | (1.49) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 101.33 | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 |
Total ReturnA, B | 21.95% | 10.53% | 17.60% | 15.00% | 13.27% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of fee waivers, if any | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of all reductions | 1.05% | 1.06% | 1.08% | 1.09% | 1.11% |
Net investment income (loss) | 1.45% | 1.61% | 1.58% | 1.74% | 1.53% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 414,151 | $ 329,459 | $ 277,329 | $ 205,851 | $ 160,526 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 per share.
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 | $ 60.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.10 | 1.18 | 1.03 | 1.01 | .79 |
Net realized and unrealized gain (loss) | 17.15 | 7.46 | 11.68 | 8.68 | 7.05 |
Total from investment operations | 18.25 | 8.64 | 12.71 | 9.69 | 7.84 |
Distributions from net investment income | (1.04) | (1.21) | (.88) | (.86) | (.65) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.01) J | (6.45) | (2.02) | (2.50) | (1.31) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.61 | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 |
Total ReturnA, B | 21.60% | 10.23% | 17.29% | 14.67% | 12.93% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of fee waivers, if any | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of all reductions | 1.32% | 1.33% | 1.35% | 1.38% | 1.40% |
Net investment income (loss) | 1.18% | 1.34% | 1.30% | 1.45% | 1.24% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,489 | $ 61,421 | $ 52,024 | $ 39,047 | $ 31,496 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 | $ 60.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .63 | .71 | .61 | .64 | .46 |
Net realized and unrealized gain (loss) | 17.06 | 7.40 | 11.61 | 8.61 | 6.98 |
Total from investment operations | 17.69 | 8.11 | 12.22 | 9.25 | 7.44 |
Distributions from net investment income | (.48) | (.69) | (.37) | (.43) | (.32) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.46) | (5.93) | (1.51) | (2.07) | (.98) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.13 | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 |
Total ReturnA, B | 21.01% | 9.63% | 16.68% | 14.06% | 12.35% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of fee waivers, if any | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of all reductions | 1.82% | 1.86% | 1.88% | 1.90% | 1.91% |
Net investment income (loss) | .68% | .81% | .78% | .93% | .73% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,799 | $ 17,388 | $ 18,548 | $ 19,330 | $ 20,033 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 | $ 60.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .65 | .75 | .65 | .68 | .49 |
Net realized and unrealized gain (loss) | 16.93 | 7.36 | 11.55 | 8.59 | 7.00 |
Total from investment operations | 17.58 | 8.11 | 12.20 | 9.27 | 7.49 |
Distributions from net investment income | (.65) | (.84) | (.53) | (.59) | (.41) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.63) | (6.07) J | (1.67) | (2.23) | (1.07) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 99.27 | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 |
Total ReturnA, B | 21.03% | 9.70% | 16.73% | 14.14% | 12.44% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of all reductions | 1.80% | 1.81% | 1.82% | 1.84% | 1.85% |
Net investment income (loss) | .70% | .85% | .83% | .99% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 228,151 | $ 164,669 | $ 134,966 | $ 102,321 | $ 81,239 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 | $ 61.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.64 | 1.69 | 1.48 | 1.42 | 1.14 |
Net realized and unrealized gain (loss) | 17.40 | 7.55 | 11.82 | 8.76 | 7.14 |
Total from investment operations | 19.04 | 9.24 | 13.30 | 10.18 | 8.28 |
Distributions from net investment income | (1.54) | (1.66) | (1.28) | (1.24) | (.98) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.52) | (6.90) | (2.42) | (2.87) I | (1.64) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 102.03 | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 |
Total ReturnA | 22.27% | 10.82% | 17.94% | 15.30% | 13.55% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .77% | .79% | .81% | .83% | .86% |
Expenses net of fee waivers, if any | .77% | .79% | .81% | .83% | .86% |
Expenses net of all reductions | .77% | .79% | .80% | .82% | .86% |
Net investment income (loss) | 1.73% | 1.88% | 1.85% | 2.01% | 1.78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,173,970 | $ 1,328,594 | $ 1,425,055 | $ 1,202,440 | $ 877,548 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 | $ 61.26 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.59 | 1.66 | 1.45 | 1.39 | 1.15 |
Net realized and unrealized gain (loss) | 17.40 | 7.53 | 11.79 | 8.73 | 7.13 |
Total from investment operations | 18.99 | 9.19 | 13.24 | 10.12 | 8.28 |
Distributions from net investment income | (1.44) | (1.54) | (1.32) | (1.19) | (1.04) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.41) I | (6.78) | (2.46) | (2.82) J | (1.70) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 101.91 | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 |
Total ReturnA | 22.26% | 10.80% | 17.90% | 15.24% | 13.57% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .87% | .87% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .87% | .87% |
Expenses net of all reductions | .80% | .82% | .84% | .87% | .87% |
Net investment income (loss) | 1.70% | 1.85% | 1.81% | 1.96% | 1.77% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 198,538 | $ 154,271 | $ 378,731 | $ 163,544 | $ 237,883 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
J Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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, 2015
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, redemption in kind, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 926,318,732 |
Gross unrealized depreciation | (39,470,234) |
Net unrealized appreciation (depreciation) on securities | $ 886,848,498 |
|
|
Tax Cost | $ 2,234,267,096 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 19,540,825 |
Undistributed long-term capital gain | $ 82,071,386 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 886,821,686 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 43,895,099 | $ 40,643,236 |
Long-term Capital Gains | 98,122,718 | 135,532,916 |
Total | $ 142,017,817 | $ 176,176,152 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,618,121,721 and $1,046,857,746, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 887,388 | $ 8,962 |
Class T | .25% | .25% | 349,080 | 259 |
Class B | .75% | .25% | 167,656 | 125,772 |
Class C | .75% | .25% | 1,862,251 | 335,223 |
|
|
| $ 3,266,375 | $ 470,216 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 197,186 |
Class T | 27,506 |
Class B* | 9,631 |
Class C* | 13,925 |
| $ 248,248 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 711,350 | .20 |
Class T | 156,755 | .22 |
Class B | 37,489 | .22 |
Class C | 376,017 | .20 |
Consumer Staples | 2,989,524 | .18 |
Institutional Class | 443,680 | .20 |
| $ 4,714,815 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $14,678 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 523,611 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $47,287,323. The net realized gain of $20,812,198 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. Then Investing Funds delivered cash and investments valued at $64,348,425 in exchange for 712,528 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,649 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $366,992.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $9,955 for the period.
The investment adviser reimbursed a portion of the Fund's operating expenses, including certain Consumer Staples expenses during the period in the amount of $2,949.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 4,812,004 | $ 5,205,524 |
Class T | 776,331 | 826,286 |
Class B | 83,556 | 138,623 |
Class C | 1,335,126 | 1,548,556 |
Consumer Staples | 29,856,743 | 26,141,452 |
Institutional Class | 2,754,772 | 5,128,684 |
Total | $ 39,618,532 | $ 38,989,125 |
From net realized gain |
|
|
Class A | $ 14,768,867 | $ 18,454,866 |
Class T | 2,841,831 | 3,478,167 |
Class B | 743,976 | 1,077,295 |
Class C | 7,778,566 | 9,334,082 |
Consumer Staples | 65,408,817 | 84,245,287 |
Institutional Class | 10,857,228 | 20,597,330 |
Total | $ 102,399,285 | $ 137,187,027 |
Annual Report
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,066,097 | 1,297,946 | $ 101,322,941 | $ 115,706,038 |
Reinvestment of distributions | 205,710 | 234,768 | 18,829,531 | 20,739,532 |
Shares redeemed | (931,333) | (1,022,897) | (86,559,239) | (90,649,691) |
Net increase (decrease) | 340,474 | 509,817 | $ 33,593,233 | $ 45,795,879 |
Class T |
|
|
|
|
Shares sold | 215,514 | 171,739 | $ 20,203,421 | $ 15,157,502 |
Reinvestment of distributions | 38,102 | 46,535 | 3,463,287 | 4,086,883 |
Shares redeemed | (146,712) | (126,021) | (13,666,581) | (11,017,450) |
Net increase (decrease) | 106,904 | 92,253 | $ 10,000,127 | $ 8,226,935 |
Class B |
|
|
|
|
Shares sold | 7,270 | 16,325 | $ 675,777 | $ 1,431,261 |
Reinvestment of distributions | 8,161 | 11,472 | 730,673 | 1,003,061 |
Shares redeemed | (57,733) | (46,659) | (5,359,510) | (4,085,147) |
Net increase (decrease) | (42,302) | (18,862) | $ (3,953,060) | $ (1,650,825) |
Class C |
|
|
|
|
Shares sold | 636,469 | 622,483 | $ 59,593,472 | $ 54,501,354 |
Reinvestment of distributions | 86,847 | 101,164 | 7,772,854 | 8,787,354 |
Shares redeemed | (332,705) | (417,359) | (30,479,924) | (36,266,564) |
Net increase (decrease) | 390,611 | 306,288 | $ 36,886,402 | $ 27,022,144 |
Consumer Staples |
|
|
|
|
Shares sold | 8,889,529 | 3,438,166 | $ 838,041,591 | $ 309,005,043 |
Reinvestment of distributions | 985,926 | 1,188,981 | 91,713,079 | 105,681,529 |
Shares redeemed | (3,580,043) | (6,154,349) | (340,719,360) | (548,691,818) |
Net increase (decrease) | 6,295,412 | (1,527,202) | $ 589,035,310 | $ (134,005,246) |
Institutional Class |
|
|
|
|
Shares sold | 3,870,748 A | 2,006,485 | $ 354,438,000A | $ 181,066,529 |
Reinvestment of distributions | 135,150 | 271,028 | 12,187,732 | 24,047,781 |
Shares redeemed | (3,804,175)B | (4,939,085) | (345,400,883)B | (445,334,927) |
Net increase (decrease) | 201,723 | (2,661,572) | $ 21,224,849 | $ (240,220,617) |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Annual Report
Fidelity Advisor Gold Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Institutional Class A | -17.45% | -12.21% | 1.65% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Gold Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Gold Fund - Institutional Class on February 28, 2005. 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. See footnote A for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Gold Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from S. Joseph Wickwire II, Portfolio Manager, Fidelity Advisor® Gold Fund: For the year, the fund's Institutional Class shares returned -17.45%, underperforming the -16.34% return of its industry benchmark, the S&P® Global BMI Gold Capped Index, and the S&P® 500. By comparison, the broadly based MSCI ACWI (All Country World Index) Index added 7.95%. It was a difficult year for gold and gold stocks as the period saw gold prices fall from a high of $1,383 to a low of $1,141 an ounce. The fund underperformed its industry benchmark by underweighting names that outperformed, including Newmont Mining and Zinjin Mining Group, the latter of which we did not own. Overweighting names that lost ground also hurt, including B2Gold and Argonaut Gold. Some non-gold equity positions also dragged on the fund's result. Conversely, underweighting stocks that underperformed contributed to results, including Barrick Gold, which lagged on concerns about its debt levels and management changes, along with uncertainty about its strategy after a failed attempt to acquire Newmont. Our bullion position also contributed, as it outperformed the gold equity benchmark.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Gold 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, 2014 to February 28, 2015).
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 | $ 789.50 | $ 5.28 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.89 | $ 5.96 |
Class T | 1.46% |
|
|
|
Actual |
| $ 1,000.00 | $ 788.20 | $ 6.47 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.55 | $ 7.30 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 786.80 | $ 8.55 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Gold | .91% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 4.04 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.28 | $ 4.56 |
Institutional Class | .89% |
|
|
|
Actual |
| $ 1,000.00 | $ 790.90 | $ 3.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.38 | $ 4.46 |
A 5% return per year before expenses
B Annualized expense ratio reflects consolidated expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Gold Portfolio
Consolidated Investment Changes (Unaudited)
Top Ten Holdings as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Goldcorp, Inc. | 8.8 | 8.9 |
Randgold Resources Ltd. sponsored ADR | 7.1 | 5.6 |
Newcrest Mining Ltd. | 6.2 | 4.8 |
Gold Bullion | 6.2 | 6.3 |
Franco-Nevada Corp. | 6.1 | 4.9 |
Agnico Eagle Mines Ltd. (Canada) | 5.0 | 4.7 |
Silver Bullion | 4.2 | 5.1 |
Eldorado Gold Corp. | 4.1 | 5.1 |
Newmont Mining Corp. | 4.0 | 3.1 |
Barrick Gold Corp. | 3.8 | 5.1 |
| 55.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Gold | 87.6% |
|
![]() | Commodities & Related Investments** | 10.4% |
|
![]() | Precious Metals & Minerals | 0.1% |
|
![]() | Silver | 0.7% |
|
![]() | Diversified Metals & Mining | 0.2% |
|
![]() | Steel | 0.0% |
|
![]() | All Others* | 1.0% |
|
As of August 31, 2014 | |||
![]() | Gold | 87.0% |
|
![]() | Commodities & Related Investments** | 11.4% |
|
![]() | Precious Metals & Minerals | 0.6% |
|
![]() | Diversified Metals & Mining | 0.3% |
|
![]() | Coal & Consumable Fuels | 0.2% |
|
![]() | Silver | 0.2% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets (liabilities). |
** Includes gold bullion and/or silver bullion. |
Geographic Diversification (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Canada | 55.8% |
|
![]() | United States of America* | 19.1% |
|
![]() | Australia | 8.1% |
|
![]() | Bailiwick of Jersey | 7.9% |
|
![]() | South Africa | 6.9% |
|
![]() | Peru | 0.8% |
|
![]() | Bermuda | 0.7% |
|
![]() | Cayman Islands | 0.4% |
|
![]() | United Kingdom | 0.3% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
As of August 31, 2014 | |||
![]() | Canada | 59.0% |
|
![]() | United States of America* | 18.2% |
|
![]() | South Africa | 7.1% |
|
![]() | Australia | 6.9% |
|
![]() | Bailiwick of Jersey | 6.5% |
|
![]() | Bermuda | 0.9% |
|
![]() | Peru | 0.7% |
|
![]() | Cayman Islands | 0.5% |
|
![]() | United Kingdom | 0.2% |
|
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
Annual Report
Gold Portfolio
Consolidated Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 88.6% | |||
Shares | Value | ||
Australia - 8.1% | |||
METALS & MINING - 8.1% | |||
Gold - 8.1% | |||
Beadell Resources Ltd. (d) | 7,687,418 | $ 1,922,223 | |
Evolution Mining Ltd. | 1,437,195 | 948,955 | |
Kingsgate Consolidated NL (a) | 78,274 | 48,319 | |
Medusa Mining Ltd. (a)(d) | 1,983,595 | 1,518,982 | |
Newcrest Mining Ltd. (a) | 6,223,650 | 69,980,874 | |
Northern Star Resources Ltd. | 4,604,518 | 8,491,210 | |
Perseus Mining Ltd.: | |||
(Australia) (a)(d) | 2,122,134 | 588,674 | |
(Canada) (a) | 1,300,000 | 369,170 | |
Regis Resources Ltd. (a)(d) | 2,525,393 | 3,759,217 | |
Resolute Mng Ltd. (a) | 2,390,161 | 616,332 | |
Saracen Mineral Holdings Ltd. (a) | 4,516,787 | 1,482,355 | |
Silver Lake Resources Ltd. (a)(d) | 4,346,985 | 696,330 | |
Troy Resources NL (a) | 195,000 | 84,567 | |
Troy Resources NL (a)(e) | 734,826 | 323,298 | |
| 90,830,506 | ||
Bailiwick of Jersey - 7.9% | |||
METALS & MINING - 7.9% | |||
Gold - 7.9% | |||
Centamin PLC | 1,848,700 | 1,878,008 | |
Lydian International Ltd. (a) | 2,325,200 | 930,006 | |
Polyus Gold International Ltd. (d) | 222,400 | 697,863 | |
Polyus Gold International Ltd. sponsored GDR | 1,509,831 | 4,620,083 | |
Randgold Resources Ltd. sponsored ADR (d) | 1,010,495 | 80,021,099 | |
| 88,147,059 | ||
Bermuda - 0.7% | |||
METALS & MINING - 0.7% | |||
Gold - 0.7% | |||
Continental Gold Ltd. (a) | 4,907,000 | 7,850,572 | |
Steel - 0.0% | |||
African Minerals Ltd. (a)(d) | 1,718,700 | 27 | |
TOTAL METALS & MINING | 7,850,599 | ||
Canada - 55.8% | |||
METALS & MINING - 55.8% | |||
Diversified Metals & Mining - 0.2% | |||
Ivanhoe Mines Ltd. (a) | 2,225,300 | 1,477,481 | |
Ivanhoe Mines Ltd. Class A warrants 12/10/15 (a)(e) | 837,300 | 20,094 | |
NovaCopper, Inc. (a) | 488,333 | 293,000 | |
Sabina Gold & Silver Corp. (a)(d) | 980,000 | 301,816 | |
True Gold Mining, Inc. (a) | 191,000 | 29,794 | |
| 2,122,185 | ||
Gold - 54.8% | |||
Agnico Eagle Mines Ltd. (Canada) (d) | 1,759,901 | 56,551,654 | |
| |||
Shares | Value | ||
Alacer Gold Corp. | 2,187,363 | $ 4,741,824 | |
Alamos Gold, Inc. | 1,174,000 | 7,099,784 | |
Argonaut Gold, Inc. (a) | 4,558,862 | 7,585,340 | |
ATAC Resources Ltd. (a) | 67,200 | 32,253 | |
AuRico Gold, Inc. | 112,100 | 395,457 | |
B2Gold Corp. (a) | 22,915,693 | 38,678,596 | |
Barrick Gold Corp. (d) | 3,295,369 | 42,862,731 | |
Centerra Gold, Inc. | 1,335,600 | 6,527,891 | |
Detour Gold Corp. (a) | 2,042,100 | 19,749,611 | |
Detour Gold Corp. (a)(e) | 785,900 | 7,600,617 | |
Eldorado Gold Corp. (d) | 7,903,535 | 45,583,943 | |
Franco-Nevada Corp. | 1,297,800 | 68,476,832 | |
Gabriel Resources Ltd. (a)(d) | 1,020,600 | 661,296 | |
Goldcorp, Inc. | 4,486,700 | 98,807,176 | |
GoldQuest Mining Corp. (a) | 2,318,500 | 250,378 | |
Guyana Goldfields, Inc. (a) | 3,286,900 | 8,571,549 | |
Guyana Goldfields, Inc. (a)(e) | 155,000 | 404,208 | |
IAMGOLD Corp. (a) | 2,920,000 | 7,147,588 | |
Kinross Gold Corp. (a) | 3,460,291 | 9,743,400 | |
Kirkland Lake Gold, Inc. (a)(d) | 376,000 | 1,570,050 | |
Lake Shore Gold Corp. (a)(d) | 2,806,600 | 2,559,414 | |
Midas Gold Corp. (a) | 100,500 | 40,197 | |
New Gold, Inc. (a) | 6,615,175 | 25,347,323 | |
NGEx Resources, Inc. (a) | 65,000 | 55,116 | |
Novagold Resources, Inc. (a) | 1,935,700 | 7,200,228 | |
OceanaGold Corp. | 2,842,300 | 5,434,043 | |
Orezone Gold Corp. (a) | 371,100 | 157,334 | |
Osisko Gold Royalties Ltd. | 546,193 | 7,794,643 | |
Pilot Gold, Inc. (a) | 1,418,150 | 1,225,184 | |
Premier Gold Mines Ltd. (a)(g) | 10,416,222 | 20,747,454 | |
Pretium Resources, Inc. (a) | 856,538 | 5,289,556 | |
Pretium Resources, Inc. (a)(e) | 225,000 | 1,389,489 | |
Pretium Resources, Inc. (a)(f) | 225,000 | 1,389,489 | |
Primero Mining Corp. (a)(d) | 1,506,800 | 5,351,725 | |
Richmont Mines, Inc. (a) | 239,900 | 804,080 | |
Rio Alto Mining Ltd. (a) | 2,742,235 | 8,598,961 | |
Romarco Minerals, Inc. (a) | 31,476,998 | 13,596,975 | |
Romarco Minerals, Inc. (a)(e) | 5,900,000 | 2,548,596 | |
Romarco Minerals, Inc. (f) | 4,600,000 | 1,788,337 | |
Roxgold, Inc. (a) | 100,000 | 51,996 | |
Rubicon Minerals Corp. (a) | 5,376,402 | 6,279,135 | |
Seabridge Gold, Inc. (a) | 659,166 | 5,121,721 | |
SEMAFO, Inc. (a) | 2,895,700 | 8,964,370 | |
Teranga Gold Corp. (a) | 85,000 | 46,916 | |
Teranga Gold Corp. CDI unit (a)(d) | 3,338,072 | 1,851,942 | |
Timmins Gold Corp. (a) | 122,600 | 106,899 | |
Torex Gold Resources, Inc. (a) | 20,093,200 | 18,484,265 | |
Yamana Gold, Inc. | 6,909,420 | 29,348,868 | |
| 614,616,434 | ||
Precious Metals & Minerals - 0.1% | |||
Chesapeake Gold Corp. (a) | 12,000 | 21,886 | |
Common Stocks - continued | |||
Shares | Value | ||
Canada - continued | |||
METALS & MINING - CONTINUED | |||
Precious Metals & Minerals - continued | |||
Gold Standard Ventures Corp. (a) | 2,125,400 | $ 918,099 | |
Klondex Mines Ltd. (a) | 1,000 | 2,160 | |
| 942,145 | ||
Silver - 0.7% | |||
MAG Silver Corp. (a) | 171,000 | 1,237,941 | |
Silver Wheaton Corp. | 47,700 | 1,030,238 | |
Tahoe Resources, Inc. | 426,600 | 5,968,510 | |
| 8,236,689 | ||
TOTAL METALS & MINING | 625,917,453 | ||
Cayman Islands - 0.4% | |||
METALS & MINING - 0.4% | |||
Gold - 0.4% | |||
Endeavour Mining Corp. (a) | 8,267,400 | 3,968,035 | |
Peru - 0.8% | |||
METALS & MINING - 0.8% | |||
Gold - 0.8% | |||
Compania de Minas Buenaventura SA sponsored ADR | 777,528 | 9,003,774 | |
South Africa - 6.9% | |||
METALS & MINING - 6.9% | |||
Gold - 6.9% | |||
AngloGold Ashanti Ltd. sponsored ADR (a) | 3,046,508 | 34,334,145 | |
Gold Fields Ltd. sponsored ADR | 5,219,126 | 24,268,936 | |
Harmony Gold Mining Co. Ltd. (a) | 1,484,000 | 3,625,670 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a)(d) | 1,757,900 | 4,324,434 | |
Sibanye Gold Ltd. ADR | 1,023,906 | 10,843,165 | |
| 77,396,350 | ||
United Kingdom - 0.3% | |||
METALS & MINING - 0.3% | |||
Gold - 0.3% | |||
Acacia Mining PLC | 837,800 | 3,559,540 | |
Pan African Resources PLC | 15,000 | 2,721 | |
| 3,562,261 | ||
United States of America - 7.7% | |||
METALS & MINING - 7.7% | |||
Gold - 7.7% | |||
Gold Resource Corp. (d) | 115,000 | 397,900 | |
McEwen Mining, Inc. (a)(d) | 679,110 | 767,394 | |
| |||
Shares | Value | ||
Newmont Mining Corp. | 1,718,500 | $ 45,248,105 | |
Royal Gold, Inc. | 552,113 | 39,807,347 | |
| 86,220,746 | ||
TOTAL COMMON STOCKS (Cost $1,340,424,123) |
| ||
Commodities - 10.4% | |||
Troy Ounces |
| ||
Gold Bullion (a) | 57,510 | 69,704,996 | |
Silver Bullion (a) | 2,837 | 47,051,645 | |
TOTAL COMMODITIES (Cost $130,172,232) |
| ||
Money Market Funds - 11.1% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 6,190,705 | 6,190,705 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 118,585,234 | 118,585,234 | |
TOTAL MONEY MARKET FUNDS (Cost $124,775,939) |
|
TOTAL INVESTMENT PORTFOLIO - 110.1% (Cost $1,595,372,294) | 1,234,429,363 |
NET OTHER ASSETS (LIABILITIES) - (10.1)% | (112,830,851) | ||
NET ASSETS - 100% | $ 1,121,598,512 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $12,286,302 or 1.1% of net assets. |
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $3,177,826 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Pretium Resources, Inc. | 3/31/11 | $ 2,172,293 |
Romarco Minerals, Inc. | 12/12/14 | 1,987,728 |
(g) 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 | $ 9,364 |
Fidelity Securities Lending Cash Central Fund | 439,263 |
Total | $ 448,627 |
Consolidated Subsidiary | Value, | Purchases | Sales | Dividend | Value, |
Fidelity Select Gold Cayman Ltd. | $ 225,764,683 | $ 65,099,608 | $ 147,759,808 | $ - | $ 116,684,748 |
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, |
Premier Gold Mines Ltd. | $ 20,772,705 | $ 1,654,461 | $ 668,621 | $ - | $ 20,747,454 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 992,896,783 | $ 987,434,430 | $ 5,414,007 | $ 48,346 |
Commodities | 116,756,641 | 116,756,641 | - | - |
Money Market Funds | 124,775,939 | 124,775,939 | - | - |
Total Investments in Securities: | $ 1,234,429,363 | $ 1,228,967,010 | $ 5,414,007 | $ 48,346 |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $113,727,253) - See accompanying schedule: Unaffiliated issuers (cost $1,309,030,420) | $ 972,149,329 |
|
Fidelity Central Funds (cost $124,775,939) | 124,775,939 |
|
Commodities (cost $130,172,232) | 116,756,641 |
|
Other affiliated issuers (cost $31,393,703) | 20,747,454 |
|
Total Investments (cost $1,595,372,294) |
| $ 1,234,429,363 |
Foreign currency held at value (cost $104,547) | 104,547 | |
Receivable for investments sold | 5,509,685 | |
Receivable for fund shares sold | 2,227,907 | |
Dividends receivable | 369,487 | |
Distributions receivable from Fidelity Central Funds | 21,274 | |
Prepaid expenses | 5,477 | |
Other receivables | 25,556 | |
Total assets | 1,242,693,296 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 106,570 | |
Payable for fund shares redeemed | 1,407,905 | |
Accrued management fee | 512,689 | |
Distribution and service plan fees payable | 50,874 | |
Other affiliated payables | 295,764 | |
Other payables and accrued expenses | 135,748 | |
Collateral on securities loaned, at value | 118,585,234 | |
Total liabilities | 121,094,784 | |
|
|
|
Net Assets | $ 1,121,598,512 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,578,854,710 | |
Accumulated net investment loss | (19,281) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,096,295,003) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (360,941,914) | |
Net Assets | $ 1,121,598,512 |
Consolidated Statement of Assets and Liabilities -
continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 18.11 | |
|
|
|
Maximum offering price per share (100/94.25 of $18.11) | $ 19.21 | |
Class T: | $ 17.83 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.83) | $ 18.48 | |
Class B: | $ 17.27 | |
|
|
|
Class C: | $ 17.20 | |
|
|
|
Gold: | $ 18.50 | |
|
|
|
Institutional Class: | $ 18.50 |
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
Gold Portfolio
Consolidated Financial Statements - continued
Consolidated Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,166,344 |
Income from Fidelity Central Funds (including $439,263 from security lending) |
| 448,627 |
Income before foreign taxes withheld |
| 9,614,971 |
Less foreign taxes withheld |
| (1,113,899) |
Total income |
| 8,501,072 |
|
|
|
Expenses | ||
Management fee | $ 7,307,511 | |
Transfer agent fees | 3,307,819 | |
Distribution and service plan fees | 625,615 | |
Accounting and security lending fees | 580,399 | |
Custodian fees and expenses | 283,527 | |
Independent trustees' compensation | 25,214 | |
Registration fees | 150,605 | |
Audit | 44,883 | |
Legal | 6,776 | |
Interest | 472 | |
Miscellaneous | 28,792 | |
Total expenses before reductions | 12,361,613 | |
Expense reductions | (454,642) | 11,906,971 |
Net investment income (loss) | (3,405,899) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investments: |
|
|
Unaffiliated issuers | (218,966,450) | |
Other affiliated issuers | (897,919) |
|
Commodities | (11,867,162) |
|
Foreign currency transactions | 197,792 | |
Total net realized gain (loss) |
| (231,533,739) |
Change in net unrealized appreciation (depreciation) on: Investments | (5,621,130) | |
Assets and liabilities in foreign currencies | (1,978) | |
Commodities | (13,914,448) | |
Total change in net unrealized appreciation (depreciation) |
| (19,537,556) |
Net gain (loss) | (251,071,295) | |
Net increase (decrease) in net assets resulting from operations | $ (254,477,194) |
Consolidated Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (3,405,899) | $ 3,413,053 |
Net realized gain (loss) | (231,533,739) | (556,608,289) |
Change in net unrealized appreciation (depreciation) | (19,537,556) | (88,077,933) |
Net increase (decrease) in net assets resulting from operations | (254,477,194) | (641,273,169) |
Share transactions - net increase (decrease) | (124,744,949) | (461,130,558) |
Redemption fees | 222,335 | 396,348 |
Total increase (decrease) in net assets | (378,999,808) | (1,102,007,379) |
|
|
|
Net Assets | ||
Beginning of period | 1,500,598,320 | 2,602,605,699 |
End of period (including accumulated net investment loss of $19,281 and accumulated net investment loss of $8,084, respectively) | $ 1,121,598,512 | $ 1,500,598,320 |
See accompanying notes which are an integral part of the consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 I | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 | $ 40.50 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.10) | - A | .07 | (.13) | (.30) |
Net realized and unrealized gain (loss) | (3.80) | (8.25) | (15.19) | (2.83) | 15.28 |
Total from investment operations | (3.90) | (8.25) | (15.12) | (2.96) | 14.98 |
Distributions from net realized gain | - | - | - | (2.59) | (4.57) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.11 | $ 22.01 | $ 30.25 | $ 45.37 | $ 50.92 |
Total ReturnB, C | (17.72)% | (27.24)% | (33.33)% | (6.24)% | 36.99% |
Ratios to Average Net Assets E, H |
|
|
|
|
|
Expenses before reductions | 1.23% | 1.21% | 1.18% | 1.14% | 1.16% |
Expenses net of fee waivers, if any | 1.19% | 1.19% | 1.17% | 1.14% | 1.15% |
Expenses net of all reductions | 1.19% | 1.18% | 1.17% | 1.14% | 1.14% |
Net investment income (loss) | (.51)% | -% G | .18% | (.28)% | (.63)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 46,898 | $ 60,270 | $ 101,202 | $ 152,969 | $ 149,178 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GAmount represents less than .01%. HExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. IFor the year ended February 29. |
Consolidated Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 | $ 40.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.15) | (.06) | (.03) | (.27) | (.43) |
Net realized and unrealized gain (loss) | (3.75) | (8.17) | (15.06) | (2.80) | 15.21 |
Total from investment operations | (3.90) | (8.23) | (15.09) | (3.07) | 14.78 |
Distributions from net realized gain | - | - | - | (2.57) | (4.45) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 17.83 | $ 21.73 | $ 29.95 | $ 45.04 | $ 50.68 |
Total ReturnB, C | (17.95)% | (27.45)% | (33.50)% | (6.49)% | 36.62% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.50% | 1.49% | 1.45% | 1.43% | 1.44% |
Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.44% | 1.42% | 1.42% |
Expenses net of all reductions | 1.46% | 1.46% | 1.44% | 1.42% | 1.42% |
Net investment income (loss) | (.79)% | (.28)% | (.09)% | (.57)% | (.90)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 16,200 | $ 18,402 | $ 24,913 | $ 40,664 | $ 45,846 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the sales charges. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 | $ 39.87 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.24) | (.16) | (.21) | (.49) | (.66) |
Net realized and unrealized gain (loss) | (3.63) | (7.98) | (14.76) | (2.76) | 15.02 |
Total from investment operations | (3.87) | (8.14) | (14.97) | (3.25) | 14.36 |
Distributions from net realized gain | - | - | - | (2.53) | (4.21) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.27 | $ 21.14 | $ 29.27 | $ 44.24 | $ 50.02 |
Total ReturnB, C | (18.31)% | (27.78)% | (33.84)% | (6.95)% | 35.97% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.97% | 1.95% | 1.93% | 1.90% | 1.93% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.92% | 1.90% | 1.92% |
Expenses net of all reductions | 1.93% | 1.93% | 1.91% | 1.90% | 1.91% |
Net investment income (loss) | (1.26)% | (.75)% | (.57)% | (1.04)% | (1.39)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,461 | $ 4,373 | $ 9,423 | $ 20,894 | $ 26,837 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
Consolidated Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 | $ 39.75 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) D | (.23) | (.16) | (.20) | (.47) | (.64) |
Net realized and unrealized gain (loss) | (3.63) | (7.94) | (14.70) | (2.76) | 14.98 |
Total from investment operations | (3.86) | (8.10) | (14.90) | (3.23) | 14.34 |
Distributions from net realized gain | - | - | - | (2.53) | (4.28) |
Redemption fees added to paid in capital D | - A | .01 | - A | - A | - A |
Net asset value, end of period | $ 17.20 | $ 21.06 | $ 29.15 | $ 44.05 | $ 49.81 |
Total ReturnB, C | (18.33)% | (27.75)% | (33.83)% | (6.93)% | 36.01% |
Ratios to Average Net Assets E, G |
|
|
|
|
|
Expenses before reductions | 1.96% | 1.96% | 1.93% | 1.87% | 1.89% |
Expenses net of fee waivers, if any | 1.92% | 1.94% | 1.92% | 1.87% | 1.88% |
Expenses net of all reductions | 1.92% | 1.93% | 1.91% | 1.87% | 1.87% |
Net investment income (loss) | (1.25)% | (.76)% | (.57)% | (1.01)% | (1.35)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 39,429 | $ 33,811 | $ 37,787 | $ 67,996 | $ 72,431 |
Portfolio turnover rateF | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CTotal returns do not include the effect of the contingent deferred sales charge. DCalculated based on average shares outstanding during the period. EFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. FAmount does not include the portfolio activity of any underlying Fidelity Central Funds. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. |
See accompanying notes which are an integral part of the Consolidated financial statements.
Annual Report
Consolidated Financial Highlights - Gold
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 | $ 40.85 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | (.04) | .06 | .16 | (.02) | (.18) |
Net realized and unrealized gain (loss) | (3.87) | (8.38) | (15.40) | (2.85) | 15.43 |
Total from investment operations | (3.91) | (8.32) | (15.24) | (2.87) | 15.25 |
Distributions from net realized gain | - | - | - | (2.61) | (4.67) |
Redemption fees added to paid in capital B | - G | .01 | - G | - G | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.72 | $ 45.96 | $ 51.44 |
Total ReturnA | (17.45)% | (27.05)% | (33.16)% | (6.00)% | 37.35% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .94% | .94% | .93% | .89% | .91% |
Expenses net of fee waivers, if any | .90% | .92% | .92% | .89% | .90% |
Expenses net of all reductions | .90% | .91% | .92% | .89% | .89% |
Net investment income (loss) | (.22)% | .27% | .43% | (.03)% | (.37)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 992,944 | $ 1,275,913 | $ 2,301,019 | $ 3,924,440 | $ 4,250,249 |
Portfolio turnover rateD | 20% | 56% | 18% | 22% | 35% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. FFor the year ended February 29. GAmount represents less than $.01 per share. |
Consolidated Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 | $ 40.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.04) | .07 | .20 | .02 | (.15) |
Net realized and unrealized gain (loss) | (3.87) | (8.36) | (15.38) | (2.85) | 15.41 |
Total from investment operations | (3.91) | (8.29) | (15.18) | (2.83) | 15.26 |
Distributions from net realized gain | - | - | - | (2.62) | (4.72) |
Redemption fees added to paid in capital C | - A | .01 | - A | - A | .01 |
Net asset value, end of period | $ 18.50 | $ 22.41 | $ 30.69 | $ 45.87 | $ 51.32 |
Total ReturnB | (17.45)% | (26.98)% | (33.09)% | (5.94)% | 37.45% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | .90% | .87% | .84% | .82% | .85% |
Expenses net of fee waivers, if any | .86% | .85% | .83% | .81% | .84% |
Expenses net of all reductions | .86% | .84% | .82% | .81% | .83% |
Net investment income (loss) | (.18)% | .34% | .52% | .04% | (.31)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 23,667 | $ 107,830 | $ 128,262 | $ 168,548 | $ 137,246 |
Portfolio turnover rateE | 20% | 56% | 18% | 22% | 35% |
AAmount represents less than $.01 per share. BTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor 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, 2015
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd, a wholly owned subsidiary (the "Subsidiary"). As of February 28, 2015, the Fund held an investment of $116,684,748 in the Subsidiary, representing 10.4% of the Fund's net assets.
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.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the consolidated financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the consolidated financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Annual Report
Notes to Consolidated Financial Statements - continued
4. Significant Accounting Policies - continued
Investment Valuation - continued
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
Annual Report
4. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which 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, losses deferred due to wash sales and capital loss carryforwards.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
Gross unrealized appreciation | $ 124,633,618 |
Gross unrealized depreciation | (616,152,284) |
Net unrealized appreciation (depreciation) on securities | $ (491,518,666) |
|
|
Tax Cost | $ 1,725,876,135 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $ (994,214,264) |
Net unrealized appreciation (depreciation) on securities and other investments | $ (491,515,302) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
No expiration |
|
Short-term | $ (134,736,786) |
Long-term | (859,477,478) |
Total capital loss carryforward | $ (994,214,264) |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
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.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
Annual Report
Notes to Consolidated Financial Statements - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $248,761,008 and $376,980,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .58% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 132,576 | $ 1,199 |
Class T | .25% | .25% | 85,648 | 148 |
Class B | .75% | .25% | 33,203 | 24,902 |
Class C | .75% | .25% | 374,188 | 110,290 |
|
|
| $ 625,615 | $ 136,539 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 31,220 |
Class T | 8,794 |
Class B* | 5,893 |
Class C* | 11,697 |
| $ 57,604 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Annual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 162,318 | .31 |
Class T | 56,530 | .33 |
Class B | 10,095 | .30 |
Class C | 107,920 | .29 |
Gold | 2,890,947 | .26 |
Institutional Class | 80,009 | .22 |
| $ 3,307,819 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $9,496 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 4,422,083 | .32% | $ 472 |
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,717 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds.
Annual Report
Notes to Consolidated Financial Statements - continued
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $446,754.
Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $275.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Gold and Institutional Class expenses during the period in the amount of $7,613.
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,014,651 | 1,443,614 | $ 20,366,842 | $ 31,671,750 |
Shares redeemed | (1,163,476) | (2,051,264) | (22,763,258) | (45,809,186) |
Net increase (decrease) | (148,825) | (607,650) | $ (2,396,416) | $ (14,137,436) |
Class T |
|
|
|
|
Shares sold | 317,888 | 364,459 | $ 6,202,712 | $ 7,796,316 |
Shares redeemed | (256,267) | (349,602) | (4,926,125) | (7,601,870) |
Net increase (decrease) | 61,621 | 14,857 | $ 1,276,587 | $ 194,446 |
Class B |
|
|
|
|
Shares sold | 6,743 | 23,041 | $ 129,320 | $ 484,615 |
Shares redeemed | (71,044) | (138,145) | (1,326,720) | (3,024,154) |
Net increase (decrease) | (64,301) | (115,104) | $ (1,197,400) | $ (2,539,539) |
Class C |
|
|
|
|
Shares sold | 1,131,151 | 877,429 | $ 21,162,781 | $ 17,346,606 |
Shares redeemed | (444,470) | (567,911) | (8,210,673) | (12,102,759) |
Net increase (decrease) | 686,681 | 309,518 | $ 12,952,108 | $ 5,243,847 |
Gold |
|
|
|
|
Shares sold | 22,066,731 | 32,449,288 | $ 446,680,830 | $ 718,341,081 |
Shares redeemed | (25,311,740) | (50,439,253) | (508,417,315) | (1,182,529,714) |
Net increase (decrease) | (3,245,009) | (17,989,965) | $ (61,736,485) | $ (464,188,633) |
Institutional Class |
|
|
|
|
Shares sold | 1,547,691 | 2,126,861 | $ 33,198,070 | $ 46,661,254 |
Shares redeemed | (5,080,368) | (1,494,359) | (106,841,413) | (32,364,497) |
Net increase (decrease) | (3,532,677) | 632,502 | $ (73,643,343) | $ 14,296,757 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Materials Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 2.49% | 13.13% | 11.26% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Materials Portfolio, the original class of the fund.
Prior to October 1, 2006, the fund was named Industrial Materials Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance 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, 2005. 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. See footnote A for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Tobias Welo, Portfolio Manager of Fidelity Advisor® Materials Fund: For the year, the fund's Institutional Class shares returned 2.49%, considerably trailing the 8.95% advance of the MSCI U.S. IMI Materials 25-50 Index and also lagging the S&P 500®. Disappointing growth in both developed and emerging economies resulted in deflationary trends that dampened returns in the materials sector. These trends included falling prices for most commodities - notably, crude oil - and a surging U.S. dollar, which often accompanies weakness in commodities. Versus the MSCI index, both stock selection and market selection hampered the fund's results. Our large overweighting in diversified chemicals firm FMC, the fund's biggest relative detractor, fell victim to less-favorable fundamentals than I anticipated. In FMC's case, it was the collapse of global grain prices and subsequent disappointing sales of the firm's pesticides and herbicides. I sold a little here but maintained most of the position. A non-index position in coal producer Peabody Energy - which I sold - also worked against us, as did a sizable overweighting in Eastman Chemical and not owning strong-performing index name Air Products and Chemicals. Conversely, the two largest relative contributors were paper packaging stocks Rock-Tenn and Graphic Packaging Holding.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Materials 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, 2014 to February 28, 2015).
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 | 1.06% |
|
|
|
Actual |
| $ 1,000.00 | $ 976.80 | $ 5.20 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.54 | $ 5.31 |
Class T | 1.36% |
|
|
|
Actual |
| $ 1,000.00 | $ 975.40 | $ 6.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.05 | $ 6.81 |
Class B | 1.89% |
|
|
|
Actual |
| $ 1,000.00 | $ 972.90 | $ 9.25 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.42 | $ 9.44 |
Class C | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 973.20 | $ 8.86 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Materials | .80% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.10 | $ 3.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.83 | $ 4.01 |
Institutional Class | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 978.30 | $ 3.78 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Materials Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
E.I. du Pont de Nemours & Co. | 11.4 | 2.7 |
Monsanto Co. | 8.5 | 8.1 |
Praxair, Inc. | 5.4 | 5.5 |
Rock-Tenn Co. Class A | 5.4 | 3.7 |
Ecolab, Inc. | 5.3 | 1.3 |
Eastman Chemical Co. | 5.3 | 4.0 |
LyondellBasell Industries NV | 4.7 | 8.2 |
FMC Corp. | 4.0 | 4.2 |
CF Industries Holdings, Inc. | 3.4 | 3.9 |
Eagle Materials, Inc. | 3.1 | 2.7 |
| 56.5 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Chemicals | 70.0% |
|
![]() | Containers & Packaging | 16.6% |
|
![]() | Metals & Mining | 6.7% |
|
![]() | Construction Materials | 3.1% |
|
![]() | Paper & Forest Products | 1.7% |
|
![]() | All Others* | 1.9% |
|
As of August 31, 2014 | |||
![]() | Chemicals | 65.6% |
|
![]() | Metals & Mining | 14.8% |
|
![]() | Containers & Packaging | 10.4% |
|
![]() | Construction Materials | 5.2% |
|
![]() | Oil, Gas & Consumable Fuels | 2.0% |
|
![]() | All Others* | 2.0% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Materials Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
CHEMICALS - 70.0% | |||
Commodity Chemicals - 10.1% | |||
Axiall Corp. | 276,627 | $ 12,810,596 | |
Cabot Corp. | 807,787 | 36,447,349 | |
LyondellBasell Industries NV Class A | 1,119,596 | 96,184,492 | |
Methanex Corp. (d) | 805,800 | 43,825,568 | |
Orion Engineered Carbons SA | 1,017,837 | 16,753,597 | |
| 206,021,602 | ||
Diversified Chemicals - 21.5% | |||
E.I. du Pont de Nemours & Co. | 3,019,400 | 235,060,289 | |
Eastman Chemical Co. | 1,460,130 | 108,721,280 | |
FMC Corp. | 1,289,836 | 81,788,501 | |
Huntsman Corp. | 734,100 | 16,487,886 | |
| 442,057,956 | ||
Fertilizers & Agricultural Chemicals - 15.0% | |||
CF Industries Holdings, Inc. | 231,823 | 70,991,157 | |
Monsanto Co. | 1,449,730 | 174,590,984 | |
The Mosaic Co. | 1,184,800 | 63,102,448 | |
| 308,684,589 | ||
Industrial Gases - 8.3% | |||
Airgas, Inc. | 507,396 | 59,476,959 | |
Praxair, Inc. | 871,874 | 111,512,685 | |
| 170,989,644 | ||
Specialty Chemicals - 15.1% | |||
Albemarle Corp. U.S. (d) | 454,800 | 25,728,036 | |
Ashland, Inc. | 447,600 | 57,122,712 | |
Ecolab, Inc. | 943,220 | 108,979,639 | |
NewMarket Corp. | 95,929 | 45,192,152 | |
Sherwin-Williams Co. | 107,754 | 30,731,441 | |
W.R. Grace & Co. (a)(d) | 432,640 | 42,896,256 | |
| 310,650,236 | ||
TOTAL CHEMICALS | 1,438,404,027 | ||
CONSTRUCTION MATERIALS - 3.1% | |||
Construction Materials - 3.1% | |||
Eagle Materials, Inc. | 816,555 | 64,099,568 | |
CONTAINERS & PACKAGING - 16.6% | |||
Metal & Glass Containers - 2.9% | |||
Aptargroup, Inc. | 470,524 | 30,993,416 | |
Ball Corp. | 386,800 | 27,737,428 | |
| 58,730,844 | ||
Paper Packaging - 13.7% | |||
Avery Dennison Corp. | 414,200 | 22,180,410 | |
Graphic Packaging Holding Co. | 3,456,895 | 52,164,546 | |
MeadWestvaco Corp. | 65,100 | 3,454,206 | |
| |||
Shares | Value | ||
Packaging Corp. of America | 555,700 | $ 46,045,302 | |
Rock-Tenn Co. Class A | 1,602,442 | 109,991,619 | |
Sealed Air Corp. | 1,016,700 | 47,917,071 | |
| 281,753,154 | ||
TOTAL CONTAINERS & PACKAGING | 340,483,998 | ||
ENERGY EQUIPMENT & SERVICES - 0.5% | |||
Oil & Gas Equipment & Services - 0.5% | |||
Aspen Aerogels, Inc. (e) | 1,277,115 | 10,127,522 | |
METALS & MINING - 6.7% | |||
Diversified Metals & Mining - 0.2% | |||
Copper Mountain Mining Corp. (a) | 3,858,277 | 4,012,287 | |
Gold - 2.3% | |||
Franco-Nevada Corp. | 333,900 | 17,617,826 | |
Royal Gold, Inc. | 413,804 | 29,835,268 | |
| 47,453,094 | ||
Steel - 4.2% | |||
Nucor Corp. | 1,001,900 | 47,119,357 | |
Steel Dynamics, Inc. | 2,213,000 | 40,320,860 | |
| 87,440,217 | ||
TOTAL METALS & MINING | 138,905,598 | ||
PAPER & FOREST PRODUCTS - 1.7% | |||
Paper Products - 1.7% | |||
Domtar Corp. | 757,500 | 34,239,000 | |
TRADING COMPANIES & DISTRIBUTORS - 0.5% | |||
Trading Companies & Distributors - 0.5% | |||
Wolseley PLC | 170,134 | 10,430,283 | |
TOTAL COMMON STOCKS (Cost $1,599,388,920) |
| ||
Money Market Funds - 2.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 17,238,460 | 17,238,460 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 33,808,395 | 33,808,395 | |
TOTAL MONEY MARKET FUNDS (Cost $51,046,855) |
|
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $1,650,435,775) | 2,087,736,851 |
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (32,501,010) | ||
NET ASSETS - 100% | $ 2,055,235,841 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,901 |
Fidelity Securities Lending Cash Central Fund | 171,277 |
Total | $ 191,178 |
Other Affiliated Issuers | |||||
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Aspen Aerogels, Inc. | $ - | $ 9,986,520 | $ 1,418,932 | $ - | $ 10,127,522 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $33,099,127) - See accompanying schedule: Unaffiliated issuers (cost $1,590,608,784) | $ 2,026,562,474 |
|
Fidelity Central Funds (cost $51,046,855) | 51,046,855 |
|
Other affiliated issuers (cost $8,780,136) | 10,127,522 |
|
Total Investments (cost $1,650,435,775) |
| $ 2,087,736,851 |
Receivable for investments sold | 20,631,838 | |
Receivable for fund shares sold | 3,294,584 | |
Dividends receivable | 2,692,932 | |
Distributions receivable from Fidelity Central Funds | 3,536 | |
Prepaid expenses | 8,741 | |
Other receivables | 41,370 | |
Total assets | 2,114,409,852 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 20,446,041 | |
Payable for fund shares redeemed | 3,331,966 | |
Accrued management fee | 932,386 | |
Distribution and service plan fees payable | 179,392 | |
Other affiliated payables | 389,442 | |
Other payables and accrued expenses | 86,389 | |
Collateral on securities loaned, at value | 33,808,395 | |
Total liabilities | 59,174,011 | |
|
|
|
Net Assets | $ 2,055,235,841 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,634,284,846 | |
Distributions in excess of net investment income | (33,066) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (16,317,015) | |
Net unrealized appreciation (depreciation) on investments | 437,301,076 | |
Net Assets | $ 2,055,235,841 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 80.43 | |
|
|
|
Maximum offering price per share (100/94.25 of $80.43) | $ 85.34 | |
Class T: | $ 79.95 | |
|
|
|
Maximum offering price per share (100/96.50 of $79.95) | $ 82.85 | |
Class B: | $ 78.31 | |
|
|
|
Class C: | $ 78.12 | |
|
|
|
Materials: | $ 80.77 | |
|
|
|
Institutional Class: | $ 80.60 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 35,388,475 |
Interest |
| 231,020 |
Income from Fidelity Central Funds |
| 191,178 |
Total income |
| 35,810,673 |
|
|
|
Expenses | ||
Management fee | $ 11,769,676 | |
Transfer agent fees | 4,417,326 | |
Distribution and service plan fees | 2,258,375 | |
Accounting and security lending fees | 653,835 | |
Custodian fees and expenses | 36,379 | |
Independent trustees' compensation | 41,798 | |
Registration fees | 152,825 | |
Audit | 51,208 | |
Legal | 13,438 | |
Interest | 1,074 | |
Miscellaneous | 27,456 | |
Total expenses before reductions | 19,423,390 | |
Expense reductions | (27,900) | 19,395,490 |
Net investment income (loss) | 16,415,183 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,791,589 | |
Other affiliated issuers | 212,549 | |
Foreign currency transactions | (58,451) | |
Redemption in-kind with affiliated entities | 6,050,156 | |
Total net realized gain (loss) |
| 140,995,843 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (115,354,398) | |
Assets and liabilities in foreign currencies | 2,668 | |
Total change in net unrealized appreciation (depreciation) |
| (115,351,730) |
Net gain (loss) | 25,644,113 | |
Net increase (decrease) in net assets resulting from operations | $ 42,059,296 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 16,415,183 | $ 11,130,072 |
Net realized gain (loss) | 140,995,843 | 105,883,339 |
Change in net unrealized appreciation (depreciation) | (115,351,730) | 227,365,491 |
Net increase (decrease) in net assets resulting from operations | 42,059,296 | 344,378,902 |
Distributions to shareholders from net investment income | (14,132,791) | (9,652,596) |
Distributions to shareholders from net realized gain | (176,045,519) | (36,877,810) |
Total distributions | (190,178,310) | (46,530,406) |
Share transactions - net increase (decrease) | 139,840,860 | 29,379,358 |
Redemption fees | 59,111 | 36,980 |
Total increase (decrease) in net assets | (8,219,043) | 327,264,834 |
|
|
|
Net Assets | ||
Beginning of period | 2,063,454,884 | 1,736,190,050 |
End of period (including distributions in excess of net investment income of $33,066 and distributions in excess of net investment income of $815,927, respectively) | $ 2,055,235,841 | $ 2,063,454,884 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 | $ 52.54 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .51 | .36 | .70 | .40 | 1.08 F |
Net realized and unrealized gain (loss) | 1.05 | 14.56 | 5.69 | (.35) | 17.40 |
Total from investment operations | 1.56 | 14.92 | 6.39 | .05 | 18.48 |
Distributions from net investment income | (.43) | (.30) | (.63) | (.40) | (1.06) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.01) |
Total distributions | (7.59) J | (1.90) | (2.18) | (.78) | (1.07) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 80.43 | $ 86.46 | $ 73.44 | $ 69.23 | $ 69.96 |
Total ReturnA, B | 2.20% | 20.46% | 9.40% | .21% | 35.33% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of fee waivers, if any | 1.06% | 1.10% | 1.13% | 1.13% | 1.16% |
Expenses net of all reductions | 1.06% | 1.09% | 1.12% | 1.13% | 1.15% |
Net investment income (loss) | .61% | .45% | 1.02% | .61% | 1.81% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 319,740 | $ 336,777 | $ 219,627 | $ 157,781 | $ 124,160 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .41%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 | $ 52.35 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .25 | .12 | .50 | .21 | .90 F |
Net realized and unrealized gain (loss) | 1.06 | 14.48 | 5.66 | (.35) | 17.34 |
Total from investment operations | 1.31 | 14.60 | 6.16 | (.14) | 18.24 |
Distributions from net investment income | (.18) | (.06) | (.46) | (.25) | (.92) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | - |
Total distributions | (7.35) | (1.66) | (2.02) J | (.63) | (.92) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 79.95 | $ 85.99 | $ 73.05 | $ 68.91 | $ 69.68 |
Total ReturnA, B | 1.90% | 20.10% | 9.10% | (.09)% | 34.98% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of fee waivers, if any | 1.37% | 1.40% | 1.42% | 1.42% | 1.44% |
Expenses net of all reductions | 1.37% | 1.39% | 1.41% | 1.41% | 1.43% |
Net investment income (loss) | .31% | .15% | .73% | .33% | 1.54% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 45,252 | $ 45,223 | $ 37,860 | $ 28,290 | $ 25,570 |
Portfolio turnover rateE | 76% K | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .14%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 | $ 51.86 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.18) | (.28) | .16 | (.11) | .60 F |
Net realized and unrealized gain (loss) | 1.03 | 14.28 | 5.57 | (.33) | 17.13 |
Total from investment operations | .85 | 14.00 | 5.73 | (.44) | 17.73 |
Distributions from net investment income | - | - | (.10) | - | (.65) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.65) | (.38) | (.65) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.31 | $ 84.63 | $ 72.21 | $ 68.13 | $ 68.95 |
Total ReturnA, B | 1.35% | 19.50% | 8.55% | (.57)% | 34.29% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of fee waivers, if any | 1.89% | 1.90% | 1.92% | 1.91% | 1.93% |
Expenses net of all reductions | 1.89% | 1.90% | 1.91% | 1.91% | 1.92% |
Net investment income (loss) | (.22)% | (.36)% | .24% | (.17)% | 1.04% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 6,487 | $ 8,671 | $ 10,218 | $ 11,040 | $ 13,507 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 | $ 51.79 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | (.12) | (.23) | .18 | (.10) | .61 F |
Net realized and unrealized gain (loss) | 1.03 | 14.23 | 5.55 | (.32) | 17.09 |
Total from investment operations | .91 | 14.00 | 5.73 | (.42) | 17.70 |
Distributions from net investment income | - | - | (.20) | - | (.72) |
Distributions from net realized gain | (7.17) | (1.58) | (1.55) | (.38) | - |
Total distributions | (7.17) | (1.58) | (1.75) | (.38) | (.72) |
Redemption fees added to paid in capital C | - I | - I | - I | - I | .01 |
Net asset value, end of period | $ 78.12 | $ 84.38 | $ 71.96 | $ 67.98 | $ 68.78 |
Total ReturnA, B | 1.43% | 19.56% | 8.58% | (.55)% | 34.29% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of fee waivers, if any | 1.82% | 1.85% | 1.89% | 1.89% | 1.93% |
Expenses net of all reductions | 1.82% | 1.84% | 1.88% | 1.89% | 1.92% |
Net investment income (loss) | (.14)% | (.30)% | .26% | (.15)% | 1.04% F |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 107,697 | $ 106,879 | $ 75,007 | $ 58,296 | $ 46,525 |
Portfolio turnover rateE | 76% J | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.35)%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Materials
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 | $ 52.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .73 | .58 | .90 | .60 | 1.25 E |
Net realized and unrealized gain (loss) | 1.05 | 14.63 | 5.71 | (.37) | 17.43 |
Total from investment operations | 1.78 | 15.21 | 6.61 | .23 | 18.68 |
Distributions from net investment income | (.65) | (.48) | (.79) | (.55) | (1.16) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.82) | (2.08) | (2.34) | (.93) | (1.19) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.77 | $ 86.81 | $ 73.68 | $ 69.41 | $ 70.11 |
Total ReturnA | 2.46% | 20.80% | 9.71% | .49% | 35.70% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .85% | .88% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .85% | .88% |
Expenses net of all reductions | .80% | .82% | .84% | .84% | .87% |
Net investment income (loss) | .87% | .73% | 1.30% | .90% | 2.10% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 1,107,689 | $ 1,231,942 | $ 1,146,782 | $ 1,089,619 | $ 1,195,371 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 | $ 52.58 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .74 | .59 | .90 | .60 | 1.28 E |
Net realized and unrealized gain (loss) | 1.05 | 14.60 | 5.70 | (.36) | 17.40 |
Total from investment operations | 1.79 | 15.19 | 6.60 | .24 | 18.68 |
Distributions from net investment income | (.68) | (.50) | (.83) | (.56) | (1.19) |
Distributions from net realized gain | (7.17) | (1.60) | (1.55) | (.38) | (.03) |
Total distributions | (7.85) | (2.10) | (2.38) | (.94) | (1.22) |
Redemption fees added to paid in capital B | - H | - H | - H | - H | .01 |
Net asset value, end of period | $ 80.60 | $ 86.66 | $ 73.57 | $ 69.35 | $ 70.05 |
Total ReturnA | 2.49% | 20.81% | 9.71% | .50% | 35.73% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .78% | .81% | .85% | .84% | .86% |
Expenses net of fee waivers, if any | .78% | .81% | .85% | .84% | .86% |
Expenses net of all reductions | .78% | .81% | .84% | .83% | .85% |
Net investment income (loss) | .89% | .74% | 1.30% | .91% | 2.11% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 468,371 | $ 333,963 | $ 246,696 | $ 89,299 | $ 85,130 |
Portfolio turnover rateD | 76% I | 53% | 61% | 94% | 87% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.83 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .72%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, in-kind transactions, passive foreign investment companies (PFIC), original issue discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 463,512,190 |
Gross unrealized depreciation | (35,847,823) |
Net unrealized appreciation (depreciation) on securities | $ 427,664,367 |
|
|
Tax Cost | $ 1,660,072,484 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed long term capital gain | $ 895,122 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 427,664,367 |
The fund intends to elect to defer to its next fiscal year $5,660,716 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of prior fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2017 | $ (810,939) |
2018 | (1,022,988) |
2019 | (80,787) |
Total with expiration | $ (1,914,714) |
The Fund acquired $1,914,714 of capital loss carryforwards as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 14,132,791 | $ 10,087,395 |
Long-term Capital Gains | 176,045,519 | 36,443,011 |
Total | $ 190,178,310 | $ 46,530,406 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,614,718,611 and $1,663,229,593, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 838,406 | $ 16,183 |
Class T | .25% | .25% | 228,842 | 240 |
Class B | .75% | .25% | 74,560 | 55,933 |
Class C | .75% | .25% | 1,116,567 | 277,171 |
|
|
| $ 2,258,375 | $ 349,527 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 150,405 |
Class T | 11,357 |
Class B* | 7,882 |
Class C* | 25,516 |
| $ 195,160 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 721,024 | .21 |
Class T | 124,541 | .27 |
Class B | 22,340 | .30 |
Class C | 247,956 | .22 |
Materials | 2,468,073 | .21 |
Institutional Class | 833,392 | .19 |
| $ 4,417,326 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $24,808 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,084,733 | .32% | $ 1,074 |
Redemptions In-Kind. During the period, 206,748 shares of the fund held by an affiliated entity were redeemed for investments with a value of $17,590,149. The net realized gain of $6,050,156 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. The Investing Funds delivered cash and investments valued at $22,792,169 in exchange for 267,891 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,260 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $171,277.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $20,813 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Materials expenses during the period in the amount of $7,087.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 1,638,100 | $ 1,076,918 |
Class T | 99,020 | 29,833 |
Materials | 8,803,568 | 6,872,385 |
Institutional Class | 3,592,103 | 1,673,460 |
Total | $ 14,132,791 | $ 9,652,596 |
Annual Report
9. Distributions to Shareholders - continued
Years ended February 28, | 2015 | 2014 |
From net realized gain |
|
|
Class A | $ 27,780,861 | $ 5,762,988 |
Class T | 3,863,168 | 809,850 |
Class B | 628,830 | 165,553 |
Class C | 9,676,799 | 1,915,182 |
Materials | 98,020,822 | 22,724,072 |
Institutional Class | 36,075,039 | 5,500,165 |
Total | $ 176,045,519 | $ 36,877,810 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,287,549 | 1,797,224 | $ 107,992,682 | $ 142,257,752 |
Reinvestment of distributions | 350,058 | 72,401 | 27,494,344 | 5,951,034 |
Shares redeemed | (1,557,532) | (965,142) | (130,043,911) | (75,392,440) |
Net increase (decrease) | 80,075 | 904,483 | $ 5,443,115 | $ 72,816,346 |
Class T |
|
|
|
|
Shares sold | 122,029 | 170,035 | $ 10,167,521 | $ 13,444,901 |
Reinvestment of distributions | 48,608 | 9,678 | 3,794,851 | 792,607 |
Shares redeemed | (130,511) | (172,106) | (10,688,592) | (13,187,903) |
Net increase (decrease) | 40,126 | 7,607 | $ 3,273,780 | $ 1,049,605 |
Class B |
|
|
|
|
Shares sold | 2,935 | 7,873 | $ 242,184 | $ 603,147 |
Reinvestment of distributions | 7,683 | 1,836 | 590,123 | 148,096 |
Shares redeemed | (30,247) | (48,755) | (2,465,575) | (3,688,524) |
Net increase (decrease) | (19,629) | (39,046) | $ (1,633,268) | $ (2,937,281) |
Class C |
|
|
|
|
Shares sold | 367,698 | 450,706 | $ 30,096,831 | $ 34,616,884 |
Reinvestment of distributions | 110,883 | 19,891 | 8,472,087 | 1,600,154 |
Shares redeemed | (366,676) | (246,286) | (29,116,038) | (18,989,979) |
Net increase (decrease) | 111,905 | 224,311 | $ 9,452,880 | $ 17,227,059 |
Materials |
|
|
|
|
Shares sold | 2,411,814 | 3,222,449 | $ 202,615,605 | $ 254,476,294 |
Reinvestment of distributions | 1,274,428 | 341,183 | 100,536,677 | 28,082,183 |
Shares redeemed | (4,164,314) | (4,936,489) | (345,204,286) | (386,209,902) |
Net increase (decrease) | (478,072) | (1,372,857) | $ (42,052,004) | $ (103,651,425) |
Institutional Class |
|
|
|
|
Shares sold | 4,739,071A | 2,646,562 | $ 400,864,210A | $ 209,408,784 |
Reinvestment of distributions | 464,747 | 73,103 | 36,366,289 | 6,019,071 |
Shares redeemed | (3,246,644)B | (2,219,316) | (271,874,142)B | (170,552,801) |
Net increase (decrease) | 1,957,174 | 500,349 | $ 165,356,357 | $ 44,875,054 |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount included in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Fidelity Advisor Telecommunications Fund - Institutional Class
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Institutional Class A | 11.85% | 13.55% | 8.10% |
A The initial offering of Institutional Class shares took place on December 12, 2006. Returns prior to December 12, 2006, are those of Telecommunications Portfolio, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor Telecommunications Fund - Institutional Class on February 28, 2005. 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. See footnote A for additional information regarding the performance of Institutional Class.
Annual Report
Fidelity Advisor Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Matthew Drukker, Portfolio Manager of Fidelity Advisor® Telecommunications Portfolio: For the year, the fund's Institutional Class shares rose 11.85%, underperforming the 12.66% gain of the MSCI U.S. IMI Telecommunications Services 25-50 Index and the S&P 500®. Telecom stocks had a strong absolute return, but they lagged the broad market due in part to a decline in consumer spending and a high debt-equity ratio for the sector. Further weighing on the sector were falling net profit margins, given continued competition among major wireless carriers - namely Verizon Communications, Sprint, AT&T and T-Mobile - and rising expenses at firms looking to expand and improve their networks. Despite these negative factors, increased demand for wireless helped support the sector, as did yield-hungry investors attracted to the dividends typically paid by telecom firms. From an industry perspective, the fund's positioning in wireless telecom services hurt the most versus the MSCI index. Looking at individual stocks, the fund's non-index position in U.K.-based Vodafone Group was the biggest relative detractor. The stock stumbled the past year amid the firm's announcement of disappointing fourth-quarter sales and expected declines in 2015 core earnings because of investment spending needed for its business. I sold a significant portion of our holdings in the stock during the period to invest in more-promising opportunities. On the flip side, positioning in alternative carriers was a plus, including an average overweighting in telecom and Internet service provider Level 3 Communications, the fund's biggest contributor and one of its largest holdings. I increased our stake in Level 3 to an overweighting as the period progressed, and its shares rose when the firm acquired competitor tw telecom in October and reported better-than-expected quarterly earnings in November.
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
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, 2014 to February 28, 2015).
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 | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,045.40 | $ 5.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,043.80 | $ 7.45 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.50 | $ 9.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.80 | $ 9.37 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Telecommunications | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.20 | $ 4.16 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.73 | $ 4.11 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.10 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Verizon Communications, Inc. | 19.9 | 23.0 |
AT&T, Inc. | 7.5 | 10.0 |
Level 3 Communications, Inc. | 6.4 | 3.1 |
DIRECTV | 6.4 | 5.2 |
SBA Communications Corp. | 4.3 | 3.4 |
Cogent Communications Group, Inc. | 4.3 | 4.0 |
T-Mobile U.S., Inc. | 4.3 | 4.3 |
CenturyLink, Inc. | 3.3 | 5.6 |
Telephone & Data Systems, Inc. | 3.2 | 3.5 |
Frontier Communications Corp. | 3.0 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Diversified Telecommunication Services | 62.8% |
|
![]() | Wireless Telecommunication Services | 19.8% |
|
![]() | Media | 9.8% |
|
![]() | Real Estate Investment Trusts | 2.7% |
|
![]() | Internet Software & Services | 1.0% |
|
![]() | All Others* | 3.9% |
|
As of August 31, 2014 | |||
![]() | Diversified Telecommunication Services | 67.3% |
|
![]() | Wireless Telecommunication Services | 17.0% |
|
![]() | Media | 8.3% |
|
![]() | Real Estate Investment Trusts | 2.8% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 3.4% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Telecommunications Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.9% | |||
Communications Equipment - 0.9% | |||
Arris Group, Inc. (a) | 42,900 | $ 1,260,402 | |
Ruckus Wireless, Inc. (a) | 151,400 | 1,916,724 | |
| 3,177,126 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 62.3% | |||
Alternative Carriers - 23.2% | |||
8x8, Inc. (a) | 867,186 | 6,425,848 | |
Cogent Communications Group, Inc. | 435,968 | 16,008,745 | |
Globalstar, Inc. (a)(d) | 2,760,500 | 7,122,090 | |
Iliad SA | 15,015 | 3,899,028 | |
inContact, Inc. (a) | 664,423 | 7,780,393 | |
Inmarsat PLC | 80,100 | 1,083,282 | |
Iridium Communications, Inc. (a)(d) | 397,876 | 3,811,652 | |
Level 3 Communications, Inc. (a) | 445,367 | 23,987,467 | |
Lumos Networks Corp. | 439,578 | 7,569,533 | |
Premiere Global Services, Inc. (a) | 416,883 | 4,060,440 | |
Towerstream Corp. (a)(d) | 807,024 | 1,823,874 | |
Vonage Holdings Corp. (a) | 617,271 | 2,802,410 | |
| 86,374,762 | ||
Integrated Telecommunication Services - 39.1% | |||
AT&T, Inc. | 801,550 | 27,701,568 | |
Atlantic Tele-Network, Inc. | 86,900 | 5,981,327 | |
Bezeq The Israel Telecommunication Corp. Ltd. | 1,411,100 | 2,262,889 | |
CenturyLink, Inc. | 321,078 | 12,156,013 | |
Cincinnati Bell, Inc. (a) | 697,514 | 2,336,672 | |
Consolidated Communications Holdings, Inc. | 218,398 | 4,647,509 | |
Frontier Communications Corp. (d) | 1,388,383 | 11,079,296 | |
General Communications, Inc. | 35,596 | 493,717 | |
IDT Corp. Class B | 159,981 | 3,367,600 | |
Telecom Italia SpA (a)(d) | 974,800 | 1,164,980 | |
Verizon Communications, Inc. | 1,500,997 | 74,224,304 | |
Windstream Holdings, Inc. (d) | 1,882 | 14,849 | |
| 145,430,724 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 231,805,486 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Technology Distributors - 0.2% | |||
Ingram Micro, Inc. Class A (a) | 32,200 | 795,662 | |
INTERNET SOFTWARE & SERVICES - 1.0% | |||
Internet Software & Services - 1.0% | |||
Gogo, Inc. (a)(d) | 95,700 | 1,720,686 | |
Rackspace Hosting, Inc. (a) | 42,300 | 2,101,041 | |
| 3,821,727 | ||
| |||
Shares | Value | ||
IT SERVICES - 0.9% | |||
IT Consulting & Other Services - 0.9% | |||
Interxion Holding N.V. (a) | 100,100 | $ 3,190,187 | |
MEDIA - 9.8% | |||
Cable & Satellite - 9.8% | |||
DIRECTV (a) | 270,000 | 23,922,000 | |
Liberty Global PLC Class C | 31,636 | 1,650,450 | |
Time Warner Cable, Inc. | 71,500 | 11,014,575 | |
| 36,587,025 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.7% | |||
Office REITs - 0.1% | |||
CyrusOne, Inc. | 18,300 | 543,876 | |
Specialized REITs - 2.6% | |||
American Tower Corp. | 86,590 | 8,584,533 | |
Crown Castle International Corp. | 11,600 | 1,001,196 | |
| 9,585,729 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 10,129,605 | ||
SOFTWARE - 0.7% | |||
Application Software - 0.6% | |||
Comverse, Inc. (a) | 47,900 | 859,326 | |
Interactive Intelligence Group, Inc. (a) | 30,700 | 1,302,908 | |
| 2,162,234 | ||
Systems Software - 0.1% | |||
Rovi Corp. (a) | 25,600 | 636,928 | |
TOTAL SOFTWARE | 2,799,162 | ||
WIRELESS TELECOMMUNICATION SERVICES - 19.5% | |||
Wireless Telecommunication Services - 19.5% | |||
Bharti Infratel Ltd. | 379,493 | 2,262,781 | |
KDDI Corp. | 48,400 | 3,354,115 | |
Leap Wireless International, Inc. rights (a) | 400 | 1,008 | |
Mobistar SA (a) | 200 | 4,715 | |
NTELOS Holdings Corp. | 88 | 398 | |
RingCentral, Inc. (a) | 247,300 | 3,899,921 | |
SBA Communications Corp. Class A (a) | 129,456 | 16,144,458 | |
Shenandoah Telecommunications Co. | 66,626 | 1,938,150 | |
SoftBank Corp. | 62,000 | 3,829,158 | |
Sprint Corp. (a)(d) | 1,149,685 | 5,886,387 | |
T-Mobile U.S., Inc. (a) | 480,197 | 15,860,907 | |
Telephone & Data Systems, Inc. | 466,964 | 11,879,564 | |
U.S. Cellular Corp. (a) | 55,900 | 2,120,287 | |
Vodafone Group PLC sponsored ADR | 161,300 | 5,574,528 | |
| 72,756,377 | ||
TOTAL COMMON STOCKS (Cost $300,622,254) |
| ||
Nonconvertible Preferred Stocks - 0.8% | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||
Integrated Telecommunication Services - 0.5% | |||
Telefonica Brasil SA sponsored ADR (d) | 87,000 | $ 1,612,980 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
TIM Participacoes SA sponsored ADR | 57,300 | 1,207,884 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $3,366,705) |
| ||
Money Market Funds - 8.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 2,667,472 | 2,667,472 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 28,288,110 | 28,288,110 | |
TOTAL MONEY MARKET FUNDS (Cost $30,955,582) |
|
TOTAL INVESTMENT PORTFOLIO - 107.1% (Cost $334,944,541) | 398,838,803 | |
NET OTHER ASSETS (LIABILITIES) - (7.1)% | (26,529,439) | |
NET ASSETS - 100% | $ 372,309,364 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,724 |
Fidelity Securities Lending Cash Central Fund | 241,214 |
Total | $ 247,938 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 365,062,357 | $ 360,067,211 | $ 4,994,138 | $ 1,008 |
Nonconvertible Preferred Stocks | 2,820,864 | 2,820,864 | - | - |
Money Market Funds | 30,955,582 | 30,955,582 | - | - |
Total Investments in Securities: | $ 398,838,803 | $ 393,843,657 | $ 4,994,138 | $ 1,008 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,251,018) - See accompanying schedule: Unaffiliated issuers (cost $303,988,959) | $ 367,883,221 |
|
Fidelity Central Funds (cost $30,955,582) | 30,955,582 |
|
Total Investments (cost $334,944,541) |
| $ 398,838,803 |
Receivable for investments sold | 5,117,986 | |
Receivable for fund shares sold | 262,644 | |
Dividends receivable | 169,798 | |
Distributions receivable from Fidelity Central Funds | 30,499 | |
Prepaid expenses | 1,685 | |
Other receivables | 12,404 | |
Total assets | 404,433,819 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,377,669 | |
Payable for fund shares redeemed | 1,164,103 | |
Accrued management fee | 170,813 | |
Distribution and service plan fees payable | 10,377 | |
Other affiliated payables | 72,823 | |
Other payables and accrued expenses | 40,560 | |
Collateral on securities loaned, at value | 28,288,110 | |
Total liabilities | 32,124,455 | |
|
|
|
Net Assets | $ 372,309,364 | |
Net Assets consist of: |
| |
Paid in capital | $ 314,390,827 | |
Undistributed net investment income | 262,486 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,235,407) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 63,891,458 | |
Net Assets | $ 372,309,364 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 63.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $63.26) | $ 67.12 | |
Class T: | $ 63.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $63.04) | $ 65.33 | |
Class B: | $ 63.45 | |
|
|
|
Class C: | $ 63.04 | |
|
|
|
Telecommunications: | $ 63.54 | |
|
|
|
Institutional Class: | $ 63.38 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,359,019 |
Income from Fidelity Central Funds |
| 247,938 |
Total income |
| 9,606,957 |
|
|
|
Expenses | ||
Management fee | $ 2,193,042 | |
Transfer agent fees | 811,199 | |
Distribution and service plan fees | 113,904 | |
Accounting and security lending fees | 159,536 | |
Custodian fees and expenses | 20,266 | |
Independent trustees' compensation | 7,823 | |
Registration fees | 81,435 | |
Audit | 44,165 | |
Legal | 3,236 | |
Interest | 466 | |
Miscellaneous | 5,823 | |
Total expenses before reductions | 3,440,895 | |
Expense reductions | (27,807) | 3,413,088 |
Net investment income (loss) | 6,193,869 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,972,473 | |
Redemption in-kind with affiliated entities | 2,885,287 | |
Foreign currency transactions | (28,453) | |
Total net realized gain (loss) |
| 7,829,307 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 28,385,962 | |
Assets and liabilities in foreign currencies | 1,342 | |
Total change in net unrealized appreciation (depreciation) |
| 28,387,304 |
Net gain (loss) | 36,216,611 | |
Net increase (decrease) in net assets resulting from operations | $ 42,410,480 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 6,193,869 | $ 14,968,972 |
Net realized gain (loss) | 7,829,307 | 2,159,537 |
Change in net unrealized appreciation (depreciation) | 28,387,304 | 48,829,048 |
Net increase (decrease) in net assets resulting from operations | 42,410,480 | 65,957,557 |
Distributions to shareholders from net investment income | (13,679,321) | (8,506,759) |
Distributions to shareholders from net realized gain | - | (32,511) |
Total distributions | (13,679,321) | (8,539,270) |
Share transactions - net increase (decrease) | (19,703,086) | (90,264,976) |
Redemption fees | 3,706 | 26,413 |
Total increase (decrease) in net assets | 9,031,779 | (32,820,276) |
|
|
|
Net Assets | ||
Beginning of period | 363,277,585 | 396,097,861 |
End of period (including undistributed net investment income of $262,486 and undistributed net investment income of $7,778,471, respectively) | $ 372,309,364 | $ 363,277,585 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 | $ 37.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .76 | 1.76F | .99 | .56 | .57 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.43 | (.86) | 9.49 |
Total from investment operations | 6.59 | 8.24 | 6.42 | (.30) | 10.06 |
Distributions from net investment income | (2.04) | (1.11) | (.96) | (.51) | (.77) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.04) | (1.11) J | (.96) | (.51) | (.77) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.26 | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 |
Total ReturnA, B | 11.54% | 16.00% | 13.97% | (.54)% | 26.87% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of fee waivers, if any | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of all reductions | 1.15% | 1.15% | 1.17% | 1.18% | 1.18% |
Net investment income (loss) | 1.26% | 3.08% F | 2.01% | 1.21% | 1.35% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,052 | $ 7,712 | $ 6,449 | $ 4,677 | $ 4,305 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.43%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 | $ 37.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .57 | 1.59F | .85 | .42 | .45 |
Net realized and unrealized gain (loss) | 5.81 | 6.44 | 5.39 | (.84) | 9.47 |
Total from investment operations | 6.38 | 8.03 | 6.24 | (.42) | 9.92 |
Distributions from net investment income | (1.84) | (.94) | (.84) | (.38) | (.66) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.84) | (.94) J | (.84) | (.38) | (.66) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 |
Total ReturnA, B | 11.19% | 15.64% | 13.61% | (.82)% | 26.54% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of fee waivers, if any | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of all reductions | 1.46% | 1.45% | 1.46% | 1.47% | 1.46% |
Net investment income (loss) | .94% | 2.78% F | 1.72% | .92% | 1.06% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,095 | $ 4,344 | $ 4,237 | $ 2,702 | $ 2,882 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.13%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 | $ 37.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 | 1.33F | .62 | .21 | .25 |
Net realized and unrealized gain (loss) | 5.84 | 6.48 | 5.42 | (.83) | 9.48 |
Total from investment operations | 6.13 | 7.81 | 6.04 | (.62) | 9.73 |
Distributions from net investment income | (1.45) | (.66) | (.55) | (.17) | (.40) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.45) | (.67) | (.55) | (.17) | (.40) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.45 | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 |
Total ReturnA, B | 10.67% | 15.13% | 13.11% | (1.29)% | 25.96% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of all reductions | 1.92% | 1.91% | 1.92% | 1.93% | 1.93% |
Net investment income (loss) | .49% | 2.32% F | 1.26% | .47% | .60% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 409 | $ 546 | $ 576 | $ 596 | $ 706 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .67%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 | $ 37.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .34 | 1.36F | .63 | .22 | .26 |
Net realized and unrealized gain (loss) | 5.80 | 6.46 | 5.41 | (.84) | 9.46 |
Total from investment operations | 6.14 | 7.82 | 6.04 | (.62) | 9.72 |
Distributions from net investment income | (1.64) | (.74) | (.59) | (.25) | (.44) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.64) | (.75) | (.59) | (.25) | (.44) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 |
Total ReturnA, B | 10.75% | 15.20% | 13.14% | (1.27)% | 25.95% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of fee waivers, if any | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of all reductions | 1.85% | 1.85% | 1.89% | 1.91% | 1.92% |
Net investment income (loss) | .56% | 2.38% F | 1.29% | .48% | .61% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,074 | $ 5,523 | $ 4,353 | $ 3,514 | $ 3,035 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .73%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 | $ 37.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .96 | 1.96E | 1.15 | .70 | .69 |
Net realized and unrealized gain (loss) | 5.85 | 6.51 | 5.43 | (.86) | 9.52 |
Total from investment operations | 6.81 | 8.47 | 6.58 | (.16) | 10.21 |
Distributions from net investment income | (2.21) | (1.28) | (1.09) | (.65) | (.87) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.21) | (1.28) I | (1.09) | (.65) | (.87) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.54 | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 |
Total ReturnA | 11.90% | 16.40% | 14.30% | (.23)% | 27.24% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .83% | .85% | .87% | .90% | .92% |
Expenses net of fee waivers, if any | .83% | .85% | .87% | .90% | .92% |
Expenses net of all reductions | .82% | .82% | .85% | .88% | .91% |
Net investment income (loss) | 1.58% | 3.41% E | 2.33% | 1.52% | 1.62% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 346,174 | $ 343,548 | $ 377,841 | $ 342,262 | $ 354,938 |
Portfolio turnover rateD | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.76%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. ITotal distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 | $ 37.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .94 | 1.93E | 1.17 | .70 | .71 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.42 | (.88) | 9.50 |
Total from investment operations | 6.77 | 8.41 | 6.59 | (.18) | 10.21 |
Distributions from net investment income | (2.19) | (1.25) | (1.14) | (.64) | (.88) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.19) | (1.26) | (1.14) | (.64) | (.88) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.38 | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 |
Total ReturnA | 11.85% | 16.30% | 14.33% | (.26)% | 27.27% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .86% | .91% | .85% | .89% | .91% |
Expenses net of fee waivers, if any | .86% | .91% | .85% | .89% | .91% |
Expenses net of all reductions | .85% | .88% | .83% | .87% | .89% |
Net investment income (loss) | 1.55% | 3.35% E | 2.35% | 1.52% | 1.64% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,505 | $ 1,604 | $ 2,641 | $ 1,022 | $ 1,743 |
Portfolio turnover rateD | 94% I | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transaction, in-kind transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 67,489,038 |
Gross unrealized depreciation | (5,485,717) |
Net unrealized appreciation (depreciation) on securities | $ 62,003,321 |
|
|
Tax Cost | $ 336,835,482 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 262,994 |
Capital loss carryforward | $ (2,739,258) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 62,000,362 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2018 | $ (2,739,258) |
The Fund elected to defer to its next fiscal year approximately $1,605,208 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 13,679,321 | $ 8,539,270 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $369,250,039 and $374,869,443, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 23,518 | $ 1,136 |
Class T | .25% | .25% | 24,040 | 2 |
Class B | .75% | .25% | 4,565 | 3,425 |
Class C | .75% | .25% | 61,781 | 12,901 |
|
|
| $ 113,904 | $ 17,464 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 12,354 |
Class T | 3,257 |
Class B* | 41 |
Class C* | 721 |
| $ 16,373 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 25,757 | .27 |
Class T | 16,249 | .34 |
Class B | 1,364 | .30 |
Class C | 13,731 | .22 |
Telecommunications | 749,337 | .20 |
Institutional Class | 4,761 | .23 |
| $ 811,199 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $16,650 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,435,667 | .33% | $ 466 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 198,779 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $12,187,185. The net realized gain of $2,885,287 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $615 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $241,214.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $27,389 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Telecommunications expenses during the period in the amount of $418.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 309,863 | $ 137,021 |
Class T | 143,116 | 71,145 |
Class B | 12,248 | 6,457 |
Class C | 161,299 | 68,251 |
Telecommunications | 12,985,170 | 8,194,747 |
Institutional Class | 67,625 | 29,138 |
Total | $ 13,679,321 | $ 8,506,759 |
From net realized gain |
|
|
Class A | $ - | $ 617 |
Class T | - | 373 |
Class B | - | 48 |
Class C | - | 466 |
Telecommunications | - | 30,889 |
Institutional Class | - | 118 |
Total | $ - | $ 32,511 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 79,279 | 62,389 | $ 4,786,534 | $ 3,565,235 |
Reinvestment of distributions | 5,091 | 2,113 | 297,550 | 123,157 |
Shares redeemed | (41,031) | (58,169) | (2,466,354) | (3,308,571) |
Net increase (decrease) | 43,339 | 6,333 | $ 2,617,730 | $ 379,821 |
Class T |
|
|
|
|
Shares sold | 20,637 | 23,341 | $ 1,237,395 | $ 1,331,922 |
Reinvestment of distributions | 2,409 | 1,193 | 139,987 | 69,243 |
Shares redeemed | (16,465) | (32,706) | (994,017) | (1,852,992) |
Net increase (decrease) | 6,581 | (8,172) | $ 383,365 | $ (451,827) |
Class B |
|
|
|
|
Shares sold | 45 | 135 | $ 2,624 | $ 7,819 |
Reinvestment of distributions | 197 | 103 | 11,445 | 6,030 |
Shares redeemed | (3,091) | (2,095) | (186,477) | (116,496) |
Net increase (decrease) | (2,849) | (1,857) | $ (172,408) | $ (102,647) |
Class C |
|
|
|
|
Shares sold | 28,734 | 31,217 | $ 1,731,696 | $ 1,769,477 |
Reinvestment of distributions | 2,043 | 819 | 118,683 | 47,679 |
Shares redeemed | (12,919) | (22,263) | (773,747) | (1,264,412) |
Net increase (decrease) | 17,858 | 9,773 | $ 1,076,632 | $ 552,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,400,370 | 3,045,047 | $ 205,982,254 | $ 171,993,078 |
Reinvestment of distributions | 212,695 | 136,279 | 12,494,070 | 7,951,397 |
Shares redeemed | (3,993,893)A | (4,653,020) | (242,841,980)A | (269,388,514) |
Net increase (decrease) | (380,828) | (1,471,694) | $ (24,365,656) | $ (89,444,039) |
Institutional Class |
|
|
|
|
Shares sold | 29,046 | 22,305 | $ 1,764,278 | $ 1,294,531 |
Reinvestment of distributions | 956 | 405 | 56,138 | 23,701 |
Shares redeemed | (17,754) | (46,560) | (1,063,165) | (2,517,260) |
Net increase (decrease) | 12,248 | (23,850) | $ 757,251 | $ (1,199,028) |
A Amount includes in-kind redemptions (See note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Strategic Advisers Core Fund was the owner of record of approximately 18% of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 20% of the total outstanding shares of the Fund.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial position of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, the results of each of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
Annual Report
Trustees and Officers - continued
The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
Consumer Staples Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/13/15 | 04/10/15 | $0.220 | $3.152 |
Gold Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Materials Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/13/15 | 04/10/15 | $0.000 | $0.036 |
Telecommunications Portfolio | Pay Date | Record Date | Dividends | Capital Gains |
Institutional Class | 04/13/15 | 04/10/15 | $0.058 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 2015, or, if subsequently determined to be different, the net capital gain of such year.
Fund |
|
Consumer Staples Portfolio | $112,892,370 |
Materials Portfolio | $141,502,281 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Fund | April 2014 | December 2014 |
Consumer Staples Portfolio |
|
|
Institutional Class | 68% | 94% |
Gold Portfolio |
|
|
Institutional Class | 0% | 0% |
Materials Portfolio |
|
|
Institutional Class | 100% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 20% | 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 2014 | December 2014 |
Consumers Staples Portfolio |
|
|
Institutional Class | 100% | 100% |
Gold Portfolio |
|
|
Institutional Class | 0% | 0% |
Materials Portfolio |
|
|
Institutional Class | 100% | 100% |
Telecommunications Portfolio |
|
|
Institutional Class | 100% | 100% |
The fund will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Consumer Staples Portfolio and Telecommunications Portfolio each underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Consumer Staples Portfolio
Gold Portfolio
Annual Report
Materials Portfolio
Telecommunications Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of the total expense ratio of each class of each fund, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each class of each fund compared to competitive fund median expenses. Each class of each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
For each of Consumer Staples Portfolio, Gold Portfolio, and Materials Portfolio, the Board noted that the total expense ratio of each class ranked below its competitive median for the 12-month period ended June 30, 2014.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the total expense ratio of each of Class A, Class B, Class C, Institutional Class, and the retail class of Telecommunications Portfolio ranked below its competitive median for the 12-month period ended June 30, 2014 and the total expense ratio of Class T ranked above its competitive median for the 12-month period ended June 30, 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T as compared to most competitor funds. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that, although the expense ratio of Class T of Telecommunications Portfolio was above the median of the universe presented for comparison, the total expense ratio of each class of each fund was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Annual Report
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
245 Summer St., Boston, MA 02210
www.fidelity.com
ASGMTI-UANN-0415
1.845768.108
Fidelity®
Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example |
| |
Investment Changes |
| |
Investments |
| |
Financial Statements |
| |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Consumer Staples Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Consumer Staples Portfolio A | 22.27% | 15.91% | 11.69% |
A Prior to October 1, 2006, Consumer Staples Portfolio was named Food and Agriculture Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Staples Portfolio, a class of the fund, on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Consumer Staples Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Robert Lee, Portfolio Manager of Consumer Staples Portfolio: For the year, the fund's Retail Class shares returned 22.27%, outperforming the 21.28% gain of its sector benchmark, the MSCI U.S. IMI Consumer Staples 25-50 Index, and the S&P 500®. The sector put up a strong absolute return and outpaced the broader market, as long-term trends supported continued growth in consumer staples sales, even amid an increasingly challenging global macroeconomic backdrop. In addition, many companies remained focused on cost cutting, which helped account for decent earnings results, while merger-and-acquisition activity among a handful of names added a bit of a spark. Versus the MSCI index, food retail was a sweet spot for the fund the past year, with grocer Kroger by far our biggest contributor and one of our largest holdings. Shares of the grocery and retail giant steadily rose during the period, as consumers continued to gravitate toward its customer-friendly stores, which boasted a bevy of locations and discounted private-label goods. As a result, the company reported consecutive quarters of better-than-expected sales and earnings growth, including expanding revenue and profits. Whole Foods Market was another winner in this space, due to timely ownership. Elsewhere, Monster Beverage, which I added to the fund during the year, helped. The fund was overweighted the energy-drink manufacturer when its shares soared in August after beverage giant Coca-Cola acquired a 17% stake in the firm. As part of the new partnership, Coca-Cola transferred its energy drink lineup to Monster in exchange for Monster's non-energy drink business, to include its natural soft drinks and juices. The exchange gave Monster an immediate sales boost and expanded international presence. Additionally, the firm launched new energy products late in 2014, and it plans to expand its lineup and international expansion in 2015. On the flip side, the fund's stake in British American Tobacco (BAT), our largest position, hurt. Slowing sales of BAT's cigarette brands, as well as heightened competition from e-cigarette makers, caused the stock to decline. Stock selection in distillers & vintners also hurt, including non-index stakes in the U.K.'s Diageo and French firms Pernod Ricard and Remy Cointreau. Cognac had been a popular gift for Chinese government officials prior to 2013, but the category took a hit last year amid the country's crackdown on corruption that banned lavish gifts, including high-end spirits, for civil servants. This weighed on the earnings and sales of all three firms over the year. I sold Pernod from the fund by period end. Of note, the fund's cash position also hindered our relative result amid a strong market, as did some of its foreign investments due to an appreciating dollar.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Consumer 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, 2014 to February 28, 2015).
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 | 1.05% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,106.30 | $ 5.48 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.59 | $ 5.26 |
Class T | 1.32% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,104.80 | $ 6.89 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.25 | $ 6.61 |
Class B | 1.81% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.10 | $ 9.43 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.82 | $ 9.05 |
Class C | 1.80% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,102.20 | $ 9.38 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.87 | $ 9.00 |
Consumer Staples | .77% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.02 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.98 | $ 3.86 |
Institutional Class | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,107.80 | $ 4.13 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Consumer Staples Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
British American Tobacco PLC sponsored ADR | 11.0 | 11.7 |
Procter & Gamble Co. | 9.1 | 8.8 |
CVS Health Corp. | 9.0 | 7.5 |
Wal-Mart Stores, Inc. | 7.0 | 4.6 |
Kroger Co. | 6.0 | 4.9 |
The Coca-Cola Co. | 4.8 | 11.5 |
Mead Johnson Nutrition Co. | 4.5 | 4.0 |
Lorillard, Inc. | 4.3 | 1.2 |
PepsiCo, Inc. | 4.2 | 2.5 |
Colgate-Palmolive Co. | 3.0 | 1.8 |
| 62.9 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Food & Staples Retailing | 26.7% |
|
![]() | Tobacco | 19.7% |
|
![]() | Beverages | 18.8% |
|
![]() | Food Products | 16.7% |
|
![]() | Household Products | 12.3% |
|
![]() | All Others* | 5.8% |
|
As of August 31, 2014 | |||
![]() | Beverages | 25.7% |
|
![]() | Food & Staples Retailing | 22.4% |
|
![]() | Tobacco | 20.4% |
|
![]() | Food Products | 14.9% |
|
![]() | Household Products | 10.8% |
|
![]() | All Others* | 5.8% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Consumer Staples Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.4% | |||
Shares | Value | ||
BEVERAGES - 18.6% | |||
Brewers - 2.9% | |||
Anheuser-Busch InBev SA NV | 367,590 | $ 46,632,487 | |
SABMiller PLC | 799,384 | 45,354,240 | |
| 91,986,727 | ||
Distillers & Vintners - 2.5% | |||
C&C Group PLC | 1,359,200 | 5,872,630 | |
Diageo PLC sponsored ADR | 384,326 | 45,677,145 | |
Remy Cointreau SA (d) | 359,676 | 26,415,775 | |
| 77,965,550 | ||
Soft Drinks - 13.2% | |||
Coca-Cola Bottling Co. Consolidated | 135,295 | 14,123,445 | |
Coca-Cola Central Japan Co. Ltd. | 450,500 | 7,931,060 | |
Coca-Cola FEMSA S.A.B. de CV sponsored ADR (d) | 52,529 | 4,533,253 | |
Coca-Cola Icecek Sanayi A/S | 567,162 | 11,021,305 | |
Embotelladora Andina SA: | |||
ADR | 376,112 | 5,205,390 | |
sponsored ADR | 188,900 | 3,141,407 | |
Fomento Economico Mexicano S.A.B. de CV sponsored ADR (a) | 87,387 | 8,324,486 | |
Monster Beverage Corp. (a) | 522,900 | 73,791,648 | |
PepsiCo, Inc. | 1,321,623 | 130,814,245 | |
The Coca-Cola Co. | 3,485,118 | 150,905,609 | |
| 409,791,848 | ||
TOTAL BEVERAGES | 579,744,125 | ||
BIOTECHNOLOGY - 0.1% | |||
Biotechnology - 0.1% | |||
Enzymotec Ltd. (a) | 507,078 | 4,183,394 | |
CHEMICALS - 0.1% | |||
Specialty Chemicals - 0.1% | |||
Senomyx, Inc. (a)(d) | 422,200 | 2,246,104 | |
FOOD & STAPLES RETAILING - 26.7% | |||
Drug Retail - 9.2% | |||
CVS Health Corp. | 2,693,976 | 279,823,287 | |
Drogasil SA (a) | 634,100 | 6,366,129 | |
| 286,189,416 | ||
Food Distributors - 0.9% | |||
Chefs' Warehouse Holdings (a) | 412,669 | 8,360,674 | |
United Natural Foods, Inc. (a) | 247,081 | 20,517,606 | |
| 28,878,280 | ||
Food Retail - 8.7% | |||
Fresh Market, Inc. (a)(d) | 413,324 | 15,731,111 | |
Kroger Co. | 2,638,018 | 187,694,981 | |
Sprouts Farmers Market LLC (a) | 312,929 | 11,518,916 | |
Whole Foods Market, Inc. | 980,100 | 55,365,849 | |
| 270,310,857 | ||
| |||
Shares | Value | ||
Hypermarkets & Super Centers - 7.9% | |||
Costco Wholesale Corp. | 190,350 | $ 27,973,836 | |
Wal-Mart Stores, Inc. | 2,577,756 | 216,351,061 | |
| 244,324,897 | ||
TOTAL FOOD & STAPLES RETAILING | 829,703,450 | ||
FOOD PRODUCTS - 16.7% | |||
Agricultural Products - 4.6% | |||
Archer Daniels Midland Co. | 1,129,316 | 54,071,650 | |
Bunge Ltd. | 999,813 | 81,764,707 | |
SLC Agricola SA | 1,281,200 | 6,232,804 | |
| 142,069,161 | ||
Packaged Foods & Meats - 12.1% | |||
Dean Foods Co. | 969,979 | 15,636,061 | |
General Mills, Inc. | 1,287,100 | 69,233,109 | |
Inner Mongoli Yili Industries Co. Ltd. | 1,222,221 | 5,505,219 | |
Keurig Green Mountain, Inc. | 543,483 | 69,337,561 | |
Lindt & Spruengli AG | 90 | 5,864,373 | |
Mead Johnson Nutrition Co. Class A | 1,336,416 | 140,002,940 | |
Nestle SA | 385,109 | 30,097,732 | |
The Hain Celestial Group, Inc. (a) | 334,978 | 20,946,174 | |
Ulker Biskuvi Sanayi A/S | 820,525 | 6,361,546 | |
Unilever NV (NY Reg.) | 339,798 | 14,771,019 | |
| 377,755,734 | ||
TOTAL FOOD PRODUCTS | 519,824,895 | ||
HOTELS, RESTAURANTS & LEISURE - 1.5% | |||
Restaurants - 1.5% | |||
ARAMARK Holdings Corp. | 1,444,628 | 45,722,476 | |
HOUSEHOLD DURABLES - 0.4% | |||
Household Appliances - 0.2% | |||
SodaStream International Ltd. (a)(d) | 240,515 | 4,310,029 | |
Housewares & Specialties - 0.2% | |||
Tupperware Brands Corp. | 94,600 | 6,754,440 | |
TOTAL HOUSEHOLD DURABLES | 11,064,469 | ||
HOUSEHOLD PRODUCTS - 12.3% | |||
Household Products - 12.3% | |||
Colgate-Palmolive Co. | 1,341,075 | 94,974,932 | |
Procter & Gamble Co. | 3,324,865 | 283,045,757 | |
Svenska Cellulosa AB (SCA) (B Shares) | 257,500 | 6,405,841 | |
| 384,426,530 | ||
PERSONAL PRODUCTS - 1.9% | |||
Personal Products - 1.9% | |||
Herbalife Ltd. | 428,610 | 13,291,196 | |
L'Oreal SA | 181,900 | 33,026,830 | |
Nu Skin Enterprises, Inc. Class A (d) | 216,667 | 11,739,018 | |
| 58,057,044 | ||
Common Stocks - continued | |||
Shares | Value | ||
PHARMACEUTICALS - 0.2% | |||
Pharmaceuticals - 0.2% | |||
Perrigo Co. PLC | 37,306 | $ 5,762,658 | |
TEXTILES, APPAREL & LUXURY GOODS - 0.2% | |||
Textiles - 0.2% | |||
Japan Tobacco, Inc. | 251,700 | 7,936,572 | |
TOBACCO - 19.7% | |||
Tobacco - 19.7% | |||
Altria Group, Inc. | 1,263,045 | 71,096,803 | |
British American Tobacco PLC sponsored ADR | 2,931,545 | 341,437,048 | |
ITC Ltd. (a) | 1,820,070 | 11,621,381 | |
Lorillard, Inc. | 1,985,503 | 135,848,115 | |
Philip Morris International, Inc. | 476,158 | 39,502,068 | |
Souza Cruz SA | 1,603,500 | 14,324,882 | |
| 613,830,297 | ||
TOTAL COMMON STOCKS (Cost $2,170,373,161) |
| ||
Nonconvertible Preferred Stocks - 0.2% | |||
|
|
|
|
BEVERAGES - 0.2% | |||
Brewers - 0.2% | |||
Ambev SA sponsored ADR | 923,810 |
| |
Money Market Funds - 1.7% | |||
Shares | Value | ||
Fidelity Cash Central Fund, 0.13% (b) | 23,231,539 | $ 23,231,539 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 29,423,466 | 29,423,466 | |
TOTAL MONEY MARKET FUNDS (Cost $52,655,005) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $2,225,337,178) | 3,121,115,594 | ||
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (9,018,217) | ||
NET ASSETS - 100% | $ 3,112,097,377 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 77,785 |
Fidelity Securities Lending Cash Central Fund | 366,992 |
Total | $ 444,777 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section at the end of this listing. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 3,062,502,014 | $ 2,985,771,795 | $ 76,730,219 | $ - |
Nonconvertible Preferred Stocks | 5,958,575 | 5,958,575 | - | - |
Money Market Funds | 52,655,005 | 52,655,005 | - | - |
Total Investments in Securities: | $ 3,121,115,594 | $ 3,044,385,375 | $ 76,730,219 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 73.8% |
United Kingdom | 13.9% |
Bermuda | 2.6% |
France | 1.9% |
Belgium | 1.5% |
Switzerland | 1.1% |
Brazil | 1.0% |
Others (Individually Less Than 1%) | 4.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $28,392,984) - See accompanying schedule: Unaffiliated issuers (cost $2,172,682,173) | $ 3,068,460,589 |
|
Fidelity Central Funds (cost $52,655,005) | 52,655,005 |
|
Total Investments (cost $2,225,337,178) |
| $ 3,121,115,594 |
Receivable for investments sold | 31,872,606 | |
Receivable for fund shares sold | 4,689,917 | |
Dividends receivable | 3,822,729 | |
Distributions receivable from Fidelity Central Funds | 22,132 | |
Prepaid expenses | 9,071 | |
Other receivables | 47,028 | |
Total assets | 3,161,579,077 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 14,312,834 | |
Payable for fund shares redeemed | 3,358,162 | |
Accrued management fee | 1,406,922 | |
Distribution and service plan fees payable | 314,215 | |
Other affiliated payables | 520,163 | |
Other payables and accrued expenses | 145,938 | |
Collateral on securities loaned, at value | 29,423,466 | |
Total liabilities | 49,481,700 | |
|
|
|
Net Assets | $ 3,112,097,377 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,123,703,221 | |
Undistributed net investment income | 5,947,947 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 86,712,312 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 895,733,897 | |
Net Assets | $ 3,112,097,377 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 101.33 | |
|
|
|
Maximum offering price per share (100/94.25 of $101.33) | $ 107.51 | |
Class T: | $ 100.61 | |
|
|
|
Maximum offering price per share (100/96.50 of $100.61) | $ 104.26 | |
Class B: | $ 100.13 | |
|
|
|
Class C: | $ 99.27 | |
|
|
|
Consumer Staples: | $ 102.03 | |
|
|
|
Institutional Class: | $ 101.91 |
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, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 63,157,453 |
Income from Fidelity Central Funds |
| 444,777 |
Total income |
| 63,602,230 |
|
|
|
Expenses | ||
Management fee | $ 14,005,834 | |
Transfer agent fees | 4,714,815 | |
Distribution and service plan fees | 3,266,375 | |
Accounting and security lending fees | 767,701 | |
Custodian fees and expenses | 94,879 | |
Independent trustees' compensation | 47,435 | |
Registration fees | 182,600 | |
Audit | 51,473 | |
Legal | 12,495 | |
Miscellaneous | 38,709 | |
Total expenses before reductions | 23,182,316 | |
Expense reductions | (12,904) | 23,169,412 |
Net investment income (loss) | 40,432,818 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 134,877,861 | |
Redemptions in-kind with affiliated entities | 20,812,198 | |
Foreign currency transactions | (31,090) | |
Total net realized gain (loss) |
| 155,658,969 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $13,239) | 315,419,939 | |
Assets and liabilities in foreign currencies | (37,629) | |
Total change in net unrealized appreciation (depreciation) |
| 315,382,310 |
Net gain (loss) | 471,041,279 | |
Net increase (decrease) in net assets resulting from operations | $ 511,474,097 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 40,432,818 | $ 41,894,781 |
Net realized gain (loss) | 155,658,969 | 171,640,518 |
Change in net unrealized appreciation (depreciation) | 315,382,310 | 26,588,951 |
Net increase (decrease) in net assets resulting from operations | 511,474,097 | 240,124,250 |
Distributions to shareholders from net investment income | (39,618,532) | (38,989,125) |
Distributions to shareholders from net realized gain | (102,399,285) | (137,187,027) |
Total distributions | (142,017,817) | (176,176,152) |
Share transactions - net increase (decrease) | 686,786,861 | (294,831,730) |
Redemption fees | 51,833 | 32,907 |
Total increase (decrease) in net assets | 1,056,294,974 | (230,850,725) |
|
|
|
Net Assets | ||
Beginning of period | 2,055,802,403 | 2,286,653,128 |
End of period (including undistributed net investment income of $5,947,947 and undistributed net investment income of $5,732,152, respectively) | $ 3,112,097,377 | $ 2,055,802,403 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 | $ 61.06 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.37 | 1.43 | 1.26 | 1.22 | .98 |
Net realized and unrealized gain (loss) | 17.28 | 7.51 | 11.73 | 8.73 | 7.10 |
Total from investment operations | 18.65 | 8.94 | 12.99 | 9.95 | 8.08 |
Distributions from net investment income | (1.28) | (1.44) | (1.08) | (1.06) | (.83) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.25) J | (6.68) | (2.22) | (2.70) | (1.49) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 101.33 | $ 87.93 | $ 85.67 | $ 74.90 | $ 67.65 |
Total ReturnA, B | 21.95% | 10.53% | 17.60% | 15.00% | 13.27% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of fee waivers, if any | 1.05% | 1.06% | 1.08% | 1.10% | 1.11% |
Expenses net of all reductions | 1.05% | 1.06% | 1.08% | 1.09% | 1.11% |
Net investment income (loss) | 1.45% | 1.61% | 1.58% | 1.74% | 1.53% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 414,151 | $ 329,459 | $ 277,329 | $ 205,851 | $ 160,526 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 per share.
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 | $ 60.77 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | 1.10 | 1.18 | 1.03 | 1.01 | .79 |
Net realized and unrealized gain (loss) | 17.15 | 7.46 | 11.68 | 8.68 | 7.05 |
Total from investment operations | 18.25 | 8.64 | 12.71 | 9.69 | 7.84 |
Distributions from net investment income | (1.04) | (1.21) | (.88) | (.86) | (.65) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.01) J | (6.45) | (2.02) | (2.50) | (1.31) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.61 | $ 87.37 | $ 85.18 | $ 74.49 | $ 67.30 |
Total ReturnA, B | 21.60% | 10.23% | 17.29% | 14.67% | 12.93% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of fee waivers, if any | 1.32% | 1.33% | 1.36% | 1.38% | 1.40% |
Expenses net of all reductions | 1.32% | 1.33% | 1.35% | 1.38% | 1.40% |
Net investment income (loss) | 1.18% | 1.34% | 1.30% | 1.45% | 1.24% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 81,489 | $ 61,421 | $ 52,024 | $ 39,047 | $ 31,496 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the sales charges.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 | $ 60.37 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .63 | .71 | .61 | .64 | .46 |
Net realized and unrealized gain (loss) | 17.06 | 7.40 | 11.61 | 8.61 | 6.98 |
Total from investment operations | 17.69 | 8.11 | 12.22 | 9.25 | 7.44 |
Distributions from net investment income | (.48) | (.69) | (.37) | (.43) | (.32) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.46) | (5.93) | (1.51) | (2.07) | (.98) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 100.13 | $ 86.90 | $ 84.72 | $ 74.01 | $ 66.83 |
Total ReturnA, B | 21.01% | 9.63% | 16.68% | 14.06% | 12.35% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of fee waivers, if any | 1.82% | 1.86% | 1.89% | 1.91% | 1.91% |
Expenses net of all reductions | 1.82% | 1.86% | 1.88% | 1.90% | 1.91% |
Net investment income (loss) | .68% | .81% | .78% | .93% | .73% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 15,799 | $ 17,388 | $ 18,548 | $ 19,330 | $ 20,033 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 | $ 60.29 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .65 | .75 | .65 | .68 | .49 |
Net realized and unrealized gain (loss) | 16.93 | 7.36 | 11.55 | 8.59 | 7.00 |
Total from investment operations | 17.58 | 8.11 | 12.20 | 9.27 | 7.49 |
Distributions from net investment income | (.65) | (.84) | (.53) | (.59) | (.41) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (4.63) | (6.07) J | (1.67) | (2.23) | (1.07) |
Redemption fees added to paid in capital C, H | - | - | - | - | - |
Net asset value, end of period | $ 99.27 | $ 86.32 | $ 84.28 | $ 73.75 | $ 66.71 |
Total ReturnA, B | 21.03% | 9.70% | 16.73% | 14.14% | 12.44% |
Ratios to Average Net Assets D, F |
|
|
|
|
|
Expenses before reductions | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of fee waivers, if any | 1.80% | 1.82% | 1.83% | 1.85% | 1.86% |
Expenses net of all reductions | 1.80% | 1.81% | 1.82% | 1.84% | 1.85% |
Net investment income (loss) | .70% | .85% | .83% | .99% | .79% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 228,151 | $ 164,669 | $ 134,966 | $ 102,321 | $ 81,239 |
Portfolio turnover rateE | 42% I | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Total returns do not include the effect of the contingent deferred sales charge.
C Calculated based on average shares outstanding during the period.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G For the year ended February 29.
H Amount represents less than $.01 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
J Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 per share.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Consumer Staples
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 | $ 61.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.64 | 1.69 | 1.48 | 1.42 | 1.14 |
Net realized and unrealized gain (loss) | 17.40 | 7.55 | 11.82 | 8.76 | 7.14 |
Total from investment operations | 19.04 | 9.24 | 13.30 | 10.18 | 8.28 |
Distributions from net investment income | (1.54) | (1.66) | (1.28) | (1.24) | (.98) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.52) | (6.90) | (2.42) | (2.87) I | (1.64) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 102.03 | $ 88.51 | $ 86.17 | $ 75.29 | $ 67.98 |
Total ReturnA | 22.27% | 10.82% | 17.94% | 15.30% | 13.55% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .77% | .79% | .81% | .83% | .86% |
Expenses net of fee waivers, if any | .77% | .79% | .81% | .83% | .86% |
Expenses net of all reductions | .77% | .79% | .80% | .82% | .86% |
Net investment income (loss) | 1.73% | 1.88% | 1.85% | 2.01% | 1.78% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,173,970 | $ 1,328,594 | $ 1,425,055 | $ 1,202,440 | $ 877,548 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $2.87 per share is comprised of distributions from net investment income of $1.236 and distributions from net realized gain of $1.637 per share.
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 | $ 61.26 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.59 | 1.66 | 1.45 | 1.39 | 1.15 |
Net realized and unrealized gain (loss) | 17.40 | 7.53 | 11.79 | 8.73 | 7.13 |
Total from investment operations | 18.99 | 9.19 | 13.24 | 10.12 | 8.28 |
Distributions from net investment income | (1.44) | (1.54) | (1.32) | (1.19) | (1.04) |
Distributions from net realized gain | (3.98) | (5.24) | (1.14) | (1.64) | (.66) |
Total distributions | (5.41) I | (6.78) | (2.46) | (2.82) J | (1.70) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 101.91 | $ 88.33 | $ 85.92 | $ 75.14 | $ 67.84 |
Total ReturnA | 22.26% | 10.80% | 17.90% | 15.24% | 13.57% |
Ratios to Average Net Assets C, E |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .85% | .87% | .87% |
Expenses net of fee waivers, if any | .80% | .82% | .85% | .87% | .87% |
Expenses net of all reductions | .80% | .82% | .84% | .87% | .87% |
Net investment income (loss) | 1.70% | 1.85% | 1.81% | 1.96% | 1.77% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 198,538 | $ 154,271 | $ 378,731 | $ 163,544 | $ 237,883 |
Portfolio turnover rateD | 42% H | 31% | 28% | 35% | 57% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Portfolio turnover rate excludes securities received or delivered in-kind.
I Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
J Total distributions of $2.82 per share is comprised of distributions from net investment income of $1.186 and distributions from net realized gain of $1.637 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, 2015
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, redemption in kind, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 926,318,732 |
Gross unrealized depreciation | (39,470,234) |
Net unrealized appreciation (depreciation) on securities | $ 886,848,498 |
|
|
Tax Cost | $ 2,234,267,096 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 19,540,825 |
Undistributed long-term capital gain | $ 82,071,386 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 886,821,686 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 43,895,099 | $ 40,643,236 |
Long-term Capital Gains | 98,122,718 | 135,532,916 |
Total | $ 142,017,817 | $ 176,176,152 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $1,618,121,721 and $1,046,857,746, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total | Retained |
Class A | -% | .25% | $ 887,388 | $ 8,962 |
Class T | .25% | .25% | 349,080 | 259 |
Class B | .75% | .25% | 167,656 | 125,772 |
Class C | .75% | .25% | 1,862,251 | 335,223 |
|
|
| $ 3,266,375 | $ 470,216 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 197,186 |
Class T | 27,506 |
Class B* | 9,631 |
Class C* | 13,925 |
| $ 248,248 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 711,350 | .20 |
Class T | 156,755 | .22 |
Class B | 37,489 | .22 |
Class C | 376,017 | .20 |
Consumer Staples | 2,989,524 | .18 |
Institutional Class | 443,680 | .20 |
| $ 4,714,815 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $14,678 for the period.
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 523,611 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $47,287,323. The net realized gain of $20,812,198 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with the Fund. Then Investing Funds delivered cash and investments valued at $64,348,425 in exchange for 712,528 shares of the Fund. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,649 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $366,992.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $9,955 for the period.
The investment adviser reimbursed a portion of the Fund's operating expenses, including certain Consumer Staples expenses during the period in the amount of $2,949.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 4,812,004 | $ 5,205,524 |
Class T | 776,331 | 826,286 |
Class B | 83,556 | 138,623 |
Class C | 1,335,126 | 1,548,556 |
Consumer Staples | 29,856,743 | 26,141,452 |
Institutional Class | 2,754,772 | 5,128,684 |
Total | $ 39,618,532 | $ 38,989,125 |
From net realized gain |
|
|
Class A | $ 14,768,867 | $ 18,454,866 |
Class T | 2,841,831 | 3,478,167 |
Class B | 743,976 | 1,077,295 |
Class C | 7,778,566 | 9,334,082 |
Consumer Staples | 65,408,817 | 84,245,287 |
Institutional Class | 10,857,228 | 20,597,330 |
Total | $ 102,399,285 | $ 137,187,027 |
Annual Report
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 1,066,097 | 1,297,946 | $ 101,322,941 | $ 115,706,038 |
Reinvestment of distributions | 205,710 | 234,768 | 18,829,531 | 20,739,532 |
Shares redeemed | (931,333) | (1,022,897) | (86,559,239) | (90,649,691) |
Net increase (decrease) | 340,474 | 509,817 | $ 33,593,233 | $ 45,795,879 |
Class T |
|
|
|
|
Shares sold | 215,514 | 171,739 | $ 20,203,421 | $ 15,157,502 |
Reinvestment of distributions | 38,102 | 46,535 | 3,463,287 | 4,086,883 |
Shares redeemed | (146,712) | (126,021) | (13,666,581) | (11,017,450) |
Net increase (decrease) | 106,904 | 92,253 | $ 10,000,127 | $ 8,226,935 |
Class B |
|
|
|
|
Shares sold | 7,270 | 16,325 | $ 675,777 | $ 1,431,261 |
Reinvestment of distributions | 8,161 | 11,472 | 730,673 | 1,003,061 |
Shares redeemed | (57,733) | (46,659) | (5,359,510) | (4,085,147) |
Net increase (decrease) | (42,302) | (18,862) | $ (3,953,060) | $ (1,650,825) |
Class C |
|
|
|
|
Shares sold | 636,469 | 622,483 | $ 59,593,472 | $ 54,501,354 |
Reinvestment of distributions | 86,847 | 101,164 | 7,772,854 | 8,787,354 |
Shares redeemed | (332,705) | (417,359) | (30,479,924) | (36,266,564) |
Net increase (decrease) | 390,611 | 306,288 | $ 36,886,402 | $ 27,022,144 |
Consumer Staples |
|
|
|
|
Shares sold | 8,889,529 | 3,438,166 | $ 838,041,591 | $ 309,005,043 |
Reinvestment of distributions | 985,926 | 1,188,981 | 91,713,079 | 105,681,529 |
Shares redeemed | (3,580,043) | (6,154,349) | (340,719,360) | (548,691,818) |
Net increase (decrease) | 6,295,412 | (1,527,202) | $ 589,035,310 | $ (134,005,246) |
Institutional Class |
|
|
|
|
Shares sold | 3,870,748 A | 2,006,485 | $ 354,438,000A | $ 181,066,529 |
Reinvestment of distributions | 135,150 | 271,028 | 12,187,732 | 24,047,781 |
Shares redeemed | (3,804,175)B | (4,939,085) | (345,400,883)B | (445,334,927) |
Net increase (decrease) | 201,723 | (2,661,572) | $ 21,224,849 | $ (240,220,617) |
A Amount includes in-kind exchanges (see Note 5: Exchanges In-Kind).
B Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
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, 2015, 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 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through SelectCo, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
Annual Report
Trustees and Officers - continued
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Consumer Staples Portfolio voted to pay on April 13, 2015 to shareholders of record at the opening of business on April 10, 2015, a distribution of $3.1520 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.2180 per share from net investment income.
Consumer Staples hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2015, $112,892,370 or, if subsequently determined to be different, the net capital gain of such year.
Consumer Staples designates 72% and 86% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Consumer Staples designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale exist and would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the fund, including the backgrounds of investment personnel of SelectCo, and also considered the fund's investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. The fund underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The fund's actual TMG %s are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the chart and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Consumer Staples Portfolio
The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expense ratio of each class ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and servicing the fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with the fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELCS-UANNPRO-0415
1.910418.105
Fidelity®
Select Portfolios®
Energy Sector
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
Shareholder Expense Example |
| |
Energy Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Energy Service Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Gas Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Natural Resources Portfolio | Performance | |
| Management's Discussion | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
Notes to Financial Statements |
| |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
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, 2014 to February 28, 2015).
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 | .79% |
|
|
|
Actual |
| $ 1,000.00 | $ 782.00 | $ 3.49 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
Energy Service Portfolio | .81% |
|
|
|
Actual |
| $ 1,000.00 | $ 637.70 | $ 3.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.78 | $ 4.06 |
Natural Gas Portfolio | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 718.60 | $ 3.49 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.73 | $ 4.11 |
Natural Resources Portfolio | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 779.90 | $ 3.66 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total 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, 2015 | Past 1 | Past 5 | Past 10 |
Energy Portfolio | -11.25% | 5.83% | 6.52% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from John Dowd, Portfolio Manager of Energy Portfolio: For the year, the fund returned -11.25%, underperforming the -9.18% return of its sector benchmark, the MSCI U.S. IMI Energy 25-50 Index, and the broadly based S&P 500®. Energy was the worst-performing sector in the S&P 500® for the year, as crude oil prices dropped to a five-year low on global oversupply and weakening demand. Versus the MSCI benchmark, the fund was hurt by stock picks and an overweighting in equipment & services firms, including Weatherford International. I liked the stock as a turnaround story, but a drop in commodity prices hurt its performance. A focus on smaller, U.S.-focused companies with dominant shale positions, such as Noble Energy and Whiting Petroleum, also hurt, as these firms were hit hard by falling oil prices and the underperformance of small-cap stocks in general. Also, the fund's non-U.S. holdings detracted due in part to a stronger dollar. Conversely, stock selection in oil & gas storage and transportation helped, including non-index stakes in master limited partnerships MPLX, Valero Energy Partners and Phillips 66 Partners.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Energy Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Exxon Mobil Corp. | 13.1 | 16.0 |
Schlumberger Ltd. | 8.2 | 9.3 |
Chevron Corp. | 6.6 | 11.6 |
EOG Resources, Inc. | 6.1 | 5.8 |
Anadarko Petroleum Corp. | 5.0 | 4.1 |
Cimarex Energy Co. | 4.0 | 3.7 |
Noble Energy, Inc. | 3.5 | 3.0 |
Baker Hughes, Inc. | 3.5 | 0.0 |
Kinder Morgan, Inc. | 2.8 | 0.0 |
Tesoro Corp. | 2.8 | 0.4 |
| 55.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Oil, Gas & Consumable Fuels | 78.5% |
|
![]() | Energy Equipment & Services | 17.8% |
|
![]() | Independent Power and Renewable Electricity Producers | 1.0% |
|
![]() | Multi-Utilities | 0.1% |
|
![]() | Real Estate Investment Trusts† | 0.0% |
|
![]() | All Others* | 2.6% |
|
As of August 31, 2014 | |||
![]() | Oil, Gas & Consumable Fuels | 76.0% |
|
![]() | Energy Equipment & Services | 22.8% |
|
![]() | Independent Power Producers & Energy Traders | 0.6% |
|
![]() | Independent Power and Renewable Electricity Producers | 0.1% |
|
![]() | All Others* | 0.5% |
|
* Includes short-term investments and net other assets (liabilities). |
†Amount represents less than 0.1% |
Annual Report
Energy Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 97.4% | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES - 17.8% | |||
Oil & Gas Drilling - 1.0% | |||
Ocean Rig UDW, Inc. (United States) | 296,300 | $ 2,370,400 | |
Odfjell Drilling A/S | 1,539,580 | 1,783,379 | |
Unit Corp. (a) | 381,400 | 11,647,956 | |
Vantage Drilling Co. (a) | 5,412,507 | 2,002,628 | |
Xtreme Drilling & Coil Services Corp. (a) | 2,252,600 | 3,261,504 | |
| 21,065,867 | ||
Oil & Gas Equipment & Services - 16.8% | |||
Baker Hughes, Inc. | 1,213,200 | 75,837,132 | |
C&J Energy Services, Inc. (a) | 109,000 | 1,485,670 | |
Dril-Quip, Inc. (a) | 167,074 | 12,139,597 | |
FMC Technologies, Inc. (a) | 796,159 | 31,790,629 | |
Halliburton Co. | 360,592 | 15,483,820 | |
Oceaneering International, Inc. | 679,627 | 37,060,060 | |
Schlumberger Ltd. | 2,135,481 | 179,722,081 | |
Total Energy Services, Inc. | 148,900 | 1,686,604 | |
Weatherford International Ltd. (a) | 830,400 | 10,537,776 | |
| 365,743,369 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 386,809,236 | ||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 1.0% | |||
Independent Power Producers & Energy Traders - 0.6% | |||
Calpine Corp. (a) | 91,700 | 1,944,040 | |
Dynegy, Inc. (a) | 403,978 | 11,258,867 | |
| 13,202,907 | ||
Renewable Electricity - 0.4% | |||
NextEra Energy Partners LP | 237,600 | 9,373,320 | |
TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 22,576,227 | ||
MULTI-UTILITIES - 0.1% | |||
Multi-Utilities - 0.1% | |||
NiSource, Inc. | 46,000 | 1,973,860 | |
OIL, GAS & CONSUMABLE FUELS - 78.5% | |||
Coal & Consumable Fuels - 0.1% | |||
Peabody Energy Corp. (d) | 330,322 | 2,609,544 | |
Integrated Oil & Gas - 21.2% | |||
BG Group PLC | 1,816,923 | 26,749,957 | |
Chevron Corp. | 1,355,923 | 144,649,866 | |
Exxon Mobil Corp. | 3,228,448 | 285,846,786 | |
Imperial Oil Ltd. | 148,400 | 5,726,595 | |
| 462,973,204 | ||
Oil & Gas Exploration & Production - 38.4% | |||
Anadarko Petroleum Corp. | 1,294,315 | 109,020,152 | |
Bankers Petroleum Ltd. (a) | 1,607,000 | 3,882,201 | |
Bonanza Creek Energy, Inc. (a) | 497,300 | 13,402,235 | |
Canadian Natural Resources Ltd. | 221,900 | 6,454,111 | |
Carrizo Oil & Gas, Inc. (a) | 127,500 | 6,067,725 | |
| |||
Shares | Value | ||
Chesapeake Energy Corp. | 880,600 | $ 14,688,408 | |
Cimarex Energy Co. | 792,845 | 86,959,240 | |
Concho Resources, Inc. (a) | 458,000 | 49,885,360 | |
ConocoPhillips Co. | 746,796 | 48,691,099 | |
Continental Resources, Inc. (a)(d) | 383,272 | 17,051,771 | |
Diamondback Energy, Inc. (a) | 238,900 | 17,012,069 | |
Energen Corp. | 416,368 | 26,914,028 | |
Energy XXI (Bermuda) Ltd. (d) | 659,600 | 3,133,100 | |
EOG Resources, Inc. | 1,491,164 | 133,787,234 | |
Evolution Petroleum Corp. | 162,543 | 1,108,543 | |
Gulfport Energy Corp. (a) | 352,500 | 16,148,025 | |
Kosmos Energy Ltd. (a) | 570,500 | 5,123,090 | |
Laredo Petroleum Holdings, Inc. (a)(d) | 450,300 | 5,372,079 | |
Marathon Oil Corp. | 97,600 | 2,719,136 | |
Memorial Resource Development Corp. | 1,254,100 | 25,721,591 | |
Newfield Exploration Co. (a) | 1,185,800 | 39,166,974 | |
Noble Energy, Inc. | 1,610,488 | 76,063,348 | |
Northern Oil & Gas, Inc. (a) | 509,501 | 4,391,899 | |
Paramount Resources Ltd. Class A (a) | 92,700 | 2,306,933 | |
PDC Energy, Inc. (a) | 484,851 | 25,057,100 | |
Peyto Exploration & Development Corp. (d) | 112,700 | 3,151,741 | |
Pioneer Natural Resources Co. | 134,799 | 20,559,543 | |
RSP Permian, Inc. (a)(d) | 43,600 | 1,184,176 | |
SM Energy Co. | 762,600 | 37,001,352 | |
Synergy Resources Corp. (a) | 498,820 | 5,960,899 | |
TAG Oil Ltd. (a) | 1,401,975 | 1,704,665 | |
Whiting Petroleum Corp. (a) | 796,272 | 26,937,882 | |
| 836,627,709 | ||
Oil & Gas Refining & Marketing - 6.6% | |||
Alon U.S.A. Energy, Inc. | 145,600 | 2,029,664 | |
CVR Refining, LP | 93,434 | 1,818,226 | |
Delek U.S. Holdings, Inc. | 26,900 | 1,002,832 | |
Marathon Petroleum Corp. | 56,568 | 5,939,640 | |
Phillips 66 Co. | 512,418 | 40,204,316 | |
Tesoro Corp. | 663,600 | 60,945,024 | |
Valero Energy Corp. | 404,981 | 24,983,278 | |
World Fuel Services Corp. | 123,677 | 6,771,316 | |
| 143,694,296 | ||
Oil & Gas Storage & Transport - 12.2% | |||
Cheniere Energy, Inc. (a) | 291,600 | 23,511,708 | |
Columbia Pipeline Partners LP | 75,800 | 2,098,902 | |
Dominion Midstream Partners LP | 75,155 | 3,081,355 | |
Enable Midstream Partners LP | 119,400 | 2,149,200 | |
EQT Midstream Partners LP | 83,800 | 6,973,836 | |
Golar LNG Ltd. | 487,500 | 15,122,250 | |
Kinder Morgan, Inc. | 1,505,600 | 61,744,656 | |
Magellan Midstream Partners LP | 90,619 | 7,448,882 | |
MPLX LP | 234,655 | 19,288,641 | |
ONEOK, Inc. | 97,900 | 4,333,054 | |
Phillips 66 Partners LP | 253,633 | 18,056,133 | |
Plains GP Holdings LP Class A | 1,014,100 | 29,043,824 | |
SemGroup Corp. Class A | 69,500 | 5,373,045 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Storage & Transport - continued | |||
Targa Resources Corp. (d) | 190,690 | $ 18,988,910 | |
The Williams Companies, Inc. | 535,100 | 26,241,304 | |
Valero Energy Partners LP | 419,611 | 22,361,070 | |
| 265,816,770 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 1,711,721,523 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.0% | |||
Specialized REITs - 0.0% | |||
InfraReit, Inc. | 20,000 | 542,400 | |
TOTAL COMMON STOCKS (Cost $2,014,813,173) |
| ||
Money Market Funds - 5.0% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 65,885,491 | 65,885,491 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 41,987,055 | 41,987,055 | |
TOTAL MONEY MARKET FUNDS (Cost $107,872,546) |
| ||
TOTAL INVESTMENT PORTFOLIO - 102.4% (Cost $2,122,685,719) | 2,231,495,792 | ||
NET OTHER ASSETS (LIABILITIES) - (2.4)% | (51,667,404) | ||
NET ASSETS - 100% | $ 2,179,828,388 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 60,471 |
Fidelity Securities Lending Cash Central Fund | 191,813 |
Total | $ 252,284 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 2,123,623,246 | $ 2,096,873,289 | $ 26,749,957 | $ - |
Money Market Funds | 107,872,546 | 107,872,546 | - | - |
Total Investments in Securities: | $ 2,231,495,792 | $ 2,204,745,835 | $ 26,749,957 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 87.4% |
Curacao | 8.2% |
Canada | 1.4% |
United Kingdom | 1.2% |
Bermuda | 1.1% |
Others (Individually Less Than 1%) | 0.7% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $40,571,103) - See accompanying schedule: Unaffiliated issuers (cost $2,014,813,173) | $ 2,123,623,246 |
|
Fidelity Central Funds (cost $107,872,546) | 107,872,546 |
|
Total Investments (cost $2,122,685,719) |
| $ 2,231,495,792 |
Receivable for fund shares sold | 5,969,314 | |
Dividends receivable | 6,433,200 | |
Distributions receivable from Fidelity Central Funds | 37,408 | |
Prepaid expenses | 10,199 | |
Other receivables | 39,977 | |
Total assets | 2,243,985,890 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 10,451 | |
Payable for investments purchased | 18,639,921 | |
Payable for fund shares redeemed | 2,042,901 | |
Accrued management fee | 991,514 | |
Other affiliated payables | 397,014 | |
Other payables and accrued expenses | 88,646 | |
Collateral on securities loaned, at value | 41,987,055 | |
Total liabilities | 64,157,502 | |
|
|
|
Net Assets | $ 2,179,828,388 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,131,647,487 | |
Undistributed net investment income | 995,458 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (61,623,983) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 108,809,426 | |
Net Assets, for 47,765,512 shares outstanding | $ 2,179,828,388 | |
Net Asset Value, offering price and redemption price per share ($2,179,828,388 ÷ 47,765,512 shares) | $ 45.64 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 37,327,773 |
Income from Fidelity Central Funds |
| 252,284 |
Total income |
| 37,580,057 |
|
|
|
Expenses | ||
Management fee | $ 12,558,997 | |
Transfer agent fees | 4,509,095 | |
Accounting and security lending fees | 695,342 | |
Custodian fees and expenses | 42,788 | |
Independent trustees' compensation | 44,322 | |
Registration fees | 121,633 | |
Audit | 46,572 | |
Legal | 13,486 | |
Interest | 857 | |
Miscellaneous | 32,951 | |
Total expenses before reductions | 18,066,043 | |
Expense reductions | (15,324) | 18,050,719 |
Net investment income (loss) | 19,529,338 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 25,743,785 | |
Redemption in-kind with affiliated entities | 22,148,450 | |
Foreign currency transactions | 30,273 | |
Total net realized gain (loss) |
| 47,922,508 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (322,612,739) | |
Assets and liabilities in foreign currencies | (4,142) | |
Total change in net unrealized appreciation (depreciation) |
| (322,616,881) |
Net gain (loss) | (274,694,373) | |
Net increase (decrease) in net assets resulting from operations | $ (255,165,035) |
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) | $ 19,529,338 | $ 15,567,368 |
Net realized gain (loss) | 47,922,508 | 322,715,272 |
Change in net unrealized appreciation (depreciation) | (322,616,881) | (48,770,629) |
Net increase (decrease) in net assets resulting from operations | (255,165,035) | 289,512,011 |
Distributions to shareholders from net investment income | (18,840,374) | (15,215,278) |
Distributions to shareholders from net realized gain | (163,093,871) | (204,942,916) |
Total distributions | (181,934,245) | (220,158,194) |
Share transactions | 1,520,395,410 | 362,585,110 |
Reinvestment of distributions | 175,944,918 | 212,043,462 |
Cost of shares redeemed | (1,075,346,718) | (775,193,374) |
Net increase (decrease) in net assets resulting from share transactions | 620,993,610 | (200,564,802) |
Redemption fees | 126,447 | 26,953 |
Total increase (decrease) in net assets | 184,020,777 | (131,184,032) |
|
|
|
Net Assets | ||
Beginning of period | 1,995,807,611 | 2,126,991,643 |
End of period (including undistributed net investment income of $995,458 and undistributed net investment income | $ 2,179,828,388 | $ 1,995,807,611 |
Other Information Shares | ||
Sold | 28,386,672 | 6,275,361 |
Issued in reinvestment of distributions | 3,458,398 | 3,846,875 |
Redeemed | (19,558,503) | (13,451,035) |
Net increase (decrease) | 12,286,567 | (3,328,799) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 56.25 | $ 54.81 | $ 55.14 | $ 60.22 | $ 43.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .46 | .44 | .53 | .41 | .29 |
Net realized and unrealized gain (loss) | (6.37) | 7.86 | (.04) | (5.06) | 16.63 |
Total from investment operations | (5.91) | 8.30 | .49 | (4.65) | 16.92 |
Distributions from net investment income | (.46) | (.46) | (.47) | (.40) | (.25) |
Distributions from net realized gain | (4.23) | (6.40) | (.35) | (.03) | - |
Total distributions | (4.70) H | (6.86) | (.82) | (.43) | (.25) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 45.64 | $ 56.25 | $ 54.81 | $ 55.14 | $ 60.22 |
Total ReturnA | (11.25)% | 15.43% | 1.00% | (7.68)% | 38.95% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .79% | .80% | .82% | .83% | .85% |
Expenses net of fee waivers, if any | .79% | .80% | .82% | .83% | .85% |
Expenses net of all reductions | .79% | .80% | .81% | .82% | .85% |
Net investment income (loss) | .85% | .76% | 1.04% | .77% | .64% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,179,828 | $ 1,995,808 | $ 2,126,992 | $ 2,504,448 | $ 3,033,023 |
Portfolio turnover rateD | 73% I | 98% | 80% | 90% | 107% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FFor the year ended February 29. GAmount represents less than $.01 per share. HTotal distributions of $4.70 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $4.233 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total 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, 2015 | Past 1 | Past 5 | Past 10 |
Energy Service Portfolio | -27.82% | 1.35% | 3.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Benjamin Shuleva, Portfolio Manager of Energy Service Portfolio: For the year, the fund returned -27.82%, underperforming the -25.80% return of the MSCI U.S. IMI Energy Equipment & Services 25-50 Index, as well as the broadly based S&P 500®. It was a difficult period for energy service stocks, which came under pressure due to dramatic drops in crude oil prices. Versus the industry index, stock picks in oil & gas drilling hurt most, including an out-of-benchmark stake in Odfjell Drilling, a Norwegian well service and offshore drilling company. Odfjell's share price plummeted about 80%, as offshore day rates fell on an oversupply of offshore rigs and investor sentiment on energy-related stocks soured. The depreciation of the Norwegian krone relative to the U.S. dollar also weighed on its result. An overweighting in Vantage Drilling hurt, as it lost roughly three-quarters of its value. Underweighting compression and engine maker Dresser-Rand Group detracted, as the stock rose on a September acquisition bid by Siemens at the peak of the energy cycle. The stock was sold from the fund that same month. Conversely, my strategy worked with Frank's International and Oceaneering International, two high-quality offshore service providers with commanding market shares in their niche segments.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Energy Service Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 19.5 | 19.2 |
Halliburton Co. | 16.9 | 15.9 |
Dril-Quip, Inc. | 5.9 | 4.9 |
National Oilwell Varco, Inc. | 5.5 | 7.6 |
Baker Hughes, Inc. | 4.9 | 3.4 |
Oceaneering International, Inc. | 4.9 | 6.1 |
Cameron International Corp. | 4.8 | 4.9 |
FMC Technologies, Inc. | 3.9 | 5.0 |
Frank's International NV | 3.8 | 2.3 |
Nabors Industries Ltd. | 3.5 | 0.0 |
| 73.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Energy Equipment & Services | 93.8% |
|
![]() | Oil, Gas & Consumable Fuels | 2.6% |
|
![]() | Construction & Engineering | 0.7% |
|
![]() | Airlines | 0.2% |
|
![]() | All Others* | 2.7% |
|
As of August 31, 2014 | |||
![]() | Energy Equipment & Services | 96.8% |
|
![]() | Oil, Gas & Consumable Fuels | 1.8% |
|
![]() | Machinery | 0.6% |
|
![]() | Airlines | 0.4% |
|
![]() | Construction & Engineering | 0.1% |
|
![]() | All Others* | 0.3% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Energy Service Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 97.3% | |||
Shares | Value | ||
AIRLINES - 0.2% | |||
Airlines - 0.2% | |||
CHC Group Ltd. (a) | 567,098 | $ 1,395,061 | |
CONSTRUCTION & ENGINEERING - 0.7% | |||
Construction & Engineering - 0.7% | |||
Enterprise Group, Inc. (a)(e) | 14,106,600 | 3,949,532 | |
Jacobs Engineering Group, Inc. (a) | 25,000 | 1,108,500 | |
| 5,058,032 | ||
ENERGY EQUIPMENT & SERVICES - 93.8% | |||
Oil & Gas Drilling - 11.8% | |||
Cathedral Energy Services Ltd. | 272,100 | 478,858 | |
Ensco PLC Class A | 70,600 | 1,727,582 | |
Eurasia Drilling Co. Ltd. GDR (Reg. S) | 106,000 | 1,876,200 | |
Independence Contract Drilling, Inc. | 619,850 | 3,539,344 | |
Nabors Industries Ltd. | 1,917,300 | 24,560,613 | |
Ocean Rig UDW, Inc. (United States) | 1,915,461 | 15,323,688 | |
Odfjell Drilling A/S (d) | 6,563,060 | 7,602,347 | |
Pacific Drilling SA (a) | 6,300 | 22,932 | |
Precision Drilling Corp. (d) | 399,800 | 2,433,788 | |
Rowan Companies PLC | 441,300 | 9,536,493 | |
Unit Corp. (a) | 16,200 | 494,748 | |
Vantage Drilling Co. (a)(e) | 18,078,100 | 6,688,897 | |
Xtreme Drilling & Coil Services Corp. (a)(e) | 5,543,202 | 8,025,914 | |
| 82,311,404 | ||
Oil & Gas Equipment & Services - 82.0% | |||
Baker Hughes, Inc. | 545,222 | 34,081,827 | |
BW Offshore Ltd. | 5,606,889 | 4,498,062 | |
C&J Energy Services, Inc. (a) | 1,132,900 | 15,441,427 | |
Cameron International Corp. (a) | 713,188 | 33,576,891 | |
Core Laboratories NV | 80,500 | 8,848,560 | |
Dril-Quip, Inc. (a)(d) | 563,900 | 40,972,974 | |
FMC Technologies, Inc. (a) | 691,262 | 27,602,092 | |
Forbes Energy Services Ltd. (a)(d)(e) | 2,005,407 | 2,125,731 | |
Forum Energy Technologies, Inc. (a) | 141,000 | 2,753,730 | |
Frank's International NV | 1,483,169 | 26,341,081 | |
Geospace Technologies Corp. (a)(d) | 63,500 | 1,183,005 | |
Gulfmark Offshore, Inc. Class A (d) | 595,617 | 9,791,943 | |
Halliburton Co. | 2,749,634 | 118,069,284 | |
McCoy Global, Inc. | 18,900 | 59,568 | |
National Oilwell Varco, Inc. | 713,762 | 38,792,965 | |
Oceaneering International, Inc. | 622,600 | 33,950,378 | |
Oil States International, Inc. (a) | 16,700 | 726,116 | |
RigNet, Inc. (a) | 58,700 | 1,856,094 | |
| |||
Shares | Value | ||
Schlumberger Ltd. | 1,622,011 | $ 136,508,445 | |
Spectrum ASA | 503,853 | 2,168,933 | |
SPT Energy Group, Inc. (d) | 9,108,000 | 1,796,751 | |
Superior Drilling Products, Inc. (d)(e) | 1,274,675 | 3,836,772 | |
TETRA Technologies, Inc. (a) | 1,002,085 | 5,982,447 | |
Weatherford International Ltd. (a) | 1,738,966 | 22,067,479 | |
| 573,032,555 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 655,343,959 | ||
OIL, GAS & CONSUMABLE FUELS - 2.6% | |||
Oil & Gas Storage & Transport - 2.6% | |||
Golar LNG Ltd. | 112,133 | 3,478,366 | |
StealthGas, Inc. (a)(e) | 2,439,589 | 15,003,472 | |
| 18,481,838 | ||
TOTAL COMMON STOCKS (Cost $642,746,103) |
| ||
Money Market Funds - 4.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 18,359,417 | 18,359,417 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 11,589,705 | 11,589,705 | |
TOTAL MONEY MARKET FUNDS (Cost $29,949,122) |
| ||
TOTAL INVESTMENT PORTFOLIO - 101.6% (Cost $672,695,225) | 710,228,012 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (11,425,110) | ||
NET ASSETS - 100% | $ 698,802,902 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 16,885 |
Fidelity Securities Lending Cash Central Fund | 52,915 |
Total | $ 69,800 |
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, |
Enterprise Group, Inc. | $ - | $ 7,321,983 | $ - | $ - | $ 3,949,532 |
Forbes Energy Services Ltd. | 1,354,964 | 5,903,638 | - | - | 2,125,731 |
StealthGas, Inc. | 4,484,964 | 18,500,745 | - | - | 15,003,472 |
Superior Drilling Products, Inc. | - | 5,576,968 | - | - | 3,836,772 |
Vantage Drilling Co. | 19,058,200 | 7,714,180 | - | - | 6,688,897 |
Xtreme Drilling & Coil Services Corp. | 14,367,927 | 4,888,897 | - | - | 8,025,914 |
Total | $ 39,266,055 | $ 49,906,411 | $ - | $ - | $ 39,630,318 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 56.4% |
Curacao | 19.5% |
Bermuda | 5.7% |
Netherlands | 5.1% |
Marshall Islands | 4.3% |
Ireland | 3.2% |
Canada | 2.1% |
Cayman Islands | 1.8% |
United Kingdom | 1.6% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,335,579) - See accompanying schedule: Unaffiliated issuers (cost $558,072,109) | $ 640,648,572 |
|
Fidelity Central Funds (cost $29,949,122) | 29,949,122 |
|
Other affiliated issuers (cost $84,673,994) | 39,630,318 |
|
Total Investments (cost $672,695,225) |
| $ 710,228,012 |
Cash |
| 11,144 |
Receivable for investments sold | 6,174,163 | |
Receivable for fund shares sold | 1,391,081 | |
Dividends receivable | 1,063,739 | |
Distributions receivable from Fidelity Central Funds | 5,065 | |
Prepaid expenses | 4,831 | |
Other receivables | 39,044 | |
Total assets | 718,917,079 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,514,647 | |
Payable for fund shares redeemed | 1,486,333 | |
Accrued management fee | 317,813 | |
Other affiliated payables | 147,779 | |
Other payables and accrued expenses | 57,900 | |
Collateral on securities loaned, at value | 11,589,705 | |
Total liabilities | 20,114,177 | |
|
|
|
Net Assets | $ 698,802,902 | |
Net Assets consist of: |
| |
Paid in capital | $ 688,017,668 | |
Distributions in excess of net investment income | (17,766) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (26,727,038) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 37,530,038 | |
Net Assets, for 12,859,425 shares outstanding | $ 698,802,902 | |
Net Asset Value, offering price and redemption price per share ($698,802,902 ÷ 12,859,425 shares) | $ 54.34 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 13,286,401 |
Income from Fidelity Central Funds |
| 69,800 |
Total income |
| 13,356,201 |
|
|
|
Expenses | ||
Management fee | $ 5,434,301 | |
Transfer agent fees | 1,945,791 | |
Accounting and security lending fees | 330,082 | |
Custodian fees and expenses | 34,501 | |
Independent trustees' compensation | 20,028 | |
Registration fees | 48,803 | |
Audit | 41,552 | |
Legal | 5,821 | |
Interest | 1,959 | |
Miscellaneous | 17,049 | |
Total expenses before reductions | 7,879,887 | |
Expense reductions | (77,207) | 7,802,680 |
Net investment income (loss) | 5,553,521 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 54,441,106 | |
Foreign currency transactions | (8,538) | |
Total net realized gain (loss) |
| 54,432,568 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (324,493,237) | |
Assets and liabilities in foreign currencies | (4,146) | |
Total change in net unrealized appreciation (depreciation) |
| (324,497,383) |
Net gain (loss) | (270,064,815) | |
Net increase (decrease) in net assets resulting from operations | $ (264,511,294) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,553,521 | $ 2,927,438 |
Net realized gain (loss) | 54,432,568 | 91,158,941 |
Change in net unrealized appreciation (depreciation) | (324,497,383) | 83,600,274 |
Net increase (decrease) in net assets resulting from operations | (264,511,294) | 177,686,653 |
Distributions to shareholders from net investment income | (4,379,828) | (2,225,534) |
Distributions to shareholders from net realized gain | (101,072,498) | - |
Total distributions | (105,452,326) | (2,225,534) |
Share transactions | 353,836,305 | 309,554,779 |
Reinvestment of distributions | 100,638,770 | 2,129,219 |
Cost of shares redeemed | (433,748,150) | (675,601,095) |
Net increase (decrease) in net assets resulting from share transactions | 20,726,925 | (363,917,097) |
Redemption fees | 60,047 | 32,958 |
Total increase (decrease) in net assets | (349,176,648) | (188,423,020) |
|
|
|
Net Assets | ||
Beginning of period | 1,047,979,550 | 1,236,402,570 |
End of period (including distribution in excess of net investment income of $17,766 and undistributed net investment income of $261,041, respectively) | $ 698,802,902 | $ 1,047,979,550 |
Other Information Shares | ||
Sold | 4,746,273 | 3,832,579 |
Issued in reinvestment of distributions | 1,536,295 | 25,285 |
Redeemed | (5,590,642) | (8,396,346) |
Net increase (decrease) | 691,926 | (4,538,482) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 86.13 | $ 74.01 | $ 73.01 | $ 85.88 | $ 58.27 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .45 | .21 | - G | (.09) | (.04) |
Net realized and unrealized gain (loss) | (23.10) | 12.09 | 1.00 | (12.79) | 27.65 |
Total from investment operations | (22.65) | 12.30 | 1.00 | (12.88) | 27.61 |
Distributions from net investment income | (.39) | (.18) | - | - | - |
Distributions from net realized gain | (8.75) | - | - | - | - |
Total distributions | (9.14) | (.18) | - | - | - |
Redemption fees added to paid in capital B | - G | - G | - G | .01 | - G |
Net asset value, end of period | $ 54.34 | $ 86.13 | $ 74.01 | $ 73.01 | $ 85.88 |
Total ReturnA | (27.82)% | 16.62% | 1.37% | (14.99)% | 47.38% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .79% | .80% | .82% | .82% | .85% |
Expenses net of fee waivers, if any | .79% | .80% | .82% | .82% | .85% |
Expenses net of all reductions | .79% | .80% | .81% | .81% | .85% |
Net investment income (loss) | .56% | .26% | .01% | (.12)% | (.06)% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 698,803 | $ 1,047,980 | $ 1,236,403 | $ 1,382,288 | $ 2,040,691 |
Portfolio turnover rateD | 55% | 34% | 49% | 74% | 85% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FFor the year ended February 29. GAmount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total 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, 2015 | Past 1 | Past 5 | Past 10 |
Natural Gas Portfolio | -17.15% | 1.63% | 3.17% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Ted Davis, Portfolio Manager of Natural Gas Portfolio: For the year, the fund returned -17.15%, underperforming the -14.33% return of the S&P® Custom Natural Gas Index and the broadly based S&P 500®. Natural gas stocks were affected by the collapse in energy markets over the past year. The primary cause of underperformance versus the industry benchmark was the steep drop in energy prices in the fourth quarter of 2014. The fund's negative impact was entirely isolated to our sizable underweighting in gas utilities, which massively outperformed energy stocks, as investors sought higher-dividend yields in the low-interest-rate environment. Among individual stocks, Canada's Encana and Texas-based Southwestern Energy were the biggest relative detractors. Non-U.S. holdings such as Encana dragged on performance because of the strength of the U.S. dollar. Contributors included an out-of-index stake in Boardwalk Pipeline Partners, a storage & transport company. An out-of-index stake in NiSource contributed, as did energy service firm Baker Hughes, which outperformed on news it would be acquired by rival Halliburton for a substantial premium.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Natural Gas Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Devon Energy Corp. | 9.0 | 7.4 |
Baker Hughes, Inc. | 7.9 | 6.1 |
Encana Corp. | 6.6 | 6.6 |
Canadian Natural Resources Ltd. | 5.6 | 5.4 |
Apache Corp. | 5.3 | 0.0 |
Marathon Oil Corp. | 4.6 | 2.9 |
Boardwalk Pipeline Partners, LP | 4.5 | 3.0 |
Chesapeake Energy Corp. | 3.7 | 0.8 |
Kinder Morgan, Inc. | 3.6 | 0.0 |
Hess Corp. | 3.6 | 2.4 |
| 54.4 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Oil, Gas & Consumable Fuels | 74.2% |
|
![]() | Energy Equipment & Services | 19.1% |
|
![]() | Multi-Utilities | 2.5% |
|
![]() | Gas Utilities | 1.6% |
|
![]() | All Others* | 2.6% |
|
As of August 31, 2014 | |||
![]() | Oil, Gas & Consumable Fuels | 66.9% |
|
![]() | Energy Equipment & Services | 27.1% |
|
![]() | Multi-Utilities | 1.7% |
|
![]() | Gas Utilities | 1.3% |
|
![]() | All Others* | 3.0% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Natural Gas Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 96.1% | |||
Shares | Value | ||
ENERGY EQUIPMENT & SERVICES - 19.1% | |||
Oil & Gas Drilling - 0.6% | |||
Archer Ltd. (a)(d) | 3,174,400 | $ 981,383 | |
Pacific Drilling SA (a) | 371,400 | 1,351,896 | |
Patterson-UTI Energy, Inc. | 51,600 | 964,146 | |
| 3,297,425 | ||
Oil & Gas Equipment & Services - 18.5% | |||
Baker Hughes, Inc. | 668,100 | 41,762,931 | |
Cameron International Corp. (a) | 191,100 | 8,996,988 | |
Era Group, Inc. (a) | 235,900 | 5,203,954 | |
Forum Energy Technologies, Inc. (a) | 143,000 | 2,792,790 | |
Oil States International, Inc. (a) | 209,900 | 9,126,452 | |
Schlumberger Ltd. | 72,800 | 6,126,848 | |
Superior Energy Services, Inc. | 228,400 | 5,111,592 | |
Weatherford International Ltd. (a) | 1,481,500 | 18,800,235 | |
| 97,921,790 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 101,219,215 | ||
GAS UTILITIES - 1.6% | |||
Gas Utilities - 1.6% | |||
AGL Resources, Inc. | 176,100 | 8,648,271 | |
MULTI-UTILITIES - 2.5% | |||
Multi-Utilities - 2.5% | |||
NiSource, Inc. | 303,600 | 13,027,476 | |
OIL, GAS & CONSUMABLE FUELS - 72.9% | |||
Coal & Consumable Fuels - 0.4% | |||
CONSOL Energy, Inc. | 59,500 | 1,915,900 | |
Integrated Oil & Gas - 4.4% | |||
Hess Corp. | 254,700 | 19,122,876 | |
Suncor Energy, Inc. (d) | 149,600 | 4,491,231 | |
| 23,614,107 | ||
Oil & Gas Exploration & Production - 53.9% | |||
Anadarko Petroleum Corp. | 138,400 | 11,657,432 | |
Apache Corp. | 424,800 | 27,968,832 | |
Bellatrix Exploration Ltd. (a) | 981,800 | 2,843,065 | |
Cabot Oil & Gas Corp. | 92,124 | 2,671,596 | |
Canadian Natural Resources Ltd. | 1,015,500 | 29,536,501 | |
Chesapeake Energy Corp. (d) | 1,179,300 | 19,670,724 | |
Cimarex Energy Co. | 112,600 | 12,349,968 | |
Crew Energy, Inc. (a)(f) | 1,512,100 | 6,918,816 | |
Crown Point Energy, Inc. (a)(e) | 181,658 | 21,071 | |
Devon Energy Corp. | 777,146 | 47,864,424 | |
Diamondback Energy, Inc. (a) | 12,100 | 861,641 | |
Emerald Oil, Inc. warrants 2/4/16 (a) | 15,002 | 0 | |
Encana Corp. | 2,701,800 | 35,207,041 | |
EOG Resources, Inc. | 98,470 | 8,834,728 | |
EQT Corp. | 9,800 | 782,138 | |
Gulfport Energy Corp. (a) | 279,400 | 12,799,314 | |
Lekoil Ltd. (a)(d) | 3,774,900 | 1,486,109 | |
| |||
Shares | Value | ||
Marathon Oil Corp. | 882,200 | $ 24,578,092 | |
Newfield Exploration Co. (a) | 155,900 | 5,149,377 | |
Northern Blizzard Resources, Inc. | 800,300 | 5,185,529 | |
PDC Energy, Inc. (a) | 197,400 | 10,201,632 | |
Savannah Petroleum PLC (a) | 1,200,000 | 490,944 | |
Southwestern Energy Co. (a) | 392,300 | 9,838,884 | |
Surge Energy, Inc. (d) | 3,652,900 | 9,175,351 | |
| 286,093,209 | ||
Oil & Gas Storage & Transport - 14.2% | |||
Boardwalk Pipeline Partners, LP | 1,460,500 | 23,952,200 | |
Kinder Morgan, Inc. | 468,000 | 19,192,680 | |
The Williams Companies, Inc. | 388,200 | 19,037,328 | |
TransCanada Corp. | 297,100 | 13,021,445 | |
| 75,203,653 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 386,826,869 | ||
TOTAL COMMON STOCKS (Cost $643,508,350) |
|
Convertible Bonds - 1.3% | ||||
| Principal Amount |
| ||
OIL, GAS & CONSUMABLE FUELS - 1.3% | ||||
Oil & Gas Exploration & Production - 1.3% | ||||
American Energy Permian Holdings LLC 8% 5/1/22 pay-in-kind (e)(g) | $ 8,000,000 |
|
Money Market Funds - 5.9% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.13% (b) | 16,803,781 | 16,803,781 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 14,309,230 | 14,309,230 | |
TOTAL MONEY MARKET FUNDS (Cost $31,113,011) |
| ||
TOTAL INVESTMENT PORTFOLIO - 103.3% (Cost $682,309,705) | 547,634,842 | ||
NET OTHER ASSETS (LIABILITIES) - (3.3)% | (17,350,154) | ||
NET ASSETS - 100% | $ 530,284,688 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $6,821,071 or 1.3% of net assets. |
(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(g) Coupon rates for floating and adjustable rate securities reflect the rates in effect 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 | $ 32,113 |
Fidelity Securities Lending Cash Central Fund | 374,363 |
Total | $ 406,476 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 509,721,831 | $ 509,721,831 | $ - | $ - |
Convertible Bonds | 6,800,000 | - | 6,800,000 | - |
Money Market Funds | 31,113,011 | 31,113,011 | - | - |
Total Investments in Securities: | $ 547,634,842 | $ 540,834,842 | $ 6,800,000 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 74.5% |
Canada | 20.0% |
Ireland | 3.5% |
Curacao | 1.2% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $13,151,907) - See accompanying schedule: Unaffiliated issuers (cost $651,196,694) | $ 516,521,831 |
|
Fidelity Central Funds (cost $31,113,011) | 31,113,011 |
|
Total Investments (cost $682,309,705) |
| $ 547,634,842 |
Receivable for investments sold | 1,832,632 | |
Receivable for fund shares sold | 436,854 | |
Dividends receivable | 442,228 | |
Interest receivable | 172,444 | |
Distributions receivable from Fidelity Central Funds | 5,893 | |
Prepaid expenses | 4,706 | |
Other receivables | 15,921 | |
Total assets | 550,545,520 | |
|
|
|
Liabilities | ||
Payable to custodian bank | $ 38,005 | |
Payable for investments purchased | 1,298,419 | |
Delayed delivery | 1,672,666 | |
Payable for fund shares redeemed | 2,511,642 | |
Accrued management fee | 249,466 | |
Other affiliated payables | 127,556 | |
Other payables and accrued expenses | 53,848 | |
Collateral on securities loaned, at value | 14,309,230 | |
Total liabilities | 20,260,832 | |
|
|
|
Net Assets | $ 530,284,688 | |
Net Assets consist of: |
| |
Paid in capital | $ 1,005,743,456 | |
Distributions in excess of net investment income | (137,121) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (340,648,873) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (134,672,774) | |
Net Assets, for 16,544,044 shares outstanding | $ 530,284,688 | |
Net Asset Value, offering price and redemption price per share ($530,284,688 ÷ 16,544,044 shares) | $ 32.05 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 15,231,836 |
Interest |
| 181,017 |
Income from Fidelity Central Funds |
| 406,476 |
Income before foreign taxes withheld |
| 15,819,329 |
Less foreign taxes withheld |
| (895,133) |
Total income |
| 14,924,196 |
|
|
|
Expenses | ||
Management fee | $ 4,913,662 | |
Transfer agent fees | 1,932,288 | |
Accounting and security lending fees | 312,379 | |
Custodian fees and expenses | 48,017 | |
Independent trustees' compensation | 18,203 | |
Registration fees | 90,475 | |
Audit | 41,270 | |
Legal | 6,250 | |
Miscellaneous | 25,117 | |
Total expenses before reductions | 7,387,661 | |
Expense reductions | (3,581) | 7,384,080 |
Net investment income (loss) | 7,540,116 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 8,504,430 | |
Redemption in-kind with affiliated entities | 33,190,903 | |
Foreign currency transactions | (88,808) | |
Total net realized gain (loss) |
| 41,606,525 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (189,416,283) | |
Assets and liabilities in foreign currencies | 5,234 | |
Total change in net unrealized appreciation (depreciation) |
| (189,411,049) |
Net gain (loss) | (147,804,524) | |
Net increase (decrease) in net assets resulting from operations | $ (140,264,408) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Gas Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 7,540,116 | $ 6,496,436 |
Net realized gain (loss) | 41,606,525 | 62,961,848 |
Change in net unrealized appreciation (depreciation) | (189,411,049) | 61,576,564 |
Net increase (decrease) in net assets resulting from operations | (140,264,408) | 131,034,848 |
Distributions to shareholders from net investment income | (6,843,809) | (6,060,459) |
Distributions to shareholders from net realized gain | (835,212) | (5,925,348) |
Total distributions | (7,679,021) | (11,985,807) |
Share transactions | 658,709,839 | 307,452,527 |
Reinvestment of distributions | 7,250,312 | 11,256,726 |
Cost of shares redeemed | (828,307,919) | (247,338,730) |
Net increase (decrease) in net assets resulting from share transactions | (162,347,768) | 71,370,523 |
Redemption fees | 61,977 | 21,783 |
Total increase (decrease) in net assets | (310,229,220) | 190,441,347 |
|
|
|
Net Assets | ||
Beginning of period | 840,513,908 | 650,072,561 |
End of period (including distributions in excess of net investment income of $137,121 and undistributed net investment income of $711,132, respectively) | $ 530,284,688 | $ 840,513,908 |
Other Information Shares | ||
Sold | 15,534,332 | 8,329,283 |
Issued in reinvestment of distributions | 209,792 | 302,074 |
Redeemed | (20,662,742) | (6,952,603) |
Net increase (decrease) | (4,918,618) | 1,678,754 |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 39.16 | $ 32.86 | $ 32.91 | $ 36.50 | $ 31.34 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .34 | .35 | .30 | .26 | .29E |
Net realized and unrealized gain (loss) | (7.03) | 6.61 | (.03) K | (3.56) | 5.19 |
Total from investment operations | (6.69) | 6.96 | .27 | (3.30) | 5.48 |
Distributions from net investment income | (.38) | (.33) | (.27) | (.29) | (.26) |
Distributions from net realized gain | (.04) | (.32) | (.05) | - | (.06) |
Total distributions | (.42) | (.66) J | (.32) | (.29) | (.32) |
Redemption fees added to paid in capital B,I | - | - | - | - | - |
Net asset value, end of period | $ 32.05 | $ 39.16 | $ 32.86 | $ 32.91 | $ 36.50 |
Total ReturnA | (17.15)% | 21.28% | .86% K | (9.03)% | 17.58% |
Ratios to Average Net AssetsC, F |
|
|
|
|
|
Expenses before reductions | .82% | .84% | .87% | .86% | .89% |
Expenses net of fee waivers, if any | .82% | .84% | .87% | .86% | .89% |
Expenses net of all reductions | .82% | .84% | .86% | .86% | .88% |
Net investment income (loss) | .84% | .98% | .96% | .81% | .95% E |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 530,285 | $ 840,514 | $ 650,073 | $ 743,680 | $ 990,083 |
Portfolio turnover rateD | 147% G | 135% | 107% | 63% | 167% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects a large, non-recurring dividend which amounted to $.15 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .47%. FExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. GPortfolio turnover rate excludes securities received or delivered in-kind. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $.66 per share is comprised of distributions from net investment income of $.332 and distributions from net realized gain of $.324 per share. KNet realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.03 per share. Excluding these litigation proceeds, the total return would have been 0.75%. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total 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, 2015 | Past 1 | Past 5 | Past 10 |
Natural Resources Portfolio | -11.45% | 4.85% | 7.20% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from John Dowd, Portfolio Manager of Natural Resources Portfolio: For the year, the fund returned -11.45%, underperforming the -9.58% return of its benchmark, the S&P® North American Natural Resources Sector Index, and the broadly based S&P 500®. Energy was the worst-performing sector in the S&P 500® for the year, as crude oil prices dropped to a five-year low on global oversupply and weakening demand. Versus the industry benchmark, the fund was hurt by stock picks and an overweighting in equipment & services firms, including Weatherford International. I liked the stock as a turnaround story, but the drop in commodity prices hurt its performance. A focus on smaller, U.S.-focused companies with dominant shale positions, such as Noble Energy and Whiting Petroleum, also hurt, as these firms were hit hard by falling oil prices and the underperformance of small-cap stocks in general. At the same time, a sizable underweighting in benchmark heavyweight Exxon Mobil detracted, as the stock outperformed the benchmark. I increased the underweighting, selling Exxon by period end. The fund's non-U.S. holdings held back results due in part to a stronger dollar. Conversely, stock selection in oil & gas storage and transportation helped, including non-index stakes in master limited partnerships MPLX, Valero Energy Partners and Phillips 66 Partners.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual Report
Natural Resources Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Schlumberger Ltd. | 8.5 | 8.9 |
EOG Resources, Inc. | 6.2 | 6.7 |
Chevron Corp. | 4.8 | 8.6 |
Anadarko Petroleum Corp. | 4.4 | 4.1 |
Cimarex Energy Co. | 4.0 | 3.7 |
Noble Energy, Inc. | 3.9 | 4.0 |
Baker Hughes, Inc. | 3.4 | 0.0 |
Kinder Morgan, Inc. | 3.0 | 0.0 |
Tesoro Corp. | 2.8 | 0.4 |
ConocoPhillips Co. | 2.6 | 2.6 |
| 43.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Oil, Gas & Consumable Fuels | 67.8% |
|
![]() | Energy Equipment & Services | 18.4% |
|
![]() | Metals & Mining | 6.9% |
|
![]() | Containers & Packaging | 5.3% |
|
![]() | Independent Power and Renewable Electricity Producers | 1.2% |
|
![]() | All Others* | 0.4% |
|
As of August 31, 2014 | |||
![]() | Oil, Gas & Consumable Fuels | 64.4% |
|
![]() | Energy Equipment & Services | 22.2% |
|
![]() | Metals & Mining | 8.4% |
|
![]() | Containers & Packaging | 3.4% |
|
![]() | Independent Power Producers & Energy Traders | 0.6% |
|
![]() | All Others* | 1.0% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Natural Resources Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
CONTAINERS & PACKAGING - 5.3% | |||
Metal & Glass Containers - 1.6% | |||
Ball Corp. (d) | 165,400 | $ 11,860,834 | |
Paper Packaging - 3.7% | |||
Graphic Packaging Holding Co. | 445,400 | 6,721,086 | |
Packaging Corp. of America | 91,800 | 7,606,548 | |
Rock-Tenn Co. Class A | 203,400 | 13,961,376 | |
| 28,289,010 | ||
TOTAL CONTAINERS & PACKAGING | 40,149,844 | ||
ENERGY EQUIPMENT & SERVICES - 18.4% | |||
Oil & Gas Drilling - 1.0% | |||
Ocean Rig UDW, Inc. (United States) | 127,400 | 1,019,200 | |
Odfjell Drilling A/S | 701,200 | 812,238 | |
Unit Corp. (a) | 97,700 | 2,983,758 | |
Vantage Drilling Co. (a) | 2,249,900 | 832,463 | |
Xtreme Drilling & Coil Services Corp. (a) | 1,009,400 | 1,461,494 | |
| 7,109,153 | ||
Oil & Gas Equipment & Services - 17.4% | |||
Baker Hughes, Inc. | 413,300 | 25,835,383 | |
Dril-Quip, Inc. (a) | 62,600 | 4,548,516 | |
FMC Technologies, Inc. (a) | 287,500 | 11,479,875 | |
Halliburton Co. | 44,700 | 1,919,418 | |
National Oilwell Varco, Inc. | 94,958 | 5,160,967 | |
Oceaneering International, Inc. | 248,300 | 13,539,799 | |
Schlumberger Ltd. | 770,792 | 64,869,856 | |
Total Energy Services, Inc. | 100,000 | 1,132,709 | |
Weatherford International Ltd. (a) | 325,600 | 4,131,864 | |
| 132,618,387 | ||
TOTAL ENERGY EQUIPMENT & SERVICES | 139,727,540 | ||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 1.2% | |||
Independent Power Producers & Energy Traders - 0.8% | |||
Calpine Corp. (a) | 33,500 | 710,200 | |
Dynegy, Inc. (a) | 181,112 | 5,047,591 | |
| 5,757,791 | ||
Renewable Electricity - 0.4% | |||
NextEra Energy Partners LP | 79,200 | 3,124,440 | |
TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 8,882,231 | ||
METALS & MINING - 6.9% | |||
Diversified Metals & Mining - 1.2% | |||
Freeport-McMoRan, Inc. | 223,800 | 4,840,794 | |
Teck Resources Ltd. Class B (sub. vtg.) | 187,800 | 3,016,578 | |
Turquoise Hill Resources Ltd. (a) | 436,050 | 1,363,855 | |
| 9,221,227 | ||
Gold - 5.0% | |||
AngloGold Ashanti Ltd. sponsored ADR (a) | 325,400 | 3,667,258 | |
| |||
Shares | Value | ||
B2Gold Corp. (a) | 884,000 | $ 1,492,073 | |
Barrick Gold Corp. (d) | 244,200 | 3,176,300 | |
Franco-Nevada Corp. | 121,100 | 6,389,694 | |
Gold Fields Ltd. sponsored ADR | 631,600 | 2,936,940 | |
Goldcorp, Inc. | 226,900 | 4,996,846 | |
Harmony Gold Mining Co. Ltd. sponsored ADR (a) | 530,400 | 1,304,784 | |
Kinross Gold Corp. (a) | 295,867 | 833,095 | |
Randgold Resources Ltd. sponsored ADR | 124,300 | 9,843,317 | |
Royal Gold, Inc. | 27,100 | 1,953,910 | |
Yamana Gold, Inc. | 390,000 | 1,656,587 | |
| 38,250,804 | ||
Silver - 0.7% | |||
Pan American Silver Corp. | 128,600 | 1,244,205 | |
Silver Wheaton Corp. | 193,600 | 4,181,425 | |
| 5,425,630 | ||
TOTAL METALS & MINING | 52,897,661 | ||
MULTI-UTILITIES - 0.1% | |||
Multi-Utilities - 0.1% | |||
NiSource, Inc. | 16,800 | 720,888 | |
OIL, GAS & CONSUMABLE FUELS - 67.8% | |||
Coal & Consumable Fuels - 0.2% | |||
Peabody Energy Corp. (d) | 180,200 | 1,423,580 | |
Integrated Oil & Gas - 6.5% | |||
BG Group PLC | 680,000 | 10,011,415 | |
Chevron Corp. | 344,200 | 36,719,256 | |
Imperial Oil Ltd. | 71,800 | 2,770,684 | |
| 49,501,355 | ||
Oil & Gas Exploration & Production - 40.4% | |||
Anadarko Petroleum Corp. | 399,700 | 33,666,731 | |
Bankers Petroleum Ltd. (a) | 662,900 | 1,601,438 | |
Bonanza Creek Energy, Inc. (a) | 186,300 | 5,020,785 | |
Canadian Natural Resources Ltd. | 441,600 | 12,844,233 | |
Carrizo Oil & Gas, Inc. (a) | 45,300 | 2,155,827 | |
Chesapeake Energy Corp. | 227,300 | 3,791,364 | |
Cimarex Energy Co. | 280,900 | 30,809,112 | |
Concho Resources, Inc. (a) | 169,100 | 18,418,372 | |
ConocoPhillips Co. | 298,800 | 19,481,760 | |
Continental Resources, Inc. (a)(d) | 180,400 | 8,025,996 | |
Diamondback Energy, Inc. (a) | 91,300 | 6,501,473 | |
Energen Corp. | 144,300 | 9,327,552 | |
Energy XXI (Bermuda) Ltd. (d) | 266,300 | 1,264,925 | |
EOG Resources, Inc. | 524,200 | 47,031,224 | |
Evolution Petroleum Corp. | 78,400 | 534,688 | |
Gulfport Energy Corp. (a) | 88,750 | 4,065,638 | |
Kosmos Energy Ltd. (a) | 229,000 | 2,056,420 | |
Laredo Petroleum Holdings, Inc. (a) | 123,500 | 1,473,355 | |
Memorial Resource Development Corp. | 489,700 | 10,043,747 | |
Murphy Oil Corp. | 46,900 | 2,386,741 | |
Newfield Exploration Co. (a) | 404,400 | 13,357,332 | |
Common Stocks - continued | |||
Shares | Value | ||
OIL, GAS & CONSUMABLE FUELS - CONTINUED | |||
Oil & Gas Exploration & Production - continued | |||
Noble Energy, Inc. | 622,900 | $ 29,419,567 | |
Northern Oil & Gas, Inc. (a)(d) | 317,795 | 2,739,393 | |
Paramount Resources Ltd. Class A (a) | 37,100 | 923,271 | |
PDC Energy, Inc. (a) | 157,300 | 8,129,264 | |
Peyto Exploration & Development Corp. (d) | 48,500 | 1,356,339 | |
Pioneer Natural Resources Co. | 51,600 | 7,870,032 | |
SM Energy Co. | 215,000 | 10,431,800 | |
Synergy Resources Corp. (a) | 217,800 | 2,602,710 | |
TAG Oil Ltd. (a) | 615,100 | 747,902 | |
Whiting Petroleum Corp. (a) | 271,367 | 9,180,346 | |
| 307,259,337 | ||
Oil & Gas Refining & Marketing - 7.2% | |||
Alon U.S.A. Energy, Inc. | 61,900 | 862,886 | |
CVR Refining, LP | 43,617 | 848,787 | |
Marathon Petroleum Corp. | 38,700 | 4,063,500 | |
Phillips 66 Co. | 183,900 | 14,428,794 | |
Tesoro Corp. | 233,200 | 21,417,088 | |
Valero Energy Corp. | 170,200 | 10,499,638 | |
World Fuel Services Corp. | 52,700 | 2,885,325 | |
| 55,006,018 | ||
Oil & Gas Storage & Transport - 13.5% | |||
Cheniere Energy, Inc. (a) | 127,000 | 10,240,010 | |
Columbia Pipeline Partners LP | 27,100 | 750,399 | |
Enable Midstream Partners LP | 53,700 | 966,600 | |
EQT Midstream Partners LP | 39,100 | 3,253,902 | |
Golar LNG Ltd. | 194,100 | 6,020,982 | |
Kinder Morgan, Inc. | 556,200 | 22,809,762 | |
Magellan Midstream Partners LP | 47,400 | 3,896,280 | |
MPLX LP | 105,000 | 8,631,000 | |
Phillips 66 Partners LP | 112,200 | 7,987,518 | |
Plains GP Holdings LP Class A | 325,300 | 9,316,592 | |
SemGroup Corp. Class A | 30,000 | 2,319,300 | |
Targa Resources Corp. | 75,700 | 7,538,206 | |
| |||
Shares | Value | ||
The Williams Companies, Inc. | 205,300 | $ 10,067,912 | |
Valero Energy Partners LP | 172,425 | 9,188,528 | |
| 102,986,991 | ||
TOTAL OIL, GAS & CONSUMABLE FUELS | 516,177,281 | ||
REAL ESTATE INVESTMENT TRUSTS - 0.0% | |||
Specialized REITs - 0.0% | |||
InfraReit, Inc. | 7,300 | 197,976 | |
TOTAL COMMON STOCKS (Cost $769,254,071) |
| ||
Money Market Funds - 4.4% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 6,684,114 | 6,684,114 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 26,940,620 | 26,940,620 | |
TOTAL MONEY MARKET FUNDS (Cost $33,624,734) |
| ||
TOTAL INVESTMENT PORTFOLIO - 104.1% (Cost $802,878,805) | 792,378,155 | ||
NET OTHER ASSETS (LIABILITIES) - (4.1)% | (31,300,292) | ||
NET ASSETS - 100% | $ 761,077,863 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 13,173 |
Fidelity Securities Lending Cash Central Fund | 117,607 |
Total | $ 130,780 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 758,753,421 | $ 748,742,006 | $ 10,011,415 | $ - |
Money Market Funds | 33,624,734 | 33,624,734 | - | - |
Total Investments in Securities: | $ 792,378,155 | $ 782,366,740 | $ 10,011,415 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 79.0% |
Curacao | 8.5% |
Canada | 6.6% |
Bermuda | 1.4% |
United Kingdom | 1.3% |
Bailiwick of Jersey | 1.3% |
South Africa | 1.1% |
Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,152,963) - See accompanying schedule: Unaffiliated issuers (cost $769,254,071) | $ 758,753,421 |
|
Fidelity Central Funds (cost $33,624,734) | 33,624,734 |
|
Total Investments (cost $802,878,805) |
| $ 792,378,155 |
Cash |
| 766,479 |
Receivable for fund shares sold | 1,247,194 | |
Dividends receivable | 1,476,183 | |
Distributions receivable from Fidelity Central Funds | 9,968 | |
Prepaid expenses | 4,135 | |
Other receivables | 17,571 | |
Total assets | 795,899,685 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 6,188,169 | |
Payable for fund shares redeemed | 1,116,340 | |
Accrued management fee | 350,749 | |
Other affiliated payables | 170,996 | |
Other payables and accrued expenses | 54,948 | |
Collateral on securities loaned, at value | 26,940,620 | |
Total liabilities | 34,821,822 | |
|
|
|
Net Assets | $ 761,077,863 | |
Net Assets consist of: |
| |
Paid in capital | $ 807,980,184 | |
Distributions in excess of net investment income | (15,782) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (36,385,916) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (10,500,623) | |
Net Assets, for 24,169,213 shares outstanding | $ 761,077,863 | |
Net Asset Value, offering price and redemption price per share ($761,077,863 ÷ 24,169,213 shares) | $ 31.49 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 12,550,144 |
Interest |
| 6 |
Income from Fidelity Central Funds |
| 130,780 |
Total income |
| 12,680,930 |
|
|
|
Expenses | ||
Management fee | $ 5,066,851 | |
Transfer agent fees | 2,069,596 | |
Accounting and security lending fees | 316,923 | |
Custodian fees and expenses | 31,249 | |
Independent trustees' compensation | 18,446 | |
Registration fees | 42,942 | |
Audit | 41,133 | |
Legal | 5,493 | |
Miscellaneous | 14,643 | |
Total expenses before reductions | 7,607,276 | |
Expense reductions | (11,031) | 7,596,245 |
Net investment income (loss) | 5,084,685 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 12,418,980 | |
Foreign currency transactions | (5,578) | |
Total net realized gain (loss) |
| 12,413,402 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (119,535,845) | |
Assets and liabilities in foreign currencies | (388) | |
Total change in net unrealized appreciation (depreciation) |
| (119,536,233) |
Net gain (loss) | (107,122,831) | |
Net increase (decrease) in net assets resulting from operations | $ (102,038,146) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 5,084,685 | $ 5,401,848 |
Net realized gain (loss) | 12,413,402 | 112,917,097 |
Change in net unrealized appreciation (depreciation) | (119,536,233) | 9,078,717 |
Net increase (decrease) in net assets resulting from operations | (102,038,146) | 127,397,662 |
Distributions to shareholders from net investment income | (3,492,100) | (2,402,760) |
Distributions to shareholders from net realized gain | (43,304,505) | (22,192,850) |
Total distributions | (46,796,605) | (24,595,610) |
Share transactions | 224,332,908 | 202,197,233 |
Reinvestment of distributions | 44,616,027 | 23,551,043 |
Cost of shares redeemed | (308,452,835) | (433,697,922) |
Net increase (decrease) in net assets resulting from share transactions | (39,503,900) | (207,949,646) |
Redemption fees | 22,379 | 13,984 |
Total increase (decrease) in net assets | (188,316,272) | (105,133,610) |
|
|
|
Net Assets | ||
Beginning of period | 949,394,135 | 1,054,527,745 |
End of period (including distributions in excess of net investment income of $15,782 and distributions in excess of net investment income of $205,092, respectively) | $ 761,077,863 | $ 949,394,135 |
Other Information Shares | ||
Sold | 6,084,348 | 5,546,646 |
Issued in reinvestment of distributions | 1,408,837 | 649,501 |
Redeemed | (8,407,605) | (12,041,120) |
Net increase (decrease) | (914,420) | (5,844,973) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 37.85 | $ 34.10 | $ 35.36 | $ 39.07 | $ 27.66 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .21 | .20 | .28 | .20 | .12 |
Net realized and unrealized gain (loss) | (4.55) | 4.52 | (1.45) | (3.59) | 11.49 |
Total from investment operations | (4.34) | 4.72 | (1.17) | (3.39) | 11.61 |
Distributions from net investment income | (.15) | (.10) | (.09) | (.26) | (.11) |
Distributions from net realized gain | (1.87) | (.88) | - | (.06) | (.09) |
Total distributions | (2.02) | (.97) H | (.09) | (.32) | (.20) |
Redemption fees added to paid in capital B, G | - | - | - | - | - |
Net asset value, end of period | $ 31.49 | $ 37.85 | $ 34.10 | $ 35.36 | $ 39.07 |
Total ReturnA | (11.45)% | 13.97% | (3.30)% | (8.63)% | 42.09% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .82% | .84% | .86% | .84% | .88% |
Expenses net of fee waivers, if any | .82% | .84% | .85% | .84% | .88% |
Expenses net of all reductions | .82% | .83% | .84% | .84% | .87% |
Net investment income (loss) | .55% | .54% | .89% | .58% | .39% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 761,078 | $ 949,394 | $ 1,054,528 | $ 1,430,581 | $ 1,971,764 |
Portfolio turnover rateD | 87% | 99% | 76% | 88% | 113% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. FFor the year ended February 29. GAmount represents less than $.01 per share. HTotal distributions of $.97 per share is comprised of distributions from net investment income of $.095 and distributions from net realized gain of $.877 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, 2015
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between funds. The Natural Resources Portfolio may also invest in certain precious metals. Certain Funds' investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Funds determine the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Funds, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, foreign currency transactions, passive foreign investment companies (PFIC), redemptions in kind, partnerships, deferred trustees compensation, market discount, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities |
Energy Portfolio | $ 2,128,898,665 | $ 318,901,796 | $ (216,304,669) | $ 102,597,127 |
Energy Service Portfolio | 678,063,925 | 182,498,521 | (150,334,434) | 32,164,087 |
Natural Gas Portfolio | 682,775,755 | 8,103,257 | (143,244,170) | (135,140,913) |
Natural Resources Portfolio | 805,647,415 | 103,420,933 | (116,690,193) | (13,269,260) |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed | Capital loss | Net unrealized appreciation (depreciation) on securities and other investments |
Energy Portfolio | $ 1,031,320 | $ 3,084,564 | $ - | $ 102,596,480 |
Energy Service Portfolio | - | - | - | 32,161,338 |
Natural Gas Portfolio | 1,045,018 | - | (276,297,969) | (135,151,401) |
Natural Resources Portfolio | - | - | - | (13,269,233) |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration |
| |
| 2018 | 2019 | Total with expiration |
Natural Gas Portfolio | $ (60,545,261) | $ (215,752,708) | $ (276,297,969) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2014 to February 28, 2015. Loss deferrals were as follows:
|
Capital losses |
Energy Portfolio | $ (58,495,599) |
Energy Service Portfolio | (21,358,338) |
Natural Gas Portfolio | (63,876,509) |
Natural Resources Portfolio | (33,617,305) |
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, 2015 |
|
|
|
| Ordinary Income | Long-term | Total |
Energy Portfolio | $ 18,840,374 | $ 163,093,871 | $ 181,934,245 |
Energy Service Portfolio | 4,379,828 | 101,072,498 | 105,452,326 |
Natural Gas Portfolio | 7,679,021 | - | 7,679,021 |
Natural Resources Portfolio | 8,283,443 | 38,513,162 | 46,796,605 |
February 28, 2014 |
|
|
|
| Ordinary Income | Long-term | Total |
Energy Portfolio | $ 58,207,320 | $ 161,950,874 | $ 220,158,194 |
Energy Service Portfolio | 2,225,534 | - | 2,225,534 |
Natural Gas Portfolio | 11,985,807 | - | 11,985,807 |
Natural Resources Portfolio | 2,402,760 | 22,192,850 | 24,595,610 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Funds transacted in 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. The securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable Fund's Schedule of Investments. With respect to purchase commitments, each applicable Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the 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 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.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Funds' financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) |
Energy Portfolio | 2,102,809,940 | 1,630,267,300 |
Energy Service Portfolio | 530,476,834 | 605,313,962 |
Natural Gas Portfolio | 1,286,930,713 | 1,253,565,518 |
Natural Resources Portfolio | 786,849,299 | 853,661,596 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized 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 Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
increase and increases as assets under management decrease. For the reporting 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% | .25% | .55% |
Energy Service Portfolio | .30% | .25% | .55% |
Natural Gas Portfolio | .30% | .25% | .55% |
Natural Resources Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
Energy Portfolio | .20% |
Energy Service Portfolio | .20% |
Natural Gas Portfolio | .22% |
Natural Resources Portfolio | .22% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount |
Energy Portfolio | $ 23,305 |
Energy Service Portfolio | 16,911 |
Natural Gas Portfolio | 16,877 |
Natural Resources Portfolio | 9,949 |
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 or other affiliated entities of 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 Lender | Average Loan | Weighted Average Interest Rate | Interest Expense |
Energy Portfolio | Borrower | $ 7,345,000 | .32% | $ 857 |
Energy Service Portfolio | Borrower | 5,648,158 | .33% | 1,959 |
Redemptions In-Kind. During the period, shares of the Funds held by affiliated entities were redeemed for cash and investments. The net realized gain on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Funds recognized no gain or loss for federal income tax purposes.
Details of these transactions with the related gain (loss) for the Funds are presented in the accompanying table:
| Value of cash and | Net Realized Gain (Loss) on | Shares |
Energy Portfolio | $ 52,353,206 | $ 22,148,450 | 894,926 |
Natural Gas Portfolio | 191,196,708 | 33,190,903 | 4,263,025 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Exchanges In-Kind. During the period, certain investment companies managed by the investment adviser or its affiliates (Investing Funds) completed exchanges in-kind with Energy Portfolio. The Investing Funds delivered cash and investments valued at $48,408,874 in exchange for 827,502 shares of Energy Portfolio. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
Other. During the period, the investment adviser reimbursed Energy Service Portfolio for certain losses in the amount of $30,537.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
Energy Portfolio | $ 3,428 |
Energy Service Portfolio | 1,601 |
Natural Gas Portfolio | 1,390 |
Natural Resources Portfolio | 1,465 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent 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, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity was as follows:
| Total Security |
Energy Portfolio | $ 191,813 |
Energy Services Portfolio | 52,915 |
Natural Gas Portfolio | 374,363 |
Natural Resources Portfolio | 117,607 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage |
Energy Portfolio | $ 9,379 |
Energy Service Portfolio | 73,871 |
Natural Resources Portfolio | 4,147 |
Annual Report
Notes to Financial Statements - continued
8. Expense Reductions - continued
In addition, during the period the following Funds were reimbursed by the investment adviser for a portion of operating expenses:
Energy Portfolio | $ 5,945 |
Energy Service Portfolio | 3,336 |
Natural Gas Portfolio | 3,581 |
Natural Resources Portfolio | 6,884 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following funds:
| Strategic Advisers Core Fund |
Energy Portfolio | 10% |
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, 2015, 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 15, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
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.
Annual Report
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains |
Select Energy Portfolio | 04/13/15 | 04/10/15 | $0.022 | $0.066 |
Select Energy Service Portfolio | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
Select Natural Gas Portfolio | 04/13/15 | 04/10/15 | $0.066 | $0.000 |
Select Natural Resources Portfolio | 04/13/15 | 04/10/15 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2015, or, if subsequently determined to be different, the net capital gain of such year.
Select Energy Portfolio | $ 65,221,850 |
Select Energy Service Portfolio | $ 72,402,532 |
Select Natural Gas Portfolio | $ 0 |
Select Natural Resources Portfolio | $ 33,055,228 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:
Select Energy Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
Select Energy Service Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
Select Natural Gas Portfolio |
|
April, 2014 | 72% |
December, 2014 | 100% |
Select Natural Resources Portfolio |
|
April, 2014 | 99% |
December, 2014 | 97% |
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:
Select Energy Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
Select Energy Service Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
Select Natural Gas Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
Select Natural Resources Portfolio |
|
April, 2014 | 100% |
December, 2014 | 100% |
The funds will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for Energy Service Portfolio in February 2014.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Energy Service Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Energy Portfolio
Energy Service Portfolio
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Natural Gas Portfolio
Natural Resources Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Total Expense Ratio. In its review of each fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the funds. As part of its review, the Board also considered the current and historical total expense ratios of each fund compared to competitive fund median expenses. Each fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that each fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Annual Report
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that each fund's total expense ratio was reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
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Fidelity Distributors Corporation
Smithfield, RI
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Fidelity®
Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
Telecommunications Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Wireless Portfolio | Performance | |
| Management's Discussion | |
| Shareholder Expense Example | |
| Investment Changes | |
| Investments | |
| Financial Statements | |
| Notes to the Financial Statements | |
Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
| |
Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the funds nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Telecommunications Portfolio | 11.90% | 13.58% | 8.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio, a class of the fund, on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
Annual Report
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Matthew Drukker, Portfolio Manager of Telecommunications Portfolio: For the year, the fund's Retail Class shares rose 11.90%, underperforming the 12.66% gain of the MSCI U.S. IMI Telecommunications Services 25-50 Index and the S&P 500®. Telecom stocks had a strong absolute return, but they lagged the broad market due in part to a decline in consumer spending and a high debt-equity ratio for the sector. Further weighing on the sector were falling net profit margins, given continued competition among major wireless carriers - namely Verizon Communications, Sprint, AT&T and T-Mobile - and rising expenses at firms looking to expand and improve their networks. Despite these negative factors, increased demand for wireless helped support the sector, as did yield-hungry investors attracted to the dividends typically paid by telecom firms. From an industry perspective, the fund's positioning in wireless telecom services hurt the most versus the MSCI index. Looking at individual stocks, the fund's non-index position in U.K.-based Vodafone Group was the biggest relative detractor. The stock stumbled the past year amid the firm's announcement of disappointing fourth-quarter sales and expected declines in 2015 core earnings because of investment spending needed for its business. I sold a significant portion of our holdings in the stock during the period to invest in more-promising opportunities. On the flip side, positioning in alternative carriers was a plus, including an average overweighting in telecom and Internet service provider Level 3 Communications, the fund's biggest contributor and one of its largest holdings. I increased our stake in Level 3 to an overweighting as the period progressed, and its shares rose when the firm acquired competitor tw telecom in October and reported better-than-expected quarterly earnings in November.
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
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, 2014 to February 28, 2015).
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 | 1.15% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,045.40 | $ 5.83 |
HypotheticalA |
| $ 1,000.00 | $ 1,019.09 | $ 5.76 |
Class T | 1.47% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,043.80 | $ 7.45 |
HypotheticalA |
| $ 1,000.00 | $ 1,017.50 | $ 7.35 |
Class B | 1.93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.50 | $ 9.77 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.22 | $ 9.64 |
Class C | 1.85% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,041.80 | $ 9.37 |
HypotheticalA |
| $ 1,000.00 | $ 1,015.62 | $ 9.25 |
Telecommunications | .82% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.20 | $ 4.16 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.73 | $ 4.11 |
Institutional Class | .83% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.10 | $ 4.21 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.68 | $ 4.16 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Telecommunications Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Verizon Communications, Inc. | 19.9 | 23.0 |
AT&T, Inc. | 7.5 | 10.0 |
Level 3 Communications, Inc. | 6.4 | 3.1 |
DIRECTV | 6.4 | 5.2 |
SBA Communications Corp. | 4.3 | 3.4 |
Cogent Communications Group, Inc. | 4.3 | 4.0 |
T-Mobile U.S., Inc. | 4.3 | 4.3 |
CenturyLink, Inc. | 3.3 | 5.6 |
Telephone & Data Systems, Inc. | 3.2 | 3.5 |
Frontier Communications Corp. | 3.0 | 0.3 |
| 62.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Diversified Telecommunication Services | 62.8% |
|
![]() | Wireless Telecommunication Services | 19.8% |
|
![]() | Media | 9.8% |
|
![]() | Real Estate Investment Trusts | 2.7% |
|
![]() | Internet Software & Services | 1.0% |
|
![]() | All Others* | 3.9% |
|
As of August 31, 2014 | |||
![]() | Diversified Telecommunication Services | 67.3% |
|
![]() | Wireless Telecommunication Services | 17.0% |
|
![]() | Media | 8.3% |
|
![]() | Real Estate Investment Trusts | 2.8% |
|
![]() | Software | 1.2% |
|
![]() | All Others* | 3.4% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Telecommunications Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 0.9% | |||
Communications Equipment - 0.9% | |||
Arris Group, Inc. (a) | 42,900 | $ 1,260,402 | |
Ruckus Wireless, Inc. (a) | 151,400 | 1,916,724 | |
| 3,177,126 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 62.3% | |||
Alternative Carriers - 23.2% | |||
8x8, Inc. (a) | 867,186 | 6,425,848 | |
Cogent Communications Group, Inc. | 435,968 | 16,008,745 | |
Globalstar, Inc. (a)(d) | 2,760,500 | 7,122,090 | |
Iliad SA | 15,015 | 3,899,028 | |
inContact, Inc. (a) | 664,423 | 7,780,393 | |
Inmarsat PLC | 80,100 | 1,083,282 | |
Iridium Communications, Inc. (a)(d) | 397,876 | 3,811,652 | |
Level 3 Communications, Inc. (a) | 445,367 | 23,987,467 | |
Lumos Networks Corp. | 439,578 | 7,569,533 | |
Premiere Global Services, Inc. (a) | 416,883 | 4,060,440 | |
Towerstream Corp. (a)(d) | 807,024 | 1,823,874 | |
Vonage Holdings Corp. (a) | 617,271 | 2,802,410 | |
| 86,374,762 | ||
Integrated Telecommunication Services - 39.1% | |||
AT&T, Inc. | 801,550 | 27,701,568 | |
Atlantic Tele-Network, Inc. | 86,900 | 5,981,327 | |
Bezeq The Israel Telecommunication Corp. Ltd. | 1,411,100 | 2,262,889 | |
CenturyLink, Inc. | 321,078 | 12,156,013 | |
Cincinnati Bell, Inc. (a) | 697,514 | 2,336,672 | |
Consolidated Communications Holdings, Inc. | 218,398 | 4,647,509 | |
Frontier Communications Corp. (d) | 1,388,383 | 11,079,296 | |
General Communications, Inc. | 35,596 | 493,717 | |
IDT Corp. Class B | 159,981 | 3,367,600 | |
Telecom Italia SpA (a)(d) | 974,800 | 1,164,980 | |
Verizon Communications, Inc. | 1,500,997 | 74,224,304 | |
Windstream Holdings, Inc. (d) | 1,882 | 14,849 | |
| 145,430,724 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 231,805,486 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 0.2% | |||
Technology Distributors - 0.2% | |||
Ingram Micro, Inc. Class A (a) | 32,200 | 795,662 | |
INTERNET SOFTWARE & SERVICES - 1.0% | |||
Internet Software & Services - 1.0% | |||
Gogo, Inc. (a)(d) | 95,700 | 1,720,686 | |
Rackspace Hosting, Inc. (a) | 42,300 | 2,101,041 | |
| 3,821,727 | ||
| |||
Shares | Value | ||
IT SERVICES - 0.9% | |||
IT Consulting & Other Services - 0.9% | |||
Interxion Holding N.V. (a) | 100,100 | $ 3,190,187 | |
MEDIA - 9.8% | |||
Cable & Satellite - 9.8% | |||
DIRECTV (a) | 270,000 | 23,922,000 | |
Liberty Global PLC Class C | 31,636 | 1,650,450 | |
Time Warner Cable, Inc. | 71,500 | 11,014,575 | |
| 36,587,025 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.7% | |||
Office REITs - 0.1% | |||
CyrusOne, Inc. | 18,300 | 543,876 | |
Specialized REITs - 2.6% | |||
American Tower Corp. | 86,590 | 8,584,533 | |
Crown Castle International Corp. | 11,600 | 1,001,196 | |
| 9,585,729 | ||
TOTAL REAL ESTATE INVESTMENT TRUSTS | 10,129,605 | ||
SOFTWARE - 0.7% | |||
Application Software - 0.6% | |||
Comverse, Inc. (a) | 47,900 | 859,326 | |
Interactive Intelligence Group, Inc. (a) | 30,700 | 1,302,908 | |
| 2,162,234 | ||
Systems Software - 0.1% | |||
Rovi Corp. (a) | 25,600 | 636,928 | |
TOTAL SOFTWARE | 2,799,162 | ||
WIRELESS TELECOMMUNICATION SERVICES - 19.5% | |||
Wireless Telecommunication Services - 19.5% | |||
Bharti Infratel Ltd. | 379,493 | 2,262,781 | |
KDDI Corp. | 48,400 | 3,354,115 | |
Leap Wireless International, Inc. rights (a) | 400 | 1,008 | |
Mobistar SA (a) | 200 | 4,715 | |
NTELOS Holdings Corp. | 88 | 398 | |
RingCentral, Inc. (a) | 247,300 | 3,899,921 | |
SBA Communications Corp. Class A (a) | 129,456 | 16,144,458 | |
Shenandoah Telecommunications Co. | 66,626 | 1,938,150 | |
SoftBank Corp. | 62,000 | 3,829,158 | |
Sprint Corp. (a)(d) | 1,149,685 | 5,886,387 | |
T-Mobile U.S., Inc. (a) | 480,197 | 15,860,907 | |
Telephone & Data Systems, Inc. | 466,964 | 11,879,564 | |
U.S. Cellular Corp. (a) | 55,900 | 2,120,287 | |
Vodafone Group PLC sponsored ADR | 161,300 | 5,574,528 | |
| 72,756,377 | ||
TOTAL COMMON STOCKS (Cost $300,622,254) |
| ||
Nonconvertible Preferred Stocks - 0.8% | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.5% | |||
Integrated Telecommunication Services - 0.5% | |||
Telefonica Brasil SA sponsored ADR (d) | 87,000 | $ 1,612,980 | |
WIRELESS TELECOMMUNICATION SERVICES - 0.3% | |||
Wireless Telecommunication Services - 0.3% | |||
TIM Participacoes SA sponsored ADR | 57,300 | 1,207,884 | |
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $3,366,705) |
| ||
Money Market Funds - 8.3% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 2,667,472 | 2,667,472 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 28,288,110 | 28,288,110 | |
TOTAL MONEY MARKET FUNDS (Cost $30,955,582) |
|
TOTAL INVESTMENT PORTFOLIO - 107.1% (Cost $334,944,541) | 398,838,803 | |
NET OTHER ASSETS (LIABILITIES) - (7.1)% | (26,529,439) | |
NET ASSETS - 100% | $ 372,309,364 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 6,724 |
Fidelity Securities Lending Cash Central Fund | 241,214 |
Total | $ 247,938 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 365,062,357 | $ 360,067,211 | $ 4,994,138 | $ 1,008 |
Nonconvertible Preferred Stocks | 2,820,864 | 2,820,864 | - | - |
Money Market Funds | 30,955,582 | 30,955,582 | - | - |
Total Investments in Securities: | $ 398,838,803 | $ 393,843,657 | $ 4,994,138 | $ 1,008 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $27,251,018) - See accompanying schedule: Unaffiliated issuers (cost $303,988,959) | $ 367,883,221 |
|
Fidelity Central Funds (cost $30,955,582) | 30,955,582 |
|
Total Investments (cost $334,944,541) |
| $ 398,838,803 |
Receivable for investments sold | 5,117,986 | |
Receivable for fund shares sold | 262,644 | |
Dividends receivable | 169,798 | |
Distributions receivable from Fidelity Central Funds | 30,499 | |
Prepaid expenses | 1,685 | |
Other receivables | 12,404 | |
Total assets | 404,433,819 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,377,669 | |
Payable for fund shares redeemed | 1,164,103 | |
Accrued management fee | 170,813 | |
Distribution and service plan fees payable | 10,377 | |
Other affiliated payables | 72,823 | |
Other payables and accrued expenses | 40,560 | |
Collateral on securities loaned, at value | 28,288,110 | |
Total liabilities | 32,124,455 | |
|
|
|
Net Assets | $ 372,309,364 | |
Net Assets consist of: |
| |
Paid in capital | $ 314,390,827 | |
Undistributed net investment income | 262,486 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (6,235,407) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 63,891,458 | |
Net Assets | $ 372,309,364 |
Statement of Assets and Liabilities - continued
| February 28, 2015 | |
|
|
|
Calculation of Maximum Offering Price Class A: | $ 63.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $63.26) | $ 67.12 | |
Class T: | $ 63.04 | |
|
|
|
Maximum offering price per share (100/96.50 of $63.04) | $ 65.33 | |
Class B: | $ 63.45 | |
|
|
|
Class C: | $ 63.04 | |
|
|
|
Telecommunications: | $ 63.54 | |
|
|
|
Institutional Class: | $ 63.38 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Telecommunications Portfolio
Financial Statements - continued
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 9,359,019 |
Income from Fidelity Central Funds |
| 247,938 |
Total income |
| 9,606,957 |
|
|
|
Expenses | ||
Management fee | $ 2,193,042 | |
Transfer agent fees | 811,199 | |
Distribution and service plan fees | 113,904 | |
Accounting and security lending fees | 159,536 | |
Custodian fees and expenses | 20,266 | |
Independent trustees' compensation | 7,823 | |
Registration fees | 81,435 | |
Audit | 44,165 | |
Legal | 3,236 | |
Interest | 466 | |
Miscellaneous | 5,823 | |
Total expenses before reductions | 3,440,895 | |
Expense reductions | (27,807) | 3,413,088 |
Net investment income (loss) | 6,193,869 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 4,972,473 | |
Redemption in-kind with affiliated entities | 2,885,287 | |
Foreign currency transactions | (28,453) | |
Total net realized gain (loss) |
| 7,829,307 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 28,385,962 | |
Assets and liabilities in foreign currencies | 1,342 | |
Total change in net unrealized appreciation (depreciation) |
| 28,387,304 |
Net gain (loss) | 36,216,611 | |
Net increase (decrease) in net assets resulting from operations | $ 42,410,480 |
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 6,193,869 | $ 14,968,972 |
Net realized gain (loss) | 7,829,307 | 2,159,537 |
Change in net unrealized appreciation (depreciation) | 28,387,304 | 48,829,048 |
Net increase (decrease) in net assets resulting from operations | 42,410,480 | 65,957,557 |
Distributions to shareholders from net investment income | (13,679,321) | (8,506,759) |
Distributions to shareholders from net realized gain | - | (32,511) |
Total distributions | (13,679,321) | (8,539,270) |
Share transactions - net increase (decrease) | (19,703,086) | (90,264,976) |
Redemption fees | 3,706 | 26,413 |
Total increase (decrease) in net assets | 9,031,779 | (32,820,276) |
|
|
|
Net Assets | ||
Beginning of period | 363,277,585 | 396,097,861 |
End of period (including undistributed net investment income of $262,486 and undistributed net investment income of $7,778,471, respectively) | $ 372,309,364 | $ 363,277,585 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class A
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 | $ 37.64 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .76 | 1.76F | .99 | .56 | .57 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.43 | (.86) | 9.49 |
Total from investment operations | 6.59 | 8.24 | 6.42 | (.30) | 10.06 |
Distributions from net investment income | (2.04) | (1.11) | (.96) | (.51) | (.77) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.04) | (1.11) J | (.96) | (.51) | (.77) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.26 | $ 58.71 | $ 51.58 | $ 46.12 | $ 46.93 |
Total ReturnA, B | 11.54% | 16.00% | 13.97% | (.54)% | 26.87% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of fee waivers, if any | 1.15% | 1.18% | 1.18% | 1.20% | 1.20% |
Expenses net of all reductions | 1.15% | 1.15% | 1.17% | 1.18% | 1.18% |
Net investment income (loss) | 1.26% | 3.08% F | 2.01% | 1.21% | 1.35% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 11,052 | $ 7,712 | $ 6,449 | $ 4,677 | $ 4,305 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.43%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class T
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 | $ 37.55 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .57 | 1.59F | .85 | .42 | .45 |
Net realized and unrealized gain (loss) | 5.81 | 6.44 | 5.39 | (.84) | 9.47 |
Total from investment operations | 6.38 | 8.03 | 6.24 | (.42) | 9.92 |
Distributions from net investment income | (1.84) | (.94) | (.84) | (.38) | (.66) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.84) | (.94) J | (.84) | (.38) | (.66) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.50 | $ 51.41 | $ 46.01 | $ 46.81 |
Total ReturnA, B | 11.19% | 15.64% | 13.61% | (.82)% | 26.54% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of fee waivers, if any | 1.47% | 1.48% | 1.48% | 1.49% | 1.48% |
Expenses net of all reductions | 1.46% | 1.45% | 1.46% | 1.47% | 1.46% |
Net investment income (loss) | .94% | 2.78% F | 1.72% | .92% | 1.06% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 5,095 | $ 4,344 | $ 4,237 | $ 2,702 | $ 2,882 |
Portfolio turnover rateE | 94% K | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the sales charges. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.13%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JTotal distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 per share. KPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Class B
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 | $ 37.60 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .29 | 1.33F | .62 | .21 | .25 |
Net realized and unrealized gain (loss) | 5.84 | 6.48 | 5.42 | (.83) | 9.48 |
Total from investment operations | 6.13 | 7.81 | 6.04 | (.62) | 9.73 |
Distributions from net investment income | (1.45) | (.66) | (.55) | (.17) | (.40) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.45) | (.67) | (.55) | (.17) | (.40) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.45 | $ 58.77 | $ 51.63 | $ 46.14 | $ 46.93 |
Total ReturnA, B | 10.67% | 15.13% | 13.11% | (1.29)% | 25.96% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of fee waivers, if any | 1.93% | 1.93% | 1.93% | 1.95% | 1.95% |
Expenses net of all reductions | 1.92% | 1.91% | 1.92% | 1.93% | 1.93% |
Net investment income (loss) | .49% | 2.32% F | 1.26% | .47% | .60% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 409 | $ 546 | $ 576 | $ 596 | $ 706 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .67%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Class C
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 | $ 37.61 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) C | .34 | 1.36F | .63 | .22 | .26 |
Net realized and unrealized gain (loss) | 5.80 | 6.46 | 5.41 | (.84) | 9.46 |
Total from investment operations | 6.14 | 7.82 | 6.04 | (.62) | 9.72 |
Distributions from net investment income | (1.64) | (.74) | (.59) | (.25) | (.44) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (1.64) | (.75) | (.59) | (.25) | (.44) |
Redemption fees added to paid in capital C, I | - | - | - | - | - |
Net asset value, end of period | $ 63.04 | $ 58.54 | $ 51.47 | $ 46.02 | $ 46.89 |
Total ReturnA, B | 10.75% | 15.20% | 13.14% | (1.27)% | 25.95% |
Ratios to Average Net Assets D, G |
|
|
|
|
|
Expenses before reductions | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of fee waivers, if any | 1.85% | 1.88% | 1.90% | 1.93% | 1.94% |
Expenses net of all reductions | 1.85% | 1.85% | 1.89% | 1.91% | 1.92% |
Net investment income (loss) | .56% | 2.38% F | 1.29% | .48% | .61% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 7,074 | $ 5,523 | $ 4,353 | $ 3,514 | $ 3,035 |
Portfolio turnover rateE | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BTotal returns do not include the effect of the contingent deferred sales charge. CCalculated based on average shares outstanding during the period. DFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. EAmount does not include the portfolio activity of any underlying Fidelity Central Funds. FInvestment income per share reflects large, non-recurring dividends which amounted to $.94 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been .73%. GExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. HFor the year ended February 29. IAmount represents less than $.01 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Telecommunications
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 | $ 37.73 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .96 | 1.96E | 1.15 | .70 | .69 |
Net realized and unrealized gain (loss) | 5.85 | 6.51 | 5.43 | (.86) | 9.52 |
Total from investment operations | 6.81 | 8.47 | 6.58 | (.16) | 10.21 |
Distributions from net investment income | (2.21) | (1.28) | (1.09) | (.65) | (.87) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.21) | (1.28) I | (1.09) | (.65) | (.87) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.54 | $ 58.94 | $ 51.75 | $ 46.26 | $ 47.07 |
Total ReturnA | 11.90% | 16.40% | 14.30% | (.23)% | 27.24% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .83% | .85% | .87% | .90% | .92% |
Expenses net of fee waivers, if any | .83% | .85% | .87% | .90% | .92% |
Expenses net of all reductions | .82% | .82% | .85% | .88% | .91% |
Net investment income (loss) | 1.58% | 3.41% E | 2.33% | 1.52% | 1.62% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 346,174 | $ 343,548 | $ 377,841 | $ 342,262 | $ 354,938 |
Portfolio turnover rateD | 94% J | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.76%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. ITotal distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 per share. JPortfolio turnover rate excludes securities received or delivered in-kind. |
Financial Highlights - Institutional Class
Years ended February 28, | 2015 | 2014 | 2013 | 2012 G | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 | $ 37.69 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .94 | 1.93E | 1.17 | .70 | .71 |
Net realized and unrealized gain (loss) | 5.83 | 6.48 | 5.42 | (.88) | 9.50 |
Total from investment operations | 6.77 | 8.41 | 6.59 | (.18) | 10.21 |
Distributions from net investment income | (2.19) | (1.25) | (1.14) | (.64) | (.88) |
Distributions from net realized gain | - | (.01) | - | - | - |
Total distributions | (2.19) | (1.26) | (1.14) | (.64) | (.88) |
Redemption fees added to paid in capital B,H | - | - | - | - | - |
Net asset value, end of period | $ 63.38 | $ 58.80 | $ 51.65 | $ 46.20 | $ 47.02 |
Total ReturnA | 11.85% | 16.30% | 14.33% | (.26)% | 27.27% |
Ratios to Average Net Assets C, F |
|
|
|
|
|
Expenses before reductions | .86% | .91% | .85% | .89% | .91% |
Expenses net of fee waivers, if any | .86% | .91% | .85% | .89% | .91% |
Expenses net of all reductions | .85% | .88% | .83% | .87% | .89% |
Net investment income (loss) | 1.55% | 3.35% E | 2.35% | 1.52% | 1.64% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 2,505 | $ 1,604 | $ 2,641 | $ 1,022 | $ 1,743 |
Portfolio turnover rateD | 94% I | 111% | 76% | 72% | 72% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.95 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.70%. FExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. GFor the year ended February 29. HAmount represents less than $.01 per share. IPortfolio turnover rate excludes securities received or delivered in-kind. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transaction, in-kind transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 67,489,038 |
Gross unrealized depreciation | (5,485,717) |
Net unrealized appreciation (depreciation) on securities | $ 62,003,321 |
|
|
Tax Cost | $ 336,835,482 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 262,994 |
Capital loss carryforward | $ (2,739,258) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 62,000,362 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
Fiscal year of expiration |
|
2018 | $ (2,739,258) |
The Fund elected to defer to its next fiscal year approximately $1,605,208 of capital losses recognized during the period November 1, 2014 to February 28, 2015.
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 13,679,321 | $ 8,539,270 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $369,250,039 and $374,869,443, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, 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
Annual Report
Notes to Financial Statements - continued
5. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution | Service | Total Fees | Retained |
Class A | -% | .25% | $ 23,518 | $ 1,136 |
Class T | .25% | .25% | 24,040 | 2 |
Class B | .75% | .25% | 4,565 | 3,425 |
Class C | .75% | .25% | 61,781 | 12,901 |
|
|
| $ 113,904 | $ 17,464 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 | $ 12,354 |
Class T | 3,257 |
Class B* | 41 |
Class C* | 721 |
| $ 16,373 |
* 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of |
Class A | $ 25,757 | .27 |
Class T | 16,249 | .34 |
Class B | 1,364 | .30 |
Class C | 13,731 | .22 |
Telecommunications | 749,337 | .20 |
Institutional Class | 4,761 | .23 |
| $ 811,199 |
|
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $16,650 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 or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,435,667 | .33% | $ 466 |
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Redemptions In-Kind. During the period, 198,779 shares of the Fund held by an affiliated entity were redeemed for investments with a value of $12,187,185. The net realized gain of $2,885,287 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $615 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $241,214.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $27,389 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, including certain Telecommunications expenses during the period in the amount of $418.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended February 28, | 2015 | 2014 |
From net investment income |
|
|
Class A | $ 309,863 | $ 137,021 |
Class T | 143,116 | 71,145 |
Class B | 12,248 | 6,457 |
Class C | 161,299 | 68,251 |
Telecommunications | 12,985,170 | 8,194,747 |
Institutional Class | 67,625 | 29,138 |
Total | $ 13,679,321 | $ 8,506,759 |
From net realized gain |
|
|
Class A | $ - | $ 617 |
Class T | - | 373 |
Class B | - | 48 |
Class C | - | 466 |
Telecommunications | - | 30,889 |
Institutional Class | - | 118 |
Total | $ - | $ 32,511 |
Annual Report
Notes to Financial Statements - continued
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between funds:
| Shares | Dollars | ||
Years ended February 28, | 2015 | 2014 | 2015 | 2014 |
Class A |
|
|
|
|
Shares sold | 79,279 | 62,389 | $ 4,786,534 | $ 3,565,235 |
Reinvestment of distributions | 5,091 | 2,113 | 297,550 | 123,157 |
Shares redeemed | (41,031) | (58,169) | (2,466,354) | (3,308,571) |
Net increase (decrease) | 43,339 | 6,333 | $ 2,617,730 | $ 379,821 |
Class T |
|
|
|
|
Shares sold | 20,637 | 23,341 | $ 1,237,395 | $ 1,331,922 |
Reinvestment of distributions | 2,409 | 1,193 | 139,987 | 69,243 |
Shares redeemed | (16,465) | (32,706) | (994,017) | (1,852,992) |
Net increase (decrease) | 6,581 | (8,172) | $ 383,365 | $ (451,827) |
Class B |
|
|
|
|
Shares sold | 45 | 135 | $ 2,624 | $ 7,819 |
Reinvestment of distributions | 197 | 103 | 11,445 | 6,030 |
Shares redeemed | (3,091) | (2,095) | (186,477) | (116,496) |
Net increase (decrease) | (2,849) | (1,857) | $ (172,408) | $ (102,647) |
Class C |
|
|
|
|
Shares sold | 28,734 | 31,217 | $ 1,731,696 | $ 1,769,477 |
Reinvestment of distributions | 2,043 | 819 | 118,683 | 47,679 |
Shares redeemed | (12,919) | (22,263) | (773,747) | (1,264,412) |
Net increase (decrease) | 17,858 | 9,773 | $ 1,076,632 | $ 552,744 |
Telecommunications |
|
|
|
|
Shares sold | 3,400,370 | 3,045,047 | $ 205,982,254 | $ 171,993,078 |
Reinvestment of distributions | 212,695 | 136,279 | 12,494,070 | 7,951,397 |
Shares redeemed | (3,993,893)A | (4,653,020) | (242,841,980)A | (269,388,514) |
Net increase (decrease) | (380,828) | (1,471,694) | $ (24,365,656) | $ (89,444,039) |
Institutional Class |
|
|
|
|
Shares sold | 29,046 | 22,305 | $ 1,764,278 | $ 1,294,531 |
Reinvestment of distributions | 956 | 405 | 56,138 | 23,701 |
Shares redeemed | (17,754) | (46,560) | (1,063,165) | (2,517,260) |
Net increase (decrease) | 12,248 | (23,850) | $ 757,251 | $ (1,199,028) |
A Amount includes in-kind redemptions (See note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Strategic Advisers Core Fund was the owner of record of approximately 18% of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 20% of the total outstanding shares of the Fund.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total returns will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Wireless Portfolio | 7.55% | 13.93% | 9.38% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2005. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index performed over the same period.
Annual Report
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Kyle Weaver, Portfolio Manager of Wireless Portfolio: For the year, the fund returned 7.55%, edging the 7.53% gain of the fund's benchmark, S&P® Custom Wireless Index, but trailing the S&P 500®. Versus the broader market, the wireless index was hampered by lagging results in its three main subindustries. Compared with the benchmark, avoiding weak-performing Brazil-based wireline and wireless services provider Oi for much of the period and then purchasing an underweighted stake in January paid off handsomely. The share price of RF Micro Devices more than doubled, driven by the success of Apple's iPhone® 6, which uses RF Micro's radio-frequency chips. In January, RF Micro and TriQuint Semiconductor merged to form a new company, Qorvo, in which the fund held a sizable stake at period end. I'll also mention wireless tower companies American Tower, SBA Communications and Crown Castle International, which jointly added considerable value. Conversely, a large underweighting in China Mobile, the largest wireless services provider in that nation, hampered relative performance, as this index component returned roughly 48%. Also weighing on performance was a non-index position in Web.com Group, a provider of Web hosting and website development services for smaller businesses, and Tangoe, a non-index provider of software and services for telecom spending management. Lastly, the fund's foreign holdings hampered performance mainly due to a strongly appreciating U.S. dollar.
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
Wireless 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, 2014 to February 28, 2015).
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 | .84% | $ 1,000.00 | $ 1,057.70 | $ 4.29 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.63 | $ 4.21 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Annual Report
Wireless Portfolio
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
Verizon Communications, Inc. | 10.4 | 17.4 |
QUALCOMM, Inc. | 9.1 | 10.3 |
American Tower Corp. | 7.3 | 4.9 |
Vodafone Group PLC sponsored ADR | 6.2 | 7.7 |
Crown Castle International Corp. | 5.9 | 3.5 |
Google, Inc. Class C | 4.3 | 3.4 |
BT Group PLC sponsored ADR | 4.1 | 3.8 |
T-Mobile U.S., Inc. | 4.0 | 1.7 |
SBA Communications Corp. | 3.6 | 2.9 |
Endurance International Group Holdings, Inc. | 3.2 | 2.3 |
| 58.1 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Diversified Telecommunication Services | 25.6% |
|
![]() | Wireless Telecommunication Services | 19.9% |
|
![]() | Communications Equipment | 17.3% |
|
![]() | Real Estate Investment Trusts | 13.2% |
|
![]() | Internet Software & Services | 10.8% |
|
![]() | All Others* | 13.2% |
|
As of August 31, 2014 | |||
![]() | Diversified Telecommunication Services | 31.6% |
|
![]() | Wireless Telecommunication Services | 19.8% |
|
![]() | Communications Equipment | 16.1% |
|
![]() | Internet Software & Services | 8.6% |
|
![]() | Real Estate Investment Trusts | 8.4% |
|
![]() | All Others* | 15.5% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Wireless Portfolio
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
COMMUNICATIONS EQUIPMENT - 17.3% | |||
Communications Equipment - 17.3% | |||
Alcatel-Lucent SA sponsored ADR (a) | 672,500 | $ 2,616,025 | |
Aruba Networks, Inc. (a) | 39,884 | 989,522 | |
Harris Corp. | 39,200 | 3,045,056 | |
Motorola Solutions, Inc. | 64,068 | 4,352,780 | |
Nokia Corp. sponsored ADR | 536,000 | 4,293,360 | |
QUALCOMM, Inc. | 339,950 | 24,649,775 | |
Ruckus Wireless, Inc. (a) | 311,700 | 3,946,122 | |
Sierra Wireless, Inc. (a) | 13,300 | 499,548 | |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 72,400 | 936,132 | |
ViaSat, Inc. (a) | 23,400 | 1,528,956 | |
| 46,857,276 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 25.6% | |||
Alternative Carriers - 1.5% | |||
inContact, Inc. (a) | 233,500 | 2,734,285 | |
Intelsat SA (a) | 53,700 | 664,269 | |
Towerstream Corp. (a) | 334,423 | 755,796 | |
| 4,154,350 | ||
Integrated Telecommunication Services - 24.1% | |||
AT&T, Inc. | 7,900 | 273,024 | |
BT Group PLC sponsored ADR | 159,600 | 11,164,020 | |
Chunghwa Telecom Co. Ltd. sponsored ADR (d) | 91,500 | 2,878,590 | |
Koninklijke KPN NV | 425 | 1,449 | |
Oi SA ADR (a)(d) | 180,000 | 376,200 | |
Orange SA | 477,300 | 8,705,193 | |
Telecom Italia SpA (a)(d) | 2,461,500 | 2,941,730 | |
Telefonica SA sponsored ADR | 154,948 | 2,400,145 | |
TELUS Corp. | 70,300 | 2,499,106 | |
TELUS Corp. | 165,000 | 5,865,611 | |
Verizon Communications, Inc. | 565,797 | 27,978,659 | |
| 65,083,727 | ||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 69,238,077 | ||
ELECTRONIC EQUIPMENT & COMPONENTS - 1.1% | |||
Electronic Manufacturing Services - 1.1% | |||
Neonode, Inc. (a)(d) | 344,100 | 1,056,387 | |
TTM Technologies, Inc. (a) | 212,400 | 1,871,244 | |
| 2,927,631 | ||
INTERNET SOFTWARE & SERVICES - 10.8% | |||
Internet Software & Services - 10.8% | |||
Endurance International Group Holdings, Inc. (a) | 468,200 | 8,717,884 | |
Gogo, Inc. (a)(d) | 62,700 | 1,127,346 | |
Google, Inc. Class C (a) | 20,700 | 11,558,880 | |
| |||
Shares | Value | ||
Web.com Group, Inc. (a) | 266,300 | $ 4,753,455 | |
Xoom Corp. (a)(d) | 173,500 | 2,958,175 | |
| 29,115,740 | ||
IT SERVICES - 0.7% | |||
IT Consulting & Other Services - 0.7% | |||
Cognizant Technology Solutions Corp. Class A (a) | 32,100 | 2,005,769 | |
MEDIA - 0.0% | |||
Cable & Satellite - 0.0% | |||
Numericable Group SA (a) | 100 | 6,200 | |
REAL ESTATE INVESTMENT TRUSTS - 13.2% | |||
Specialized REITs - 13.2% | |||
American Tower Corp. | 199,492 | 19,777,637 | |
Crown Castle International Corp. | 185,700 | 16,027,767 | |
| 35,805,404 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.4% | |||
Semiconductors - 4.4% | |||
Altera Corp. | 37,100 | 1,373,071 | |
Marvell Technology Group Ltd. | 83,100 | 1,339,572 | |
Qorvo, Inc. (a) | 112,425 | 7,802,295 | |
Xilinx, Inc. | 31,600 | 1,338,892 | |
| 11,853,830 | ||
SOFTWARE - 2.8% | |||
Application Software - 2.8% | |||
Interactive Intelligence Group, Inc. (a) | 30,100 | 1,277,444 | |
Synchronoss Technologies, Inc. (a) | 66,436 | 2,940,457 | |
Tangoe, Inc. (a) | 278,300 | 3,453,703 | |
| 7,671,604 | ||
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 3.6% | |||
Technology Hardware, Storage & Peripherals - 3.6% | |||
Apple, Inc. | 20,200 | 2,594,892 | |
BlackBerry Ltd. (a) | 129,500 | 1,399,895 | |
Samsung Electronics Co. Ltd. | 4,641 | 5,719,535 | |
| 9,714,322 | ||
WIRELESS TELECOMMUNICATION SERVICES - 19.9% | |||
Wireless Telecommunication Services - 19.9% | |||
America Movil S.A.B. de CV Series L sponsored ADR | 120,800 | 2,582,704 | |
China Mobile Ltd. sponsored ADR | 10,200 | 691,050 | |
Leap Wireless International, Inc. rights (a) | 16,600 | 41,832 | |
NTELOS Holdings Corp. | 28,100 | 127,012 | |
RingCentral, Inc. (a) | 7,600 | 119,852 | |
Rogers Communications, Inc. Class B (non-vtg.) (d) | 157,800 | 5,580,624 | |
SBA Communications Corp. Class A (a) | 77,700 | 9,689,967 | |
Shenandoah Telecommunications Co. | 1,300 | 37,817 | |
SoftBank Corp. | 25,800 | 1,593,424 | |
Spok Holdings, Inc. | 14,900 | 276,991 | |
Sprint Corp. (a) | 100,733 | 515,753 | |
Common Stocks - continued | |||
Shares | Value | ||
WIRELESS TELECOMMUNICATION SERVICES - CONTINUED | |||
Wireless Telecommunication Services - continued | |||
T-Mobile U.S., Inc. (a) | 329,075 | $ 10,869,347 | |
Telephone & Data Systems, Inc. | 160,014 | 4,070,756 | |
U.S. Cellular Corp. (a) | 22,100 | 838,253 | |
Vodafone Group PLC sponsored ADR | 483,281 | 16,702,191 | |
| 53,737,573 | ||
TOTAL COMMON STOCKS (Cost $220,102,672) |
| ||
Nonconvertible Preferred Stocks - 0.0% | |||
|
|
|
|
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.0% | |||
Integrated Telecommunication Services - 0.0% | |||
Oi SA (PN) (a) | 15,880 |
| |
Money Market Funds - 5.5% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 2,676,696 | 2,676,696 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 12,047,540 | 12,047,540 | |
TOTAL MONEY MARKET FUNDS (Cost $14,724,236) |
|
TOTAL INVESTMENT PORTFOLIO - 104.9% (Cost $235,127,515) | 283,690,890 | |
NET OTHER ASSETS (LIABILITIES) - (4.9)% | (13,242,012) | |
NET ASSETS - 100% | $ 270,448,878 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,692 |
Fidelity Securities Lending Cash Central Fund | 292,516 |
Total | $ 295,208 |
Other Information |
The following is a summary of the inputs used, as of February 28, 2015, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Common Stocks | $ 268,933,426 | $ 255,649,798 | $ 13,241,796 | $ 41,832 |
Nonconvertible Preferred Stocks | 33,228 | 33,228 | - | - |
Money Market Funds | 14,724,236 | 14,724,236 | - | - |
Total Investments in Securities: | $ 283,690,890 | $ 270,407,262 | $ 13,241,796 | $ 41,832 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows (Unaudited): |
United States of America | 69.8% |
United Kingdom | 10.3% |
Canada | 5.9% |
France | 4.2% |
Korea (South) | 2.1% |
Finland | 1.6% |
Italy | 1.1% |
Taiwan | 1.1% |
Mexico | 1.0% |
Others (Individually Less Than 1%) | 2.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $11,384,421) - See accompanying schedule: Unaffiliated issuers (cost $220,403,279) | $ 268,966,654 |
|
Fidelity Central Funds (cost $14,724,236) | 14,724,236 |
|
Total Investments (cost $235,127,515) |
| $ 283,690,890 |
Cash |
| 9,164 |
Receivable for investments sold | 1,374,321 | |
Receivable for fund shares sold | 137,093 | |
Dividends receivable | 93,296 | |
Distributions receivable from Fidelity Central Funds | 9,471 | |
Prepaid expenses | 1,093 | |
Other receivables | 16,219 | |
Total assets | 285,331,547 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 2,406,804 | |
Payable for fund shares redeemed | 212,523 | |
Accrued management fee | 121,042 | |
Other affiliated payables | 58,264 | |
Other payables and accrued expenses | 36,496 | |
Collateral on securities loaned, at value | 12,047,540 | |
Total liabilities | 14,882,669 | |
|
|
|
Net Assets | $ 270,448,878 | |
Net Assets consist of: |
| |
Paid in capital | $ 219,256,634 | |
Undistributed net investment income | 385,053 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 2,244,018 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 48,563,173 | |
Net Assets, for 28,339,333 shares outstanding | $ 270,448,878 | |
Net Asset Value, offering price and redemption price per share ($270,448,878 ÷ 28,339,333 shares) | $ 9.54 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 6,896,930 |
Income from Fidelity Central Funds |
| 295,208 |
Total income |
| 7,192,138 |
|
|
|
Expenses | ||
Management fee | $ 1,511,284 | |
Transfer agent fees | 628,737 | |
Accounting and security lending fees | 111,420 | |
Custodian fees and expenses | 34,850 | |
Independent trustees' compensation | 5,430 | |
Registration fees | 23,672 | |
Audit | 36,718 | |
Legal | 2,130 | |
Interest | 278 | |
Miscellaneous | 3,462 | |
Total expenses before reductions | 2,357,981 | |
Expense reductions | (9,341) | 2,348,640 |
Net investment income (loss) | 4,843,498 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 15,103,537 | |
Foreign currency transactions | (114,030) | |
Total net realized gain (loss) |
| 14,989,507 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (640,467) | |
Assets and liabilities in foreign currencies | 18,821 | |
Total change in net unrealized appreciation (depreciation) |
| (621,646) |
Net gain (loss) | 14,367,861 | |
Net increase (decrease) in net assets resulting from operations | $ 19,211,359 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
| Year ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 4,843,498 | $ 16,383,640 |
Net realized gain (loss) | 14,989,507 | 36,579,449 |
Change in net unrealized appreciation (depreciation) | (621,646) | 6,969,184 |
Net increase (decrease) in net assets resulting from operations | 19,211,359 | 59,932,273 |
Distributions to shareholders from net investment income | (16,759,973) | (2,744,292) |
Distributions to shareholders from net realized gain | (28,888,507) | - |
Total distributions | (45,648,480) | (2,744,292) |
Share transactions | 42,710,221 | 117,927,758 |
Reinvestment of distributions | 44,098,611 | 2,633,352 |
Cost of shares redeemed | (79,982,116) | (141,492,075) |
Net increase (decrease) in net assets resulting from share transactions | 6,826,716 | (20,930,965) |
Redemption fees | 2,631 | 5,399 |
Total increase (decrease) in net assets | (19,607,774) | 36,262,415 |
|
|
|
Net Assets | ||
Beginning of period | 290,056,652 | 253,794,237 |
End of period (including undistributed net investment income of $385,053 and undistributed net investment income of $12,634,450, respectively) | $ 270,448,878 | $ 290,056,652 |
Other Information Shares | ||
Sold | 4,509,142 | 12,229,697 |
Issued in reinvestment of distributions | 4,839,668 | 259,699 |
Redeemed | (8,448,923) | (14,564,406) |
Net increase (decrease) | 899,887 | (2,075,010) |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 H | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 10.57 | $ 8.60 | $ 7.68 | $ 8.29 | $ 6.47 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | .17 | .56E | .12 | .10F | .08 |
Net realized and unrealized gain (loss) | .48 | 1.51 | .94 | (.33) | 1.82 |
Total from investment operations | .65 | 2.07 | 1.06 | (.23) | 1.90 |
Distributions from net investment income | (.62) | (.10) | (.14) | (.08) | (.08) |
Distributions from net realized gain | (1.06) | - | - | (.30) | - |
Total distributions | (1.68) | (.10) | (.14) | (.38) | (.08) |
Redemption fees added to paid in capital B,I | - | - | - | - | - |
Net asset value, end of period | $ 9.54 | $ 10.57 | $ 8.60 | $ 7.68 | $ 8.29 |
Total ReturnA | 7.55% | 24.11% | 13.89% | (2.55)% | 29.55% |
Ratios to Average Net AssetsC,G |
|
|
|
|
|
Expenses before reductions | .86% | .88% | .90% | .90% | .92% |
Expenses net of fee waivers, if any | .86% | .88% | .90% | .90% | .92% |
Expenses net of all reductions | .85% | .86% | .87% | .89% | .91% |
Net investment income (loss) | 1.76% | 5.91% E | 1.50% | 1.23% F | 1.08% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 270,449 | $ 290,057 | $ 253,794 | $ 262,696 | $ 361,082 |
Portfolio turnover rateD | 48% | 120% | 100% | 114% | 111% |
ATotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. BCalculated based on average shares outstanding during the period. CFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. DAmount does not include the portfolio activity of any underlying Fidelity Central Funds. EInvestment income per share reflects large, non-recurring dividends which amounted to $.45 per share. Excluding these non-recurring dividends, the ratio of net investment income (loss) to average net assets would have been 1.23%. FInvestment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .90%. GExpense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund. HFor the year ended February 29. IAmount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
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. Share transactions on the Statement of Changes in Net Assets may contain exchanges between 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 Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of February 28, 2015, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 57,174,127 |
Gross unrealized depreciation | (9,761,796) |
Net unrealized appreciation (depreciation) on securities | $ 47,412,331 |
|
|
Tax Cost | $ 236,278,559 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 1,326,877 |
Undistributed long-term capital gain | $ 2,453,239 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 47,412,129 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 19,922,070 | $ 2,744,292 |
Long-term Capital Gains | 25,726,410 | - |
Total | $ 45,648,480 | $ 2,744,292 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $133,087,289 and $169,693,214, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, 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 .23% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $5,431 for the period.
Annual Report
5. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of 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 Loan | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 7,837,000 | .32% | $ 278 |
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $432 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $292,516.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $8,390 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses during the period in the amount of $951.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of 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 positions of Telecommunications Portfolio and Wireless Portfolio (funds of Fidelity Select Portfolios) at February 28, 2015, 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, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Funds' Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Funds' Trustees."
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.
Annual Report
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
Annual Report
Trustees and Officers - continued
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for each fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
Telecommunications Portfolio designates 20% and 100% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Telecommunications Portfolio 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 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Distributions (Unaudited)
The Board of Trustees of Select Wireless Portfolio voted to pay on April 13, 2015 to shareholders of record at the opening of business on April 10, 2015 a distribution of $0.122 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.014 per share from net investment income.
Wireless Portfolio hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2015, $10,735,210, or, if subsequently determined to be different, the net capital gain of such year.
Wireless Portfolio designates 2% and 44% of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
Wireless Portfolio designates 100% and 86% 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 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Telecommunications Portfolio
Wireless Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with each fund; (iv) the extent to which economies of scale exist and would be realized as each fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Telecommunications Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended May 31, 2014, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should benefit the shareholders of each fund.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Telecommunications Portfolio
Wireless Portfolio
The Board noted that each fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that each fund's management fee is fair and reasonable in light of the services that each fund receives and the other factors considered.
Annual Report
Total Expense Ratio. In its review of the total expense ratio of each class of Telecommunications Portfolio, the Board considered the fund's management fee as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the total expense ratio of each of Class A, Class B, Class C, Institutional Class, and the retail class of Telecommunications Portfolio ranked below its competitive median for the 12-month period ended June 30, 2014 and the total expense ratio of Class T ranked above its competitive median for the 12-month period ended June 30, 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Class T was above the competitive median primarily because of higher 12b-1 fees on Class T as compared to most competitor funds. Class T has a higher 12b-1 fee, but a lower front-end sales charge, than traditionally priced front-end sales charge classes. The Board considered that Class T is primarily sold load-waived in the retirement plan market where its 0.50% 12b-1 fee is comparable to competing no-load, higher 12b-1 fee classes designed specifically for retirement plans. The Board noted that each fund offers multiple classes, each of which has a different sales load and 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes of each fund vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.
In its review of Wireless Portfolio's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that Wireless Portfolio's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that, although the expense ratio of Class T of Telecommunications Portfolio was above the median of the universe presented for comparison, the total expense ratio of each class of Telecommunications Portfolio and the total expense ratio of Wireless Portfolio were reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and servicing each fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with each fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of each fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which each fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
The Board recognized that each fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). SelectCo calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management (U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
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Fidelity®
Select Portfolios®
Utilities Sector
Utilities Portfolio
Annual Report
February 28, 2015
(Fidelity Cover Art)
Contents
Performance | How the fund has done over time. | |
Management's Discussion of Fund Performance | The Portfolio Manager's review of fund performance and strategy. | |
Shareholder Expense Example |
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Investment Changes |
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Investments |
| |
Financial Statements |
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Notes to Financial Statements |
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Report of Independent Registered Public Accounting Firm |
| |
Trustees and Officers |
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Distributions |
| |
Board Approval of Investment Advisory Contracts and Management Fees |
|
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2015 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended February 28, 2015 | Past 1 | Past 5 | Past 10 |
Utilities Portfolio A | 11.22% | 15.13% | 8.98% |
A Prior to October 1, 2006, Utilities Portfolio operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 28, 2005. 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
Management's Discussion of Fund Performance
Market Recap: The U.S. stock market closed near its all-time high for the 12 months ending February 28, 2015, supported by low interest rates and the relative strength of the U.S. economy and dollar. The large-cap S&P 500® Index returned 15.51%. Growth stocks in the index outperformed value-oriented names. The tech-heavy Nasdaq Composite Index® rose 16.58%, while the small-cap Russell 2000® Index advanced 5.63%, rallying from early-period weakness amid growth and valuation worries. Among the 10 major market sectors tracked by MSCI U.S. IMI 25-50 classifications, most notched a double-digit gain, led by health care (+24%), consumer staples (+21%), information technology (+20%) and utilities (+15%). Conversely, energy (-9%) was the only sector to lose ground, reflecting a sharp drop in crude prices beginning midyear and attributed to weaker global demand and a U.S. supply boom. Volatility spiked to a three-year high in October amid concerns about economic growth and Ebola, as well as unrest in Syria, Iraq and Ukraine. Nevertheless, the S&P 500® index finished the period well above its mid-October nadir, bolstered by the relative economic strength of the U.S., which marked a six-year low in its unemployment rate, and consumer confidence that declined only slightly from its 11-year high reached in January.
Comments from Douglas Simmons, Portfolio Manager of Utilities Portfolio: For the year, the fund returned 11.22%, underperforming the 15.13% gain of the MSCI U.S. IMI Utilities 25-50 Index, as well as the S&P 500®. The utilities sector, which typically pays higher dividends than most sectors, was attractive to yield-seeking investors in an environment of low-and-falling longer-term bond yields. Relative to the MSCI sector index, the fund's holdings of deregulated electric utilities, as well as an overweighting in independent power producers, hurt most. I invested in these growth-oriented segments thinking that they would eventually benefit from rising power prices, due partly to the shutdown of many coal-fired power plants, as well as proposed reforms that I believe will benefit the economics of low-cost power generators. That thesis is still intact, in my opinion, although it has yet to play out. Deregulated companies remained under pressure during the period amid falling prices for oil and natural gas that weighed on power pricing. In addition, declining bond yields attracted investors to more traditionally defensive, dividend-paying utilities, which the fund underweighted relative to its benchmark. Offsetting this underperformance to a degree was our significant non-benchmark stake in oil & gas storage & transport stocks, which included terminal operator Cheniere Energy and pipeline company Energy Transfer Equity, our two top performers. I overweighted oil & gas storage & transport, but significantly cut back on the stake due to commodity-price declines. I liked the high dividend growth offered by electric transmission companies, and increased the fund's weighting in electric utilities, although the group remained underweighted relative to the index. This was an area where our stock selection was unfavorable, including the two biggest detractors, an investment in Oklahoma electric utility OGE Energy and untimely ownership of Chicago-based Exelon. I significantly underweighted gas utilities because I found most of these stocks to be too expensive.
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, 2014 to February 28, 2015).
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 | .79% | $ 1,000.00 | $ 1,000.50 | $ 3.92 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.88 | $ 3.96 |
A 5% return per year before expenses
B Annualized expense ratio reflects expenses net of applicable fee waivers.
* 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
Investment Changes (Unaudited)
Top Ten Stocks as of February 28, 2015 | ||
| % of fund's | % of fund's net assets |
NextEra Energy, Inc. | 12.8 | 10.5 |
Exelon Corp. | 10.5 | 6.0 |
Dominion Resources, Inc. | 9.9 | 10.9 |
Sempra Energy | 9.8 | 7.9 |
PG&E Corp. | 7.3 | 3.9 |
PPL Corp. | 5.0 | 6.2 |
NiSource, Inc. | 4.9 | 4.9 |
Calpine Corp. | 4.9 | 2.2 |
Edison International | 4.5 | 4.7 |
Southern Co. | 3.0 | 0.0 |
| 72.6 |
Top Industries (% of fund's net assets) | |||
As of February 28, 2015 | |||
![]() | Electric Utilities | 43.7% |
|
![]() | Multi-Utilities | 33.3% |
|
![]() | Independent Power and Renewable Electricity Producers | 11.7% |
|
![]() | Oil, Gas & Consumable Fuels | 5.8% |
|
![]() | Real Estate Investment Trusts | 2.0% |
|
![]() | All Others* | 3.5% |
|
As of August 31, 2014 | |||
![]() | Electric Utilities | 41.7% |
|
![]() | Multi-Utilities | 28.2% |
|
![]() | Oil, Gas & Consumable Fuels | 12.9% |
|
![]() | Independent Power Producers & Energy Traders | 8.0% |
|
![]() | Media | 3.1% |
|
![]() | All Others* | 6.1% |
|
* Includes short-term investments and net other assets (liabilities). |
Annual Report
Investments February 28, 2015
Showing Percentage of Net Assets
Common Stocks - 97.2% | |||
Shares | Value | ||
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.7% | |||
Alternative Carriers - 0.7% | |||
Cogent Communications Group, Inc. | 185,891 | $ 6,825,918 | |
ELECTRIC UTILITIES - 43.7% | |||
Electric Utilities - 43.7% | |||
Edison International | 698,912 | 44,905,096 | |
Exelon Corp. | 3,070,800 | 104,161,536 | |
FirstEnergy Corp. | 503,000 | 17,594,940 | |
Hawaiian Electric Industries, Inc. | 51,900 | 1,715,295 | |
ITC Holdings Corp. | 345,100 | 13,365,723 | |
NextEra Energy, Inc. | 1,224,685 | 126,705,911 | |
NRG Yield, Inc. Class A (d) | 357,055 | 18,320,492 | |
OGE Energy Corp. | 802,485 | 26,088,787 | |
PPL Corp. | 1,437,842 | 49,030,412 | |
Southern Co. | 645,911 | 29,576,265 | |
| 431,464,457 | ||
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 11.7% | |||
Independent Power Producers & Energy Traders - 10.6% | |||
Black Hills Corp. | 166,050 | 8,440,322 | |
Calpine Corp. (a) | 2,278,987 | 48,314,524 | |
Dynegy, Inc. (a) | 439,937 | 12,261,044 | |
NRG Energy, Inc. | 1,189,322 | 28,519,942 | |
The AES Corp. | 580,023 | 7,522,898 | |
| 105,058,730 | ||
Renewable Electricity - 1.1% | |||
Abengoa Yield PLC (d) | 330,331 | 10,831,553 | |
TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 115,890,283 | ||
MULTI-UTILITIES - 33.3% | |||
Multi-Utilities - 33.3% | |||
Dominion Resources, Inc. | 1,352,512 | 97,502,590 | |
NiSource, Inc. | 1,130,223 | 48,497,869 | |
PG&E Corp. | 1,337,737 | 71,876,609 | |
Sempra Energy | 899,951 | 97,374,698 | |
TECO Energy, Inc. | 732,400 | 14,377,012 | |
| 329,628,778 | ||
OIL, GAS & CONSUMABLE FUELS - 5.8% | |||
Oil & Gas Storage & Transport - 5.8% | |||
Cheniere Energy Partners LP Holdings LLC | 938,500 | 21,970,285 | |
| |||
Shares | Value | ||
Columbia Pipeline Partners LP | 39,100 | $ 1,082,679 | |
Energy Transfer Equity LP | 447,117 | 28,557,363 | |
Genesis Energy LP | 10,500 | 483,000 | |
Plains GP Holdings LP Class A | 187,821 | 5,379,193 | |
| 57,472,520 | ||
REAL ESTATE INVESTMENT TRUSTS - 2.0% | |||
Specialized REITs - 2.0% | |||
Crown Castle International Corp. | 226,600 | 19,557,846 | |
TOTAL COMMON STOCKS (Cost $862,938,791) |
| ||
Money Market Funds - 2.8% | |||
|
|
|
|
Fidelity Cash Central Fund, 0.13% (b) | 19,427,092 | 19,427,092 | |
Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c) | 8,641,255 | 8,641,255 | |
TOTAL MONEY MARKET FUNDS (Cost $28,068,347) |
| ||
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $891,007,138) | 988,908,149 | ||
NET OTHER ASSETS (LIABILITIES) - 0.0% | (482,237) | ||
NET ASSETS - 100% | $ 988,425,912 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 19,318 |
Fidelity Securities Lending Cash Central Fund | 55,762 |
Total | $ 75,080 |
Other Information |
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements
Statement of Assets and Liabilities
| February 28, 2015 | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $8,236,090) - See accompanying schedule: Unaffiliated issuers (cost $862,938,791) | $ 960,839,802 |
|
Fidelity Central Funds (cost $28,068,347) | 28,068,347 |
|
Total Investments (cost $891,007,138) |
| $ 988,908,149 |
Receivable for investments sold | 10,617,987 | |
Receivable for fund shares sold | 1,619,484 | |
Dividends receivable | 3,945,064 | |
Distributions receivable from Fidelity Central Funds | 4,578 | |
Prepaid expenses | 3,702 | |
Other receivables | 7,447 | |
Total assets | 1,005,106,411 | |
|
|
|
Liabilities | ||
Payable for fund shares redeemed | $ 7,320,182 | |
Accrued management fee | 481,021 | |
Other affiliated payables | 195,371 | |
Other payables and accrued expenses | 42,670 | |
Collateral on securities loaned, at value | 8,641,255 | |
Total liabilities | 16,680,499 | |
|
|
|
Net Assets | $ 988,425,912 | |
Net Assets consist of: |
| |
Paid in capital | $ 880,867,459 | |
Undistributed net investment income | 3,403,986 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,253,456 | |
Net unrealized appreciation (depreciation) on investments | 97,901,011 | |
Net Assets, for 13,568,157 shares outstanding | $ 988,425,912 | |
Net Asset Value, offering price and redemption price per share ($988,425,912 ÷ 13,568,157 shares) | $ 72.85 |
Statement of Operations
| Year ended February 28, 2015 | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 25,232,047 |
Income from Fidelity Central Funds |
| 75,080 |
Total income |
| 25,307,127 |
|
|
|
Expenses | ||
Management fee | $ 5,187,641 | |
Transfer agent fees | 1,865,748 | |
Accounting and security lending fees | 317,687 | |
Custodian fees and expenses | 16,979 | |
Independent trustees' compensation | 17,674 | |
Registration fees | 107,945 | |
Audit | 42,080 | |
Legal | 5,204 | |
Interest | 240 | |
Miscellaneous | 10,808 | |
Total expenses before reductions | 7,572,006 | |
Expense reductions | (52,985) | 7,519,021 |
Net investment income (loss) | 17,788,106 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 55,831,503 | |
Redemption in-kind with affiliated entities | 2,658,037 | |
Foreign currency transactions | 20,458 | |
Futures contracts | (327,581) | |
Total net realized gain (loss) |
| 58,182,417 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 6,621,791 | |
Assets and liabilities in foreign currencies | 743 | |
Total change in net unrealized appreciation (depreciation) |
| 6,622,534 |
Net gain (loss) | 64,804,951 | |
Net increase (decrease) in net assets resulting from operations | $ 82,593,057 |
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) | $ 17,788,106 | $ 13,521,451 |
Net realized gain (loss) | 58,182,417 | 23,716,346 |
Change in net unrealized appreciation (depreciation) | 6,622,534 | 56,164,291 |
Net increase (decrease) in net assets resulting from operations | 82,593,057 | 93,402,088 |
Distributions to shareholders from net investment income | (14,727,703) | (8,245,345) |
Distributions to shareholders from net realized gain | (53,286,789) | (4,809,786) |
Total distributions | (68,014,492) | (13,055,131) |
Share transactions | 882,547,504 | 522,009,446 |
Reinvestment of distributions | 65,214,543 | 12,368,212 |
Cost of shares redeemed | (669,930,558) | (451,211,733) |
Net increase (decrease) in net assets resulting from share transactions | 277,831,489 | 83,165,925 |
Redemption fees | 83,359 | 37,400 |
Total increase (decrease) in net assets | 292,493,413 | 163,550,282 |
Net Assets | ||
Beginning of period | 695,932,499 | 532,382,217 |
End of period (including undistributed net investment income of $3,403,986 and undistributed net investment income of $3,436,635, respectively) | $ 988,425,912 | $ 695,932,499 |
Other Information Shares | ||
Sold | 11,876,954 | 7,881,437 |
Issued in reinvestment of distributions | 894,827 | 188,339 |
Redeemed | (9,055,975) | (6,938,672) |
Net increase (decrease) | 3,715,806 | 1,131,104 |
Financial Highlights
Years ended February 28, | 2015 | 2014 | 2013 | 2012 F | 2011 |
Selected Per-Share Data |
|
|
|
|
|
Net asset value, beginning of period | $ 70.64 | $ 61.04 | $ 52.56 | $ 50.28 | $ 42.24 |
Income from Investment Operations |
|
|
|
|
|
Net investment income (loss) B | 1.41 | 1.49 | 1.41 | 1.43 | 1.14 |
Net realized and unrealized gain (loss) | 6.40 | 9.80 | 7.70 | 1.99 | 8.09 |
Total from investment operations | 7.81 | 11.29 | 9.11 | 3.42 | 9.23 |
Distributions from net investment income | (1.20) | (1.07) | (.63) | (1.14) | (1.19) |
Distributions from net realized gain | (4.42) | (.62) | - | - | - |
Total distributions | (5.61)H | (1.69) | (.63) | (1.14) | (1.19) |
Redemption fees added to paid in capitalB | .01 | -G | -G | -G | -G |
Net asset value, end of period | $ 72.85 | $ 70.64 | $ 61.04 | $ 52.56 | $ 50.28 |
Total ReturnA | 11.22% | 18.71% | 17.46% | 6.85% | 22.07% |
Ratios to Average Net AssetsC, E |
|
|
|
|
|
Expenses before reductions | .80% | .82% | .83% | .86% | .90% |
Expenses net of fee waivers, if any | .80% | .82% | .83% | .86% | .90% |
Expenses net of all reductions | .80% | .80% | .79% | .84% | .87% |
Net investment income (loss) | 1.89% | 2.28% | 2.49% | 2.78% | 2.46% |
Supplemental Data |
|
|
|
|
|
Net assets, end of period (000 omitted) | $ 988,426 | $ 695,932 | $ 532,382 | $ 518,969 | $ 454,097 |
Portfolio turnover rateD | 129% I | 160% | 158% | 202% | 238% |
A Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F For the year ended February 29.
G Amount represents less than $.01 per share.
H Total distributions of $5.61 per share is comprised of distributions from net investment income of $1.199 and distributions from net realized gain of $4.415 per share.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended February 28, 2015
1. Organization.
Utilities Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .01%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website 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 website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity SelectCo, LLC (SelectCo) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Annual Report
3. Significant Accounting Policies - continued
Investment Valuation - continued
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, partnerships, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 110,903,281 |
Gross unrealized depreciation | (20,225,985) |
Net unrealized appreciation (depreciation) on securities | $ 90,677,296 |
|
|
Tax Cost | $ 898,230,853 |
Annual Report
Notes to Financial Statements - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $ 4,763,587 |
Undistributed long-term capital gain | $ 12,118,230 |
Net unrealized appreciation (depreciation) on securities and other investments | $ 90,677,296 |
The tax character of distributions paid was as follows:
| February 28, 2015 | February 28, 2014 |
Ordinary Income | $ 33,469,958 | $ 8,245,345 |
Long-term Capital Gains | 34,544,534 | 4,809,786 |
Total | $ 68,014,492 | $ 13,055,131 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (the Update). The Update amends the accounting for certain repurchase agreements and expands disclosure requirements for reverse repurchase agreements, securities lending and other similar transactions. The disclosure requirements are effective for annual and interim reporting periods beginning after December 15, 2014. Management is currently evaluating the impact of the Update on the Fund's financial statements and related disclosures.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts may be mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
Annual Report
4. Derivative Instruments - continued
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent daily payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable, if any, is included in daily variation margin for derivative instruments in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract. The net realized gain (loss) and change in net unrealized appreciation (depreciation) on futures contracts during the period is included in the Statement of Operations.
Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument or index at period end.
During the period the Fund recognized net realized gain (loss) of $(327,581) related to its investment in futures contracts. This amount is included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities other than short-term securities and in-kind transactions, aggregated $1,409,007,873 and $1,191,094,297, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, 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 .20% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20,066 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 or other affiliated entities of 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 Loan | Weighted Average | Interest Expense |
Borrower | $ 5,271,400 | .33% | $ 240 |
Redemptions In-Kind. During the period, 197,773 shares of the Fund held by an affiliated entity were redeemed in kind for investments with a value of $14,338,554. The net realized gain of $2,658,037 on investments delivered through the in-kind redemption is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
Annual Report
Notes to Financial Statements - continued
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,281 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. 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, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $55,762.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $52,119 for the period.
In addition, the investment adviser reimbursed a portion of the Fund's operating expenses, during the period in the amount of $866.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Utilities Portfolio (a fund of Fidelity Select Portfolios) at February 28, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Utilities Portfolio's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2015
Annual Report
Trustees and Officers
The Trustees and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 75 funds.
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. The officers hold office without limit in time, except that any officer may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Experience, Skills, Attributes, and Qualifications of the Fund's Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person (as defined in the 1940 Act) and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through SelectCo, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Fund's Trustees."
The fund's Statement of Additional Informational (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Annual Report
Trustees and Officers - continued
Interested Trustee*:
Correspondence intended for the Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2014 Trustee Chairman of the Board of Trustees | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
* Trustee has been determined to be an "Interested Trustee" by virtue of, among other things, his affiliation with the trust or various entities under common control with SelectCo.
+ The information above includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustee) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+ | |
David A. Rosow (1942) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Rosow also serves as Trustee of other Fidelity funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed oil refining, drilling and marketing of petroleum products (including specialty petroleum products), the recreation industry, and real estate development. Previously, Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of other Fidelity funds (2012-2013). |
Garnett A. Smith (1947) | |
Year of Election or Appointment: 2013 Trustee | |
| Mr. Smith also serves as Trustee of other Fidelity funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of other Fidelity funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012). |
Michael E. Wiley (1950) | |
Year of Election or Appointment: 2008 Trustee Chairman of the Independent Trustees | |
| Mr. Wiley also serves as Trustee of other Fidelity funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005). |
+ The information above includes each Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Trustee's qualifications to serve as a Trustee, which led to the conclusion that each Trustee should serve as a Trustee for the fund.
Officers:
Except for Anthony R. Rochte, correspondence intended for each officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation | |
Christopher S. Bartel (1971) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Bartel also serves as Vice President of other funds. Mr. Bartel serves as a Director, President, and Chief Executive Officer of Fidelity Management & Research (Japan) Limited (2012-present), a Director of Fidelity Management & Research (Hong Kong) (2012-present), and Senior Vice President of Global Equity Research (2010-present). Previously, Mr. Bartel served as Senior Vice President of Equity Research (2009-2010), Managing Director of Research (2006-2009), and an analyst and portfolio manager (2000-2006). |
Elizabeth Paige Baumann (1968) | |
Year of Election or Appointment: 2012 Anti-Money Laundering (AML) Officer | |
| Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer of FMR LLC (2012-present) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as Vice President and Deputy Anti-Money Laundering Officer (2007-2012). |
Marc Bryant (1966) | |
Year of Election or Appointment: 2013 Secretary | |
| Mr. Bryant also serves as an officer of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC. Previously, Mr. Bryant served as Secretary and Chief Legal Officer of Fidelity Rutland Square Trust II (2010-2014). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006). |
William C. Coffey (1969) | |
Year of Election or Appointment: 2009 Assistant Secretary | |
| Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009). |
Jonathan Davis (1968) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (2003-2010). |
Adrien E. Deberghes (1967) | |
Year of Election or Appointment: 2013 President and Treasurer | |
| Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Stephanie J. Dorsey (1969) | |
Year of Election or Appointment: 2010 Assistant Treasurer | |
| Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank. |
Howard J. Galligan III (1966) | |
Year of Election or Appointment: 2014 Chief Financial Officer | |
| Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011). |
James D. Gryglewicz (1972) | |
Year of Election or Appointment: 2014 Chief Compliance Officer | |
| Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Fidelity SelectCo, LLC (2014-present), Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present). |
Brian B. Hogan (1964) | |
Year of Election or Appointment: 2009 Vice President | |
| Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (2014-present) and President of FMR's Equity Division (2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. |
Chris Maher (1972) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of FMR's Program Management Group (2010-2013), and Vice President of Valuation Oversight (2008-2010). |
Kenneth B. Robins (1969) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles. |
Anthony R. Rochte (1968) | |
Year of Election or Appointment: 2013 Vice President | |
| Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012). |
Stacie M. Smith (1974) | |
Year of Election or Appointment: 2013 Assistant Treasurer | |
| Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009). |
Renee Stagnone (1975) | |
Year of Election or Appointment: 2013 Deputy Treasurer | |
| Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments. |
Joseph F. Zambello (1957) | |
Year of Election or Appointment: 2011 Deputy Treasurer | |
| Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments. Previously, Mr. Zambello served as Vice President of FMR's Program Management Group (2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009). |
Annual Report
Distributions (Unaudited)
The Board of Trustees of Select Utilities Portfolio voted to pay on April 13, 2015 to shareholders of record at the opening of business on April 10, 2015 a distribution of $1.091 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.276 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2015, $34,161,530, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% and 72% of the dividends distributed in April and December, respectively, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 100% and 72% of the dividends distributed in April and December, respectively, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2016 of amounts for use in preparing 2015 income tax returns.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Utilities Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees (Committees) - Operations, Audit, Fair Valuation, and Governance and Nominating - each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2015 meeting, the Board, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale exist and would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of SelectCo and the sub-advisers (together with SelectCo, the Investment Advisers) as it relates to the fund, including the backgrounds of investment personnel of SelectCo, and also considered the fund's investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the investment staff of the Investment Advisers, including its size, education, experience, and resources, as well as the Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board believes that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.
Annual Report
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs for income-oriented solutions; (iv) reducing fund expenses for certain index funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching sector-based exchange-traded funds and establishing SelectCo to manage sector-based funds and products; (viii) continuing to develop, acquire, and implement systems and technology to improve security and services to the funds and to increase efficiency; (ix) modifying the eligibility criteria for certain share classes to increase their marketability to a portion of the defined contribution plan market; (x) waiving redemption fees for certain qualified fund-of-fund and wrap programs and certain retirement plan transactions; and (xi) launching new Institutional Class shares of certain money market funds to attract and retain assets and to fill a gap in money market fund offerings.
Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.
The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance.
In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors including the following: general market conditions; issuer-specific information; tactical opportunities for investment; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.
The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2014.
Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should benefit the fund's shareholders.
Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison and making the competitive group more inclusive.
Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The fund's actual TMG %s are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the chart and considered by the Board.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Utilities Portfolio
The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for the 12-month period ended June 30, 2014.
Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.
Total Expense Ratio. In its review of the fund's total expense ratio, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
The Board noted that the fund's total expense ratio ranked below its competitive median for the 12-month period ended June 30, 2014.
Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients.
Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the fund's total expense ratio was reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and servicing the fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, Fidelity presents to the Board information about the profitability of its relationship with the fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the profitability analysis used by Fidelity. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of fund profitability and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
Annual Report
The Board also reviewed Fidelity's non-fund businesses and fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the funds' business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was satisfied that the profitability was not excessive.
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that in 2013, it and the boards of other Fidelity funds created an ad hoc committee (the Economies of Scale Committee) to analyze whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under SelectCo's management plus assets under FMR's management). FMR calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total group assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results; (ii) portfolio manager changes that have occurred during the past year and the amount of the investment that each portfolio manager has made in the Fidelity fund(s) that he or she manages; (iii) Fidelity's compensation structure for portfolio managers, research analysts, and other key personnel, including its effects on fund profitability; (iv) the arrangements with and compensation paid to certain fund sub-advisers on behalf of the Fidelity funds; (v) Fidelity's fee structures, including the group fee structure and definition of group assets, and the rationale for recommending different fees among different categories of funds and classes; (vi) the methodology with respect to competitive fund data and peer group classifications; (vii) Fidelity's transfer agent fee, expense, and service structures for different funds and classes, and the impact of the increased use of omnibus accounts; and (viii) explanations regarding the relative total expense ratios of certain funds and classes, total expense competitive trends and methodologies for total expense competitive comparisons, and actions that might be taken by Fidelity to reduce total expense ratios for certain funds and classes or to achieve further economies of scale.
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Investment Adviser
Fidelity SelectCo, LLC
Denver, CO
Investment Sub-Advisers
FMR Co., Inc.
FMR Investment Management
(U.K.) Limited
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
245 Summer Street
Boston, MA 02210
1-800-544-8888
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
SELUTL-UANNPRO-0415
1.910427.105
Item 2. Code of Ethics
As of the end of the period, February 28, 2015, 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 David A. Rosow is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Rosow 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 Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Consumer Staples Portfolio, Electronics Portfolio, Energy Portfolio, Energy Service Portfolio, Gold Portfolio, IT Services Portfolio, Materials Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Software and Computer Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Utilities Portfolio and Wireless Portfolio (the "Funds"):
Services Billed by PwC
February 28, 2015 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Chemicals Portfolio | $35,000 | $- | $6,900 | $- |
Communications Equipment Portfolio | $34,000 | $- | $6,300 | $- |
Computers Portfolio | $35,000 | $- | $2,800 | $- |
Consumer Staples Portfolio | $40,000 | $- | $5,300 | $- |
Electronics Portfolio | $35,000 | $- | $5,300 | $- |
Energy Portfolio | $38,000 | $- | $7,500 | $- |
Energy Service Portfolio | $37,000 | $- | $3,600 | $- |
Gold Portfolio | $57,000 | $- | $8,400 | $- |
IT Services Portfolio | $35,000 | $- | $2,800 | $- |
Materials Portfolio | $41,000 | $- | $6,500 | $- |
Natural Gas Portfolio | $35,000 | $- | $5,300 | $- |
Natural Resources Portfolio | $35,000 | $- | $4,800 | $- |
Software and Computer Services Portfolio | $36,000 | $- | $2,800 | $- |
Technology Portfolio | $37,000 | $- | $2,800 | $- |
Telecommunications Portfolio | $38,000 | $- | $5,300 | $- |
Utilities Portfolio | $36,000 | $- | $5,700 | $- |
Wireless Portfolio | $33,000 | $- | $2,800 | $- |
February 28, 2014 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Chemicals Portfolio | $36,000 | $- | $2,700 | $1,900 |
Communications Equipment Portfolio | $34,000 | $- | $2,700 | $1,600 |
Computers Portfolio | $35,000 | $- | $2,700 | $1,700 |
Consumer Staples Portfolio | $41,000 | $- | $2,700 | $2,300 |
Electronics Portfolio | $35,000 | $- | $2,700 | $1,800 |
Energy Portfolio | $38,000 | $- | $2,900 | $2,200 |
Energy Service Portfolio | $36,000 | $- | $2,700 | $1,900 |
Gold Portfolio | $55,000 | $- | $6,400 | $2,000 |
IT Services Portfolio | $35,000 | $- | $2,700 | $1,800 |
Materials Portfolio | $40,000 | $- | $2,700 | $2,100 |
Natural Gas Portfolio | $34,000 | $- | $2,700 | $1,700 |
Natural Resources Portfolio | $34,000 | $- | $2,700 | $1,800 |
Software and Computer Services Portfolio | $37,000 | $- | $2,700 | $2,400 |
Technology Portfolio | $37,000 | $- | $2,700 | $2,200 |
Telecommunications Portfolio | $38,000 | $- | $2,700 | $1,600 |
Utilities Portfolio | $35,000 | $- | $2,700 | $1,700 |
Wireless Portfolio | $34,000 | $- | $2,700 | $1,600 |
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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, 2015A | February 28, 2014A |
Audit-Related Fees | $5,900,000 | $4,970,000 |
Tax Fees | $- | $- |
All Other Fees | $- | $50,000 |
A Amounts may reflect rounding.
"Audit-Related Fees" represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
"Tax Fees" represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
"All Other Fees" represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | February 28, 2015 A | February 28, 2014 A,B |
PwC | $8,185,000 | $5,565,000 |
A Amounts may reflect rounding.
B Reflects current period presentation.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and FMR's review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust's Audit Committee must pre-approve all audit and non-audit services provided by a fund's independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund ("Covered Service") are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X ("De Minimis Exception")
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds' last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
By: | /s/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 29, 2015 |
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/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 29, 2015 |
By: | /s/Howard J. Galligan III |
| Howard J. Galligan III |
| Chief Financial Officer |
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Date: | April 29, 2015 |